Exhibit 99.1

 

PRESS RELEASE    Contact:             Richard P. Smith
For Immediate Release    President & CEO (530) 898-0300

TRICO BANCSHARES ANNOUNCES QUARTERLY RESULTS

CHICO, Calif. – (July 26, 2018) – TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company of Tri Counties Bank, today announced net income of $15,029,000 for the quarter ended June 30, 2018, compared to $13,589,000 for the quarter ended June 30, 2017. Diluted earnings per share were $0.65 for the quarter ended June 30, 2018, compared to $0.58 for the quarter ended June 30, 2017. Net income before taxes was $20,811,000 and $21,236,000 for the quarters ended June 30, 2018 and 2017, respectively. Net income for the quarter ended June 30, 2018 includes the effect of a change in the Company’s Federal tax rate from 35% to 21% that resulted from the Tax Cuts and Jobs Act of 2017 that was effective on January 1, 2018. Also, affecting net income during the quarter ended June 30, 2018 was $601,000 of merger and acquisition expenses related to the merger with FNB Bancorp (“FNBB”) that was completed on July 6, 2018. The Company recorded no merger and acquisition expense in the quarter ended June 30, 2017.

Performance highlights and other developments for the Company during the quarter ended June 30, 2018 included the following:

 

    Total loan balances averaged $3,104,126,000 during the three months ended June 30, 2018 representing a $320,440,000 (11.5%) increase compared to the quarter ended June 30, 2017.

 

    The average rate of interest paid on deposits, including the effect of noninterest-bearing deposits, remained low at 0.12%.

The following is a summary of the components of the Company’s consolidated net income, average common shares, and average diluted common shares outstanding for the periods indicated:

 

     Three months ended
June 30,
               
(dollars and shares in thousands)    2018      2017      $ Change      % Change  

Net interest income

   $ 45,869      $ 43,434      $ 2,435        5.6

Reversal of provision for loan losses

     638        796        (158   

Noninterest income

     12,174        12,910        (736      (5.7 %) 

Noninterest expense

     (37,870      (35,904      (1,966      5.5

Provision for income taxes

     (5,782      (7,647      1,865        (24.4 %) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 15,029      $ 13,589      $ 1,440        10.6
  

 

 

    

 

 

    

 

 

    

 

 

 

Average common shares

     22,983        22,900        83        0.4

Average diluted common shares

     23,276        23,240        36        0.2

The following is a summary of certain of the Company’s consolidated assets and deposits as of the dates indicated:

 

Ending balances    As of June 30,                
($‘s in thousands)    2018      2017      $ Change      % Change  

Total assets

   $ 4,863,153      $ 4,519,935      $ 343,218        7.6

Total loans

     3,146,313        2,826,393        319,920        11.3

Total investments

     1,251,776        1,249,043        2,733        0.2

Total deposits

   $ 4,077,222      $ 3,878,422      $ 198,800        5.1
Qtrly avg balances    As of June 30,                
($‘s in thousands)    2018      2017      $ Change      % Change  

Total assets

   $ 4,814,523      $ 4,492,389      $ 322,134        7.2

Total loans

     3,104,126        2,783,686        320,440        11.5

Total investments

     1,258,660        1,213,959        44,701        3.7

Total deposits

   $ 4,042,110      $ 3,851,519      $ 190,591        4.9


The Company’s primary source of revenue is net interest income, or the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Included in the Company’s net interest income is interest income from municipal bonds that is almost entirely exempt from Federal income tax. These municipal bonds are classified as investments – nontaxable, and the Company may present the interest income from these bonds on a fully tax equivalent (FTE) basis.

Loans acquired through purchase, or acquisition of other banks, are classified by the Company as Purchased Not Credit Impaired (PNCI), Purchased Credit Impaired – cash basis (PCI – cash basis), or Purchased Credit Impaired – other (PCI – other). Loans not acquired in an acquisition or otherwise “purchased” are classified as “originated”. Often, such purchased loans are purchased at a discount to face value, and part of this discount is accreted into (added to) interest income over the remaining life of the loan. A loan may also be purchased at a premium to face value, in which case, the premium is amortized into (subtracted from) interest income over the remaining life of the loan. Generally, as time goes on, the effects of loan discount accretion and loan premium amortization decrease as the purchased loans mature or pay off early. Upon the early pay off of a loan, any remaining (unaccreted) discount or (unamortized) premium is immediately taken into interest income; and as loan payoffs may vary significantly from quarter to quarter, so may the impact of discount accretion and premium amortization on interest income. Further details regarding interest income from loans, including fair value discount accretion, may be found under the heading “Supplemental Loan Interest Income Data” in the Consolidated Financial Data table at the end of this announcement.

