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TriCo Bancshares Announces Quarterly Results

Stocks in this article: TCBK

The Company provided $1,524,000 for loan losses in the fourth quarter of 2012 versus $532,000 in the third quarter of 2012 and $5,429,000 in the fourth quarter of 2011. The decrease in provision for loan losses during the fourth quarter of 2012 compared to the fourth quarter of 2011 was primarily the result of improvement in collateral values and estimated cash flows related to nonperforming and purchased credit impaired loans, and a reduction in nonperforming loans.

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

  Three months ended      
December 31,
(dollars in thousands) 2012   2011

$ Change

% Change

Service charges on deposit accounts 3,502 3,877 ($375 ) (9.7 %)
ATM fees and interchange 2,040 1,857 183 9.9 %
Other service fees 483 419 64 15.3 %
Mortgage banking service fees 512 389 123 31.6 %
Change in value of mortgage servicing rights (502 ) (85 )   (417 ) 490.6 %
Total service charges and fees 6,035   6,457     (422 ) (6.5 %)
Gain on sale of loans 2,493 1,219 1,274 104.5 %
Commission on NDIP 745 555 190 34.2 %
Increase in cash value of life insurance 470 535 (65 ) (12.1 %)
Change in indemnification asset (501 ) 512 (1,013 ) (197.9 %)
Gain on sale of foreclosed assets 422 213 209 98.1 %
Gain on life insurance death benefit 75 789 (714 ) (90.5 %)
Other noninterest income 272   209     63   30.1 %
Total other noninterest income 3,976   4,032     (56 ) (1.4 %)
Total noninterest income 10,011   10,489     ($478 ) (4.6 %)

The $375,000 decrease in service charges on deposit accounts is due to decreased nonsufficient funds fees. The $183,000 increase in ATM fees and interchange revenue is primarily due to increased interchange revenue as a result of additional resources focused on growing that line of business. The $123,000 increase in mortgage banking service fees, and the $1,274,000 increase in gain on sale of loans are due to a significant increase in residential real estate mortgage loans originated and sold by the Bank for which the Bank remains as the loan servicer. The increase in residential real estate mortgage loans originated by the Bank is primarily due to historically low interest rates, and an increase in resources focused in this area. These same historically low interest rates have shortened the estimated life of the loans that the Bank services, thus shortening and reducing the estimated cash flow stream of servicing revenue from such loans, and thus, reducing the value the Bank’s mortgage servicing rights. This decrease in mortgage servicing rights negatively impacted service charge and fee revenue by $417,000 when compared to the year-ago quarter. The $190,000 increase in commission on sale of non-deposit investment products (NDIP) is due to increase resources focused in that area. The $1,013,000 negative impact from change in indemnification asset is due to improved (lessened) future loss estimates related to loans covered by FDIC loss-sharing agreements. While this item has a negative impact on this revenue item, it is more than offset by a reduction in the Bank’s loan loss provision.

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