<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, 2000 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 5, 2000: 7,181,350
<PAGE>
<TABLE>
<CAPTION>
TRICO BANCSHARES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
March 31, December 31,
2000 1999
------------------ ------------------
<S> <C> <C>
Assets:
Cash and due from banks $ 40,079 $ 52,036
Federal funds sold and repurchase agreements 14,900 8,400
------------------ ------------------
Cash and cash equivalents 54,979 60,436
Securities available-for-sale 225,454 231,708
Loans, net of allowance for loan losses
of $11,914 and $11,037, respectively 585,810 576,942
Premises and equipment, net 15,966 16,043
Other real estate owned 1,152 760
Accrued interest receivable 6,112 6,076
Other assets 33,472 32,831
------------------ ------------------
Total assets $ 922,945 $ 924,796
================== ==================
Liabilities:
Deposits:
Noninterest-bearing demand $ 144,072 $ 155,937
Interest-bearing demand 150,708 143,923
Savings 222,451 222,615
Time certificates 266,109 271,635
------------------ ------------------
Total deposits 783,340 794,110
Federal funds purchased 4,700 0
Accrued interest payable and other liabilities 14,092 12,058
Long term borrowings 45,500 45,505
------------------ ------------------
Total liabilities 847,632 851,673
Shareholders' equity:
Common stock 50,229 50,043
Retained earnings 31,149 28,613
Accumulated other comprehensive loss (6,065) (5,533)
------------------ ------------------
Total shareholders' equity 75,313 73,123
------------------ ------------------
Total liabilities and shareholders' equity $ 922,945 $ 924,796
================== ==================
</TABLE>
<PAGE>
TRICO BANCSHARES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands except earnings per common share)
For the three months
ended March 31,
2000 1999
Interest income:
Interest and fees on loans $ 14,063 $ 12,384
Interest on investment
securities-taxable 3,080 3,405
Interest on investment
securities-tax exempt 558 548
Interest on federal funds sold 193 8
-------------- --------------
Total interest income 17,894 16,345
-------------- --------------
Interest expense:
Interest on deposits 5,769 5,109
Interest on federal funds purchased 9 201
Interest on repurchase agreements 1 7
Interest on other borrowings 629 521
-------------- --------------
Total interest expense 6,408 5,838
-------------- --------------
Net interest income 11,486 10,507
Provision for loan losses 800 840
-------------- --------------
Net interest income after
provision for loan losses 10,686 9,667
Noninterest income:
Service charges and fees 1,807 1,707
Other income 2,819 1,255
-------------- --------------
Total noninterest income 4,626 2,962
-------------- --------------
Noninterest expenses:
Salaries and related expenses 4,834 4,433
Other, net 4,190 4,053
-------------- --------------
Total noninterest expenses 9,024 8,486
-------------- --------------
Net income before income taxes 6,288 4,143
Income taxes 2,360 1,509
-------------- --------------
Net income $ 3,928 $ 2,634
============== ==============
Basic earnings per common share $ 0.55 $ 0.37
============== ==============
Diluted earnings per common share $ 0.54 $ 0.36
============== ==============
<PAGE>
<TABLE>
<CAPTION>
TRICO BANCSHARES
CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(in thousands, except number of shares)
Common stock Accumulated
------------------------ Other
Number Retained Comprehensive Comprehensive
of shares Amount earnings Loss Total Income
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1999 7,152,329 $50,043 $28,613 ($5,533) $73,123
Exercise of Common Stock options,
net of tax 32,750 171 171
Repurchase of Common Stock (3,729) (26) (29) (55)
Common stock cash dividends (1,363) (1,363)
Stock option amortization 41 41
Comprehensive income:
Net income 3,928 3,928 $3,928
Other comprehensive loss:
Change in unrealized loss
on securities, net of tax (532) (532) (532)
----------------
Comprehensive income $3,396
-------------------------------------------------------------------------------------
Balance, March 31, 2000 7,181,350 $50,229 $31,149 ($6,065) $75,313
-------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRICO BANCSHARES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the three months
ended March 31,
2000 1999
-------------- --------------
<S> <C> <C>
Operating activities:
Net income $3,928 $2,634
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 800 840
Depreciation and amortization 638 647
Amortization of intangible assets 241 284
Accretion and amortization of investment
securities discounts and premiums, net 73 181
Deferred income taxes 1,901 (80)
Investment security gains, net - (9)
Gain on sale of OREO (29) (14)
Gain on sale of loans (358) (358)
(Gain) loss on sale of fixed assets 23 (7)
Amortization of stock options 41 41
Decrease (increase) in interest receivable (36) 481
Increase (decrease) in interest payable 193 (67)
Decrease in other assets and liabilities (2,053) 3,025
-------------- --------------
Net cash provided by operating activities 5,362 7,598
-------------- --------------
Investing activities:
Proceeds from maturities of securities available-for-sale 14,673 34,883
Proceeds from sales of securities available-for-sale - 9,187
Purchases of securities available-for-sale (7,990) (28,018)
Proceeds from sale of fixed asset 21 27
Net increase in loans (9,799) (16,000)
Purchases of premises and equipment (528) (406)
Proceeds from sale of OREO 126 185
-------------- --------------
Net cash used by investing activities (3,497) (142)
-------------- --------------
Financing activities:
Net decrease in deposits (10,770) (14,877)
Net increase (decrease) in Fed funds purchased 4,700 (4,600)
Borrowings under long-term debt agreements - 1,000
Payments of principal on long-term debt agreements (5) (3,404)
Repurchase of common stock (55) (49)
Cash dividends (1,363) (1,139)
Exercise of common stock options 171 365
-------------- --------------
Net cash used by financing activities (7,322) (22,704)
-------------- --------------
(Decrease) in cash and cash equivalents (5,457) (15,248)
Cash and cash equivalents at beginning of period 60,436 50,483
-------------- --------------
Cash and cash equivalents at end of period $54,979 $35,235
-------------- --------------
Supplemental information
Cash paid for taxes $275 $50
Cash paid for interest expense $6,215 $5,905
</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, 2000 and 1999 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, 1999.
Note B - Comprehensive Income
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 other comprehensive income. 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,
2000 1999
Net income $ 3,928 $ 2,634
Net change in unrealized gains
(losses) on securities available-for-sale,
net of tax (532) (777)
Comprehensive income $ 3,396 $ 1,857
<PAGE>
Note C - Earnings per Share
The Company's basic and diluted earnings per share are as follows (in thousands
except per share data):
Three Months Ended March 31, 2000
Weighted
Average Per-Share
Income Shares Amount
Basic Earnings per Share
Net income available to common shareholders $3,928 7,171,612 $0.55
Common stock options outstanding -- 157,466
Diluted Earnings per Share
Net income available to common shareholders $3,928 7,329,078 $0.54
====== =========
Three Months Ended March 31, 1999
Weighted
Average Per-Share
Income Shares Amount
Basic Earnings per Share
Net income available to common shareholders $2,634 7,105,437 $0.37
Common stock options outstanding -- 191,889
Diluted Earnings per Share
Net income available to common shareholders $2,634 7,297,326 $0.36
====== =========
<PAGE>
Note D - Business Segments
The Company is principally engaged in traditional community banking activities
provided through its twenty-nine branches and eight in-store branches located
throughout Northern California. Community banking activities include the Bank's
commercial and retail lending, deposit gathering and investment and liquidity
management activities. In addition to its community banking services, the Bank
offers investment brokerage and leasing services. The Company held investments
in real estate through its wholly-owned subsidiary, TCB Real Estate. During
1998, TCB Real Estate divested all investment properties, and in April 1999, TCB
Real Estate was dissolved. These activities were monitored and reported by Bank
management as separate operating segments.
As permitted under the Statement, the results of the separate branches have been
aggregated into a single reportable segment, Community Banking. The Company's
leasing, investment brokerage and real estate segments do not meet the
prescribed aggregation or materiality criteria and therefore are reported as
"Other" in the following table.