Following is a summary of the components of net interest income for the periods indicated (dollars in thousands):

 

     Three months ended
June 30,
              
(dollars and shares in thousands)    2018     2017     $ Change      % Change  

Interest income

   $ 48,478     $ 45,044     $ 3,434        7.6

Interest expense

     (2,609     (1,610     (999      62.0

FTE adjustment

     313       625       (312      (49.9 %) 
  

 

 

   

 

 

   

 

 

    

 

 

 

Net interest income (FTE)

   $ 46,182     $ 44,059     $ 2,123        4.8
  

 

 

   

 

 

   

 

 

    

 

 

 

Net interest margin (FTE)

     4.14     4.26     
  

 

 

   

 

 

      

Purchased loan discount accretion:

         

Amount (included in interest income)

   $ 559     $ 2,170       

Effect on average loan yield

     0.07     0.31     

Effect on net interest margin (FTE)

     0.05     0.21     


The following table shows the components of net interest income and net interest margin on a fully tax-equivalent (FTE) basis for the periods indicated:

ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS

(unaudited, dollars in thousands)

 

     Three Months Ended     Three Months Ended     Three Months Ended  
     June 30, 2018           March 31, 2018           June 30, 2017        
     Average      Income/     Yield/     Average      Income/     Yield/     Average      Income/     Yield/  
     Balance      Expense     Rate     Balance      Expense     Rate     Balance      Expense     Rate  

Assets

                     

Earning assets

                     

Loans

   $ 3,104,126      $ 39,304       5.06   $ 3,028,178      $ 38,049       5.03   $ 2,783,686      $ 36,418       5.23

Investments - taxable

     1,122,534        7,736       2.76     1,125,394        7,658       2.72     1,077,703        7,231       2.68

Investments - nontaxable

     136,126        1,355       3.98     136,160        1,353       3.97     136,256        1,667       4.89

Cash at Federal Reserve and other banks

     94,874        396       1.67     90,864        373       1.64     137,376        353       1.03
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

   

Total earning assets

     4,457,660        48,791       4.38     4,380,596        47,433       4.33     4,135,021        45,669       4.42
     

 

 

        

 

 

        

 

 

   

Other assets, net

     356,863            360,631            357,368       
  

 

 

        

 

 

        

 

 

      

Total assets

   $ 4,814,523          $ 4,741,227          $ 4,492,389       
  

 

 

        

 

 

        

 

 

      

Liabilities and shareholders’ equity

                     

Interest-bearing

                     

Demand deposits

   $ 995,528        214       0.09   $ 994,206        211       0.08   $ 936,482        201       0.09

Savings deposits

     1,393,121        427       0.12     1,371,377        411       0.12     1,353,132        410       0.12

Time deposits

     313,556        593       0.76     306,514        474       0.62     321,515        363       0.45

Other borrowings

     139,307        586       1.68     107,781        342       1.27     20,011        13       0.26

Junior subordinated debt

     56,928        789       5.54     56,882        697       4.90     56,736        623       4.39
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

   

Total interest-bearing liabilities

     2,898,440        2,609       0.36     2,836,760        2,135       0.30     2,687,876        1,610       0.24
     

 

 

        

 

 

        

 

 

   

Noninterest-bearing deposits

     1,339,905            1,332,235            1,240,390       

Other liabilities

     65,745            66,219            66,898       

Shareholders’ equity

     510,433            506,013            497,225       
  

 

 

        

 

 

        

 

 

      

Total liabilities and shareholders’ equity

   $ 4,814,523          $ 4,741,227          $ 4,492,389       
  

 

 

        

 

 

        

 

 

      

Net interest rate spread

          4.02          4.03          4.18

Net interest income/net interest margin (FTE)

 

     46,182       4.14        45,298       4.14        44,059       4.26
     

 

 

        

 

 

        

 

 

   

FTE adjustment

        (313          (312          (625  
     

 

 

        

 

 

        

 

 

   

Net interest income (not FTE)

      $ 45,869          $ 44,986          $ 43,434    
     

 

 

        

 

 

        

 

 

   

Purchase loan discount accretion effect:

 

                  

Amount (included in interest income)

 

   $ 559          $ 632          $ 2,170    

Effect on avg loan yield

        0.07          0.08          0.31  

Effect on net interest margin

        0.05          0.06          0.21  

Net interest income (FTE) during the three months ended June 30, 2018 increased $2,123,000 (4.8%) to $46,182,000 compared to $44,059,000 during the three months ended June 30, 2017. The increase in net interest income (FTE) was due primarily to an increase in the average balance of loans that was partially offset by a 17 basis point decrease in yield on loans, and a 12 basis point increase in the average rate paid on interest-bearing liabilities.

