<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1995 Commission file number 0-10661
-------------- -------
TRICO BANCSHARES
----------------
(Exact name of registrant as specified in its charter)
California 94-2792841
- ------------------------------ -------------------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
15 Independence Circle, Chico, California 95926
-----------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 916/898-0300
------------
-------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Title of Class: Common stock, no par value
Outstanding shares as of May 5, 1995: 3,519,207
<PAGE>
TRICO BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
---------- ------------
1995 1994
---- ----
<S> <C> <C>
Assets:
Cash and due from banks $ 25,125 $ 39,709
Securities held-to-maturity
(approximate market value $133,977 and $131,649) 141,688 143,788
Securities available-for-sale, net of
unrealized gain(loss) of $(3,063) and $(5,343) 73,855 74,706
Loans, net of allowance for loan losses
of $(5,596) and $(5,608) 291,114 301,742
Premises and equipment, net 13,288 13,198
Investment in real estate properties 1,173 1,173
Other real estate owned 1,760 1,877
Accrued interest receivable 4,149 4,748
Other assets 12,247 12,893
-------- --------
Total assets $564,399 $593,834
-------- --------
-------- --------
Liabilities:
Deposits
Noninterest-bearing demand $ 70,101 $ 88,957
Interest-bearing demand 80,503 80,657
Savings 179,833 190,800
Time certificates 159,267 130,758
-------- --------
Total deposits 489,704 491,172
Accrued interest payable and other liabilities 7,397 5,475
Short term borrowings 0 30,457
Long term borrowings 16,488 18,499
-------- --------
Total liabilities 513,589 545,603
Shareholders' equity:
Preferred stock 3,899 3,899
Common stock 43,656 43,552
Retained earnings 5,661 4,488
Unrealized loss on securities available-for-sale (2,406) (3,708
-------- --------
Total shareholders' equity 50,810 48,231
-------- --------
Total liabilities and shareholders' equity $564,399 $593,834
-------- --------
-------- --------
</TABLE>
2
<PAGE>
TRICO BANCSHARES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands except earnings per common share)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1995 1994
---- ----
<S> <C> <C>
Interest income:
Interest and fees on loans $ 8,037 $ 7,078
Interest on investment
securities-taxable 3,130 2,856
Interest on investment
securities-tax exempt 44 61
Interest on federal funds sold 90 31
------- -------
Total interest income 11,301 10,026
------- -------
Interest expense:
Interest on deposits 3,750 3,464
Interest on federal funds purchased 10 20
Interest on other borrowings 613 123
------- -------
Total interest expense 4,373 3,607
------- -------
Net interest income 6,928 6,419
Provision for loan losses 40 15
------- -------
Net interest income after
provision for loan losses 6,888 6,404
Noninterest income:
Service charges and fees 1,021 818
Other income 442 337
Securities gains (losses), net (31) (58)
------- -------
Total noninterest income 1,432 1,097
------- -------
Noninterest expenses:
Salaries and related expenses 2,810 2,563
Other, net 2,746 2,678
------- -------
Total noninterest expenses 5,556 5,241
------- -------
Net income before income taxes 2,764 2,260
Income taxes 1,134 927
------- -------
Net income 1,630 1,333
Preferred stock dividends 105 105
------- -------
Net income available to
common shareholders 1,525 1,228
Primary earnings per common share $ 0.41 $ 0.33
------- -------
------- -------
Fully diluted earnings per common share $ 0.41 $ 0.33
------- -------
------- -------
</TABLE>
3
<PAGE>
TRICO BANCSHARES
CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(in thousands, except number of shares)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK UNREALIZED
--------------------- ------------------------ SECURITIES
NUMBER NUMBER RETAINED HOLDING
OF SHARES AMOUNT OF SHARES AMOUNT EARNINGS GAIN (LOSS) TOTAL
--------- ------ --------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1994 8,000 $3,899 3,513,707 $43,552 $4,488 $(3,708) 48,231
Exercise common stock
option 0 0 5,500 52 0 0 52
Preferred stock cash
dividend 0 0 0 0 (105) 0 (105)
Common stock cash
dividends 0 0 0 0 (352) 0 (352)
Change in unrealized loss
on securities 0 0 0 0 0 1,302 1,302
Stock option amortization 0 0 0 52 0 0 52
Net income, March 31, 1995 0 0 0 0 1,630 0 1,630
------ ------- ---------- -------- ------- -------- --------