Summarized financial information concerning the Bank's reportable segments is as
follows (in thousands):
Community
Banking Other Total
Three Months Ended March 31, 2000
Net interest income $ 11,306 $ 180 $ 11,486
Noninterest income 3,926 700 4,626
Noninterest expense 8,599 425 9,024
Net income 3,678 250 3,928
Assets $912,003 $10,942 $922,945
Three Months Ended March 31, 1999
Net interest income $ 10,490 $ 17 $ 10,507
Noninterest income 2,353 609 2,962
Noninterest expense 8,184 302 8,486
Net income 2,430 204 2,634
Assets $873,408 $11,564 $884,972
Note E - Other Income
Included in the results for the three months ended March 31, 2000 was a one-time
pre-tax income item of $1,510,000. This one-time item represents the initial
value of 88,796 common shares of John Hancock Financial Services, Inc. (JHF)
which the Bank received as a consequence of its ownership of certain insurance
policies through John Hancock Mutual Life Insurance Company and John Hancock's
conversion from a mutual company to a stock company.
<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 had quarterly earnings of $3,928,000 for the three months ended
March 31, 2000. The quarterly earnings represented a 49.1% increase over the
$2,634,000 reported for the three months ended March 31, 1999. Diluted earnings
per share were $0.54 versus $0.36. Included in the results for the three months
ended March 31, 2000 was a one-time pre-tax income item of $1,510,000. This
one-time item represents the initial value of 88,796 common shares of John
Hancock Financial Services, Inc. (JHF) which the Bank received as a consequence
of its ownership of certain insurance policies through John Hancock Mutual Life
Insurance Company and John Hancock's conversion from a mutual company to a stock
company. Excluding the receipt of the JHF shares, net income for the three
months ended March 31, 2000 would have been $3,039,000 and diluted earnings per
share would have been $0.42, and would have represented 15.4% and 16.7%
increases over the same period in the prior year, respectively.
Factors contributing to the improved operating results included growth in loan
balances that was funded mainly by runoff of lower yielding investment
securities, and a five percent increase in noninterest income excluding the
one-time income event noted above. Improvements in these areas were offset in
part by a six percent increase in noninterest expenses.
First quarter 2000 pretax earnings increased $2,145,000 to $6,288,000. Net
interest income reflected growth of 9.3% to $11,486,000. The interest income
component was up $1,589,000 (9.5%) due to higher quarter over quarter volume of
loans and a 57 basis point increase in the average yield on earning assets. The
average balance of loans was up $52,498,000 (9.8%) to $586,659,000 while the
average balance of securities was down $47,753,000 (17.5%) to $225,875,000 in
2000. The average yield on loans was up 32 basis points to 9.59% and the average
yield on securities was up 75 basis points to 6.95% in 2000. The average balance
of interest earning assets increased $17,674,000 (2.2%) to $826,197,000 and the
average yield on interest earning assets increased to 8.80% in the first quarter
of 2000 versus 8.23% in the first quarter of 1999. Interest expense increased
$570,000 (9.8%) which was due to a 25 basis point increase in the average rate
paid on interest bearing liabilities to 3.74% and a 2.5% increase in the average
volume of interest bearing liabilities to $686,088,000 in 2000. Net interest
margin was 5.70% for the first quarter of 2000 versus 5.34% in the same quarter
of the prior year.
Provision for loan losses for the first quarter of 2000 was $800,000 versus
$840,000 in the same quarter in 1999. The Company had net loan recoveries of
$77,000 in the first quarter of 2000 compared to $60,000 of net loan charge-offs
in the same period of 1999.
Noninterest income in the first quarter of 2000 was $4,626,000 versus $2,962,000
in the same period of 1999. As described above, the 2000 results include a
one-time pre-tax income item of $1,510,000 from the receipt of common stock.
