<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, 1998 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.)
63 Constitution Drive, Chico, California 95973
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 530/898-0300
- --------------------------------------------------------------------------------
(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 12, 1998: 4,675,192
<PAGE>
TRICO BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------------- -----------------
<S> <C> <C>
Assets:
Cash and due from banks $ 33,572 $ 48,476
Federal funds sold and repurchase agreements 2,000 15,000
----------------- -----------------
Cash and cash equivalents 35,572 63,476
Securities held-to-maturity
(approximate fair value $86,535 and $88,950) 86,622 90,764
Securities available-for-sale, net of
unrealized gain of $370 and $480 188,026 175,753
Loans, net of allowance for loan losses of $(6,784) and $(6,459) 461,371 442,508
Premises and equipment, net 18,056 18,901
Investment in real estate properties 449 856
Other real estate owned 1,335 2,230
Accrued interest receivable 5,496 5,701
Other assets 25,495 25,976
----------------- -----------------
Total assets $ 822,422 $ 826,165
================= =================
Liabilities:
Deposits
Noninterest-bearing demand $ 114,739 $ 122,069
Interest-bearing demand 132,833 130,958
Savings 213,572 216,402
Time certificates 267,861 254,665
----------------- -----------------
Total deposits 729,005 724,094
Federal funds purchased - 15,300
Repurchase agreements 3,300 -
Accrued interest payable and other liabilities 12,344 10,207
Long term borrowings 11,436 11,440
----------------- -----------------
Total liabilities 756,085 761,041
Shareholders' equity:
Common stock 48,221 48,161
Retained earnings 18,140 16,956
Unrealized gain(loss) on securities available-for-sale, net (24) 7
----------------- -----------------
Total shareholders' equity 66,337 65,124
----------------- -----------------
Total liabilities and shareholders' equity $ 822,422 $ 826,165
================= =================
</TABLE>
<PAGE>
TRICO BANCSHARES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands except earnings per common share)
For the three months
ended March 31,
1998 1997
-------------- -------------
Interest income:
Interest and fees on loans $ 11,321 $ 10,731
Interest on investment
securities-taxable 3,630 2,944
Interest on investment
securities-tax exempt 248 68
Interest on federal funds sold 66 215
-------------- -------------
Total interest income 15,265 13,958
-------------- -------------
Interest expense:
Interest on deposits 5,712 5,209
Interest on federal funds purchased 4 39
Interest on repurchase agreements 53 -
Interest on other borrowings 169 360
-------------- -------------
Total interest expense 5,938 5,608
-------------- -------------
Net interest income 9,327 8,350
Provision for loan losses 825 600
-------------- -------------
Net interest income after
provision for loan losses 8,502 7,750
Noninterest income:
Service charges and fees 1,882 1,491
Other income 1,124 606
-------------- -------------
Total noninterest income 3,006 2,097
-------------- -------------
Noninterest expenses:
Salaries and related expenses 4,187 3,576
Other, net 4,200 3,716
-------------- -------------
Total noninterest expenses 8,387 7,292
-------------- -------------
Net income before income taxes 3,121 2,555
Income taxes 1,191 991
-------------- -------------
Net income 1,930 1,564
Basic earnings per common share $ 0.41 $ 0.34
============== =============
Diluted earnings per common share $ 0.40 $ 0.32
============== =============
<PAGE>
TRICO BANCSHARES
CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(in thousands, except number of shares)
<TABLE>
<CAPTION>
Common stock Unrealized
------------------------------- Gain/(Loss)
Number Retained on Securities,
of shares Amount earnings Net Total
--------------- ------------- ------------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1997 4,662,649 $ 48,161 $ 16,956 $ 7 $ 65,124
Exercise common stock
options 2,100 19 $ 19
Common stock cash
dividends (746) $ (746)
Change in unrealized (loss)
on securities (31) $ (31)
Stock option amortization 41 $ 41
Net income 1,930 $ 1,930
--------------- ------------- ------------- ----------------- ------------
Balance,
March 31, 1998 4,664,749 $ 48,221 $ 18,140 $ (24) $ 66,337
=============== ============= ============= ================= ============
</TABLE>
<PAGE>
TRICO BANCSHARES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1997
--------------- --------------
<S> <C> <C>
Operating activities:
Net income $1,930 $1,564
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 825 600
Provision for losses on other real estate owned 38 10
Depreciation and amortization 628 492
Amortization of intangible assets 335 185
Accretion of investment security discounts (162) (10)
Deferred income taxes (36) 4,452
Investment security (gains) losses (net) (80) -