Balance,
March 31, 1995 8,000 $3,899 3,519,207 $43,656 $5,661 $(2,406) $50,810
------ ------- ---------- -------- ------- -------- --------
------ ------- ---------- -------- ------- -------- --------
</TABLE>
4
<PAGE>
TRICO BANCSHARES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1995 1994
---- ----
<S> <C> <C>
Operating activities:
Net income $ 1,630 $ 1,333
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 40 15
Provision for losses on other real estate owned 0 0
Provision for real estate losses 0 0
Depreciation and amortization 386 320
Amortization of investment security discounts 39 115
Deferred income taxes 279 (31)
Investment security (gains) losses (net) 31 58
(Gain) loss on sale of OREO (net) (99) 0
(Gain) loss on sale of loans (net) (12) 0
Origination of loans held for sale (2,512) (1,982)
Proceeds from loan sales 2,155 3,980
Amortization of stock options 52 83
(Increase) decrease in interest receivable 599 (356)
Increase (decrease) in interest payable 1,000 60
(Increase) decrease in other assets and liabilities 212 4,476
------- -------
Net cash provided by operating activities 3,800 8,071
Investing activities:
Proceeds from maturities of securities held-to-maturity 2,096 0
Proceeds from maturities of securities available-for-sale 4,181 17,342
Proceeds from sales of securities available-for-sale 1,972 14,405
Purchases of securities available-for-sale (3,042) (60,897)
Net (increase) decrease in loans 10,651 12,432
Purchases of premises and equipment (423) (438)
Proceeds from sale of real estate properties 0 647
Proceeds from the sale of OREO 522 0
------- -------
Net cash used by investing activities 15,957 (16,509)
Financing activities:
Net increase (decrease) in deposits (1,468) (4,713)
Repayment of repurchase agreements (30,457) 0
Borrowings under long-term debt agreements 0 11,389
Payments of principal on long-term debt agreements (2,011) 0
Redemption of Preferred Stock 0 0
Cash dividends - Preferred (105) (105)
Cash dividends - Common (352) (301)
Sale of Common Stock 52 143
------- -------
------- -------
Net cash provided by financing activities (34,341) 6,413
------- -------
Increase (decrease) in cash and cash equivalents (14,584) (2,025)
Cash and cash equivalents at beginning of year 39,709 42,922
------- -------
Cash and cash equivalents at end of year $ 25,125 $ 40,897
------- -------
------- -------
Supplemental information:
Cash paid for taxes $ 315 $ 612
Cash paid for interest expense $ 3,373 $ 3,547
</TABLE>
5
<PAGE>
Item 1. NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
(SEC) and in Management's opinion, include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of results for
such interim periods. Certain information and note disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to SEC rules or
regulations; however, the Company believes that the disclosures made are
adequate to make the information presented not misleading.
The interim results for the three months ended March 31, 1995 and 1994 are not
necessarily indicative of results for the full year. It is suggested that these
financial statements be read in conjunction with the financial statements and
the notes included in the Company's Annual Report for the year ended
December 31, 1994.
Certain reclassifications have been made to the prior year's financial
statements in order to conform with the classifications of the March 31,1995
financial statements.
NOTE B - IMPAIRED LOANS AND TROUBLED DEBT RESTRUCTURINGS
As of January 1, 1995, the Company adopted the FASB Statement of Financial
Accounting Standards No 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN,
(SFAS 114) and SFAS 118, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN -
INCOME RECOGNITION AND DISCLOSURES. SFAS 114 requires that certain impaired
loans be measured based on the present value of expected future cash flows
discounted at the loan's original effective interest rate. As a practical
expedient, impairment may be measured based on the loan's observable market
price or the fair value of the collateral if the loan is collateral dependent.
When the measure of the impaired loan is less than the recorded investment in
the loan, the impairment is recorded through a valuation allowance.
The Company had previously measured the allowance for loan losses using methods
similar to those prescribed in SFAS 114. As a result of adopting these
statements, no additional allowance for loan losses was required as of
January 1, 1995.
