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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year Commission File Number 0-10661
ended December 31, 2001
TriCo Bancshares
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(Exact name of registrant as specified in its charter)
California 94-2792841
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
63 Constitution Drive, Chico, California 95973
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(530) 898-0300
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value
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(Title of Class)
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 periods 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
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The aggregate market value of the voting stock held by non-affiliates of the
registrant, as of February 12, 2002, was approximately $100,102,000. This
computation excludes a total of 1,960,200 shares which are beneficially owned by
the officers and directors of Registrant who may be deemed to be the affiliates
of Registrant under applicable rules of the Securities and Exchange Commission.
The number of shares outstanding of Registrant's classes of common stock, as of
February 12, 2002, was 6,990,980 shares of Common Stock, without par value.
The following documents are incorporated herein by reference into the parts of
Form 10-K indicated: Registrant's Annual Report to Shareholders for the fiscal
year ended December 31, 2001, for Item 7, and Registrant's Proxy Statement for
use in connection with its 2002 Annual Meeting of Shareholders, for Part III.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. X
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PART I
1. BUSINESS
Formation of Bank Holding Company.
TriCo Bancshares (hereinafter the "Company") was incorporated under the
laws of the State of California on October 13, 1981. It was organized at the
direction of the Board of Directors of Tri Counties Bank (the "Bank") for the
purpose of forming a bank holding company. On September 7, 1982, a wholly-owned
subsidiary of the Company was merged with and into the Bank resulting in the
shareholders of the Bank becoming the shareholders of the Company and the Bank
becoming the wholly-owned subsidiary of the Company. (The merger of the
wholly-owned subsidiary of the Company with and into the Bank is hereafter
referred to as the "Reorganization.") At the time of the Reorganization, the
Company became a bank holding company subject to the supervision of the Board of
Governors of the Federal Reserve System (the "FRB") in accordance with the Bank
Holding Company Act of 1956, as amended. The Bank remains subject to the
supervision of the State of California Department of Financial Institutions and
the Federal Deposit Insurance Corporation (the "FDIC"). The Bank currently is
the only subsidiary of the Company and the Company has not yet commenced any
business operations independent of the Bank.
Provision of Banking Services.
The Bank was incorporated as a California banking corporation on June 26,
1974, and received its Certificate of Authority to begin banking operations on
March 11, 1975.
The Bank engages in the general commercial banking business in the
California counties of Butte, Del Norte, Glenn, Kern, Lake, Lassen, Madera,
Mendocino, Merced, Nevada, Sacramento, Shasta, Siskiyou, Stanislaus, Sutter,
Tehama, Tulare, and Yuba. The Bank currently has 30 traditional branches, and 7
in-store branches. It opened its first banking office in Chico, California in
1975, followed by branch offices in Willows, Durham and Orland, California. The
Bank opened its fifth banking office at an additional location in Chico in 1980.
On March 27, 1981, the Bank acquired the assets of Shasta County Bank and
thereby acquired six additional offices. These offices are located in the
communities of Bieber, Burney, Cottonwood, Fall River Mills, Palo Cedro and
Redding, California. On November 7, 1987, the Bank purchased the deposits and
premises of the Yreka Branch of Wells Fargo Bank, thereby acquiring an
additional branch office. On August 1, 1988, the Bank opened a new office in
Chico at East 20th Street and Forest Avenue. The Bank opened a branch office in
Yuba City on September 10, 1990. The Bank opened four supermarket branches in
1994. These supermarket branches were opened on March 7, March 28, June 6 and
June 13, 1994 in Red Bluff, Yuba City, and two in Redding, respectively. The
Bank added one conventional branch in Redding through its acquisition of Country
National Bank on July 21, 1994. On November 7, 1995, the Bank opened a
supermarket branch in Chico. In March 1996 the Bank opened its sixth supermarket
branch in Grass Valley. The acquisition of Sutter Buttes Savings Bank in October
1996 added a branch in Marysville. Loan production offices were established in
Bakersfield and Sacramento in 1996. On February 21, 1997, the Bank purchased
nine branches from Wells Fargo Bank, N.A. The acquired branches are located in
Crescent City, Weed, Mt. Shasta, Susanville, Covelo, Middletown, Patterson,
Gustine and Chowchilla. This acquisition expanded the Bank's market area from
the Sacramento Valley and intermountain areas to include parts of the northern
coastal region and the northern San Joaquin Valley. In November 1998 the Bank
converted its Bakersfield and Sacramento loan production offices to full service
branches. In July 1999, the Bank opened a supermarket branch at Beale Air Force
Base. The Bank opened branch offices in Visalia and Modesto, during August 1999
and January 2000, respectively. In August of 2000, the Bank opened its most
recent branch in Paradise. The Bank plans on opening branches in Oroville and
Brentwood in the second quarter of 2002.