The 17 basis point decrease in loan yields from 5.23% during the three months ended June 30, 2017 to 5.06% during the three months ended June 30, 2018 was due to a decrease in purchased loan discount accretion from $2,170,000 during the three months ended June 30, 2017 to $559,000 during the three months ended June 30, 2018. This decrease in purchased loan discount accretion reduced loan yields by 24 basis points, and net interest margin by 16 basis points, but was substantially offset by increases in new and renewed loan yields due to increases in market yields. The 12 basis point increase in the average rate paid on interest-bearing liabilities was primarily due to increases in market rates that increased the rates the Company pays on its time deposits, overnight borrowings, and junior subordinated debt.


Also affecting net interest margin during the three months ended June 30, 2018, was the decrease in the Federal tax rate from 35% to 21%. This decrease in the Federal tax rate caused the fully tax-equivalent (FTE) yield on the Company’s nontaxable investments to decrease from 4.89% during the three months ended June 30, 2017 to 3.98% during the three months ended March 31, 2018, and resulted in net interest income (FTE) being $312,000, or 3 basis points, less than it otherwise would have been.

The negative impact on net interest margin from the decreases in average loan yields was offset by the positive impact of an increase in average loan balances and a decrease in the average balance of lower yielding interest earning cash compared to the year-ago quarter.

The table below that sets forth a summary of the changes in interest income and interest expense from changes in average asset and liability balances (volume) and changes in average interest yields and rates for each category of interest earning asset and interest paying liability for the periods indicated:

 

     Three months ended June 30, 2018  
     compared with three months ended  
     June 30, 2017  
(dollars in thousands)    Volume      Yield/Rate      Total  

Increase (decrease) in interest income:

        

Loans

   $ 4,190      $ (1,304    $ 2,886  

Investments - taxable

     300        205        505  

Investments - nontaxable

     (2      (310      (312

Federal funds sold

     (109      152        43  
  

 

 

    

 

 

    

 

 

 

Total

     4,379        (1,257      3,122  
  

 

 

    

 

 

    

 

 

 

Increase (decrease) in interest expense:

        

Demand deposits (interest-bearing)

     13        —          13  

Savings deposits

     12        5        17  

Time deposits

     (9      239        230  

Other borrowings

     78        495        573  

Junior subordinated debt

     2        164        166  
  

 

 

    

 

 

    

 

 

 

Total

     96        903        999  
  

 

 

    

 

 

    

 

 

 

Increase (decrease) in net interest income

   $ 4,283      $ (2,160    $ 2,123  
  

 

 

    

 

 

    

 

 

 

The Company recorded a reversal of provision for loan losses of $638,000 during the three months ended June 30, 2018 compared to a reversal of provision for loan losses of $796,000 during the three months ended June 30, 2017. The $638,000 reversal of provision for loan losses during the three months ended June 30, 2018 was due primarily to continued low loan losses, improvement in collateral values of impaired loans, and net upgrades in the credit quality of performing loans during the three months ended June 30, 2018. Nonperforming loans were $25,420,000, or 0.81% of loans outstanding as of June 30, 2018, compared to $24,394,000, or 0.81% of loans outstanding as of December 31, 2017, and $17,429,000, or 0.62% of loans outstanding as of June 30, 2017. During the three months ended June 30, 2018 the Company recorded net loan recoveries of $188,000.


The following table presents the key components of noninterest income for the periods indicated:

 

     Three months ended
June 30,
               
(dollars in thousands)    2018      2017      $ Change      % Change  

Service charges on deposit accounts

   $ 3,613      $ 4,323      ($ 710      (16.4 %) 

ATM fees and interchange

     4,510        4,248        262        6.2

Other service fees

     630        839        (209      (24.9 %) 

Mortgage banking service fees

     511        526        (15      (2.9 %) 

Change in value of mortgage servicing rights

     (36      (457      421        (92.1 %) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Total service charges and fees

     9,228        9,479        (251      (2.6 %) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Gain on sale of loans

     666        777        (111      (14.3 %) 