6
<PAGE>
As of March 31, 1995, the Company's recorded investment in impaired loans and
the related valuation allowance calculated under SFAS 114 are as follows:
<TABLE>
<CAPTION>
RECORDED VALUATION
INVESTMENT ALLOWANCE
(IN THOUSANDS)
<S> <C> <C>
Impaired Loans -
Valuation allowance required $ 206 $ 127
No valuation allowance required 2,230 -
------- -------
Total impaired loans $2,436 $ 127
------- -------
------- -------
</TABLE>
The valuation allowance related to impaired loans under SFAS 114 is included in
the allowance for loan losses on the consolidated balance sheet at March 31,
1995. The average recorded investment in impaired loans for the three months
ended March 31, 1995 was $1,724,000.
Interest payments received on impaired loans are recorded as interest income
unless collection of the remaining recorded investment is doubtful at which time
payments received are recorded as reductions of principal. The Company
recognized interest income on impaired loans of $27,000 for the three months
ended March 31, 1995.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As TriCo Bancshares (the "Company" ) has not commenced any business operations
independent of Tri Counties Bank (the "Bank"), the following discussion pertains
primarily to the Bank. Average balances, including such balances used in
calculating certain financial ratios, are generally comprised of average daily
balances for the Company. Unless otherwise stated, interest income and net
interest income are presented on a tax equivalent basis.
OVERVIEW
The Company had earnings of $1,630,000 for the first quarter ended March 31,
1995 versus $1,333,000 in the prior year. The higher 1995 first quarter
earnings reflected improved performance in both net interest income and
noninterest income from the year earlier period. Net interest income increased
$496,000 or 7.7% to $6,960,000. Noninterest income increased $335,000 or 30.5%
to $1,432,000.
Net interest income benefited from an increase in interest income due to higher
interest rates as well as higher average balances of loans, securities and
Federal funds sold. Overall, interest income increased $1,262,000 or 12.5% to
$11,333,000. The major portion of the increase was due to a 73 basis point
increase in yields to 8.45% from the year earlier period. The increase in
interest income was offset in part by an increase in interest expense. The Bank
had a higher volume of interest bearing liabilities. These liabilities paid
interest at an average rate of 3.86% which was a 61 basis point increase over
the prior year. The higher interest rates paid accounted for most of the
increase in interest expense. Net interest margin for the quarter was 5.19%
versus 4.96% in the first quarter of 1994.
Service charges and fee income contributed 60% of the increase in noninterest
income. Various fees and services contributed to the increase. Other income
increased $105,000 or 31.2%. Gains in the income from the sale of annuities and
mutual funds and OREO property contributed to the increase. Lower activity
levels in mortgage lending contributed to a reduction in earnings from the sale
of loans.
Noninterest expense increased $315,000 or 6.0%. Employee salaries and benefits
accounted for 78.4% of this increase. Normal salary progression and sales
incentives contributed to the increase.
Assets of the Company at March 31, 1994 were $564,399,000 which was a decrease
from $587,133,000 a year ago. Loan balances increased slightly in the first
quarter. Management matched investment maturities and Federal funds sold
positions with decreases in deposit totals. By first quarter end 1995,
Management had also paid off all short term borrowings. In shareholders'
equity, the unrealized
8
<PAGE>
loss on securities increased $684,000 to $2,406,000 from the year ago level.
However, due to favorable changes in long term interest rates, this unrealized
loss decreased $1,302,000 from the December 31,1994 balance.
The Bank opened its first supermarket branch in March 1994. Since then three
other branches were also opened. At March 31, 1995 these four branches had
deposits in excess of $22,000,000 in over 5,000 accounts. The Bank has a
contract with Albertson's Inc. to open branches in some of their stores located
north and east of Sacramento. The first one will be in Chico and is targeted to
open in July of this year. The Bank plans to open two other locations in 1995.
Establishment of supermarket branches is subject to the approval of the
California State Banking Department. Management views the supermarket branches
as a long term growth strategy. It appears that it will take 18 to 24 months
for each branch to reach a break even operating level.
At March 31, 1995 TriCo Bancshares had a leverage ratio of 9.4% based on ending
assets, a Tier 1 capital ratio of 14.3% and a total risk-based capital ratio of
15.5%.
The following table provides a summary of the major elements of income and
expense for the first quarter of 1995 compared with the first quarter of 1994.