(Gain) loss on sale of OREO (25) (14)
(Gain) loss on sale of loans (215) (17)
(Gain) loss on sale of fixed assets 38 (6)
Amortization of stock options 41 52
(Increase) decrease in interest receivable 205 (160)
Increase (decrease) in interest payable 54 1,388
(Increase) decrease in other assets and liabilities 2,274 (3,708)
--------------- --------------
Net cash provided by operating activities $5,850 $4,828
--------------- --------------
Investing activities:
Proceeds from maturities of securities held-to-maturity 4,191 2,643
Proceeds from maturities of securities available-for-sale 53,091 15,230
Proceeds from sales of securities available-for-sale 15,079 -
Purchases of securities available-for-sale (80,298) (117,036)
Proceeds from sale of fixed asset 173 9
Net (increase) decrease in loans (18,049) 8,792
Purchases of premises and equipment (982) (1,137)
Proceeds from sale of OREO 882 97
Purchases and additions to real estate properties (21) (54)
--------------- --------------
Net cash used by investing activities (25,934) (91,456)
--------------- --------------
Financing activities:
Net increase (decrease) in deposits 4,911 97,667
Net increase (decrease) in Fed funds purchased (15,300) (4,900)
Net increase (decrease) in repurchase agreements 3,300 -
Payments of principal on long-term debt agreements (4) (3,003)
Cash dividends - Common (746) (735)
Exercise of common stock options 19 33
--------------- --------------
Net cash provided by financing activities (7,820) 89,062
--------------- --------------
Increase (decrease) in cash and cash equivalents (27,904) 2,434
Cash and cash equivalents at beginning of year 63,476 52,231
--------------- --------------
Cash and cash equivalents at end of year $35,572 $54,665
=============== ==============
Supplemental information
Cash paid for taxes $280 -
Cash paid for interest expense $5,884 $4,220
</TABLE>
<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, 1998 and 1997 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, 1997.
Note B - Comprehensive Income
As of January 1, 1998, the Company adopted FASB Statement of Financial
Accounting Standards No 130, Reporting Comprehensive Income, (SFAS 130). This
statement established standards for the reporting and display of comprehensive
income and its components in the financial statements. For the Company
comprehensive income includes net income reported on the statement of income and
changes in the fair value of its available-for-sale investments reported as a
component of shareholder's equity. The following table presents net income
adjusted by the change in unrealized gains or losses on the available-for-sale
investments as a component of comprehensive income (in thousands).
Three months ended
March 31,
1998 1997
Net income $ 1,930 $ 1,564
Net change in unrealized gains (losses)
on available-for-sale investments (31) (326)
--------- ---------
Comprehensive income $ 1,899 $ 1,238
========= =========
<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. Except within the "overview" section, interest income
and net interest income are presented on a tax equivalent basis.
In addition to the historical information contained herein, this Quarterly
Report contains certain forward-looking statements. The reader of this Quarterly
Report should understand that all such forward-looking statements are subject to
various uncertainties and risks that could affect their outcome. The Company's
actual results could differ materially from those suggested by such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, variances in the actual versus
projected growth in assets, return on assets, loan losses, expenses, rates
charged on loans and earned on securities investments, rates paid on deposits,
competition effects, fee and other noninterest income earned as well as other
factors. This entire Quarterly Report should be read to put such forward-looking
statements in context and to gain a more complete understanding of the
uncertainties and risks involved in the Company's business.
Overview
The Company earned $1,930,000, a 23% increase, for the first quarter ended March
31, 1998 versus $1,564,000 in the first quarter of 1997. Diluted earnings per
share were $0.40 versus $0.32.
Factors contributing to the improved operating results included growth in both
the loan and securities portfolios and higher noninterest income. Gains in these
areas were offset in part by a higher provision for loan losses and increases in
noninterest expenses. As the acquisition of deposits and operations of nine
branches formerly owned by Wells Fargo Bank, N.A. "Wells" took place on February
21, 1997, the 1998 first quarter operating results include nearly two months
additional operational income and costs for those branches as compared to 1997
first quarter results. First quarter 1997 noninterest expenses included one time
acquisition costs of $273,000 or $0.03 per share.