General Banking Services.
The Bank conducts a commercial banking business including accepting demand,
savings and time deposits and making commercial, real estate, and consumer
loans. It also offers installment note collection, issues cashier's checks and
money orders, sells travelers checks and provides safe deposit boxes and other
customary banking services. Brokerage services are provided at the Bank's
offices by the Bank's association with Raymond James Financial Services, Inc.
The Bank does not offer trust services or international banking services.
The Bank's operating policy since its inception has emphasized retail
banking. Most of the Bank's customers are retail customers and small to
medium-sized businesses. The business of the Bank emphasizes serving the needs
of local businesses, farmers and ranchers, retired individuals and wage earners.
The majority of the Bank's loans are direct loans made to individuals and
businesses in the regions of California where its branches are located. At
December 31, 2001, the total of the Bank's consumer installment loans
outstanding was $155,046,000 (24%), the total of commercial loans outstanding
was $130,054,000 (20%), and the total of real estate loans including
construction loans of $46,735,000 was $373,632,000 (56%). The Bank takes real
estate, listed and unlisted securities, savings and time deposits, automobiles,
machinery, equipment, inventory, accounts receivable and notes receivable
secured by property as collateral for loans.
-2-
Most of the Bank's deposits are attracted from individuals and
business-related sources. No single person or group of persons provides a
material portion of the Bank's deposits, the loss of any one or more of which
would have a materially adverse effect on the business of the Bank, nor is a
material portion of the Bank's loans concentrated within a single industry or
group of related industries.
In order to attract loan and deposit business from individuals and small to
medium-sized businesses, branches of the Bank set lobby hours to accommodate
local demands. In general, lobby hours are from 9:00 a.m. to 5:00 p.m. Monday
through Thursday, and from 9:00 a.m. to 6:00 p.m. on Friday. Certain branches
with less activity open later and close earlier. Some Bank offices also utilize
drive-up facilities operating from 9:00 a.m. to 7:00 p.m. The supermarket
branches are open from 9:00 a.m. to 7:00 p.m. Monday through Saturday and 11:00
a.m. to 5:00 p.m. on Sunday.
The Bank offers 24-hour ATMs at almost all branch locations. The ATMs are
linked to several national and regional networks such as CIRRUS and STAR. In
addition, banking by telephone on a 24-hour toll-free number is available to all
customers. This service allows a customer to obtain account balances and most
recent transactions, transfer moneys between accounts, make loan payments, and
obtain interest rate information.
In February 1998, the Bank became the first bank in the Northern Sacramento
Valley to offer banking services on the Internet. This banking service provides
customers one more tool for anywhere, anytime access to their accounts.
Other activities.
In addition to the banking services referred to above, pursuant to
California law, TCB Real Estate Corporation, a wholly-owned subsidiary of the
Bank, was engaged in limited real estate investments until December 1998. At
that time, TCB Real Estate Corporation divested its remaining real estate
investments. Such investments consisted of holding certain real property for the
purpose of development or as income earning assets. The amount of the Bank's
assets committed to such investment did not exceed the total of the Bank's
capital and surplus. In 1996 the FDIC directed the Bank to divest the properties
held by TCB Real Estate Corporation and to terminate its operations. The Bank
and the FDIC agreed to a plan that called for the divestiture by June 30, 1999.
TCB Real Estate Corporation was dissolved on April 27, 1999.
The Bank may in the future engage in other businesses either directly or
indirectly through subsidiaries acquired or formed by the Bank subject to
regulatory constraints. See "Regulation and Supervision."
Employees.
At December 31, 2001, the Company and the Bank employed 505 persons,
including five executive officers. Full time equivalent employees were 412. No
employees of the Company or the Bank are presently represented by a union or
covered under a collective bargaining agreement. Management believes that its
employee relations are excellent.
Competition.
The banking business in California generally, and in the Bank's primary
service area specifically, is highly competitive with respect to both loans and
deposits. It is dominated by a relatively small number of major banks with many
offices operating over a wide geographic area. Among the advantages such major
banks have over the Bank are their ability to finance wide ranging advertising
campaigns and to allocate their investment assets to regions of high yield and
demand. By virtue of their greater total capitalization such institutions have
substantially higher lending limits than does the Bank.
In addition to competing with savings institutions, commercial banks
compete with other financial markets for funds. Yields on corporate and
government debt securities and other commercial paper may be higher than on
deposits, and therefore affect the ability of commercial banks to attract and
hold deposits. Commercial banks also compete for available funds with money
market instruments and mutual funds. During past periods of high interest rates,
money market funds have provided substantial competition to banks for deposits
and they may continue to do so in the future. Mutual funds are also a major
source of competition for savings dollars.