9
<PAGE>
TRICO BANCSHARES
CONDENSED COMPARATIVE
INCOME STATEMENT
(in thousands, except earnings per common share)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
1995 1994 PERCENTAGE
---- ---- CHANGE
(IN THOUSANDS, EXCEPT INCREASE
EARNINGS PER SHARE) (DECREASE)
<S> <C> <C> <C>
Interest income $11,333 $10,071 12.5%
Interest expense 4,373 3,607 21.2%
------- ------- -----
Net interest income 6,960 6,464 7.7%
Provision for loan losses 40 15 166.7%
------- ------- -----
Net interest income after 6,920 6,449 7.3%
provision for loan losses
Noninterest income 1,432 1,097 30.5%
Noninterest expenses 5,556 5,241 6.0%
------- ------- -----
Net income before income taxes 2,796 2,305 21.3%
Income taxes 1,134 927 22.3%
Tax equivalent adjustment(1) 32 45 -27.9%
------- ------- -----
Net income 1,630 1,333 22.3%
------- ------- -----
------- ------- -----
Preferred stock dividends (105) (105) 0.0%
Net income available to 1,525 1,228 24.2%
common shareholders'
Primary earnings per common share 0.41 0.33 24.8%
<FN>
(1)Interest on tax-free securities is reported on a tax equivalent basis of 1.75
and 1.73 for March 31, 1995 and 1994.
</TABLE>
10
<PAGE>
NET INTEREST INCOME / NET INTEREST MARGIN
Net interest income represents the excess of interest and fees earned on
interest-earning assets (loans, securities and Federal Funds sold) over the
interest paid on deposits and borrowed funds. Net interest margin is net
interest income expressed as a percentage of average earning assets. Net
interest income comprises the major portion of the Bank's income.
In the three months ended March 31, 1995, interest income increased $1,262,000
or 12.5% over the same period in 1994. The average balance of earning assets
increased $14,770,000 to $536,285,000 which accounted for an increase in
interest income of $254,000. The average rate earned on these assets increased
73 basis points. This accounted for an increase in interest income of
$1,008,000. All categories of earning assets increased from prior year levels.
No one category increased significantly. Average rates received on loans were
up 108 basis points which accounted for $807,000 of the increase in interest
income.
For the first quarter of 1995, interest expense increased by $766,000 or 21.2%
over the year earlier period. Average balances of interest bearing liabilities
were $9,320,000 or 2.1% higher in than in the previous year. Increased volumes
in time deposits, short and long term debt accounted for the change. Increases
in those categories were offset in part by decreases in demand deposits, savings
and Federal funds purchased. Changes in the interest bearing liability volumes
accounted for $183,000 of the interest expense increase. Average rates paid on
time certificates of deposits increased 121 basis points and accounted for
$506,000 of the increase.
The combined effect of the increase in both interest income and interest expense
for the first quarter of 1995 versus 1994 resulted in an increase of $496,000 or
7.7% in net interest income. Net interest margin increased 23 basis points from
4.96% to 5.19%. However, net interest margin decreased from 5.39% in the fourth
quarter of 1994. If interest rates remain stable, Management would expect net
interest margin to be under some downward pressure as time deposits roll over
into higher rate instruments.
The following two tables provide summaries of the components of the interest
income, interest expense and net interest margins on earning assets for the
quarter ended March 31, 1995 versus the same period in 1994.