Commission on nondeposit investment products

     810        705        105        14.9

Increase in cash value of life insurance

     656        626        30        4.8

Change in indemnification asset

     —          711        (711      (100.0 %) 

Gain on sale of foreclosed assets

     17        153        (136      (88.9 %) 

Other noninterest income

     797        459        338        73.6
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other noninterest income

     2,946        3,431        (485      (14.1 %) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest income

   $ 12,174      $ 12,910      ($ 736      (5.7 %) 
  

 

 

    

 

 

    

 

 

    

 

 

 

Noninterest income decreased $736,000 (5.7%) to $12,174,000 during the three months ended June 30, 2018 compared to the three months ended June 30, 2017. The decrease in noninterest income was due to the changes noted in the table above. The $710,000 (16.4%) decrease in service charges on deposit accounts was made up of a $329,000 (14.1%) decrease in nonsufficient fund (NSF) fees to $2,010,000, and a $381,000 (19.2%) decrease in other deposit account service charges to $1,603,000. The decrease in NSF fees was due primarily to continued growth in customer adoption of the bank’s digital services that improves the ability of customers to manage funds and avoid overdrafts. The decrease in other deposit service charges was due primarily to the rapid growth of customer adoption of e-Statements that reduces statement fees. Both NSF fees and service charges are also reduced by higher average deposit account balances: the average Consumer DDA account balance was 7.1% higher at the end of the second quarter of 2018 compared to the same period a year earlier, while the average Business DDA account was 7.6% higher. Higher account balances mean that fewer customers have balances small enough to require payment of a monthly maintenance fee on their accounts and fewer customers are in danger of overdrawing their accounts. The $421,000 (92.1%) increase in change in value of mortgage servicing rights (MSRs) was due to relatively steady estimated prepayment speeds and a declining market discount rate to value MSR cash flow during the three months ended June 30, 2018 compared to increasing estimated prepaid speeds and a steady discount rate during the three months ended June 30, 2017. These factors caused the value of MSR to decrease only $36,000 during the three months ended June 30, 2018 compared to a decrease of $457,000 during the three months ended June 30, 2017. During the three months ended June 30, 2017, the Company recorded a $711,000 gain upon the early termination of its loss sharing agreement with the FDIC. The $338,000 increase in other noninterest income to $797,000 was due primarily to a $372,000 recovery on a purchased loan for which the initial charge off was recorded prior to acquisition. Such pre-acquisition loan recoveries are recorded in miscellaneous other noninterest income.


The following table presents the key components of the Company’s noninterest expense for the periods indicated:

 

     Three months ended                
     June 30,                
(dollars in thousands)    2018      2017      $ Change      % Change  

Base salaries, overtime and temporary help, net of deferred loan origination costs

   $ 14,429      $ 13,657      $ 772        5.7

Commissions and incentives

     2,159        2,173        (14      (0.6 %) 

Employee benefits

     4,865        4,664        201        4.3
  

 

 

    

 

 

    

 

 

    

 

 

 

Total salaries and benefits expense

     21,453        20,494        959        4.7
  

 

 

    

 

 

    

 

 

    

 

 

 

Occupancy

     2,720        2,705        15        0.6

Equipment

     1,637        1,805        (168      (9.3 %) 

Data processing and software

     2,679        2,441        238        9.8

ATM and POS network charges

     1,437        1,075        362        33.7

Telecommunications

     681        668        13        1.9

Postage

     301        329        (28      (8.5 %) 

Courier service

     224        263        (39      (14.8 %) 

Advertising

     1,035        1,167        (132      (11.3 %) 

Assessments

     417        420        (3      (0.7 %) 

Operational losses

     252        430        (178      (41.4 %) 

Professional fees

     774        690        84        12.2

Foreclosed assets expense

     180        38        142        373.7

Provision for (reversal of) foreclosed asset losses

     —          94        (94      (100.0 %) 

Change in reserve for unfunded commitments

     (137      (135      (2      1.5

Intangible amortization

     339        352        (13      (3.7 %) 

Merger and acquisition expense

     601        —          601     

Other miscellaneous expense

     3,277        3,068        209        6.8
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other noninterest expense

     16,417        15,410        1,007        6.5
  

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest expense

   $ 37,870      $ 35,904      $ 1,966        5.5
  

 

 

    

 

 

    

 

 

    

 

 

 

Average full time equivalent employees

     1,001        1,007        (6      (0.6 %) 

Merger & acquisition expense:

           