As a consequence of the extensive regulation of commercial banking
activities in the United States, the business of the Company and its subsidiary
are particularly susceptible to being affected by enactment of federal and state
legislation which may have the effect of increasing or decreasing the cost of
doing business, modifying permissible activities or enhancing the competitive
position of other financial institutions.
The Bank relies substantially on local promotional activity, personal
contacts by its officers, directors, employees and shareholders, extended hours,
personalized service and its reputation in the communities it services to
compete effectively.
-3-
Regulation and Supervision.
As a registered bank holding company under the Bank Holding Company Act of
1956 (the "BHC Act"), the Company is subject to the regulation and supervision
of the Board of Governors of the Federal Reserve System ("FRB"). The BHC Act
requires the Company to file reports with the FRB and provide additional
information requested by the FRB. The Company must receive the approval of the
FRB before it may acquire all or substantially all of the assets of any bank, or
ownership or control of the voting shares of any bank if, after giving effect to
such acquisition of shares, the Company would own or control more than 5 percent
of the voting shares of such bank.
The Company and any subsidiaries it may
acquire or organize will be deemed to be affiliates of the Bank within the
Federal Reserve Act. That Act establishes certain restrictions, which limit the
extent to which the Bank can supply its funds to the Company and other
affiliates. The Company is also subject to restrictions on the underwriting and
the public sale and distribution of securities. It is prohibited from engaging
in certain tie-in arrangements in connection with any extension of credit, sale
or lease of property, or furnishing of services.
The Company is prohibited from engaging in, or acquiring direct or indirect
control of any company engaged in non-banking activities, unless the FRB by
order or regulation has found such activities to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto.
Notwithstanding this prohibition, under the Financial Services
Modernization Act of 1999, the Company may engage in any activity, and may
acquire and retain the shares of any company engaged in any activity, that the
FRB, in coordination with the Secretary of the Treasury, determines (by
regulation or order) to be financial in nature or incidental to such financial
activities. Furthermore, such law dictates several activities that are
considered to be financial in nature, and therefore are not subject to FRB
approval.
Under California law, dividends and other distributions by the Company are
subject to declaration by the Board of Directors at its discretion out of net
assets. Dividends cannot be declared and paid when such payment would make the
Company insolvent.
FRB policy prohibits a bank holding company from declaring or paying a cash
dividend which would impose undue pressure on the capital of subsidiary banks or
would be funded only through borrowings or other arrangements that might
adversely affect the holding company's financial position. The policy further
declares that a bank holding company should not continue its existing rate of
cash dividends on its common stock unless its net income is sufficient to fully
fund each dividend and its prospective rate of earnings retention appears
consistent with its capital needs, asset quality and overall financial
condition. Other FRB policies forbid the payment by bank subsidiaries to their
parent companies of management fees, which are unreasonable in amount or exceed
a fair market value of the services rendered (or, if no market exists, actual
costs plus a reasonable profit).
In addition, the FRB has authority to prohibit banks that it regulates from
engaging in practices, which in the opinion of the FRB are unsafe or unsound.
Such practices may include the payment of dividends under some circumstances.
Moreover, the payment of dividends may be inconsistent with capital adequacy
guidelines. The Company may be subject to assessment to restore the capital of
the Bank should it become impaired.
The Company is subject to the minimum capital requirements of the FRB. As a
result of these requirements, the growth in assets of the Company is limited by
the amount of its capital accounts as defined by the FRB. Capital requirements
may have an affect on profitability and the payment of distributions by the
Company. If the Company is unable to increase its assets without violating the
minimum capital requirements, or is forced to reduce assets, its ability to
generate earnings would be reduced. Furthermore, earnings may need to be
retained rather than paid as distributions to shareholders.
The FRB has adopted guidelines utilizing a risk-based capital structure.
These guidelines apply on a consolidated basis to bank holding companies with
consolidated assets of $150 million or more. For bank holding companies with
less than $150 million in consolidated assets, the guidelines apply on a
bank-only basis unless the holding company is engaged in non-bank activity
involving significant leverage or has a significant amount of outstanding debt
that is held by the general public. The Company currently has consolidated
assets of more than $150 million; accordingly, the risk-based capital guidelines
apply to the Company on a consolidated basis.
-4-
Qualifying capital is divided into two tiers. Tier 1 capital consists
generally of common stockholders' equity, qualifying noncumulative perpetual
preferred stock, qualifying cumulative perpetual preferred stock (up to 25
percent of total Tier 1 capital) and minority interests in the equity accounts
of consolidated subsidiaries, less goodwill and certain other intangible assets.