11
<PAGE>
TRICO BANCSHARES
ANALYSIS OF CHANGE IN NET INTEREST
MARGIN ON EARNING ASSETS
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31, 1995 MARCH 31, 1994
-------------- ---------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE(1) EXPENSE RATE BALANCE(1) EXPENSE RATE
<S> <C> <C> <C> <C> <C> <C>
Assets
Earning assets
Loan(2,3) $300,461 $ 8,037 $10.70% $294,159 $ 7,078 9.62%
Securities 229,340 3,206 5.59% 222,397 2,962 5.33%
Federal funds sold 6,484 90 5.55% 4,959 31 2.50%
-------- ------- -------- -------
Total earning assets 536,285 11,333 8.45% 521,515 10,071 7.72%
------- -------
Cash and due from bank 30,939 31,828
Premises and equipment 13,255 12,594
Other assets,net 9,143 15,465
Less: allowance
for loan losses (5,649) (4,589)
-------- --------
Total $583,973 $576,812
-------- --------
-------- --------
Liabilities
and shareholders' equity
Interest-bearing
Demand deposits $ 81,466 494 2.43% $ 83,657 535 2.56%
Savings deposits 183,652 1,403 3.06% 209,474 1,582 3.02%
Time deposits 145,912 1,853 5.08% 139,209 1,347 3.87%
Federal funds purchased 642 10 6.23% 1,873 16 3.42%
Short-term debt 23,815 362 6.08% 711 7 3.94%
Long-term debt 18,258 251 5.50% 9,501 120 5.05%
-------- ------- -------- -------
Total interest-bearing
liabilities 453,745 4,373 3.86% 444,425 3,607 3.25%
------- -------
Noninterest-bearing deposit 73,892 79,355
Other liabilities 6,847 5,650
Shareholders' equity 49,489 47,382
-------- --------
Total liabilities
and shareholders' equity 583,973 $576,812
-------- --------
-------- --------
Net interest rate spread(5) 4.60% 4.48%
Net interest income/net $ 6,960 $ 6,464
------- -------
------- -------
interest margin(6) 5.19% 4.96%
------- -------
------- -------
<FN>
(1)Average balances are computed principally on the basis of daily balances.
(2)Nonaccrual loans are included.
(3)Interest income on loans includes fees on loans of $382,000 in 1995 and
$372,000 in 1994.
(4)Interest income is stated on a tax equivalent basis of 1.75 and 1.73 at
March 31, 1995 and 1994.
(5)Net interest rate spread represents the average yield earned on interest-
earning assets less the average rate paid on interest-bearing liabilities.
(6)Net interest margin is computed by dividing net interest income by total
average earning assets.
</TABLE>
12
<PAGE>
TRICO BANCSHARES
ANALYSIS OF VOLUME AND RATE CHANGES
ON NET INTEREST INCOME AND EXPENSE
(in thousand)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------
1995 OVER 1994
--------------
YIELD/
VOLUME RATE(4) TOTAL
-------- -------- --------
<S> <C> <C> <C>
Increase (decrease) in
interest income:
Loans(1,2) $ 152 $ 807 $ 959
Investment securities(3) 92 152 244
Federal funds sold 10 49 59
-------- -------- --------
Total 254 1,008 1,262
-------- -------- --------
Increase (decrease) in
interest expense:
Demand deposits
(interest-bearing) (14) (27) (41)
Savings deposits (195) 16 (179)
Time deposits 65 441 506
Federal funds purchased (11) 5 (6)
Short-term debt 227 128 355
Long-term debt 111 20 131
-------- -------- --------
Total 183 583 766
-------- -------- --------
<FN>
(1) Nonaccrual loans are included.
(2) Interest income on loans includes fee income on loans of $382,000 in 1995
and $372,000 in 1994.
(3) Interest income is stated on a tax equivalent basis of 1.75 and 1.73 for
March 31, 1995 and 1994.
(4) The rate/volume variance has been included in the rate variance.
</TABLE>
13
<PAGE>
PROVISION FOR LOAN LOSSES
In the first quarter of 1995, the Bank made an additional provision for possible
loan losses of $40,000. This was in comparison to a provision of $15,000 made
in the first quarter of 1994. The 1995 provision nearly replaced the $52,000 of
net chargeoffs. Management decided that no additional provision was necessary
as there was no evidence of deterioration in loan quality which would require
additional provision. At quarter's end the allowance for loan losses was 1.89%
of the ending loan portfolio.
NONINTEREST INCOME
Total noninterest income for the first quarter of 1995 increased $335,000 or
30.5% from the same period in 1994. Service charges and fees on deposit
accounts increased $203,000 or 24.8%. This income accounted for 60% of the
increase in noninterest income. Other income increased $105,000 or 31.2%.
Commissions earned on the sale of annuities and mutual funds and a gain on the
sale of OREO property accounted for most of the increase. Lower activity levels
in mortgage lending due to higher mortgage interest rates resulted in a
reduction in earnings from the sale of loans as compared to the first quarter in
1994.