First quarter 1998 pretax earnings increased $566,000 to $3,121,000 compared to
the first quarter of 1997. Net interest income reflected growth of 11.7% to
$9,327,000. The interest income component was up $1,307,000 (9.4%) due to higher
quarter over quarter volume of both loans and securities. A large portion of the
increase in securities average balance was due to the investment of proceeds
from the Wells branch deposits. Average yields on both loans and securities were
up slightly in the first quarter of 1998. Interest expense increased $330,000
(5.9%) which was due to increased volume of interest bearing liabilities. The
average rate paid on interest bearing liabilities decreased 11 basis points to
3.84%. Net interest margin was up slightly to 5.22% for the first quarter of
1998 versus 5.14% in the prior year. Given a stable interest rate environment
and continuing loan growth, management would expect net interest margin to
improve slightly for the remainder of 1998. Provision for loan losses for the
first quarter of 1998 was $825,000 which was $225,000 higher than in the same
quarter in 1997. The higher provision was made to cover loan growth and to
increase the allowance for loan losses.
Noninterest income reflected growth of $909,000 (43.4%) to a total of $3,006,000
for the first quarter of 1998 over the prior year. The service charge and fee
income portion increased $391,000 to $1,882,000 due to an increase in account
volumes and new ATM fees imposed on non-Bank customers. Other income increased
from $606,000 in 1997 to $1,124,000 in 1998. The sale of mortgage loans
originated in the first quarter added $198,000 which was the largest single
factor in the increase. The Company also realized gains of $80,000 on the sale
of investment securities in 1998 versus none in 1997. Commissions on the sale of
mutual funds and annuities increased $66,000 to total $458,000.
Noninterest expense increased $1,095,000 to $8,387,000 in the first quarter 1998
versus 1997. Salary and benefit expense increased $611,000 or 17.1% on a quarter
over quarter basis. The salary expense was higher due to increased staff from
the Wells branch acquisition, higher benefit costs and normal salary
progression. Occupancy costs increased $151,000 due mostly to higher
depreciation relating to equipment for the acquired branches and upgraded
technology. Other expenses such as communications, telephone, ATM charges,
courier service and postage, costs were higher as a result of the 1997 Wells
branch acquisitions. The amortization of intangible assets related to the Wells
branches added $149,000 of expense in the first quarter of 1998.
Assets of the Company totaled $822,422,000 at March 31, 1998 which was a
decrease of $3,743,000 from the December 31, 1997 total and a $25,121,000
increase from the March 31, 1997 ending balances.
For the first quarter of 1998 the Company had an annualized return on assets of
0.96% and a return on equity of 11.66% versus 0.85% and 10.12% in 1997. TriCo
Bancshares ended the quarter with a Tier 1 capital ratio of 10.7% and a total
risk-based capital ratio of 12.0%.
<PAGE>
The following table provides a summary of the major elements of income and
expense for the first quarter of 1998 compared with the first quarter of 1997.
TRICO BANCSHARES
CONDENSED COMPARATIVE
INCOME STATEMENT
(in thousands, except earnings per common share)
Three months
ended March 31, Percentage
1998 1997 Change
(in thousands, except increase
earnings per share) (decrease)
Interest income $ 15,394 $ 13,993 10.0%
Interest expense 5,938 5,608 5.9%
---------- ----------
Net interest income 9,456 8,385 12.8%
Provision for loan losses 825 600 37.5%
---------- ----------
Net interest income after 8,631 7,785 10.9%
provision for loan losses
Noninterest income 3,006 2,097 43.3%
Noninterest expenses 8,387 7,292 15.0%
---------- ----------
Net income before income taxes 3,250 2,590 25.5%
Income taxes 1,191 991 20.2%
Tax equivalent adjustment1 129 35 264.7%
---------- ----------
Net income 1,930 1,564 23.4%
========== ==========
Diluted earnings per common share 0.40 0.32 25.0%
1Interest on tax-free securities is reported on a tax equivalent basis of 1.52
and 1.52 for March 31, 1998 and 1997 respectively.
<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.
Net interest income and net interest margin comparisons between the first
quarters of 1998 and 1997 are influenced by the inclusion of three months of
operations in 1998 of the nine branches purchased from Wells on February 21,
1997, compared to the inclusion of just over one month of such operations in
1997.