Tier 2 capital consists of, among other things, allowance for loan and lease
losses up to 1.25 percent of weighted risk assets, perpetual preferred stock,
hybrid capital instruments, perpetual debt, mandatory convertible debt
securities, subordinated debt and intermediate-term preferred stock. Tier 2
capital qualifies as part of total capital up to a maximum of 100 percent of
Tier 1 capital. Amounts in excess of these limits may be issued but are not
included in the calculation of risk-based capital ratios. As of December 31,
2001, the Company must have a minimum ratio of qualifying total capital to
weighted risk assets of 8 percent, of which at least 4 percent must be in the
form of Tier 1 capital.
The Federal regulatory agencies have adopted a minimum Tier 1 leverage
ratio which is intended to supplement risk-based capital requirements and to
ensure that all financial institutions, even those that invest predominantly in
low-risk assets, continue to maintain a minimum level of Tier 1 capital. These
regulations provide that a banking organization's minimum Tier 1 leverage ratio
be determined by dividing its Tier 1 capital by its quarterly average total
assets, less goodwill and certain other intangible assets. Under the current
rules, the Company is required to maintain a minimum Tier 1 leverage ratio of 4
percent.
Insurance of Deposits.
The Bank's deposit accounts are insured up to a maximum of $100,000 per
depositor by the FDIC. The FDIC issues regulations and generally supervises the
operations of its insured banks. This supervision and regulation is intended
primarily for the protection of depositors, not shareholders.
As of December 31, 2001, the deposit insurance premium rate was $0.0188 per
$100.00 in deposits. In November 1990, federal legislation was passed which
removed the cap on the amount of deposit insurance premiums that can be charged
by the FDIC. Under this legislation, the FDIC is able to increase deposit
insurance premiums as it sees fit. This could result in a significant increase
in the cost of doing business for the Bank in the future. The FDIC now has
authority to adjust deposit insurance premiums paid by insured banks every six
months.
The Bank's Risk-Based Capital Requirements.
The Bank is subject to the minimum capital requirements of the FDIC. As a
result of these requirements, the growth in assets of the Bank is limited by the
amount of its capital accounts as defined by the FRB. Capital requirements may
have an effect on profitability and the payment of dividends on the common stock
of the Bank. If the Bank is unable to increase its assets without violating the
minimum capital requirements or is forced to reduce assets, its ability to
generate earnings would be reduced. Further, earnings may need to be retained
rather than paid as dividends to the Company.
Federal banking law requires the federal banking regulators to take "prompt
corrective action" with respect to banks that do not meet minimum capital
requirements. In response to this requirement, the FDIC adopted final rules
based upon the five capital tiers defined by the Federal Deposit Insurance
Corporation Improvement Act of 1991 (FDICIA): well capitalized, adequately
capitalized, under capitalized, significantly under capitalized and critically
under capitalized. For example, the FDIC's rules provide that an institution is
"well-capitalized" if its total risk-based capital ratio is 10 percent or
greater, its Tier 1 risk-based capital ratio is 6 percent or greater, its
leverage ratio is 5 percent or greater, and the institution is not subject to a
capital directive or an enforceable written agreement or order. A bank is
"adequately capitalized" if its total risk-based capital ratio is 8 percent or
greater, its Tier 1 risk-based capital ratio is 4 percent or greater, and its
leverage ratio is 4 percent or greater (3 percent or greater for certain of the
highest-rated institutions). An institution is "significantly undercapitalized"
if its risk-based capital ratio is less than 6 percent, its Tier 1 risk-based
capital ratio is less than 3 percent, or its tangible equity (Tier 1 capital) to
total assets is equal to or less than 2 percent. An institution may be deemed to
be in a capitalization category that is lower than is indicated by its actual
capital position if it engages in unsafe or unsound banking practices.
No sanctions apply to institutions which are "well" or "adequately"
capitalized under the prompt corrective action requirements. Undercapitalized
institutions are required to submit a capital restoration plan for improving
capital. In order to be accepted, such plan must include a financial guaranty
from the institution's holding company that the institution will return to
capital compliance. If such a guarantee were deemed to be a commitment to
maintain capital under the federal Bankruptcy Code, a claim for a subsequent
breach of the obligations under such guarantee in a bankruptcy proceeding
involving the holding company would be entitled to a priority over third-party
general unsecured creditors of the holding company. Undercapitalized
institutions are prohibited from making capital distributions or paying
management fees to controlling persons; may be subject to growth limitations;
and acquisitions, branching and entering into new lines of business are
restricted. Finally, the institution's regulatory agency has discretion to
impose certain of the restrictions generally applicable to significantly
undercapitalized institutions.
In the event an institution is deemed to be significantly undercapitalized,
it may be required to: sell stock, merge or be acquired, restrict transactions
with affiliates, restrict interest rates paid on deposits, divest a subsidiary,
or dismiss specified directors or officers. If the institution is a bank holding
company, it may be prohibited from making any capital distributions without
prior approval of the FRB and may be required to divest a subsidiary. A
critically undercapitalized institution is generally prohibited from making
payments on subordinated debt and may not, without the approval of the FDIC,
enter into a material transaction other than in the ordinary course of business,
engage in any covered transaction, or pay excessive compensation or bonuses.
