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TriCo Bancshares Reports First Quarter 2024 Net Income of $27.7 Million, Diluted EPS of $0.83

1Q24 Financial Highlights

  • Net income was $27.7 million compared to $26.1 million in the trailing quarter; pre-tax pre-provision net revenue was $42.0 million compared to $42.4 million in the trailing quarter
  • Deposit balances increased $153.6 million or 7.8% (annualized) from the trailing quarter, respectively
  • Average yield on earning assets was 5.13%, an increase of 4 basis points over the 5.09% in the trailing quarter
  • Net interest margin was 3.68% in the recent quarter, narrowing 13 basis points from 3.81% in the trailing quarter; management expects that net interest margin will reach an inflection point in the second half of 2024
  • Non-interest bearing deposits averaged 33.8% of total deposits during the first quarter of 2024
  • The average cost of total deposits was 1.21%, an increase of 16 basis points as compared to 1.05% in the trailing quarter, and an increase of 96 basis points from 0.25% in the same quarter of the prior year; the Company's total cost of deposits have increased 117 basis points since FOMC rate actions began in March 2022, which translates to a cycle-to-date deposit beta of 22.3%

TriCo Bancshares (NASDAQ: TCBK):

Executive Commentary:

"The start of the second quarter of 2024 also represents the start of Tri Counties Bank's 50th year of operations. Thinking back to our humble beginnings, we have achieved great success through our consistent delivery of Service with Solutions® and we are thankful to be recognized as an industry leading Community Bank in California. Amidst a challenging operating and economic environment, our financial results for the first quarter clearly illustrate our resilience and ability to create shareholder value," explained Rick Smith, President and Chief Executive Officer.

Peter Wiese, EVP and Chief Financial Officer, added, "As changing economic forecasts created short term volatility, we continued to execute a variety of balance sheet and operationally focused strategies which, during the first quarter of 2024, resulted in our ability to grow deposits, reduce borrowings, and improve our efficiency ratio. As the balance of 2024 unfolds, we anticipate that the incremental repricing of earning assets will provide an increasing level of benefit to revenues."

Selected Financial Highlights

  • For the quarter ended March 31, 2024, the Company’s return on average assets was 1.13%, while the return on average equity was 9.50%; for the trailing quarter ended December 31, 2023, the Company’s return on average assets was 1.05%, while the return on average equity was 9.43%.
  • Diluted earnings per share were $0.83 for the first quarter of 2024, compared to $0.78 for the trailing quarter and $1.07 during the first quarter of 2023.
  • The loan to deposit ratio decreased to 85.1% as of March 31, 2024, as compared to 86.7% for the trailing quarter end, as a result of deposit growth during the quarter.
  • The efficiency ratio improved to 57.36% for the quarter ended March 31, 2024, as compared to 58.71% for the trailing quarter end, due to management's focus on expense control as well as the absence of non-recurring costs in the quarter.
  • The provision for credit losses was approximately $4.3 million during the quarter ended March 31, 2024, as compared to $6.0 million during the trailing quarter end, reflecting the risks associated with general economic trends and forecasts.
  • The allowance for credit losses (ACL) to total loans was 1.83% as of March 31, 2024, compared to 1.79% as of the trailing quarter end, and 1.69% as of March 31, 2023. Non-performing assets to total assets were 0.37% on March 31, 2024, as compared to 0.35% as of December 31, 2023, and 0.20% at March 31, 2023. At March 31, 2024, the ACL represented 363% of non-performing loans.

Financial results reported in this document are preliminary and unaudited. Final financial results and other disclosures will be reported on Form 10-Q for the period ended March 31, 2024, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.

Operating Results and Performance Ratios

 

Three months ended

 

 

 

 

 

March 31,

 

December 31,

 

 

 

 

(dollars and shares in thousands, except per share data)

 

2024

 

 

 

2023

 

 

$ Change

 

% Change

Net interest income

$

82,736

 

 

$

86,617

 

 

$

(3,881

)

 

(4.5

)%

Provision for credit losses

 

(4,305

)

 

 

(5,990

)

 

 

1,685

 

 

(28.1

)%

Noninterest income

 

15,771

 

 

 

16,040

 

 

 

(269

)

 

(1.7

)%

Noninterest expense

 

(56,504

)

 

 

(60,267

)

 

 

3,763

 

 

(6.2

)%

Provision for income taxes

 

(9,949

)

 

 

(10,325

)

 

 

376

 

 

(3.6

)%

Net income

$

27,749

 

 

$

26,075

 

 

$

1,674

 

 

6.4

%

Diluted earnings per share

$

0.83

 

 

$

0.78

 

 

$

0.05

 

 

6.4

%

Dividends per share

$

0.33

 

 

$

0.30

 

 

$

0.03

 

 

10.0

%

Average common shares

 

33,245

 

 

 

33,267

 

 

 

(22

)

 

(0.1

)%

Average diluted common shares

 

33,370

 

 

 

33,352

 

 

 

18

 

 

0.1

%

Return on average total assets

 

1.13

%

 

 

1.05

%

 

 

 

 

Return on average equity

 

9.50

%

 

 

9.43

%

 

 

 

 

Efficiency ratio

 

57.36

%

 

 

58.71

%

 

 

 

 

 

Three months ended

March 31,

 

 

 

 

(dollars and shares in thousands, except per share data)

 

2024

 

 

 

2023

 

 

$ Change

 

% Change

Net interest income

$

82,736

 

 

$

93,336

 

 

$

(10,600

)

 

(11.4

)%

Provision for credit losses

 

(4,305

)

 

 

(4,195

)

 

 

(110

)

 

2.6

%

Noninterest income

 

15,771

 

 

 

13,635

 

 

 

2,136

 

 

15.7

%

Noninterest expense

 

(56,504

)

 

 

(53,794

)

 

 

(2,710

)

 

5.0

%

Provision for income taxes

 

(9,949

)

 

 

(13,149

)

 

 

3,200

 

 