Professional fees

   $ 196        —          

Advertising and marketing

     164        —          

Miscellaneous other expense

     241        —          
  

 

 

    

 

 

       

Total merger & acquisition expense

   $ 601        —          
  

 

 

    

 

 

       

Salary and benefit expenses increased $959,000 (4.7%) to $21,453,000 during the three months ended June 30, 2018 compared to $20,494,000 during the three months ended June 30, 2017. Base salaries, net of deferred loan origination costs increased $772,000 (5.7%) to $14,429,000. The increase in base salaries was due to annual merit increases, and the addition of employees with base salaries above the average base salary that were partially offset by a 0.6% decrease in average full time equivalent employees to 1,001 from 1,007 in the year-ago quarter. Commissions and incentive compensation decreased $14,000 (0.6%) to $2,159,000 during the three months ended June 30, 2018 compared to the year-ago quarter. Benefits & other compensation expense increased $201,000 (4.3%) to $4,865,000 during the three months ended June 30, 2018 due primarily to an increase in health insurance expense.    

Other noninterest expense increased $1,007,000 (6.5%) to $16,417,000 during the three months ended June 30, 2018 compared to the three months ended June 30, 2017. The increase in other noninterest expense was due to the changes noted in the table above. The $238,000 and $362,000 increases in data processing and software expense and ATM & POS network charges, respectively, were due primarily to system enhancements and capacity expansion. The $168,000 decrease in equipment expense was due to decreased equipment rental, repair and maintenance. During the three months ended June 30, 2018, the Company incurred $601,000 of merger related expense associated with the proposed merger with FNBB of which $324,000 is nondeductible for tax purposes.


The effective combined Federal and State income tax rate on income was 27.8% and 36.0% for the three months ended June 30, 2018 and 2017, respectively. This decrease in effective combined Federal and State income tax rate was due primarily to a decrease in the Federal tax rate from 35% to 21% effective January 1, 2018. The effective combined Federal and State income tax rate was greater than the Federal statutory tax rate due to State income tax expense of $2,315,000 and $2,143,000, for the three months ended June 30, 2018 and 2017, respectively, that were partially offset by the effects of tax-exempt income of $1,042,000 and $1,042,000, respectively, from investment securities, $656,000 and $627,000, respectively, from increase in cash value of life insurance, Federal low-income housing tax credits of $122,000 and $147,000, respectively, $84,000 and $450,000, respectively, of Federal equity compensation excess tax benefits, and $324,000 of nondeductible merger expense during the three months ended June 30, 2018. The low income housing tax credits and the equity compensation excess tax benefits represent direct reductions in tax expense.

The provisions for income taxes applicable to net income before taxes differ from amounts computed by applying the statutory Federal income tax rates to income before taxes. The effective tax rate and the statutory Federal income tax rate are reconciled for the periods indicated as follows:

 

     Three months ended
June 30,
 
     2018     2017  

Federal statutory income tax rate

     21.0     35.0

State income taxes, net of federal tax benefit

     8.8       6.6  

Tax-exempt interest on municipal obligations

     (1.0     (1.7

Increase in cash value of insurance policies

     (0.7     (1.0

Low income housing tax credits

     (0.6     (0.7

Equity compensation

     (0.4     (2.1

Nondeductible merger expenses

     0.3       —    

Other

     0.4       (0.1
  

 

 

   

 

 

 

Effective tax rate

     27.8     36.0
  

 

 

   

 

 

 


The Company’s financial statements are prepared in conformity with generally accepted accounting principles in the United States of America (GAAP). The Company uses certain non-GAAP measures to provide supplemental information regarding performance.    Net income and the effective tax rate for the three months ended June 30, 2018 include the effects of $601,000 of expenses related to the merger with FNBB, of which $324,000 are non-deductible for taxes.    Net income for the three months ended June 30, 2017 includes no merger related expenses. The Company believes that presenting the effective tax rate, net income, return on average assets (ROAA), return on average equity (ROAE), and earnings per common share, excluding the impact of merger & acquisition expenses, provides additional clarity to the users of the financial statements regarding core financial performance. The following table presents a comparison of the effective tax rate, net income, ROAA, ROAE, and earnings per common share as reported, and as adjusted for the impact of merger & acquisition expenses, for the periods indicated.

