Positive earnings momentum on the back of strong second quarter
results - including a 94% year-over-year earnings growth - have
) achieve a Zacks #1 Rank (Strong Buy) on September 5. This
commercial banking service provider has delivered positive earnings
surprises in three of the last four quarters with an average beat
With a solid return of 28.9% over the last one year and a history
of paying quarterly dividends throughout the financial crisis, this
stock offers an attractive investment opportunity.
The Rank Driver
Better-than-expected second quarter earnings, decent loan growth
and fundamental strength - including strong credit quality - are
the primary rank drivers for this stock.
TriCo Bancshares reported its second quarter results on July 27
with earnings per share of 33 cents, beating the Zacks Consensus
Estimate of 27 cents by 22.2% and year-ago earnings of 17 cents by
94.0%. Robust results for the reported quarter were primarily aided
by higher non-interest income, elevated net interest income and
reduced provision for loan losses.
However, on the downside, non-interest expense escalated 21.4% year
over year to $24.4 billion. Elevated salaries and benefits expense
and higher foreclosed asset expense led to the boost in
However, net interest income increased 18.8% to $25.9 billion from
$21.8 million in the year-ago quarter. The rise was primarily due
to higher yield on loans and the increase in average loan
Non-interest income jumped 28.2% year over year to $10.6
million. Provision for loan losses skidded 39.3% from the year-ago
quarter to $3.4 million. Non-interest expense bolstered 21.4% from
the year-ago period to $24.4 million.
TRICO BANCSHRS (TCBK): Free Stock Analysis
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Credit quality continues to exhibit improvement. Nonperforming
originated loans were $69.7 million, sliding down 5.4% from $73.7
million as of June 30, 2011. Net charge-offs for the quarter were
$4.2 million compared with $5.2 million in the year-ago
As of June 30, 2012, TriCo Bancshares's total risk-based capital
ratio was 14.3%, Tier 1 capital ratio was 13.0% and Tier 1 leverage
ratio was 9.7%. Tangible book value per share came in at $12.91
versus $11.82 in the year-ago quarter.
The Zacks Consensus Estimate for 2012 increased 7.4% to $1.16 per
share over the last 60 days. The current estimate implies a
year-over-year growth of 0.2%. For 2013, over the same time frame,
the Zacks Consensus Estimate surged by 2.4% to $1.29 per share,
indicating a year-over-year growth of 10.8%.
TriCo Bancshares currently trades at a forward P/E of 13.1x, a 2.3%
premium to the peer group average of 12.8x. On a price-to-book
basis, the shares are trading at 1.1x, a 15.4% discount to the peer
group average of 1.3x. Given the company's strong fundamentals, the
valuation looks reasonable.
TriCo Bancshares has a trailing 12-month ROE of 10.2%, in line with
the peer group average.
About the Company
Headquartered in Chico, California, TriCo Bancshares is a bank
holding company. It operates through 41 traditional branches, 27
in-store branches, and 76 ATMs throughout California through its
subsidiary - Tri Counties Bank, which offers an array of commercial
banking services. The company, which was founded in 1974, has a
market capitalization of roughly $244.5 million.
Marlin Business Services Corp.
) is also a Zacks #1 Rank bank stock.