(24.3

)%

Net income

$

27,749

 

 

$

35,833

 

 

$

(8,084

)

 

(22.6

)%

Diluted earnings per share

$

0.83

 

 

$

1.07

 

 

$

(0.24

)

 

(22.4

)%

Dividends per share

$

0.33

 

 

$

0.30

 

 

$

0.03

 

 

10.0

%

Average common shares

 

33,245

 

 

 

33,296

 

 

 

(51

)

 

(0.2

)%

Average diluted common shares

 

33,370

 

 

 

33,438

 

 

 

(68

)

 

(0.2

)%

Return on average total assets

 

1.13

%

 

 

1.47

%

 

 

 

 

Return on average equity

 

9.50

%

 

 

13.36

%

 

 

 

 

Efficiency ratio

 

57.36

%

 

 

50.29

%

 

 

 

 

Balance Sheet Data

Total loans outstanding was $6.8 billion as of March 31, 2024, an organic increase of 5.9% over March 31, 2023. As compared to December 31, 2023, total loans outstanding increased during the quarter by $6.2 million or 0.4% annualized. As the Company continued with its balance sheet augmentation strategies, investments decreased by $84.3 million and $356.2 million for the three and twelve month periods ended March 31, 2024 and ending the quarter with a balance of $2.22 billion or 22.6% of total assets. Quarterly average earning assets to quarterly total average assets was 92.0% on March 31, 2024, compared to 91.6% at March 31, 2023. The loan-to-deposit ratio was 85.1% on March 31, 2024, as compared to 80.0% at March 31, 2023. The Company did not utilize brokered deposits during 2024 or 2023 and continues to rely on organic deposit growth and short-term borrowings to fund cash flow timing differences.

Total shareholders' equity increased by $3.4 million during the quarter ended March 31, 2024, as net income of $27.7 million was partially offset by a $11.2 million change in accumulated other comprehensive losses, and cash dividend payments on common stock of approximately $10.9 million. As a result, the Company’s book value grew to $35.06 per share at March 31, 2024, compared to $32.84 at March 31, 2023. The Company’s tangible book value per share, a non-GAAP measure, calculated by subtracting goodwill and other intangible assets from total shareholders’ equity and dividing that sum by total shares outstanding, was $25.60 per share at March 31, 2024, as compared to $23.22 at March 31, 2023. As noted above, changes in the fair value of available-for-sale investment securities, net of deferred taxes continue to create moderate levels of volatility in tangible book value per share.

Trailing Quarter Balance Sheet Change

Ending balances

March 31,

 

December 31,

 

 

 

Annualized

% Change

(dollars in thousands)

 

2024

 

 

 

2023

 

 

$ Change

Total assets

$

9,813,767

 

$

9,910,089

 

$

(96,322

)

 

(3.9

)%

Total loans

 

6,800,695

 

 

 

6,794,470

 

 

 

6,225

 

 

0.4

 

Total investments

 

2,221,555

 

 

 

2,305,882

 

 

 

(84,327

)

 

(14.6

)

Total deposits

 

7,987,658

 

 

 

7,834,038

 

 

 

153,620

 

 

7.8

 

Total other borrowings

 

392,409

 

 

 

632,582

 

 

 

(240,173

)

 

(151.9

)

Loans outstanding increased by $6.2 million or 0.4% on an annualized basis during the quarter ended March 31, 2024. During the quarter, loan originations/draws totaled approximately $325.5 million while payoffs/repayments of loans totaled $321.3 million, which compares to originations/draws and payoffs/repayments during the trailing quarter ended of $450.0 million and $368.0 million, respectively. While origination volume decreased from the previous quarter, activity levels continue to be lower relative to the comparative period in 2023 due in part to disciplined pricing and underwriting, as well as decreased borrower demand given economic uncertainties. Investment security balances decreased $84.3 million or 14.6% on an annualized basis as the result of net prepayments, and maturities, collectively totaling approximating $66.4 million, in addition to net decreases in the market value of securities of $15.9 million. For the foreseeable future, management intends to utilize cash flows from the investment security portfolio and organic deposit growth to support loan growth or reduce borrowings, thus driving an improved mix of earning assets. Deposit balances increased by $153.6 million or 7.8% annualized during the period, led by growth within time deposits. Proceeds from the call or maturity of investment securities, and growth in deposits, during the quarter supported a net decrease of $240.2 million in short-term borrowings, which totaled $392.4 million at March 31, 2024.

Average Trailing Quarter Balance Sheet Change

Quarterly average balances for the period ended

March 31,

 

December 31,

 

 

 

Annualized

% Change

(dollars in thousands)

 

2024

 

 

 

2023

 

 

$ Change

 

Total assets

$

9,855,797

 

$

9,879,355

 

$

(23,558

)

 

(1.0

)%

Total loans

 

6,785,840

 

 

 

6,746,153

 

 

 

39,687

 

 

2.4

 

Total investments

 

2,266,320

 

 

 

2,295,235

 

 

 

(28,915

)

 

(5.0

)

Total deposits

 

7,821,044

 

 

 

7,990,993

 

 

 

(169,949

)

 

(8.5

)

Total other borrowings

 

584,696

 

 

 

515,959

 

 

 

68,737

 

 

53.3

 

Year Over Year Balance Sheet Change

Ending balances

As of March 31,

 

 

 

% Change

(dollars in thousands)

 

2024

 

 

 

2023

 

 

$ Change

 

Total assets

$

9,813,767

 

$

9,842,394

 

$

(28,627

)

 

(0.3

)%

Total loans

 

6,800,695

 

 

 

6,422,421

 

 

 

378,274

 

 

5.9

 

Total investments

 

2,221,555

 

 

 

2,577,769

 

 

 

(356,214

)

 

(13.8

)

Total deposits

 

7,987,658

 

 

 

8,025,865

 

 

 

(38,207

)

 

(0.5

)

Total other borrowings

 

392,409

 

 

 

434,140

 

 

 

(41,731

)

 

(9.6

)

Loan balances increased as a result of organic activities by approximately $378.3 million or 5.9% during the twelve-month period ending March 31, 2024. Over the same period deposit balances have declined by $38.2 million or 0.5%. The Company has offset these declines through the deployment of excess cash balances, runoff of investment security balances, and proceeds from short-term Federal Home Loan Bank (FHLB) borrowings.