 

     Three months ended
June 30,
 
($‘s in thousands except per share amounts)    2018     2017  

Net income before tax

   $ 20,811     $ 21,236  

Effect of merger expense

     601       —    
  

 

 

   

 

 

 

Adjusted net income before tax

   $ 21,412     $ 21,236  
  

 

 

   

 

 

 

Income tax expense

   $ 5,782     $ 7,647  

Effect of merger expense

     82       —    
  

 

 

   

 

 

 

Adjusted income tax expense

   $ 5,864     $ 7,647  
  

 

 

   

 

 

 

Net income

   $ 15,029     $ 13,589  

Effect of merger expense

     519       —    
  

 

 

   

 

 

 

Adjusted net income

   $ 15,548     $ 13,589  
  

 

 

   

 

 

 

Effective tax rate

     27.8     36.0

Adjusted effective tax rate

     27.4     36.0

ROAA

     1.25     1.21

Adjusted ROAA

     1.29     1.21

ROAE

     11.78     10.93

Adjusted ROAE

     12.18     10.93

Earnings per common share:

    

Basic

   $ 0.65     $ 0.59  

Diluted

   $ 0.65     $ 0.58  

Adjusted earnings per common share:

    

Basic

   $ 0.68     $ 0.59  

Diluted

   $ 0.67     $ 0.58  

M&A expense

   $ 601       —    

Non-deductible M&A expense

   $ 324       —    

Average assets

   $ 4,814,523     $ 4,492,389  

Average equity

   $ 510,433     $ 497,225  

Weighted average shares

     22,983,439       22,899,600  

Weighted average diluted shares

     23,276,471       23,240,112  

Richard P. Smith, President and CEO of the Company commented, “The second quarter of 2018 produced very strong operating results for the Company. Year over year average loan growth of 11.5% contributed significantly to bank performance. Additionally, deposit costs remain low due to our strong mix of noninterest bearing deposits on business checking accounts and the low cost characteristics of consumer checking and savings account products. Our customers continue to benefit from the improved economic activity in the markets we serve.”

Smith added, “Following the strong results of the quarter, we completed our acquisition of First National Bank of Northern California on July 6, 2018. On July 20, 2018, we began the conversion of all information systems, signage and marketing materials, allowing us to open for business as Tri Counties Bank in the San Francisco Bay Area on July 23, 2018. We are very excited to now serve our new customers in the Bay Area with our talented and dedicated banking team. We believe our Service With Solutions® approach to banking will be well received.”

 


On July 6, 2018, the Company completed its previously-announced merger with FNBB. While FNBB’s banking subsidiary, First National Bank of Northern California officially became part of Tri Counties Bank on July 6, 2018, the First National Bank branches continued to operate under the name “First National Bank” until the conversion of its operating systems to the operating systems of Tri Counties Bank on July 22, 2018 at which time First National Bank banking centers along with the client relationships and all accounts converted to Tri Counties Bank.

As of July 6, 2018, the newly combined company, operating as TriCo Bancshares with its banking subsidiary, Tri Counties Bank, has total assets of approximately $6.1 billion. TriCo issued approximately 7.4 million shares of common stock in the merger bringing total shares outstanding to approximately 30.4 million. Immediately prior to the merger on July 6, 2018, FNBB had investment securities of approximately $344 million, loans of approximately $868 million, deposits of approximately $995 million, and total assets of approximately $1,288 million. These amounts are subject to change as the Company is in the process of determining the fair value of FNBB assets and liabilities acquired in accordance with generally accepted accounting principles.

About TriCo Bancshares

Established in 1975, Tri Counties Bank is a wholly-owned subsidiary of TriCo Bancshares (NASDAQ: TCBK) headquartered in Chico, California, providing a unique brand of customer Service with Solutions available in traditional stand-alone and in-store bank branches in communities throughout Northern and Central California. Tri Counties Bank provides an extensive and competitive breadth of consumer, small business and commercial banking financial services, along with convenient around-the-clock ATM, online and mobile banking access. Brokerage services are provided by the Bank’s investment services through affiliation with Raymond James Financial Services, Inc. Visit www.TriCountiesBank.com to learn more.

