TriCo Bancshares , parent company of Tri Counties Bank, Thursday reported record quarterly earnings of $2,751,000 for the second quarter ended June 30, 1999.
The quarterly earnings represented a 28.5% increase over the $2,141,000 reported for the same period of 1998. Diluted earnings per share for the second quarter 1999 were $0.38 versus $0.29 in the year earlier period. Earnings for the six months ended June 30, 1999 were $5,385,000 versus year ago results of $4,071,000, and represent a 32.3% increase. The diluted earnings per share were $0.74 and $0.56 for the respective six-month periods.
Factors contributing to the improved operating results included continued loan growth, an increase in net interest rate spread, a reduction in provision for loan losses, and a reduction in noninterest expenses.
Pretax earnings for the second quarter of 1999 were $4,352,000 versus $3,393,000 for the same period in 1998. During the second quarter of 1998, the Bank sold its credit card portfolio of $14,365,000 for a gain of $793,000 that is included in noninterest income for 1998. Net interest income reflected growth of 9.8% to $10,741,000.
The interest income component was up $313,000 (1.9%) due to higher quarter-over-quarter volume of earning assets ($807,687,000 versus $769,550,000) partially offset by the effect of a 22 basis point decrease in yield on average earning assets. Interest expense decreased $647,000 (10.0%) which was due predominately to a 49 basis point decrease in the average rate paid on interest bearing liabilities. Net interest margin was 5.46% for the second quarter of 1999 versus 5.20% in the same quarter of the prior year.
This higher net interest margin reflects the effects of a higher growth rate in earning assets versus interest-bearing liabilities, and a larger decrease in the average rate paid on interest bearing liabilities as compared to the decrease in the average yield earned on interest bearing assets.
The decrease in rates and yields from June of 1998 to June of 1999 is a reflection of the general decrease in market interest rates that occurred in the fall of 1998. The provision for loan losses of $870,000 for the second quarter of 1999 was $365,000 lower than the $1,235,000 recorded in the same quarter of 1998.
Excluding the gain on the sale of the credit card portfolio in 1998, noninterest income for the second quarter of 1999 increased $206,000 (6.5%) from the same period in 1998. Income from service charges and fees decreased $95,000 (5.1%), primarily due to the absence of credit card fees that contributed $122,000 of income in the second quarter of 1998.
Other income, excluding the gain on the sale of the credit card portfolio, increased $301,000 (23.4%) in the second quarter of 1999 versus the same quarter in 1998. Gain on sale of other real estate owned accounted for $156,000 of the increase. Gains on the sale of loans were up $115,000 to $195,000. Commissions on the sale of mutual funds and annuities were up $16,000 to $665,000.
Noninterest expense decreased $221,000 (2.4%) in the second quarter 1999 versus 1998. Salary and benefit expense increased $252,000 (6.0%) mostly due to higher commission payments to sales personnel and accruals for performance incentive programs. Base salaries increased $103,000 (3%). Other expenses decreased $473,000 (9.7%). On a quarter-over-quarter basis, provision for OREO valuation was reduced $148,000 to $10,000 and all other expenses were favorable by a total of $325,000.
Assets of the Company totaled $888,425,000 at June 30, 1999 and represented a decrease of $16,174,000 (1.8%) and an increase of $15,130,000 (1.7%) from the December 31, 1998 and June 30, 1998 ending balances, respectively. Changes in earning assets from the prior year quarter end balances included an increase in loans of $73,339,000 to $564,642,000 and a decrease in securities of $60,442,000 to $237,435,000. From year end 1998 balances, nonperforming assets have decreased $529,000 and total $2,548,000 at June 30, 1999. Nonperforming assets were 0.29% of total assets at quarter end.
Year to date 1999, on an annualized basis, the Company realized a return on assets of 1.21% and a return on equity of 14.68% versus 0.99% and 12.19% in the first half of 1998. TriCo Bancshares ended the quarter with a Tier 1 capital ratio of 10.5% a nd a total risk-based capital ratio of 11.7%.
In addition to the historical information contained herein, this press release contains certain forward-looking statements. The reader of this press release should understand that all such forward-looking statements are subject to various uncertain ties 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 press release 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.
Tri Counties Bank headquarters are in Chico and it conducts operations through 26 traditional branches and 9 in-store branches located in 17 California counties. The Bank provides traditional deposit, lending, mortgage and commercial products and services to business and retail customers throughout its market area.
CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except share data)
3 months ended 6 months ended
June 30, June 30,
Statement of Income Data 1999 1998 1999 1998
——— ———- ———- ———-
Net interest income $ 10,741 $ 9,781 $ 21,248 $ 19,108
loan losses 870 1,235 1,710 2,060
Noninterest income 3,368 3,955 6,330 6,961
Noninterest expense 8,887 9,108 17,373 17,495
Net income 2,751 2,141 5,385 4,071
Earnings per share
Basic $ 0.39 $ 0.31 $ 0.76 $ 0.58
Diluted 0.38 0.29 0.74 0.56
Book value per
common share 9.99 9.70
Shares outstanding 7,127,747 7,012,788
shares 7,124,366 7,007,285 7,115,024 6,997,967
diluted shares 7,311,880 7,288,481 7,304,713 7,283,015
Balance Sheet Data
Total assets 888,425 873,295
Securities, held-to-maturity — 82,926
Securities, available-for-sale 237,435 214,951
Total loans, gross 564,642 491,303
Allowance for loan losses 9,716 7,138
Total deposits 746,095 725,478
Total shareholders’ equity 71,195 68,029
Unrealized gain (loss)
available-for-sale, net (3,441) 159
Non-performing loans 1,829 3,989
Other real estate owned 719 1,464
Selected Financial Ratios
Return on average total assets 1.21% 0.99%
Return on average equity 14.68% 12.19%
Net interest margin 5.40% 5.21%
Allowance for loan losses to total loans 1.72% 1.45%
Allowance for loan losses to NPL’s 531% 179%
Allowance for loan losses to NPA’s 381% 131%
Total risk based capital ratio 11.73% 11.82%
Tier 1 Capital ratio 10.48% 10.57%
Leverage ratio 7.71% 7.13%