Primary Sources of Liquidity

(dollars in thousands)

March 31, 2024

 

December 31, 2023

 

March 31, 2023

Borrowing capacity at correspondent banks and FRB

$

2,882,859

 

 

$

2,921,525

 

 

$

2,853,219

 

Less: borrowings outstanding

 

(367,000

)

 

 

(600,000

)

 

 

(394,095

)

Unpledged available-for-sale (AFS) investment securities

 

1,435,990

 

 

 

1,558,506

 

 

 

1,883,353

 

Cash held or in transit with FRB

 

41,541

 

 

 

51,253

 

 

 

67,468

 

Total primary liquidity

$

3,993,390

 

 

$

3,931,284

 

 

$

4,409,945

 

 

Estimated uninsured deposit balances

$

2,450,179

$

2,371,000

$

2,113,000

On March 31, 2024, the Company's primary sources of liquidity represented 50% of total deposits and 163% of estimated total uninsured (excluding collateralized municipal deposits and intercompany balances) deposits, respectively. As secondary sources of liquidity, the Company's held-to-maturity investment securities had a fair value of $118.5 million, including approximately $9.3 million in net unrealized losses.

Net Interest Income and Net Interest Margin

During the twelve-month period ended March 31, 2024, the Federal Open Market Committee's (FOMC) actions have resulted in an increase in the Fed Funds Rate by approximately 50 basis points. During the same period the Company's yield on total loans increased 51 basis points to 5.72% for the three months ended March 31, 2024, from 5.21% for the three months ended March 31, 2023. The tax equivalent yield on the Company's investment security portfolio was 3.38% for the quarter ended March 31, 2024, an increase of 17 basis points from the 3.21% for the three months ended March 31, 2023. The cost of total interest-bearing deposits and total interest-bearing liabilities increased by 140 basis points and 150 basis points, respectively, between the three-month periods ended March 31, 2024 and 2023. Since FOMC rate actions began in March 2022, the Company's cost of total deposits has increased 117 basis points which translates to a cycle to date deposit beta of 22.3%.

The Company continues to manage its cost of deposits through the use of various pricing and product mix strategies. As of March 31, 2024, December 31, 2023, and March 31, 2023, deposits priced utilizing these strategies totaled $1.4 billion, $1.3 billion and $0.7 billion, respectively, and carried weighted average rates of 3.75%, 3.60%, and 2.68%, respectively.

 

Three months ended

 

 

 

 

 

March 31,

 

December 31,

 

 

 

 

(dollars in thousands)

 

2024

 

 

 

2023

 

 

Change

 

% Change

Interest income

$

115,417

 

 

$

115,909

 

 

$

(492

)

 

(0.4

)%

Interest expense

 

(32,681

)

 

 

(29,292

)

 

 

(3,389

)

 

11.6

%

Fully tax-equivalent adjustment (FTE) (1)

 

275

 

 

 

360

 

 

 

(85

)

 

(23.6

)%

Net interest income (FTE)

$

83,011

 

 

$

86,977

 

 

$

(3,966

)

 

(4.6

)%

Net interest margin (FTE)

 

3.68

%

 

 

3.81

%

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

1,332

 

 

$

1,459

 

 

$

(127

)

 

(8.7

)%

Net interest margin less effect of acquired loan discount accretion (1)

 

3.62

%

 

 

3.75

%

 

 

(0.13

)%

 

 

 

Three months ended

March 31,

 

 

 

 

(dollars in thousands)

 

2024

 

 

 

2023

 

 

Change

 

% Change

Interest income

$

115,417

 

 

$

102,907

 

 

$

12,510

 

 

12.2

%

Interest expense

 

(32,681

)

 

 

(9,571

)

 

 

(23,110

)

 

241.5

%

Fully tax-equivalent adjustment (FTE) (1)

 

275

 

 

 

392

 

 

 

(117

)

 

(29.8

)%

Net interest income (FTE)

$

83,011

 

 

$

93,728

 

 

$

(10,717

)

 

(11.4

)%

Net interest margin (FTE)

 

3.68

%

 

 

4.20

%

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

1,332

 

 

$

1,397

 

 

$

(65

)

 

(4.7

)%

Net interest margin less effect of acquired loan discount accretion (1)

 

3.62

%

 

 

4.14

%

 

 

(0.52

)%

 

 

(1)

 

Certain information included herein is presented on a fully tax-equivalent (FTE) basis and / or to present additional financial details which may be desired by users of this financial information. The Company believes the use of these non-generally accepted accounting principles (non-GAAP) measures provide additional clarity in assessing its results, and the presentation of these measures are common practice within the banking industry. See additional information related to non-GAAP measures at the back of this document.

Analysis Of Change In Net Interest Margin On Earning Assets

Three months ended

 

Three months ended

 

Three months ended

(dollars in thousands)

March 31, 2024

 

December 31, 2023

 

March 31, 2023

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

6,785,840

 

$

96,485

 

5.72

%

 

$

6,746,153

 

$

95,841

 

5.64

%

 

$

6,413,958

 

$

82,415

 

5.21

%

Investments-taxable

 

2,127,420

 

 

 

17,829

 

 

3.37

%

 

 

2,121,652

 

 

 

18,522

 

 

3.46

%

 

 

2,415,485

 

 

 

18,916

 

 

3.18

%

Investments-nontaxable (1)

 

138,900

 

 

 

1,192

 

 

3.45

%

 

 

173,583

 

 

 

1,561

 

 

3.57

%

 

 

189,050

 

 

 

1,699

 

 

3.64

%

Total investments

 

2,266,320

 

 

 

19,021

 

 

3.38

%

 

 