For the three months ended March 31, 1998, interest income increased $1,401,000
or 10.0% over the same period in 1997. The average balance of total earning
assets was higher by $72,781,000 which was an 11.2% increase. The average
balances of loans and securities outstanding increased $21,732,000 (5.0%) and
$62,881,000 (30.8%), respectively, while Federal Funds sold decreased
$11,382,000 (72.6%). The loan and securities volume increases accounted for
additional interest income of $540,000 and $938,000 respectively. The decrease
in the average balance of Federal Funds sold resulted in a reduction in interest
income of $156,000. The average yields on loans, securities and Federal Funds
sold were higher by 4, 3 and 64 basis points respectively, adding $79,000 to
interest income for the quarter. Nevertheless, the overall yield on earning
assets fell 9 basis points to 8.49% as securities, which have lower yields than
loans, made up a higher percentage of the earning assets.
For the first quarter of 1998, interest expense increased by $330,000 or 5.9%
over the year earlier period. Average balances of all deposit categories and
short term borrowings were $62,976,000 higher for the first quarter of 1998
versus year earlier balances. Long-term debt average balance was $12,475,000
lower. All of the increase in interest expense was the result of the higher
balances, offset in part by a decrease in the average rate paid on interest
bearing liabilities by 11 basis points to 3.84%.
The combined effect of the increase in both interest income and interest expense
for the first quarter of 1998 versus 1997 resulted in an increase of $1,071,000
or 12.8% in net interest income. Net interest margin was up 8 basis points from
5.14% to 5.22%. Management expects the net interest margin to move higher during
the balance of 1998 to the extent the Bank is successful in replacing some of
the investment portfolio with higher yielding loans.
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, 1998 versus the same period in 1997.
<PAGE>
TRICO BANCSHARES
ANALYSIS OF CHANGE IN NET INTEREST
MARGIN ON EARNING ASSETS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998 March 31, 1997
-------------- --------------
Average Income/ Yield/ Average Income/ Yield/
Balance1 Expense Rate Balance1 Expense Rate
<S> <C> <C> <C> <C> <C> <C>
Assets
Earning assets
Loan 2,3 $ 453,532 $ 11,321 9.98% $ 431,800 $ 10,731 9.94%
Securities 267,179 4,007 6.00% 204,298 3,047 5.97%
Federal funds sold 4,457 66 5.92% 16,289 215 5.28%
------------- ------------- ----------- ------------- ------------ -----------
Total earning assets 725,168 15,394 8.49% 652,387 13,993 8.58%
------------- ------------
Cash and due from bank 32,670 40,981
Premises and equipment 18,985 15,511
Other assets,net 34,419 29,080
Less: allowance
for loan losses (6,621) (6,018)
------------- -------------
Total $ 804,621 $ 731,941
============= =============
Liabilities
and shareholders' equity
Interest-bearing
Demand deposits $ 133,610 748 2.24% $ 106,692 604 2.26%
Savings deposits 217,184 1,648 3.04% 196,804 1,493 3.03%
Time deposits 251,803 3,316 5.27% 237,228 3,112 5.25%
Fed funds purchased 235 4 6.81% 2,854 39 5.47%
Repurchase agreements 3,722 53 5.70% - - -
Long-term debt 11,438 169 5.91% 23,913 360 6.02%
------------- ------------- ----------- ------------- ------------ -----------
Total interest-bearing
liabilities 617,992 5,938 3.84% 567,491 5,608 3.95%
------------- ------------
Noninterest-bearing deposits 109,581 92,958
Other liabilities 10,845 9,669
Shareholders' equity 66,203 61,823
------------- -------------
Total liabilities
and shareholders' equity $ 804,621 $ 731,941
============= =============
Net interest rate spread5 4.65% 4.63%
Net interest income/net $ 9,456 $ 8,385
============= ============
interest margin6 5.22% 5.14%
============= ============
1Average balances are computed principally on the basis of daily balances.
2Nonaccrual loans are included.
3Interest income on loans includes fees on loans of $627,000 in 1998 and $576,000 in 1997.
4Interest income is stated on a tax equivalent basis of 1.52 and 1.52 at March 31, 1998 and 1997
respectively.
5Net interest rate spread represents the average yield earned on interest-earning assets less the
average rate paid
on interest-bearing liabilities.
6Net interest margin is computed by dividing net interest income by total
average earning assets.
