TriCo Bancshares Reports Operating Results (10-Q)

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May 10, 2010
TriCo Bancshares (TCBK, Financial) filed Quarterly Report for the period ended 2010-03-31.

Trico Bancshares has a market cap of $287.07 million; its shares were traded at around $18.1 with a P/E ratio of 33.52 and P/S ratio of 2.01. The dividend yield of Trico Bancshares stocks is 2.87%. Trico Bancshares had an annual average earning growth of 2.7% over the past 10 years.

Highlight of Business Operations:

The Company had quarterly earnings of $1,558,000 for the three months ended March 31, 2010. This represents a decrease of $1,324,000 (45.9%) when compared with earnings of $2,882,000 for the quarter ended March 31, 2009. Diluted earnings per share for the quarter ended March 31, 2010 decreased 44.4% to $0.10 compared to $0.18 for the quarter ended March 31, 2009. The decrease in earnings from the prior year quarter was due to a $1,020,000 (4.4%) decrease in net interest income, a $700,000 (9.0%) increase in provision for loan losses and a $1,602,000 (9.3%) increase in noninterest expense, that were partially offset by a $932,000 (14.1%) increase in noninterest income and a $1,066,000 (61.6%) decrease in tax expense.

Interest and fee income (FTE) for the first quarter of 2010 decreased $2,946,000 (10.2%) from the first quarter of 2009. The decrease was primarily due to a 0.96% decrease in the average yield on those interest-earning assets to 5.19% and a $96,665,000 (6.2%) decrease in average balances of loans to $1,469,685,000. The 0.96% decrease in the average yield on interest-earning assets was primarily due to a 0.31% decrease in the average yield of loans, a 0.73% decrease in the average yield on investments, and a $210,993,000 (461%) increase in the average balance of interest-earning cash at the Federal Reserve Bank that earned 0.24% during the quarter ended March 31, 2010. The decrease in the average yield on loans is due primarily to payoffs of higher yielding loans and increased levels of nonaccrual loans from the year-ago quarter. The decrease in the average yield on investments is due to lower yields being offered in the marketplace for investments, and the Companys decision to reinvest and invest some of its excess cash in investment securities. The $96,665,000 decrease in the average balance of loans from the year-ago quarter was due primarily to weak loan demand and increased levels of loan charge-offs that persisted throughout 2009 and the first quarter of 2010.

The Company provided $8,500,000 for loan losses in the first quarter of 2010 versus $7,800,000 in the fourth quarter of 2009 and $7,800,000 in the first quarter of 2009. The allowance for loan losses increased $867,000 from $35,473,000 at December 31, 2009 to $36,340,000 at March 31, 2010. The provision for loan losses and increase in the allowance for loan and lease losses during the first quarter of 2010 were primarily the result of changes in the make-up of the loan portfolio and the Banks loss factors in reaction to increased losses in the construction, commercial real estate, commercial & industrial (C&I), home equity and auto indirect loan portfolios. Management re-evaluates its loss ratios and assumptions quarterly and makes changes as appropriate based upon, among other things, changes in loss rates experienced, collateral support for underlying loans, changes and trends in the economy, and changes in the loan mix.

In the first quarter of 2010, the Company recorded $8,101,000 in loan charge-offs less $468,000 in recoveries resulting in $7,633,000 of net loan charge-offs versus $2,616,000 of net loan charge-offs in the first quarter of 2009. Primary causes of the charges taken in the first quarter of 2010 were gross charge-offs of $455,000 on five residential real estate loans, $2,567,000 on eight commercial real estate loans, $2,650,000 on 42 home equity lines and loans, $526,000 on 91 auto indirect loans, $340,000 on other consumer loans and overdrafts, $526,000 on 20 C&I loans, and $1,037,000 on six residential construction loans.

The $2,567,000 in charge-offs in commercial real estate loans was primarily the result of a $1,262,000 charge taken on a loan secured by an office building in northern California, a $284,000 charge on a loan secured by a retail building in northern California and $966,000 in charges taken on four loans secured by commercial warehouses in central California. The remaining $55,000 was spread over two loans spread throughout the Companys footprint.

As shown in the table above, noninterest income for the first quarter of 2010 increased $932,000 (14.1%) to $7,547,000 from $6,615,000 in the first quarter of 2009. Service charges on deposit accounts increased $193,000 (5.4%) to $3,778,000 due primarily to an increase in non-sufficient funds per item fees that took effect in April 2009. ATM fees and interchange revenue increased $270,000 (24.6%) to $1,368,000 due to increased customer point-of -sale transactions that are the result of incentives for such usage. The improvement in change in value of mortgage servicing rights and the decrease in gain on sale of loans are due primarily to increased residential mortgage rates that have slowed the pace of mortgage refinancing. The decrease in commissions on sale of nondeposit investment products, which includes annuity products, is the result of the current economic and interest rate environment. The improvement in increase in cash value of life insurance is due to increased earnings rates from such insurance policies. Other noninterest income increased $381,000 (249%) to $534,000 due to the receipt of $400,000 by the Company under the terms of a legal settlement.

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