2,295,235

 

 

 

20,083

 

 

3.47

%

 

 

2,604,535

 

 

 

20,615

 

 

3.21

%

Cash at Fed Reserve and other banks

 

14,377

 

 

 

186

 

 

5.20

%

 

 

23,095

 

 

 

345

 

 

5.93

%

 

 

26,818

 

 

 

269

 

 

4.07

%

Total earning assets

 

9,066,537

 

 

 

115,692

 

 

5.13

%

 

 

9,064,483

 

 

 

116,269

 

 

5.09

%

 

 

9,045,311

 

 

 

103,299

 

 

4.63

%

Other assets, net

 

789,260

 

 

 

 

 

 

 

814,872

 

 

 

 

 

 

 

850,866

 

 

 

 

 

Total assets

$

9,855,797

 

 

 

 

 

 

$

9,879,355

 

 

 

 

 

 

$

9,878,927

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,710,844

 

 

$

4,947

 

 

1.16

%

 

$

1,755,900

 

 

$

4,714

 

 

1.07

%

 

$

1,673,114

 

 

$

387

 

 

0.09

%

Savings deposits

 

2,651,917

 

 

 

10,900

 

 

1.65

%

 

 

2,765,679

 

 

 

10,828

 

 

1.55

%

 

 

2,898,463

 

 

 

4,154

 

 

0.58

%

Time deposits

 

811,894

 

 

 

7,682

 

 

3.81

%

 

 

652,709

 

 

 

5,564

 

 

3.38

%

 

 

274,805

 

 

 

604

 

 

0.89

%

Total interest-bearing deposits

 

5,174,655

 

 

 

23,529

 

 

1.83

%

 

 

5,174,288

 

 

 

21,106

 

 

1.62

%

 

 

4,846,382

 

 

 

5,145

 

 

0.43

%

Other borrowings

 

584,696

 

 

 

7,378

 

 

5.08

%

 

 

515,959

 

 

 

6,394

 

 

4.92

%

 

 

277,632

 

 

 

2,809

 

 

4.10

%

Junior subordinated debt

 

101,106

 

 

 

1,774

 

 

7.06

%

 

 

101,087

 

 

 

1,792

 

 

7.03

%

 

 

101,044

 

 

 

1,617

 

 

6.49

%

Total interest-bearing liabilities

 

5,860,457

 

 

 

32,681

 

 

2.24

%

 

 

5,791,334

 

 

 

29,292

 

 

2.01

%

 

 

5,225,058

 

 

 

9,571

 

 

0.74

%

Noninterest-bearing deposits

 

2,646,389

 

 

 

 

 

 

 

2,816,705

 

 

 

 

 

 

 

3,372,194

 

 

 

 

 

Other liabilities

 

174,359

 

 

 

 

 

 

 

173,885

 

 

 

 

 

 

 

194,202

 

 

 

 

 

Shareholders’ equity

 

1,174,592

 

 

 

 

 

 

 

1,097,431

 

 

 

 

 

 

 

1,087,473

 

 

 

 

 

Total liabilities and shareholders’ equity

$

9,855,797

 

 

 

 

 

 

$

9,879,355

 

 

 

 

 

 

$

9,878,927

 

 

 

 

 

Net interest rate spread (1) (2)

 

 

 

 

2.89

%

 

 

 

 

 

3.08

%

 

 

 

 

 

3.89

%

Net interest income and margin (1) (3)

 

 

$

83,011

 

 

3.68

%

 

 

 

$

86,977

 

 

3.81

%

 

 

 

$

93,728

 

 

4.20

%

(1)

 

Fully taxable equivalent (FTE). All yields and rates are calculated using specific day counts for the period and year as applicable.

(2)

 

Net interest spread is the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(3)

 

Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets.

Net interest income (FTE) during the three months ended March 31, 2024, decreased $4.0 million or 4.6% to $83.0 million compared to $87.0 million during the three months ended December 31, 2023. In addition, net interest margin declined 13 basis points to 3.68%, compared to the trailing quarter. The decrease in net interest income is primarily attributed to an additional $2.4 million or 11.5% in deposit interest expense due to changes in product mix as customers continue to be drawn towards higher yielding term deposit accounts. Deposit cost increases during the current quarter were also influenced by continued competitive pricing pressures. Net interest income for the quarter was also impacted by an increase of $1.0 million in other borrowings costs and declines in investment income totaling $1.0 million, with a partial offset from increased loan income of $0.6 million.

As compared to the same quarter in the prior year, average loan yields increased 51 basis points from 5.21% during the three months ended March 31, 2023, to 5.72% during the three months ended March 31, 2024. The accretion of discounts from acquired loans added 6 basis points to loan yields during each of the quarters ended March 31, 2024 and March 31, 2023. The rates paid on interest bearing deposits increased by 21 basis points during the quarter ended March 31, 2024, compared to the trailing quarter. The cost of interest-bearing deposits increased by 140 basis points between the quarter ended March 31, 2024, and the same quarter of the prior year. In addition, the average balance of noninterest-bearing deposits decreased by $170.3 million quarter over quarter and decreased by $725.8 million from three-month average for the period ended March 31, 2023 amidst a continued migration of customer funds to interest-bearing products. As of March 31, 2024, the ratio of average total noninterest-bearing deposits to total average deposits was 33.8%, as compared to 35.2% and 41.0% on December 31, 2023 and March 31, 2023, respectively.

Interest Rates and Earning Asset Composition

As of March 31, 2024, the Company's loan portfolio consisted of approximately $6.8 billion in outstanding principal with a weighted average coupon rate of 5.47%. During the three-month periods ending March 31, 2024, December 31, 2023, and March 31, 2023, the weighted average coupon on loan production in the quarter was 7.78%, 7.54% and 6.91%, respectively. Included in the March 31, 2024 total loans are adjustable rate loans totaling $3.6 billion, of which, $974.1 million are considered floating based on the Wall Street Prime index. In addition, the Company holds certain investment securities with fair values totaling $345.6 million which are subject to repricing on not less than a quarterly basis.