Critically undercapitalized institutions are subject to appointment of a
receiver or conservator.
-5-
Bank Regulation.
The federal regulatory agencies are required to adopt regulations, which
will establish safety and soundness standards that apply to banks and bank
holding companies. These standards must address bank operations, management,
asset quality, earnings, stock valuation and employee compensation. A bank
holding company or bank failing to meet established standards will face
mandatory regulatory enforcement action.
The grounds upon which a conservator or receiver of a bank can be appointed
have been expanded. For example, a conservator or receiver can be appointed for
a bank that fails to maintain minimum capital levels and has no reasonable
prospect of becoming adequately capitalized.
Federal law also requires, with some exception, that each bank have an
annual examination performed by its primary federal regulatory agency, and an
outside independent audit. The outside audit must consider bank regulatory
compliance in addition to financial statement reporting.
Federal law also restricts the acceptance of brokered deposits by insured
depository institutions and contains a number of consumer banking provisions,
including disclosure requirements and substantive contractual limitations with
respect to deposit accounts.
Governmental Monetary Policies and Economic Conditions.
The principal sources of funds essential to the business of banks and bank
holding companies are deposits, stockholders' equity and borrowed funds. The
availability of these various sources of funds and other potential sources, such
as preferred stock or commercial paper, and the extent to which they are
utilized, depends on many factors, the most important of which are the FRB's
monetary policies and the relative costs of different types of funds. An
important function of the FRB is to regulate the national supply of bank credit
in order to combat recession and curb inflationary pressure. Among the
instruments of monetary policy used by the FRB to implement these objections are
open market operations in United States Government securities, changes in the
discount rate on bank borrowings, and changes in reserve requirements against
bank deposits. The monetary policies of the FRB have had a significant effect on
the operating results of commercial banks in the past and are expected to
continue to do so in the future. In view of the recent changes in regulations
affecting commercial banks and other actions and proposed actions by the federal
government and its monetary and fiscal authorities, including proposed changes
in the structure of banking in the United States, no prediction can be made as
to future changes in interest rates, credit availability, deposit levels, the
overall performance of banks generally or the Company and its subsidiaries in
particular.
General.
The Company conducts all of its business operations within a single
geographic area. The Company is principally engaged in traditional community
banking activities provided through its thirty branches and seven in-store
branches located throughout Northern and Central 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. In
1998 and prior, the Company held investments in real estate through its
wholly-owned subsidiary, TCB Real Estate. These activities were monitored and
reported by Bank management as separate operating segments.
-6-
2. PROPERTIES
As the Company has not yet acquired any properties independent of the Bank,
its only subsidiary, the properties of the Bank and the Bank's subsidiaries
comprise all of the properties of the Company.
Bank Properties
The Bank owns and leases properties that house administrative and data
processing functions and 37 banking offices. Owned and leased branches and major
facilities are listed below.
Branch/Facility3 Address Square Ft. Lease Expires
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Bakersfield 5201 California Ave., Suite 102 Bakersfield, CA 93309 3,200 January 31, 2005
Beale AFB ISB 17601 25th St. Bldg. 25608 (Commissary) Beale AFB, CA 95903 546 February 23, 2004
Bieber Bridge & Market Streets Bieber, CA 96009 Owned
Burney 37093 Main St. Burney, CA 96013 3,500 Owned
California Street 1845 California St. Redding, CA 96001 3,265 Owned
Chico Mall 1950 E. 20th St., Suite G725 Chico, CA 95928 1,334 August 31, 2005
Chowchilla 305 Trinity St. Chowchilla, CA 93610 6,000 December 31, 2009
Cottonwood 3349 Main St. Cottonwood, CA 96022 4,900 Owned
Covelo 76405 Covelo Rd. Covelo, CA 95428 3,000 Month-to-Month
Crescent City 936 Third St. Crescent City, CA 95531 4,700 Owned