</TABLE>
<PAGE>
TRICO BANCSHARES
ANALYSIS OF VOLUME AND RATE CHANGES
ON NET INTEREST INCOME AND EXPENSE
(in thousand)
For the three months ended March 31,
1998 over 1997
Yield/
Volume Rate4 Total
--------- ----------- -----------
Increase (decrease) in interest income:
Loans 1,2 $ 540 $ 50 $ 590
Investment securities3 938 22 960
Federal funds sold (156) 7 (149)
--------- --------- ----------
Total 1,322 79 1,401
--------- --------- ----------
Increase (decrease) in interest expense:
Demand deposits
(interest-bearing) 152 (8) 144
Savings deposits 155 - 155
Time deposits 191 13 204
Federal funds purchased (36) 1 (35)
Repurchase agreements 53 - 53
Long-term debt (188) (3) (191)
--------- -------- ----------
Total 327 3 330
--------- -------- ----------
Increase (decrease) in
net interest income $ 995 $ 76 $ 1,071
========= ======== ==========
1Nonaccrual loans are included.
2Interest income on loans includes fee income on loans of $627,000 in 1998 and
$576,000 in 1997.
3Interest income is stated on a tax equivalent basis of 1.52 and 1.52 for March
31, 1998 and 1997 respectively.
4The rate/volume variance has been included in the rate variance.
<PAGE>
Provision for Loan Losses
The Bank provided $825,000 for loan losses in the first quarter of 1998 versus
$600,000 in 1997. Net charge-offs for all loans in the first quarter of 1998
totaled $500,000 versus $831,000 in the year earlier period. The higher
provision for 1998 was made to cover loan growth and to increase the overall
coverage to nonperforming loans. In the first quarter of 1998, net charge offs
of credit cards totaled $262,000 versus $233,000 in the year earlier period. As
of May 1, 1998, the Bank sold its credit card portfolio and is no longer liable
for charge offs in that portfolio. For all of 1997, net credit card charge offs
totaled $958,000 which was 36.3% of the total charge offs for the year.
Management anticipates the level of the monthly provision should decrease as a
result of the sale of the credit card portfolio.
Noninterest Income
Total noninterest income for the first quarter of 1998 increased $909,000 or
43.4% from the same period in 1997. Service charges and fees on deposit accounts
increased 26.2% to $1,882,000 in the first quarter versus year ago results. This
change is due to increases in account volumes mainly as a result of the nine
branch acquisition in 1997 and newly implemented ATM fees imposed on non-bank
customers. Other income was up from $606,000 in 1997 to $1,124,000 in 1998.
Gains on sales of securities contributed $80,000. Real estate mortgage
production increased substantially from the prior year with the result that
gains on sale of those loans amounted to $215,000 versus $17,000 in the first
quarter of 1997. Nonrecurring miscellaneous income was $126,000 higher in 1998.
Noninterest Expense
Noninterest expense is comprised of operating expenses of the Company and the
Bank, plus the total noninterest (income) expenses of the Bank's real estate
development subsidiary. These expenses increased $1,095,000 or 15.0% in the
first quarter of 1998 versus the same period last year. One time direct costs
related to the conversion of the nine Wells branches totaled $273,000 in 1997.
Salary and benefit expense increased $611,000 or 17.1% on a quarter over quarter
basis. The salary expense was higher due to increased staff from the 1997 Wells
branch acquisition, higher benefit costs and normal salary progression.
Occupancy costs increased $151,000 mostly due to higher depreciation relating to
equipment for the acquired branches and upgraded technology. Other expenses such
as computer communications, telephone, ATM charges, courier service and postage
were higher as a result of the branch acquisition. Amortization of intangible
assets related to the Wells branches added $149,000 of expense in the first
quarter of 1998.
Provision for Income Taxes
The effective tax rate for the three months ended March 31, 1998 is 38.2% and
reflects a decrease from 38.8% in the year earlier period. The decrease in tax
rate is the result of higher nontaxable earnings from municipal bonds. The Bank
has been increasing its holdings of tax-exempt municipal bonds so the tax rate
should continue to be somewhat lower during 1998.
Loans
In the first quarter of 1998, loan balances increased $19,188,000 or 4.3% from
the year end balances. Both commercial and real estate loans increased while
there was a slight decrease in consumer loans. At March 31, 1998 loans totaled
$468,155,000 which was a $38,540,000 (9.0%) increase from the year earlier
totals. Subsequent to March 31, 1998 the Bank sold its credit card portfolio
which at March 31, 1998 had outstanding balances of $14,423,000. The Bank
expects to record a net gain of approximately $725,000 related to the sale in
the second quarter of 1998.