Excluding this one-time event, noninterest income would have increased $154,000
(5.2%) to $3,116,000. Service charges and fees were up $100,000 (5.9%) to
$1,807,000 over the year ago period. Commission income from the sale of
insurance and investment products was $680,000 in the first quarter of 2000
versus $535,000 in 1999. For the three months ended March 31, 2000, gain on sale
of loans was $75,000 compared to $358,000 in the first three months of 1999.
Noninterest expense increased $538,000 (6.3%) to $9,024,000 in the first quarter
2000 versus 1999. Salary and benefit expense increased $401,000 (9.1%) on a
quarter over quarter basis to $4,834,000. The salary expense was higher due to a
2.7% increase in average full-time equivalent employees to 383, and annual
salary increases. Other noninterest expenses increased $137,000 (3.4%) to
$4,190,000 in the first quarter of 2000. Assets of the Company totaled
$922,945,000 at March 31, 2000 which was a decrease of $1,851,000 from December
31, 1999 balances and an increase of $37,973,000 from March 31, 1999 ending
balances.
For the first quarter of 2000 the Company had an annualized return on assets of
1.73% and a return on equity of 21.26% versus 1.19% and 14.37% in 1999.
Excluding the one-time income event that occurred in the first quarter of 2000,
the Company would have had an annualized return on assets of 1.34% and a return
on equity of 16.45%. TriCo Bancshares ended the quarter with a Tier 1 capital
ratio of 10.8% and a total risk-based capital ratio of 12.1%.
The following table provides a summary of the major elements of income and
expense for the first quarter of 2000 compared with the first quarter of 1999.
<PAGE>
<TABLE>
<CAPTION>
TRICO BANCSHARES
CONDENSED COMPARATIVE
INCOME STATEMENT
(in thousands, except earnings per common share)
Three months Percentage
ended March 31, Change
2000 1999
<S> <C> <C> <C>
Interest income $ 18,181 $ 16,630 9.3%
Interest expense 6,408 5,838 9.8%
-------------- --------------
Net interest income 11,773 10,792 9.1%
Provision for loan losses 800 840 (4.8%)
-------------- --------------
Net interest income after 10,973 9,952 10.3%
provision for loan losses
Noninterest income 4,626 2,962 56.2%
Noninterest expenses 9,024 8,486 6.3%
-------------- --------------
Net income before income taxes 6,575 4,428 48.5%
Income taxes 2,360 1,509 56.4%
Tax equivalent adjustment1 287 285 0.7%
-------------- --------------
Net income $ 3,928 $ 2,634 49.1%
============== ==============
Diluted earnings per common share $ 0.54 $ 0.36 50.0%
1 Interest on tax-free securities is reported on a tax equivalent basis of 1.52
for March 31, 2000 and 1999.
</TABLE>
<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.
For the three months ended March 31, 2000, interest income increased $1,551,000
or 9.3% over the same period in 1999. The average balance of total earning
assets was higher by $17,674,000 (2.2%). The average balance of loans and
Federal Funds sold outstanding increased $52,498,000 (9.8%) and 12,929,000
(176%), respectively, while investment security average balances decreased
$47,753,000 (17.5%). The loan and federal funds volume increases accounted for
additional interest income of $1,217,000 and $141,000, respectively, during the
first quarter of 2000 versus the year earlier period. The decrease in the
average balance of investment securities resulted in a reduction in interest
income of $740,000. The average yields on loans, investment securities and
Federal Funds sold were higher by 32, 75 and 129 basis points, respectively, and
increased interest income for the quarter by $933,000 over the first quarter of
1999. The overall yield on earning assets increased 57 basis points to 8.80%.
For the first quarter of 2000, interest expense increased by $570,000 or 9.8%
over the year earlier period. Average balances of demand deposits, time
deposits, and long-term debt increased $1,932,000 (1.3%), $24,074,000 (9.8%),
and $7,741,00 (20.5%), respectively. The average balances of savings deposits
and short-term borrowings were lower by $596,000 (0.2%) and $16,172,000 (96.1%),
respectively, during the first quarter of 2000 versus the year earlier period.