Data Processing 1103 Fortress St. Chico, CA 95926 13,600 April 24, 2011
Durham 9411 Midway Durham, CA 95938 2,150 Owned
East Ave. ISB 146 W. East Ave. (Albertson's) Chico, CA 95973 475 August 22, 2005
Fall River Mills 43308 Hwy. 299 East Fall River Mills, CA 96028 2,200 Owned
Grass Valley ISB 12054 Nevada City Hwy. (Albertson's) Grass Valley, CA 95949 450 August 22, 2005
Gustine 319 Fifth St. Gustine, CA 95322 5,100 Owned
Hartnell ISB 110 Hartnell Ave. (Raley's) Redding, CA 96002 482 May 29, 2004
Headquarters Bldg. 63 Constitution Dr. Chico, CA 95973 30,000 Owned
Hilltop 1250 Hilltop Dr. Redding, CA 96049 6,252 Owned
Lake Blvd. ISB 201 Lake Blvd. (Raley's) Redding, CA 96003 482 May 29, 2004
Marysville 729 E St. Marysville, CA 95901 1,600 November 30, 2002
Middletown 21097 Calistoga Rd. Middletown, CA 95461 2,600 April 30, 2007
Modesto 3320 Tully Rd., Suite 3 Modesto, CA 95350 3,850 August 31, 2004
Mt. Shasta 204 Chestnut St. Mt. Shasta, CA 96067 6,500 February 28, 2007
Orland 100 E. Walker St. Orland, CA 95963 3,300 Owned
Palo Cedro 9125 Deschutes Rd. Palo Cedro, CA 96073 3,400 Owned
Paradise 6848 "Q" Skyway Paradise, CA 95963 6,600 May 31, 2010
Park Plaza 780 Mangrove Ave. Chico, CA 95926 10,000 December 31, 2009
Patterson 17 Plaza Patterson, CA 95363 4,000 Owned
Pillsbury 2171 Pillsbury Rd. Chico, CA 95926 5,705 Owned
Red Bluff ISB 727 Main St. (Raley's) Red Bluff, CA 96080 482 February 27, 2004
Redding2 1810 Market St. Redding, CA 96001 14,000 Owned
Susanville 1605 Main St. Susanville, CA 96130 7,200 March 31, 2002
Sacramento 1760 Challenge Way, Suite 100 Sacramento, CA 95815 3,005 June 30, 2005
TriCo Offices1 15 Independence Circle 7,000 April 24, 2011
Visalia 2914 W. Main St. Visalia, CA 93291 2,400 April 30, 2002
Weed 303 Main St. Weed, CA 96094 6,200 Owned
Willows 210 N. Tehama St. Willows, CA 95988 4,800 Owned
Yreka 165 S. Broadway Yreka, CA 96097 6,000 Owned
Yuba City 1441 Colusa Ave. Yuba City, CA 95993 6,900 Owned
Yuba City ISB 700 Onstott Rd. (Raley's) Yuba City, CA 95991 482 March 29, 2004
1This leased building was vacated in 1998 and is being subleased.
2This building was vacated in 1997 and is currently being leased.
3"ISB" in branch name indicates In-store branch.
-7-
3. LEGAL PROCEEDINGS
Neither the Company nor the Bank is a party to any material legal
proceedings, other than ordinary routine litigation incidental to the business
of the Company and the Bank, nor is any of their property the subject of any
such proceedings.
4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable.
-8-
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Common Stock of the Company trades on the NASDAQ National Market under
the symbol "TCBK." The shares were first listed in the NASDAQ Stock Market in
April 1993.
The following table summarizes the Common Stock high and low trading prices
and volume of shares traded by quarter as reported by NASDAQ.
Prices of the Approximate
Company's Common Trading
Stock Volume
Quarter Ended:1 High Low (in shares)
March 31, 2000 $ 19.25 $ 14.75 563,400
June 30, 2000 17.00 15.44 446,100
September 30, 2000 17.50 15.69 620,900
December 31, 2000 17.00 14.75 232,700
March 31, 2001 16.63 14.88 707,000
June 30, 2001 17.33 14.81 667,900
September 30, 2001 19.80 16.75 530,000
December 31, 2001 19.74 17.93 874,200
1Quarterly trading activity has been compiled from NASDAQ trading reports.
Holders
As of February 12, 2002, there were approximately 1,754 holders of record
of the Company's Common Stock.
Dividends
The Company has paid quarterly dividends since March 1990. On February 12,
2002, the Company declared a quarterly cash dividend of $0.20 per share payable
on March 29, 2002 to holders of record at the close of business on March 8,
2002. The Company paid quarterly dividends of $0.20 per share in each quarter of
2001 as well as the second, third and fourth quarters of 2000, and $0.19 per
share in the first quarter of 2000.
The holders of Common Stock of the Company are entitled to receive cash
dividends when and as declared by the Board of Directors, out of funds legally
available therefore, subject to the restrictions set forth in the California
General Corporation Law (the "Corporation Law"). The Corporation Law provides
that a corporation may make a distribution to its shareholders if the
corporation's retained earnings equal at least the amount of the proposed
distribution.
The Company, as sole shareholder of the Bank, is entitled to receive
dividends when and as declared by the Bank's Board of Directors, out of funds
legally available therefore, subject to the powers of the FDIC and the
restrictions set forth in the California Financial Code (the "Financial Code").