Forward-Looking Statement

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the impact of changes in financial services policies, laws and regulations; technological changes; mergers and acquisitions, including costs or difficulties related to the integration of acquired companies; changes in the level of the Company’s nonperforming assets and charge-offs; any deterioration in values of California real estate, both residential and commercial; the effect of changes in accounting standards and practices; possible other-than-temporary impairment of securities held by the Company; changes in consumer spending, borrowing and savings habits; ability to attract deposits and other sources of liquidity; changes in the financial performance and/or condition of our borrowers; the impact of competition from financial and bank holding companies and other financial service providers; the possibility that any of the anticipated benefits of the Company’s recent merger with FNBB will not be realized or will not be realized within the expected time period, or that integration of FNBB’s operations with those of the Company will be materially delayed or will be more costly or difficult than expected; the challenges of integrating and retaining key employees; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; unanticipated regulatory or judicial proceedings; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; and the Company’s ability to manage the risks involved in the foregoing. Additional factors that could cause results to differ materially from those described above can be found in our Annual Report on Form 10-K for the year ended December 31, 2017, which is on file with the Securities and Exchange Commission (the “SEC”) and available in the “Investor Relations” section of our website, https://www.tcbk.com/investor-relations and in other documents we file with the SEC. Annualized, pro forma, projections and estimates are not forecasts and may not reflect actual results.


TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA    

(Unaudited. Dollars in thousands, except share data)    

 

    

 

    Three months ended    

 

 
     June 30,
2018
    March 31,
2018
    December 31,
2017
    September 30,
2017
    June 30,
2017
 

Statement of Income Data

          

Interest income

   $ 48,478     $ 47,121     $ 46,961     $ 45,913     $ 45,044  

Interest expense

     2,609       2,135       1,868       1,829       1,610  

Net interest income

     45,869       44,986       45,093       44,084       43,434  

Provision (benefit from reversal of provision) for loan losses

     (638     (236     1,677       765       (796

Noninterest income:

          

Service charges and fees

     9,228       9,356       9,562       9,475       9,479  

Other income

     2,946       2,934       2,916       3,455       3,431  

Total noninterest income

     12,174       12,290       12,478       12,930       12,910  

Noninterest expense:

          

Base salaries net of deferred loan origination costs

     14,429       13,962       13,942       13,600       13,657  

Incentive compensation expense

     2,159       2,452       2,247       2,609       2,173  

Employee benefits and other compensation expense

     4,865       5,238       4,421       4,724       4,664  

Total salaries and benefits expense

     21,453       21,652       20,610       20,933       20,494  

Other noninterest expense

     16,417       16,510       17,466       16,289       15,410  

Total noninterest expense

     37,870       38,162       38,076       37,222       35,904  

Income before taxes

     20,811       19,350       17,818       19,027       21,236  

Net income

   $ 15,029     $ 13,910     $ 2,989     $ 11,897     $ 13,589  

Share Data

          

Basic earnings per share

   $ 0.65     $ 0.61     $ 0.13     $ 0.52     $ 0.59  

Diluted earnings per share

   $ 0.65     $ 0.60     $ 0.13     $ 0.51     $ 0.58  

Book value per common share

   $ 22.27     $ 22.01     $ 22.03     $ 22.09     $ 21.76  

Tangible book value per common share

   $ 19.28     $ 19.00     $ 19.01     $ 19.04     $ 18.70  

Shares outstanding

     23,004,153       22,956,323       22,955,963       22,941,464       22,925,069  

Weighted average shares

     22,983,439       22,956,239       22,944,523       22,931,855       22,899,600  

Weighted average diluted shares

     23,276,471       23,283,127       23,289,545       23,244,235       23,240,112  

Credit Quality

          

Nonperforming originated loans

   $ 17,077     $ 16,080     $ 15,463     $ 11,689     $ 10,581  

Total nonperforming loans

     25,420       24,381       24,394       21,955       17,429  

Foreclosed assets, net of allowance

     1,374       1,564       3,226       3,071       3,489  

Loans charged-off

     318       480       627       862       2,512  

Loans recovered

   $ 506     $ 366     $ 526     $ 701     $ 434  

Selected Financial Ratios

          

Return on average total assets

     1.25     1.17     0.26     1.04     1.21

Return on average equity

     11.78     11.00     2.33     9.38     10.93

Average yield on loans

     5.06     5.03     5.18     5.18     5.23

Average yield on interest-earning assets

     4.38     4.33     4.44     4.42     4.42

Average rate on interest-bearing liabilities

     0.36     0.30     0.27     0.27     0.24

Net interest margin (fully tax-equivalent)

     4.14     4.14     4.26     4.24     4.26

Supplemental Loan Interest Income Data:

          

Discount accretion PCI - cash basis loans

   $ 180     $ 246     $ 516     $ 398     $ 386  

Discount accretion PCI - other loans

     95       60       445       407       797  

Discount accretion PNCI loans

     284       326       528       559       987  

All other loan interest income

     38,745       37,417       36,705       35,904       34,248  

Total loan interest income

   $ 39,304     $ 38,049     $ 38,194     $ 37,268     $ 36,418  


TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA    

(Unaudited. Dollars in thousands)    