For the first quarter of 2000, the average balance of total interest bearing
liabilities increased $16,979,000 (2.5%) over the year earlier period increasing
interest expense by $192,000. The overall average rate on earning liabilities
increased by 25 basis points to 3.74%, and increased interest expense by
$378,000.
The net effect of the increases in interest income and expense for the first
quarter of 2000 versus 1999 resulted in an increase of $981,000 or 9.1% in net
interest income. Net interest margin was up 36 basis points from 5.34% to 5.70%.
The average balance of noninterest bearing deposits was $3,757,000 (2.8%) higher
in the first quarter of 2000 versus the first quarter of 1999.
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, 2000 versus the same period in 1999.
<PAGE>
<TABLE>
<CAPTION>
TRICO BANCSHARES
ANALYSIS OF CHANGE IN NET INTEREST
MARGIN ON EARNING ASSETS
(in thousands)
Three Months Ended
March 31, 2000 March 31, 1999
-------------- --------------
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 $ 586,659 $ 14,063 9.59% $ 534,161 $ 12,384 9.27%
Securities 225,875 3,925 6.95% 273,628 4,238 6.20%
Federal funds sold 13,663 193 5.65% 734 8 4.36%
------------- ------------ ----------- ------------- ------------- -----------
Total earning assets 826,197 18,181 8.80% 808,523 16,630 8.23%
------------ -------------
Cash and due from bank 37,362 35,592
Premises and equipment 16,025 16,107
Other assets,net 40,927 35,301
Less: allowance
for loan losses (11,404) (8,471)
------------- -------------
Total $ 909,107 $ 887,052
============= =============
Liabilities
and shareholders' equity
Interest-bearing
Demand deposits $ 147,239 578 1.57% $ 145,307 564 1.55%
Savings deposits 223,905 1,695 3.03% 224,501 1,679 2.99%
Time deposits 268,779 3,496 5.20% 244,705 2,866 4.68%
Fed funds purchased 584 9 6.16% 16,280 201 4.94%
Repurchase agreements 79 1 5.06% 555 7 5.05%
Long-term debt 45,502 629 5.53% 37,761 521 5.52%
------------- ------------ ----------- ------------- ------------- -----------
Total interest-bearing
liabilities 686,088 6,408 3.74% 669,109 5,838 3.49%
------------ -------------
Noninterest-bearing deposits 136,115 132,358
Other liabilities 12,994 12,242
Shareholders' equity 73,910 73,343
------------- -------------
Total liabilities
and shareholders' equity $ 909,107 $ 887,052
============= =============
Net interest rate spread5 5.06% 4.74%
Net interest income/net $ 11,773 $ 10,792
============ =============
interest margin6 5.70% 5.34%
============ =============
1Average balances are computed principally on the basis of daily balances.
2Nonaccrual loans are included. 3Interest income on loans includes fees on loans
of $606,000 in 2000 and $737,000 in 1999. 4Interest income is stated on a tax
equivalent basis of 1.52 at March 31, 2000 and 1999. 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,
2000 over 1999
Yield/
Volume Rate4 Total
-------- ------- ---------
Increase (decrease) in interest income:
Loans 1,2 $1,217 $462 $1,679
Investment securities3 (740) 427 (313)
Federal funds sold 141 44 185
-------- ------- ---------
Total 618 933 1,551
-------- ------- ---------
Increase (decrease) in interest expense:
Demand deposits
(interest-bearing) 7 7 14
Savings deposits (4) 20 16
Time deposits 282 348 630
Federal funds purchased (194) 2 (192)
Repurchase agreements (6) - (6)
Long-term debt 107 1 108
-------- ------ ---------
Total 192 378 570
-------- ------ ---------
Increase in net interest income $426 $555 $981
======== ====== =========
1Nonaccrual loans are included.
2Interest income on loans includes fee income on loans of $606,000 in 2000 and
$737,000 in 1999. 3Interest income is stated on a tax equivalent basis of 1.52
for March 31, 2000 and 1999. 4The rate/volume variance has been included in the
rate variance.