Asset Quality and Credit Loss Provisioning

During the three months ended March 31, 2024, the Company recorded a provision for credit losses of $4.3 million, as compared to $6.0 million during the trailing quarter, and $4.2 million during the first quarter of 2023.

 

Three months ended

(dollars in thousands)

March 31, 2024

 

December 31, 2023

 

March 31, 2023

Addition to allowance for credit losses

$

4,015

 

$

6,040

 

 

$

4,315

 

Addition to (reversal of) reserve for unfunded loan commitments

 

290

 

 

 

(50

)

 

 

(120

)

Total provision for credit losses

$

4,305

 

 

$

5,990

 

 

$

4,195

 

 

Three months ended

(dollars in thousands)

March 31, 2024

 

March 31, 2023

Balance, beginning of period

$

121,522

 

 

$

105,680

 

Provision for credit losses

 

4,015

 

 

 

4,315

 

Loans charged-off

 

(1,275

)

 

 

(1,758

)

Recoveries of previously charged-off loans

 

132

 

 

 

170

 

Balance, end of period

$

124,394

 

 

$

108,407

 

The allowance for credit losses (ACL) was $124.4 million or 1.83% of total loans as of March 31, 2024. The provision for credit losses on loans of $4.0 million during the recent quarter was the net effect of charge-offs and increases in reserves for qualitative factors and changes in quantitative reserves under the cohort model, inclusive of a $1.6 million decrease in specific reserves for individually evaluated credits. Similar to prior quarters, the provision for credit losses of $4.3 million during the three months ended March 31, 2024, was largely attributed to risks associated with the qualitative components of the ACL model as compared to any significant deterioration in credit quality. For the current quarter, the qualitative components of the ACL that contributed to a net increase in required reserves primarily related to trends in unemployment and general economic trends that are inconsistent with those desired by the FOMC. The quantitative components of the ACL collectively decreased reserve requirements by approximately $1.4 million over the trailing quarter, primarily attributed to the charge-off or improvement in risk grades for credits previously associated with specific reserves.

The Company utilizes a forecast period of approximately eight quarters and obtains the forecast data from publicly available sources as of the balance sheet date. This forecast data continues to evolve and includes improving shifts in the magnitude of changes for both the unemployment and GDP factors leading up to the balance sheet date. Despite continued declines on a year over year comparative basis, core inflation remains elevated from wage pressures, and higher living costs such as housing, energy and food prices. Management notes the rapid intervals of rate increases by the Federal Reserve may create repricing risk for certain borrowers and continued inversion of the yield curve, creates informed expectations of the US potentially entering a recession within 12 months. While projected cuts in interest rates from the Federal Reserve during 2024 may improve this outlook, the uncertainty associated with the extent and timing of these potential reductions has inhibited a change to forecasted reserve levels. As a result, management continues to believe that certain credit weaknesses are likely present in the overall economy and that it is appropriate to maintain a reserve level that incorporates such risk factors.

Loans past due 30 days or more decreased by $2.9 million during the quarter ended March 31, 2024, to $16.5 million, as compared to $19.4 million at December 31, 2023. Of the total $16.5 million in loans identified as past due, approximately $4.7 million is less than 90 days past due, the majority of which is well-secured. Non-performing loans were $34.2 million at March 31, 2024, an increase of $2.4 million from $31.9 million as of December 31, 2023, and an increase of $18.2 million from $16.0 million as of March 31, 2023. The increase in non-performing loans as compared to the trailing quarter is concentrated between non-owner occupied commercial real estate and agriculture lending, specifically the result of declines in commodity prices and therefore, expected revenue available to borrowers from harvest proceeds. Management continues to proactively work with these borrowers to identify actionable and appropriate resolution strategies which are customary for the industries. Of the $34.2 million loans designated as non-performing as of March 31, 2024, approximately $21.3 million are current with respect to payments required under their original loan agreements.

 

March 31,

 

% of Loans

Outstanding

 

December 31,

 

% of Loans

Outstanding

 

March 31

 

% of Loans

Outstanding

(dollars in thousands)

 

2024

 

 

 

 

2023

 

 

 

 

2023

 

 

Risk Rating:

 

 

 

 

 

 

 

 

 

 

 

Pass

$

6,616,294

 

 

97.3

%

 

$

6,603,161

 

 

97.2

%

 

$

6,232,962

 

 

97.0

%

Special Mention

 

108,073

 

 

1.6

%

 

 

103,812

 

 

1.5

%

 

 

125,492

 

 

2.0

%

Substandard

 

76,328

 

 

1.1

%

 

 

87,497

 

 

1.3

%

 

 

63,967

 

 

1.0

%

Total

$

6,800,695

 

 

 

 

$

6,794,470

 

 

 

 

$

6,422,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified loans to total loans

 

1.12

%

 

 

 

 

1.29

%

 

 

 

 

1.00

%

 

 

Loans past due 30+ days to total loans

 

0.24

%

 

 

 

 

0.29

%

 

 

 

 

0.12

%

 

 

The ratio of classified loans to total loans of 1.12% as of March 31, 2024 decreased 17 basis points from December 31, 2023 and increased 12 basis points from the comparative quarter ended 2023. The improvement in classified loans outstanding was spread amongst several substandard relationships primarily within commercial real estate. As a percentage of total loans outstanding, classified assets remain consistent with volumes experienced prior to the recent quantitative easing cycle spurred by the COVID pandemic and reflect management's historically conservative approach to credit risk monitoring. Further, management has taken action to proactively assess the repayment capacity of borrowers that will likely be subject to rate resets in the near term. To date this analysis as well as management's observations of loans that have experienced a rate reset, have not resulted in the need to provide any concessions to borrowers. The Company's combined criticized loan balances decreased during the quarter by $6.9 million to $184.4 million as of March 31, 2024, and management believes the associated credit risk has been adequately reserved against.