The Financial Code provides that a bank may not make any distributions in excess
of the lesser of: (i) the bank's retained earnings, or (ii) the bank's net
income for the last three fiscal years, less the amount of any distributions
made by the bank to its shareholders during such period. However, a bank may,
with the prior approval of the California Superintendent of Banks (the
"Superintendent"), make a distribution to its shareholders of up to the greater
of (A) the bank's retained earnings, (B) the bank's net income for its last
fiscal year, or (C) the bank's net income for its current fiscal year. If the
Superintendent determines that the shareholders' equity of a bank is inadequate
or that a distribution by the bank to its shareholders would be unsafe or
unsound, the Superintendent may order a bank to refrain from making a proposed
distribution. The FDIC may also order a bank to refrain from making a proposed
distribution when, in its opinion, the payment of such would be an unsafe or
unsound practice. The Bank paid dividends totaling $12,187,000 to the Company in
2001. As of December 31, 2001 and subject to the limitations and restrictions
under applicable law, the Bank had funds available for dividends in the amount
of $13,327,000.
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The Federal Reserve Act limits the loans and advances that the Bank may
make to its affiliates. For purposes of such Act, the Company is an affiliate of
the Bank. The Bank may not make any loans, extensions of credit or advances to
the Company if the aggregate amount of such loans, extensions of credit,
advances and any repurchase agreements and investments exceeds 10% of the
capital stock and surplus of the Bank. Any such permitted loan or advance by the
Bank must be secured by collateral of a type and value set forth in the Federal
Reserve Act.
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6. FIVE YEAR SELECTED FINANCIAL DATA (in thousands, except share data)
2001 2000 1999 1998 1997
Statement of Operations Data:1
Interest income $73,372 $76,653 $68,589 $65,138 $59,877
Interest expense 23,486 28,543 24,370 25,296 23,935
Net interest income 49,886 48,110 44,219 39,842 35,942
Provision for loan losses 4,400 5,000 3,550 4,200 3,000
Net interest income after
provision for loan losses 45,486 43,110 40,669 35,642 32,942
Noninterest income 15,061 14,645 12,101 12,869 9,566
Noninterest expense 40,804 37,895 34,833 34,692 32,932
Income before income taxes 19,743 19,860 17,937 13,819 9,576
Provision for income taxes 7,324 7,237 6,534 5,049 3,707
Net income $12,419 $12,623 $11,403 $8,770 $5,869
Share Data:2
Diluted earnings per share $1.72 $1.72 $1.56 $1.21 $0.81
Cash dividend paid per share $0.80 $0.79 $0.70 $0.49 $0.43
Common shareholders' equity
at year end $12.44 $11.87 $10.22 $10.22 $9.31
Balance Sheet Data at year end:
Total loans, gross $658,732 $640,391 $587,979 $532,433 $448,967
Total assets 1,005,447 972,071 924,796 904,599 826,165
Total deposits 880,393 837,832 794,110 769,173 724,094
Total long-term debt 22,956 33,983 45,505 37,924 11,440
Total shareholders' equity $86,933 $85,233 $73,123 $72,029 $65,124
Selected Financial Ratios:
Return on average assets 1.27% 1.35% 1.26% 1.03% 0.75%
Return on average common
shareholders' equity 14.19% 16.03% 15.59% 12.80% 9.34%
Total risk-based capital ratio 11.68% 12.22% 11.77% 11.83% 11.90%
Net interest margin3 5.73% 5.73% 5.49% 5.28% 5.16%
Allowance for loan losses to total
loans outstanding at end of year 1.98% 1.82% 1.88% 1.54% 1.44%
1 Tax-exempt securities are presented on an actual yield basis.
2 Retroactively adjusted to reflect 3-for-2 stock split effected in 1998.
3 Calculated on a tax equivalent basis.
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7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Management's Discussion and Analysis of Financial Condition and Results of
Operations, included in Registrant's 2001 Annual Report to Shareholders, (pages
29 through 48 of Exhibit 13.1 as electronically filed) is incorporated herein by
reference.
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Discussion is included in Management's Discussion and Analysis (pages 29
through 48 of Exhibit 13.1 as electronically filed) and is incorporated herein
by reference.
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and independent auditor's report,
included in Registrant's 2001 Annual Report to Shareholders, are incorporated
herein by reference:
Pages of Exhibit 13.1
as Electronically Filed
Report of Independent Public Accountants 28
Consolidated Balance Sheets as of
December 31, 2001 and 2000 1
Consolidated Statements of Income
for the years ended December 31,
2001, 2000 and 1999 2
Consolidated Statements of Changes in
Shareholders' Equity for the
years ended December 31, 2001,
2000 and 1999 3
Consolidated Statements of Cash Flows
for the years ended December 31,
2001, 2000 and 1999 4
Notes to Consolidated Financial
Statements 5-27
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
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PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding Registrant's directors and executive officers will be
set forth under the caption, "Proposal No. 1 - Election of Directors of the
Company" in Registrant's Proxy Statement for use in connection with the Annual
Meeting of Shareholders to be held on or about May 14, 2002. Said information is
incorporated herein by reference.