Securities
At March 31, 1998, securities held-to-maturity had a cost basis of $86,622,000
and an approximate fair value of $86,535,000. This portfolio contained
mortgage-backed securities totaling $64,244,000 of which $25,320,000 were
collateralized mortgage obligations (CMO's). The securities available-for-sale
portfolio had a fair value of $188,026,000 and an amortized cost of
$187,656,000. This portfolio contained mortgage-backed securities with an
amortized cost of $58,177,000 of which $19,915,000 were CMO's.
<PAGE>
Nonperforming Loans
As shown in the following table, total nonperforming assets have decreased 18.7%
to $6,081,000 in the first three months of 1998. Non performing assets represent
only 0.74% of total assets. Both nonaccrual loans and OREO decreased during this
period. All nonaccrual loans are considered to be impaired when determining the
valuation allowance under SFAS 114. The collections department personnel
continue to make a concerted effort to work problem and potential problem loans
to reduce risk of loss.
March 31, December 31,
1998 1997
Nonaccrual loans $ 4,529 $ 4,721
Accruing loans past due 90 days or more 217 528
Restructured loans (in compliance with
modified terms) 0 0
--------- ----------
Total nonperforming loans 4,746 5,249
Other real estate owned 1,335 2,230
--------- ----------
Total nonperforming assets $ 6,081 $ 7,479
========= ==========
Nonincome producing investments in real
estate held by Bank's real estate
development subsidiary $ 449 $ 856
========= ==========
Nonperforming loans to total loans 1.01% 1.17%
Allowance for loan losses to
nonperforming loans 143% 123%
Nonperforming assets to total assets 0.74% 0.91%
Allowance for loan losses to
nonperforming assets 112% 86%
<PAGE>
Allowance for Loan Loss
The Bank maintains its allowance for loan losses at a level Management believes
will be adequate to absorb probable losses inherent in existing loans, leases
and commitments to extend credit, based on evaluations of the collectibility,
impairment and prior loss experience of loans, leases and commitments to extend
credit. The following table presents information concerning the allowance and
provision for loan losses.
March 31, March 31,
1998 1997
(in thousands)
Balance, beginning of period $ 6,459 $ 6,097
Provision charged to operations 825 600
Loans charged off (556) (861)
Recoveries of loans previously
charged off 56 30
=============== ===============
Balance, end of period $ 6,784 $ 5,866
=============== ===============
Ending loan portfolio $ 468,155 $ 429,615
=============== ===============
Allowance to loans as a
percentage of ending loan portfolio 1.45% 1.37%
=============== ===============
Equity
The following table indicates the amounts of regulatory capital of the Company.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 1998:
Total Capital
to Risk Weighted Assets $64,528 11.96% =>$43,146 =>8.0% =>$53,933 =>10.0%
Tier I Capital
to Risk Weighted Assets $57,794 10.72% =>$21,573 =>4.0% =>$32,360 => 6.0%
</TABLE>
Item 3. MARKET RISK MANAGEMENT
There have not been any significant changes in the risk management profile of
the Bank since December 31, 1997.
<PAGE>
PART II
Other Information
(a) Item 6. Exhibits Filed Herewith
Exhibit No. Exhibits
3.1 Articles of Incorporation, as amended to date, filed as
Exhibit 3.1 to Registrant's Report on Form 10-K, filed for
the year ended December 31, 1989, are incorporated herein
by reference.
3.2 Bylaws, as amended to 1992, filed as Exhibit 3.2 to
Registrant's Report on Form 10-K, filed for the year ended
December 31, 1992, are incorporated herein by reference.
4.2 Certificate of Determination of Preferences of Series B
Preferred Stock, filed as Appendix A to Registrant's
Registration Statement on Form S-1 (No. 33-22738), is
incorporated herein by reference.
10.1 Lease for Park Plaza Branch premises entered into as of
September 29, 1978, by and between Park Plaza Limited
Partnership as lessor and Tri Counties Bank as lessee,
filed as Exhibit 10.9 to the TriCo Bancshares Registration
Statement on Form S-14 (Registration No. 2-74796) is
incorporated herein by reference.
10.2 Lease for Administration Headquarters premises entered into
as of April 25, 1986, by and between Fortress-Independence
Partnership (A California Limited Partnership) as lessor
and Tri Counties Bank as lessee, filed as Exhibit 10.6 to
Registrant's Report on Form 10-K filed for the year ended
December 31, 1986, is incorporated herein by reference.