As of March 31, 2024, other real estate owned consisted of 10 properties with a carrying value of approximately $2.5 million, a decrease of $0.2 million from the trailing quarter as a result of deterioration in property values.

Non-performing assets of $36.7 million at March 31, 2024, represented 0.37% of total assets, a change from the $34.6 million or 0.35% and $19.5 million or 0.20% as of December 31, 2023 and March 31, 2023, respectively.

Allocation of Credit Loss Reserves by Loan Type

 

As of March 31, 2024

 

As of December 31, 2023

 

As of March 31, 2023

(dollars in thousands)

Amount

 

% of Loans

Outstanding

 

Amount

 

% of Loans

Outstanding

 

Amount

 

% of Loans

Outstanding

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

CRE - Non Owner Occupied

$

36,687

 

1.65

%

 

$

35,077

 

1.58

%

 

$

32,963

 

1.53

%

CRE - Owner Occupied

 

16,111

 

 

1.65

%

 

 

15,081

 

 

1.58

%

 

 

14,559

 

 

1.50

%

Multifamily

 

15,682

 

 

1.60

%

 

 

14,418

 

 

1.52

%

 

 

13,873

 

 

1.47

%

Farmland

 

3,695

 

 

1.39

%

 

 

4,288

 

 

1.58

%

 

 

3,542

 

 

1.29

%

Total commercial real estate loans

 

72,175

 

 

1.62

%

 

 

68,864

 

 

1.57

%

 

 

64,937

 

 

1.49

%

Consumer:

 

 

 

 

 

 

 

 

 

 

 

SFR 1-4 1st Liens

 

14,140

 

 

1.60

%

 

 

14,009

 

 

1.59

%

 

 

11,920

 

 

1.48

%

SFR HELOCs and Junior Liens

 

9,942

 

 

2.88

%

 

 

10,273

 

 

2.88

%

 

 

10,914

 

 

2.91

%

Other

 

3,359

 

 

4.48

%

 

 

3,171

 

 

4.34

%

 

 

2,062

 

 

3.76

%

Total consumer loans

 

27,441

 

 

2.10

%

 

 

27,453

 

 

2.09

%

 

 

24,896

 

 

2.02

%

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

11,867

 

 

2.16

%

 

 

12,750

 

 

2.17

%

 

 

12,069

 

 

2.18

%

Construction

 

9,162

 

 

2.63

%

 

 

8,856

 

 

2.55

%

 

 

5,655

 

 

2.50

%

Agricultural Production

 

3,708

 

 

2.55

%

 

 

3,589

 

 

2.48

%

 

 

833

 

 

1.77

%

Leases

 

41

 

 

0.44

%

 

 

10

 

 

0.12

%

 

 

17

 

 

0.20

%

Allowance for credit losses

 

124,394

 

 

1.83

%

 

 

121,522

 

 

1.79

%

 

 

108,407

 

 

1.69

%

Reserve for unfunded loan commitments

 

6,140

 

 

 

 

 

5,850

 

 

 

 

 

4,195

 

 

 

Total allowance for credit losses

$

130,534

 

 

1.92

%

 

$

127,372

 

 

1.87

%

 

$

112,602

 

 

1.75

%

In addition to the allowance for credit losses above, the Company has acquired various performing loans whose fair value as of the acquisition date was determined to be less than the principal balance owed on those loans. This difference represents the collective discount of credit, interest rate and liquidity measurements which is expected to be amortized over the life of the loans. As of March 31, 2024, the unamortized discount associated with acquired loans totaled $23.3 million, which, when combined with the total allowance for credit losses above, represents 2.26% of total loans.

Non-interest Income

Three months ended

 

 

 

 

(dollars in thousands)

March 31, 2024

 

December 31, 2023

 

Change

 

% Change

ATM and interchange fees

$

6,169

 

 

$

6,531

 

 

$

(362

)

 

(5.5

)%

Service charges on deposit accounts

 

4,663

 

 

 

4,732

 

 

 

(69

)

 

(1.5

)%

Other service fees

 

1,366

 

 

 

1,432

 

 

 

(66

)

 

(4.6

)%

Mortgage banking service fees

 

428

 

 

 

444

 

 

 

(16

)

 

(3.6

)%

Change in value of mortgage servicing rights

 

11

 

 

 

(291

)

 

 

302

 

 

(103.8

)%

Total service charges and fees

 

12,637

 

 

 

12,848

 

 

 

(211

)

 

(1.6

)%

Increase in cash value of life insurance

 

803

 

 

 

876

 

 

 

(73

)

 

(8.3

)%

Asset management and commission income

 

1,128

 

 

 

1,284

 

 

 

(156

)

 

(12.1

)%

Gain on sale of loans

 

261

 

 

 

283

 

 

 

(22

)

 

(7.8

)%

Lease brokerage income

 

161

 

 

 

109

 

 

 

52

 

 

47.7

%

Sale of customer checks

 

312

 

 

 

292

 

 

 

20

 

 

6.8

%

Loss on sale of investment securities

 

 

 

 

(120

)

 

 

120

 

 

n/m

 

(Loss) gain on marketable equity securities

 

(28

)

 

 

117

 

 

 

(145

)

 

(123.9

)%

Other income

 

497

 

 

 

351

 

 

 

146

 

 

41.6

%

Total other non-interest income

 

3,134

 

 

 

3,192

 

 

 

(58

)

 

(1.8

)%

Total non-interest income

$

15,771

 

 

$

16,040

 

 

$

(269

)

 

(1.7

)%

Non-interest income decreased $0.3 million or 1.7% to $15.8 million during the three months ended March 31, 2024, compared to $16.0 million during the quarter ended December 31, 2023. The value of mortgage servicing rights changed by $0.3 million or 103.8% attributed to an increase in the reference rates during the quarter. Other income increased by $0.1 million or 41.6% attributed to $0.2 million in realized gains on alternative investments. However, these benefits were offset by fewer transactions that drive interchange and service fee income, where revenues from these sources declined by $0.5 million.