11. EXECUTIVE COMPENSATION
Information regarding compensation of Registrant's directors and executive
officers will be set forth under the caption, "Proposal No. 1 - Election of
Directors of the Company" in Registrant's Proxy Statement for use in connection
with the Annual Meeting of Shareholders to be held on or about May 14, 2002.
Said information is incorporated herein by reference.
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners,
directors and executive officers of Registrant will be set forth under the
caption, "Information Concerning the Solicitation" in Registrant's Proxy
Statement for use in connection with the Annual Meeting of Shareholders to be
held on or about May 14, 2002. Said information is incorporated herein by
reference.
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is set
forth under the caption, "Proposal No. 1 - Election of Directors of the Company"
in Registrant's Proxy Statement for use in connection with the Annual Meeting of
Shareholders to be held on or about May 14, 2002. Said information is
incorporated herein by reference.
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PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Index to Financial Statements:
A list of the consolidated financial statements of
Registrant incorporated herein is included in Item 8 of this Report.
2. Financial Statement Schedules:
Schedules have been omitted because they are not
applicable or are not required under the instructions contained in Regulation
S-X or because the information required to be set forth therein is included in
the consolidated financial statements or notes thereto.
3. 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 date, 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.
3.3 Certificate of Determination of Preferences of series AA
Junior Participating Preferred Stock filed with the
California Secretary of State on June 28, 2001, filed as
Exhibit 3.3 to Registrant's Report on Form 10-Q filed for
the quarter ended September 30, 2001, 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.
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10.6 Rights Agreement dated June 25, 2001, by and between TriCo
Bancshares and Mellon Investor Services LLC, as Rights
Agent, filed a Exhibit 1 to the Registrant's Form 8-A filed
on July 5, 2001, is incorporated herein by reference.
10.7 Form of Change of Control Agreement dated April 10, 2001,
by and between the registrant and each of Craig Carney,
Richard O'Sullivan, Thomas Reddish, Ray Rios and Richard
Smith, filed as Exhibit 10.9 to Registrant's Report on Form
10-Q for the quarter ended September 30, 2001, is
incorporated herein by reference.
10.8 The 1993 Non-Qualified Stock Option Plan filed as Exhibit
4.1, the Non-Qualified Stock Option Plan filed as Exhibit
4.2 and the Incentive Stock Option Plan filed as Exhibit
4.3 to Registrant's Form S-8 Registration No. 33-88704
dated January 19, 1995, the 1995 Incentive Stock Option
Plan filed as Exhibit 4.1 to Registrant's Form S-8,
Registration No. 33-62063 dated August 23, 1995, and the
TriCo Bancshares 2001 Stock Option Plan filed as Exhibit 4
to Registrant's Form S-8, Registration No. 333-66064 dated
July 27, 2001, are incorporated herein by reference.
11.1 Computation of earnings per share.
13.1 TriCo Bancshares 2001 Annual Report to Shareholders.*
21.1 Tri Counties Bank, a California banking corporation, is the
only subsidiary of Registrant.
23.1 Report of Arthur Andersen LLP
* Deemed filed only with respect to those portions thereof incorporated herein
by reference.
(b) Reports on Form 8-K:
None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: February 26, 2002 TRICO BANCSHARES
By:
/s/ Richard P. Smith
Richard P. Smith, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
the following persons on behalf of the registrant and in the capacities and on
the dates indicated have signed this report below.
Date: February 26, 2002 /s/ Richard P. Smith
Richard P. Smith, President, Chief Executive
Officer and Director (Principal Executive Officer)
Date: February 26, 2002 /s/ Thomas J. Reddish
Thomas J. Reddish, Vice President and Chief
Financial Officer (Principal Financial and
Accounting Officer)
Date: February 26, 2002 /s/ William J. Casey
William J. Casey, Director and Chairman
of the Board
Date: February 26, 2002 /s/ Craig S. Compton
Craig S. Compton, Director
Date: February 26, 2002 /s/ Brian D. Leidig
Brian D. Leidig, Director
Date: February 26, 2002 /s/ Wendell J. Lundberg
Wendell J. Lundberg, Director
Date: February 26, 2002 /s/ Donald E. Murphy
Donald E. Murphy, Director and
Vice Chairman of the Board
Date: February 26, 2002 /s/ Robert H. Steveson
Robert H. Steveson, Director and
Vice Chairman of the Board
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Date: February 26, 2002 /s/ Carroll R. Taresh
Carroll R. Taresh, Director
Date: February 26, 2002 /s/ Alex A. Vereschagin, Jr.
Alex A. Vereschagin, Jr., Director
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