 

     Three months ended  
     June 30,     March 31,     December 31,     September 30,     June 30,  
Balance Sheet Data    2018     2018     2017     2017     2017  

Cash and due from banks

   $ 184,062     $ 182,979     $ 205,428     $ 188,034     $ 167,649  

Securities, marketable equity

     2,868       2,890       2,938       2,957       2,955  

Securities, available for sale

     754,207       735,895       727,945       675,279       669,614  

Securities, held to maturity

     477,745       496,035       514,844       536,567       559,518  

Restricted equity securities

     16,956       16,956       16,956       16,956       16,956  

Loans held for sale

     3,601       2,149       4,616       2,733       2,537  

Loans:

          

Commercial loans

     237,619       216,015       220,500       227,479       225,743  

Consumer loans

     350,925       348,789       365,113       361,320       360,782  

Real estate mortgage loans

     2,401,040       2,359,379       2,291,995       2,194,874       2,106,567  

Real estate construction loans

     156,729       145,550       137,557       147,940       133,301  

Total loans, gross

     3,146,313       3,069,733       3,015,165       2,931,613       2,826,393  

Allowance for loan losses

     (29,524     (29,973     (30,323     (28,747     (28,143

Foreclosed assets

     1,374       1,564       3,226       3,071       3,489  

Premises and equipment

     59,014       58,558       57,742       54,995       51,558  

Cash value of life insurance

     99,047       98,391       97,783       97,142       96,410  

Goodwill

     64,311       64,311       64,311       64,311       64,311  

Other intangible assets

     4,496       4,835       5,174       5,513       5,852  

Mortgage servicing rights

     7,021       6,953       6,687       6,419       6,596  

Accrued interest receivable

     14,253       12,407       13,772       12,656       11,605  

Other assets

     57,409       56,274       55,051       86,936       62,635  

Total assets

   $ 4,863,153     $ 4,779,957     $ 4,761,315     $ 4,656,435     $ 4,519,935  

Deposits:

          

Noninterest-bearing demand deposits

   $ 1,369,834     $ 1,359,996     $ 1,368,218     $ 1,283,949     $ 1,261,355  

Interest-bearing demand deposits

     1,006,331       1,022,299       971,459       965,480       956,690  

Savings deposits

     1,385,268       1,395,481       1,364,518       1,367,597       1,346,016  

Time certificates

     315,789       306,628       304,936       310,430       314,361  

Total deposits

     4,077,222       4,084,404       4,009,131       3,927,456       3,878,422  

Accrued interest payable

     1,175       958       930       867       781  

Reserve for unfunded commitments

     3,727       3,864       3,164       2,989       2,599  

Other liabilities

     58,896       63,529       63,258       62,850       59,868  

Other borrowings

     152,839       65,041       122,166       98,730       22,560  

Junior subordinated debt

     56,950       56,905       56,858       56,810       56,761  

Total liabilities

   $ 4,350,809     $ 4,274,701     $ 4,255,507     $ 4,149,702     $ 4,020,991  

Total shareholders’ equity

   $ 512,344     $ 505,256     $ 505,808     $ 506,733     $ 498,944  

Accumulated other comprehensive income (loss)

   $ (21,123   $ (17,205   $ (5,228   $ (4,612   $ (4,501

Average loans

   $ 3,104,126     $ 3,028,178     $ 2,948,277     $ 2,878,944     $ 2,783,686  

Average interest-earning assets

   $ 4,457,660     $ 4,380,596     $ 4,289,656     $ 4,214,488     $ 4,135,021  

Average total assets

   $ 4,814,523     $ 4,741,227     $ 4,658,677     $ 4,572,424     $ 4,492,389  

Average deposits

   $ 4,042,110     $ 4,004,332     $ 3,961,422     $ 3,878,183     $ 3,851,519  

Average total equity

   $ 510,433     $ 506,013     $ 513,007     $ 507,389     $ 497,225  

Total risk based capital ratio

     13.9     13.9     14.1     14.4     14.8

Tier 1 capital ratio

     13.1     13.0     13.2     13.6     13.9

Tier 1 common equity ratio

     11.7     11.6     11.7     12.1     12.3

Tier 1 leverage ratio

     10.9     10.8     10.8     11.0     11.0

Tangible capital ratio

     9.3     9.3     9.3     9.5     9.6

*****************

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