<PAGE>
Provision for Loan Losses
The Bank provided $800,000 for loan losses in the first quarter of 2000 versus
$840,000 in the same period of 1999. The company had net loan recoveries of
$77,000 in the first quarter of 2000 compared to $60,000 of net loan charge-offs
in the same period of 1999.
Noninterest Income
Noninterest income in the first quarter of 2000 was $4,626,000 versus $2,962,000
in the same period of 1999. As described above, the 2000 results include a
one-time pre-tax income item of $1,510,000 from the receipt of common stock.
Excluding this one-time event, noninterest income would have increased $154,000
(5.2%) to $3,116,000. Service charges and fees were up $100,000 (5.9%) to
$1,807,000 over the year ago period. Commission income from the sale of
insurance and investment products was $680,000 in the first quarter of 2000
versus $535,000 in 1999. For the three months ended March 31, 2000, gain on sale
of loans were $75,000 compared to $358,000 in the first quarter of 1999.
Noninterest Expense
Noninterest expense increased $538,000 (6.3%) to $9,024,000 in the first quarter
2000 versus the first quarter of 1999. Salary and benefit expense increased
$401,000 (9.1%) on a quarter over quarter basis to $4,834,000. The salary
expense was higher due to a 2.7% increase in average full-time equivalent
employees to 383, and annual salary increases. Other noninterest expenses
increased $137,000 (3.4%) to $4,190,000 in the first quarter of 2000.
Provision for Income Taxes
The effective tax rate for the three months ended March 31, 2000 was 37.5% and
reflects an increase from 36.4% in the year earlier period. The increase in tax
rate is mainly the result of a lower percentage of nontaxable earnings to total
earnings.
<PAGE>
Loans
In the first quarter of 2000, loan balances increased $9,745,000 or 1.7% from
the year end balances. Both commercial and consumer loans increased while there
was a slight decrease in real estate loans. At March 31, 2000 loans totaled
$597,724,000 which was a $49,173,000 (9.0%) increase from the year earlier
totals.
Securities
At March 31, 2000, securities available-for-sale had a fair value of
$225,454,000 and an amortized cost of $235,178,000. This portfolio contained
mortgage-backed securities with an amortized cost of $133,240,000 of which
$18,026,000 was CMO's. At March 31, 2000, the Bank had no securities classified
as held-to-maturity.
<PAGE>
Nonperforming Loans
As shown in the following table, total nonperforming assets have increased 49.9%
to $5,159,000 in the first three months of 2000. Non performing assets represent
0.56% of total assets. Both nonaccrual loans and OREO increased during this
period. All nonaccrual loans are considered to be impaired when determining the
valuation allowance under SFAS 114. The Bank continues to make a concerted
effort to work problem and potential problem loans to reduce risk of loss.
March 31, December 31,
2000 1999
Nonaccrual loans $ 2,759 $ 1,758
Accruing loans past due 90 days or more 1,248 923
Restructured loans (in compliance with
modified terms) 0 0
--------- ---------
Total nonperforming loans 4,007 2,681
Other real estate owned 1,152 760
--------- ---------
Total nonperforming assets $ 5,159 $ 3,441
========= =========
Nonperforming loans to total loans 0.67% 0.46%
Allowance for loan losses to
nonperforming loans 297% 412%
Nonperforming assets to total assets 0.56% 0.37%
Allowance for loan losses to
nonperforming assets 231% 321%
<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,
1999 2000
(in thousands)
Balance, beginning of period $ 11,037 $ 8,206
Provision charged to operations 800 840
Loans charged off (74) (100)
Recoveries of loans previously
charged off 151 40
=========== ==========
Balance, end of period $ 11,914 $ 8,986
=========== ==========
Ending loan portfolio $ 597,724 $ 548,551
=========== ==========
Allowance to loans as a
percentage of ending loan portfolio 1.99% 1.64%
=========== ==========
<TABLE>
<CAPTION>
Equity
The following table indicates the amounts of regulatory capital of the Company.