NONINTEREST EXPENSE
Noninterest expense is comprise of operating expenses of the Company and the
Bank, plus the total noninterest (income) expenses (excluding gains or losses
from securities) of the Bank's real estate development subsidiary. These
expenses increased $315,000 or 6.0% in the first quarter of 1995 versus the same
period last year.
Salaries and benefits increased $247,000 or 9.6%. Most of the salary increase
was due to normal salary progressions, new staffing at supermarket branches and
sales incentives paid. Other expenses increased $68,000 or 2.5%. Of this
increase, premise and equipment accounted for $52,000. These expenses were up
due in part to the additional depreciation and lease expenses of the four
supermarket branches.
Management continually reviews these expenses and expense controls. New expense
tracking reports have been developed to aid in this process.
PROVISION FOR INCOME TAXES
The effective tax rate for the three months ended March 31, 1995 is 41.0%. This
rate equals the combined California and Federal statutory rates. The actual
rate equals the statutory rate as the Bank does not have significant holdings of
tax-
14
<PAGE>
exempt securities. The Bank does not anticipate increasing its tax-free
securities holdings in the near term.
LOANS
In the first quarter of 1995, loan balances decreased $10,761,000 or 3.5% from
the year end balances. Commercial loans decreased $5.7 million due in part to
seasonality of agriculture loans and the continuing soft economy in the Bank's
market area. Construction loans decreased $5.6 million due to the wet winter in
Northern California and the economy. Real estate commercial loans increased
slightly and consumer loans were unchanged. Due to the soft loan demand,
competition for loan customers is aggressive. Consequently, loan pricing
margins to prime have declined.
SECURITIES
At March 31, 1995, securities held-to-maturity had a cost basis of $141,688,000
and an approximate market value of $133,977,000. This portfolio contained
mortgage-backed securities totaling $94,983,000 of which $43,319,000 were CMO's.
The securities available-for-sale portfolio had a fair market value of
$73,855,000 with a cost basis of $76,918,000. This portfolio contained
mortgage-backed securities totaling $34,781,000 of which $29,769,000 were CMO's.
At December 31, 1994, the market value of the two portfolios was $17,482,000
less than the cost. As long term interest rates moved down in the first quarter
of 1995, at March 31, 1995 this unrealized loss had decreased to $11,791,000.
Management has contracted with an investment advisory firm to provide the Bank
with advisory services for its investment portfolio. This firm manages over
$4.0 billion in fixed income assets. It offers a level of expertise,
consolidated buying power and portfolio reporting and analysis at a
significantly lower cost than could be duplicated in house. Bank Management
retains security purchase/sale decision authority.
15
<PAGE>
NONPERFORMING LOANS
As shown in the following table, total nonperforming assets have increased about
5% to $3,436,000 in the first three months of 1995. Non performing assets
represent only 0.61% of total assets. Nonaccrual loans increased while OREO
decreased during this period. All nonaccrual loans are considered to be
impaired when determining any valuation allowance under SFAS 114 (See Note B).
Loan Administration personnel continue to make a concerted effort to work
problem and potential problem loans to reduce risk of loss.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
---- ----
<S> <C> <C>
Nonaccrual loans $1,656 $1,122
Accruing loans past due 90 days or more 20 24
Restructured loans (in compliance with
modified terms) 0 0
------ ------
Total nonperforming loans 1,676 1,146
Other real estate owned 1,760 2,124
------ ------
Total nonperforming assets $3,436 $3,270
------ ------
------ ------
Nonincome producing investments in real
estate held by Bank's real estate
development subsidiary $1,173 $1,173
------ -----
------ -----
Nonperforming loans to total loans 0.56% 0.37%
Allowance for loan losses to
nonperforming loans 334% 489%
Nonperforming assets to total assets 0.61% 0.55%
Allowance for loan losses to
nonperforming assets 163% 171%
</TABLE>
16
<PAGE>
ALLOWANCE FOR LOAN LOSS
The Bank maintains its allowance for loan losses at a level considered by
Management to be adequate to cover the risk of loss in the loan portfolio at a
particular point in time. This determination includes an evaluation and
analysis of historical experience, current loan mix and volume, projected
economic conditions and as of January 1, 1995 the valuation allowance for
impaired loans has been calculated in accordance with SFAS 114 (See Note B).
The following table presents information concerning the allowance and provision
for loan losses.