 

Three months ended March 31,

 

 

 

 

(dollars in thousands)

 

2024

 

 

 

2023

 

 

Change

 

% Change

ATM and interchange fees

$

6,169

 

 

$

6,344

 

 

$

(175

)

 

(2.8

)%

Service charges on deposit accounts

 

4,663

 

 

 

3,431

 

 

 

1,232

 

 

35.9

%

Other service fees

 

1,366

 

 

 

1,166

 

 

 

200

 

 

17.2

%

Mortgage banking service fees

 

428

 

 

 

465

 

 

 

(37

)

 

(8.0

)%

Change in value of mortgage servicing rights

 

11

 

 

 

(209

)

 

 

220

 

 

(105.3

)%

Total service charges and fees

 

12,637

 

 

 

11,197

 

 

 

1,440

 

 

12.9

%

Increase in cash value of life insurance

 

803

 

 

 

802

 

 

 

1

 

 

0.1

%

Asset management and commission income

 

1,128

 

 

 

934

 

 

 

194

 

 

20.8

%

Gain on sale of loans

 

261

 

 

 

206

 

 

 

55

 

 

26.7

%

Lease brokerage income

 

161

 

 

 

98

 

 

 

63

 

 

64.3

%

Sale of customer checks

 

312

 

 

 

288

 

 

 

24

 

 

8.3

%

Loss on sale of investment securities

 

 

 

 

(164

)

 

 

164

 

 

n/m

 

Gain on marketable equity securities

 

(28

)

 

 

42

 

 

 

(70

)

 

(166.7

)%

Other income

 

497

 

 

 

232

 

 

 

265

 

 

114.2

%

Total other non-interest income

 

3,134

 

 

 

2,438

 

 

 

696

 

 

28.5

%

Total non-interest income

$

15,771

 

 

$

13,635

 

 

$

2,136

 

 

15.7

%

Non-interest income increased $2.1 million or 15.7% to $15.8 million during the three months ended March 31, 2024, compared to $13.6 million during the comparative quarter ended March 31, 2023. Service charges on deposit accounts increased by $1.2 million or 35.9% as compared to the equivalent period in 2023 following $0.9 million in waived or reversed fees as a courtesy to customers in the prior year.

Non-interest Expense

 

Three months ended

 

 

 

 

(dollars in thousands)

March 31, 2024

 

December 31, 2023

 

Change

 

% Change

Base salaries, net of deferred loan origination costs

$

24,020

 

 

$

23,889

 

$

131

 

 

0.5

%

Incentive compensation

 

3,257

 

 

 

3,894

 

 

 

(637

)

 

(16.4

)%

Benefits and other compensation costs

 

7,027

 

 

 

6,272

 

 

 

755

 

 

12.0

%

Total salaries and benefits expense

 

34,304

 

 

 

34,055

 

 

 

249

 

 

0.7

%

Occupancy

 

3,951

 

 

 

4,036

 

 

 

(85

)

 

(2.1

)%

Data processing and software

 

5,107

 

 

 

5,017

 

 

 

90

 

 

1.8

%

Equipment

 

1,356

 

 

 

1,322

 

 

 

34

 

 

2.6

%

Intangible amortization

 

1,030

 

 

 

1,216

 

 

 

(186

)

 

(15.3

)%

Advertising

 

762

 

 

 

875

 

 

 

(113

)

 

(12.9

)%

ATM and POS network charges

 

1,661

 

 

 

1,863

 

 

 

(202

)

 

(10.8

)%

Professional fees

 

1,340

 

 

 

2,032

 

 

 

(692

)

 

(34.1

)%

Telecommunications

 

511

 

 

 

576

 

 

 

(65

)

 

(11.3

)%

Regulatory assessments and insurance

 

1,251

 

 

 

1,297

 

 

 

(46

)

 

(3.5

)%

Postage

 

308

 

 

 

320

 

 

 

(12

)

 

(3.8

)%

Operational loss

 

352

 

 

 

445

 

 

 

(93

)

 

(20.9

)%

Courier service

 

480

 

 

 

537

 

 

 

(57

)

 

(10.6

)%

(Gain) loss on sale or acquisition of foreclosed assets

 

(38

)

 

 

19

 

 

 

(57

)

 

(300.0

)%

Loss on disposal of fixed assets

 

5

 

 

 

1

 

 

 

4

 

 

400.0

%

Other miscellaneous expense

 

4,124

 

 

 

6,656

 

 

 

(2,532

)

 

(38.0

)%

Total other non-interest expense

 

22,200

 

 

 

26,212

 

 

 

(4,012

)

 

(15.3

)%

Total non-interest expense

$

56,504

 

 

$

60,267

 

 

$

(3,763

)

 

(6.2

)%

Average full-time equivalent staff

 

1,188

 

 

 

1,211

 

 

 

(23

)

 

(1.9

)%

Non-interest expense for the quarter ended March 31, 2024, decreased $3.8 million or 6.2% to $56.5 million as compared to $60.3 million during the trailing quarter ended December 31, 2023. Total salaries and benefits expense increased by $0.2 million or 0.7%, reflecting the reduction of $0.6 million in incentive compensation paid on production and sales volumes, offset by an increase of $0.8 million in benefits and other routine compensation expenses as it is common to observe seasonally higher benefit costs in the first quarter of any calendar year. Professional fees declined by $0.7 million or 34.1%, primarily due to timing differences related to legal and consulting projects. Other miscellaneous expenses decreased by $2.5 million or 38.0% to a more normalized quarterly run rate following several non-recurring expenses during the fourth quarter of 2023.