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, 2000:
Total Capital to Risk Weighted Assets
Consolidated $83,892 12.05% =>$55,695 =>8.0% =>$69,619 =>10.0%
Tri Counties Bank $82,618 11.89% =>$55,602 =>8.0% =>$69,502 =>10.0%
Tier I Capital to Risk Weighted Assets
Consolidated $75,190 10.80% =>$27,847 =>4.0% =>$41,771 =>6.0%
Tri Counties Bank $73,890 10.63% =>$27,801 =>4.0% =>$41,701 =>6.0%
Tier I Capital to Average Assets
Consolidated $75,190 8.33% =>$36,117 =>4.0% =>$45,146 =>5.0%
Tri Counties Bank $73,890 8.19% =>$36,071 =>4.0% =>$45,090 =>5.0%
</TABLE>
<PAGE>
Year 2000
The Company previously recognized the material nature of the business issues
surrounding computer processing of dates into and beyond the Year 2000 and began
taking corrective action as required pursuant to the interagency statements
issued by the Federal Financial Institutions Examination Council.
Management believes the Company has completed all the activities within its
control to ensure that the Company's systems are Year 2000 compliant. The
Company has not experienced and interruptions to normal operations due to the
start of the Year 2000. The Company's Year 2000 readiness costs were
approximately $103,000. The Company does not currently expect to apply any
further funds to address the Year 2000 issues.
As of April 20, 2000, the Company has not experienced any material disruptions
of its internal computer systems or software applications and has not
experienced any problems with the computer systems or software applications of
its third party vendors, suppliers or service providers. The Company will
continue to monitor these third parties to determine the impact, if any, on its
business and the actions it must take, if any, in the event of non-compliance by
any of these third parties. Based upon the Company's assessment of compliance by
third parties, there appears to be no material business risk posed by any such
non-compliance.
Although the Company's Year 2000 rollover did not present any material business
disruption, there are some remaining Year 2000 related risks. Management
believes that appropriate actions have been taken to address these remaining
Year 2000 issues and contingency plans are in place to minimize the financial
impact to the Company. Management, however, cannot be certain that Year 2000
issues affecting its customers, suppliers or service providers will not have a
material adverse impact on the Company.
Item 3. MARKET RISK MANAGEMENT
There have not been any significant changes in the risk management profile of
the Bank since December 31, 1999.
<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.
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 5, 2000 /s/ Richard P. Smith
---------------- -------------------------------------
Richard P. Smith
President and Chief Executive Officer
Date May 5, 2000 /s/ Thomas J. Reddish
---------------- -------------------------------------
Thomas J. Reddish
Vice President and CFO
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000356171
<NAME> TRICO BANCSHARES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 40,079
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 14,900
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 225,454
<INVESTMENTS-MARKET> 225,454
<LOANS> 597,724
<ALLOWANCE> 11,914
<TOTAL-ASSETS> 922,945
<DEPOSITS> 783,340
<SHORT-TERM> 4,700
<LIABILITIES-OTHER> 14,092
<LONG-TERM> 45,500
0
0
<COMMON> 50,229
<OTHER-SE> 25,084
<TOTAL-LIABILITIES-AND-EQUITY> 922,945
<INTEREST-LOAN> 14,063
<INTEREST-INVEST> 3,638
<INTEREST-OTHER> 193
<INTEREST-TOTAL> 17,894
<INTEREST-DEPOSIT> 5,769
<INTEREST-EXPENSE> 6,408
<INTEREST-INCOME-NET> 11,486
<LOAN-LOSSES> 800
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 9,024
<INCOME-PRETAX> 6,288
<INCOME-PRE-EXTRAORDINARY> 6,288
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,928
<EPS-BASIC> 0.55
<EPS-DILUTED> 0.54
<YIELD-ACTUAL> 8.80
<LOANS-NON> 2,759
<LOANS-PAST> 1,248
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 11,307
<CHARGE-OFFS> 74
<RECOVERIES> 151
<ALLOWANCE-CLOSE> 11,914
<ALLOWANCE-DOMESTIC> 11,914
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