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Balance, beginning of period $ 5,608 $ 5,973
Provision charged to operations 40 15
Loan charged off (119) (107)
Recoveries of loans previously
charged off 67 95
-------- --------
Balance, end of period $ 5,596 $ 5,976
-------- --------
-------- --------
Ending loan portfolio $296,711 $290,254
-------- --------
-------- --------
Allowance to loans as a
percentage of ending loan portfolio 1.89% 2.06%
-------- --------
</TABLE>
17
<PAGE>
EQUITY
The following table indicates the amounts of regulatory capital of the Company.
<TABLE>
<CAPTION>
Tier I Total Risk- Leverage
Based
---------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
March 31,1995
Company's % 14.3% 15.5% 9.4%
Regulatory minimum % 4.0% 8.0% 4.0%
Company's capital $ $53,216 $57,877 $53,216
Regulatory minimum $ 14,886 29,872 22,576
------- ------- -------
Computed excess $38,330 $28,005 $30,640
------- ------- -------
------- ------- -------
</TABLE>
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRICO BANCSHARES
Date May 5, 1995 /s/ Robert H. Stevenson
--------------------------- ----------------------------------
Robert H. Stevenson
President and
Chief Executive Officer
Date May 5, 1995 /s/ Robert M. Stanberry
---------------------------- ----------------------------------
Robert M. Stanberry
Vice President and
Chief Financial Officer
19
<PAGE>
PART II
OTHER INFORMATION
PAGE
----
Item 6. EXHIBITS INDEX
a. EXHIBITS
Computations of Earnings Per Share 21
b. REPORTS ON FORM 8-K:
None
20
<PAGE>
EXHIBIT 11
COMPUTATIONS OF EARNINGS PER SHARE
(in thousands
except earnings per share)
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------
1995 1994
---- ----
<S> <C> <C>
Shares used in the computation
of earnings per share(1):
Weighted daily average
of shares outstanding 3,515,000 3,447,946
Shares used in the computation of
primary earnings per shares 3,678,644 3,738,569
---------- ----------
---------- ----------
Shares used in the computation of
fully diluted earnings per share 3,689,501 3,738,569
---------- ----------
---------- ----------
Net income used in the computation
of earnings per common share:
Net income, as reported $ 1,626 $ 1,333
Adjustment for preferred
stock dividend (105) (105)
---------- ----------
Net income, as adjusted $ 1,521 $ 1,228
---------- ----------
---------- ----------
Primary earnings per share $ 0.41 $ 0.33
---------- ----------
---------- ----------
Fully diluted earnings per share $ 0.41 $ 0.33
---------- ----------
---------- ----------
<FN>
(1)Retroactively adjusted for stock dividends.
</TABLE>
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0000356171
<NAME> TRICO BANCSHARES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 25,125
<INT-BEARING-DEPOSITS> 419,603
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 73,855
<INVESTMENTS-CARRYING> 141,688
<INVESTMENTS-MARKET> 133,977
<LOANS> 296,710
<ALLOWANCE> 5,596
<TOTAL-ASSETS> 564,399
<DEPOSITS> 489,704
<SHORT-TERM> 0
<LIABILITIES-OTHER> 7,397
<LONG-TERM> 16,488
<COMMON> 43,656
0
3,899
<OTHER-SE> 3,255
<TOTAL-LIABILITIES-AND-EQUITY> 564,399
<INTEREST-LOAN> 8,037
<INTEREST-INVEST> 3,174
<INTEREST-OTHER> 90
<INTEREST-TOTAL> 11,301
<INTEREST-DEPOSIT> 3,750
<INTEREST-EXPENSE> 4,373
<INTEREST-INCOME-NET> 6,928
<LOAN-LOSSES> 40
<SECURITIES-GAINS> (31)
<EXPENSE-OTHER> 5,556
<INCOME-PRETAX> 2,764
<INCOME-PRE-EXTRAORDINARY> 1,630
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,630
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
<YIELD-ACTUAL> .085
<LOANS-NON> 1,656
<LOANS-PAST> 20
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,608
<CHARGE-OFFS> 119
<RECOVERIES> 67
<ALLOWANCE-CLOSE> 5,596
<ALLOWANCE-DOMESTIC> 5,596
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