10.3 Lease for Data Processing premises entered into as of April
25, 1986, by and between Fortress-Independence Partnership
(A California Limited Partnership) as lessor and Tri
Counties Bank as lessee, filed as Exhibit 10.7 to
Registrant's Report on Form 10-K filed for the year ended
December 31, 1986, is incorporated herein by reference.
10.4 Lease for Chico Mall premises entered into as of March 11,
1988, by and between Chico Mall Associates as lessor and
Tri Counties Bank as lessee, filed as Exhibit 10.4 to
Registrant's Report on Form 10-K filed for the year ended
December 31, 1988, is incorporated by reference.
10.5 First amendment to lease entered into as of May 31, 1988 by
and between Chico Mall Associates and Tri Counties Bank,
filed as Exhibit 10.5 to Registrant's Report on Form 10-K
filed for the year ended December 31, 1988, is incorporated
by reference.
10.9 Employment Agreement of Robert H. Steveson, dated December
12, 1989 between Tri Counties Bank and Robert H. Steveson,
filed as Exhibit 10.9 to Registrant's Report on Form 10-K
filed for the year ended December 31, 1989, is incorporated
by reference.
10.11 Lease for Purchasing and Printing Department premises
entered into as of February 1, 1990, by and between Dennis
M. Casagrande as lessor and Tri Counties Bank as lessee,
filed as Exhibit 10.11 to Registrant's Report on Form 10-K
filed for the year ended December 31, 1991, is incorporated
herein by reference.
10.12 Addendum to Employment Agreement of Robert H. Steveson,
dated April 9, 1991, filed as Exhibit 10.12 to Registrant's
Report on Form 10-K filed for the year ended December 31,
1991, is incorporated herein by reference.
11.1 Computation of earnings per share.
22.1 Tri Counties Bank, a California banking corporation, is the
only subsidiary of Registrant.
(b) Reports on Form 8-K:
None
<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 12, 1998 /s/ Robert H. Steveson
-------------------- --------------------------
Robert H. Steveson
President and
Chief Executive Officer
Date May 12, 1998 /s/ Robert M. Stanberry
-------------------- --------------------------
Robert M. Stanberry
Vice President and
Chief Financial Officer
EXHIBIT 11
COMPUTATIONS OF EARNINGS PER SHARE
(in thousands
except earnings per share)
(unaudited)
For the three months
ended March 31,
1998 1997
Shares used in the computation of earnings per share:
Shares used in the computation of
basic earnings per share 4,659,029 4,641,833
=============== ================
Shares used in the computation of
diluted earnings per share 4,851,658 4,821,344
=============== ================
Net income used in the computation
of earnings per common share $ 1,930 $ 1,564
=============== ================
Basic earnings per common share $ 0.41 $ 0.34
=============== ================
Diluted earnings per common share $ 0.40 $ 0.32
=============== ================
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000356171
<NAME> TRICO BANCSHARES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 33,572
<INT-BEARING-DEPOSITS> 614,266
<FED-FUNDS-SOLD> 2,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 188,026
<INVESTMENTS-CARRYING> 86,622
<INVESTMENTS-MARKET> 86,535
<LOANS> 468,155
<ALLOWANCE> 6,784
<TOTAL-ASSETS> 822,422
<DEPOSITS> 729,005
<SHORT-TERM> 3,300
<LIABILITIES-OTHER> 12,344
<LONG-TERM> 11,436
0
0
<COMMON> 48,221
<OTHER-SE> 18,116
<TOTAL-LIABILITIES-AND-EQUITY> 822,422
<INTEREST-LOAN> 11,321
<INTEREST-INVEST> 3,878
<INTEREST-OTHER> 66
<INTEREST-TOTAL> 15,265
<INTEREST-DEPOSIT> 5,712
<INTEREST-EXPENSE> 5,938
<INTEREST-INCOME-NET> 9,327
<LOAN-LOSSES> 825
<SECURITIES-GAINS> 80
<EXPENSE-OTHER> 8,387
<INCOME-PRETAX> 3,121
<INCOME-PRE-EXTRAORDINARY> 3,121
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,930
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.40
<YIELD-ACTUAL> 8.49
<LOANS-NON> 4,529
<LOANS-PAST> 217
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,459
<CHARGE-OFFS> 556
<RECOVERIES> 56
<ALLOWANCE-CLOSE> 6,784
<ALLOWANCE-DOMESTIC> 6,784
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