 

Three months ended March 31,

 

 

 

 

(dollars in thousands)

 

2024

 

 

 

2023

 

 

Change

 

% Change

Base salaries, net of deferred loan origination costs

$

24,020

 

 

$

23,000

 

$

1,020

 

 

4.4

%

Incentive compensation

 

3,257

 

 

 

2,895

 

 

 

362

 

 

12.5

%

Benefits and other compensation costs

 

7,027

 

 

 

6,668

 

 

 

359

 

 

5.4

%

Total salaries and benefits expense

 

34,304

 

 

 

32,563

 

 

 

1,741

 

 

5.3

%

Occupancy

 

3,951

 

 

 

4,160

 

 

 

(209

)

 

(5.0

)%

Data processing and software

 

5,107

 

 

 

4,032

 

 

 

1,075

 

 

26.7

%

Equipment

 

1,356

 

 

 

1,383

 

 

 

(27

)

 

(2.0

)%

Intangible amortization

 

1,030

 

 

 

1,656

 

 

 

(626

)

 

(37.8

)%

Advertising

 

762

 

 

 

759

 

 

 

3

 

 

0.4

%

ATM and POS network charges

 

1,661

 

 

 

1,709

 

 

 

(48

)

 

(2.8

)%

Professional fees

 

1,340

 

 

 

1,589

 

 

 

(249

)

 

(15.7

)%

Telecommunications

 

511

 

 

 

595

 

 

 

(84

)

 

(14.1

)%

Regulatory assessments and insurance

 

1,251

 

 

 

792

 

 

 

459

 

 

58.0

%

Postage

 

308

 

 

 

299

 

 

 

9

 

 

3.0

%

Operational loss

 

352

 

 

 

435

 

 

 

(83

)

 

(19.1

)%

Courier service

 

480

 

 

 

339

 

 

 

141

 

 

41.6

%

Gain on sale or acquisition of foreclosed assets

 

(38

)

 

 

 

 

 

(38

)

 

n/m

 

Loss on disposal of fixed assets

 

5

 

 

 

 

 

 

5

 

 

n/m

 

Other miscellaneous expense

 

4,124

 

 

 

3,483

 

 

 

641

 

 

18.4

%

Total other non-interest expense

 

22,200

 

 

 

21,231

 

 

 

969

 

 

4.6

%

Total non-interest expense

$

56,504

 

 

$

53,794

 

 

$

2,710

 

 

5.0

%

Average full-time equivalent staff

 

1,188

 

 

 

1,219

 

 

 

(31

)

 

(2.5

)%

Non-interest expense increased $2.7 million or 5.0% to $56.5 million during the three months ended March 31, 2024, as compared to $53.8 million for the quarter ended March 31, 2023. Total salaries and benefits expense increased by $1.7 million or 5.3% to $34.3 million, largely from annual compensation adjustments and other routine increases in benefits and compensation. Salaries expense was also impacted by an increase in average compensation per employee as various strategic talent acquisitions were made in order to further prepare the Company to execute its growth objectives beyond $10 billion in total assets. Data processing and software expenses increased by $1.1 million or 26.7% related to ongoing investments in the Company's data management and security infrastructure. Regulatory assessment charges increased $0.5 million or 58.0% following the increase in assessment rates beginning in the second quarter of 2023.

Provision for Income Taxes

The Company’s effective tax rate was 26.4% for the quarter and year ended March 31, 2024, as compared to 28.4% for the year ended December 31, 2023. Differences between the Company's effective tax rate and applicable federal and state blended statutory rate of approximately 29.6% are due to the proportion of non-taxable revenues, non-deductible expenses, and benefits from tax credits as compared to the levels of pre-tax earnings.

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 and loan production offices in communities throughout 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 ATMs, online and mobile banking access. Brokerage services are provided by Tri Counties Advisors through affiliation with Raymond James Financial Services, Inc. Visit www.TriCountiesBank.com to learn more.

Forward-Looking Statements

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 our control. We caution 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 conditions of the United States economy in general and the strength of the local economies in which we conduct operations; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit or changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; the impacts of inflation, interest rate, market and monetary fluctuations on the Company's business condition and financial operating results; the impact of changes in financial services industry policies, laws and regulations; regulatory restrictions affecting our ability to successfully market and price our products to consumers; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learning; extreme weather, natural disasters and other catastrophic events that may or may not be caused by climate change and their effects on the Company's customers and the economic and business environments in which the Company operates; the impact of a slowing U.S. economy, decreases in housing and commercial real estate prices, and potentially increased unemployment on the performance of our loan portfolio, the market value of our investment securities and possible other-than-temporary impairment of securities held by us due to changes in credit quality or rates; the availability of, and cost of, sources of funding and the demand for our products; adverse developments with respect to U.S. or global economic conditions and other uncertainties, including the impact of supply chain disruptions, commodities prices, inflationary pressures and labor shortages on the economic recovery and our business; the impacts of international hostilities, wars, terrorism or geopolitical events; adverse developments in the financial services industry generally such as the recent bank failures and any related impact on depositor behavior or investor sentiment; risks related to the sufficiency of liquidity; the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; the costs or effects of mergers, acquisitions or dispositions we may make, as well as whether we are able to obtain any required governmental approvals in connection with any such activities, or identify and complete favorable transactions in the future, and/or realize the anticipated financial and business benefits; the regulatory and financial impacts associated with exceeding $10 billion in total assets; the negative impact on our reputation and profitability in the event customers experience economic harm or in the event that regulatory violations are identified; the ability to execute our business plan in new markets; the future operating or financial performance of the Company, including our outlook for future growth and changes in the level and direction of our nonperforming assets and charge-offs; the appropriateness of the allowance for credit losses, including the assumptions made under our current expected credit losses model; any deterioration in values of California real estate, both residential and commercial; the effectiveness of the Company's asset management activities managing the mix of earning assets and in improving, resolving or liquidating lower-quality assets; the effect of changes in the financial performance and/or condition of our borrowers; changes in accounting standards and practices; changes in consumer spending, borrowing and savings habits; our ability to attract and maintain deposits and other sources of liquidity; the effects of changes in the level or cost of checking or savings account deposits on our funding costs and net interest margin; increasing noninterest expense and its impact on our financial performance; competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional competitors including retail businesses and technology companies; the challenges of attracting, integrating and retaining key employees; the vulnerability of the Company's operational or security systems or infrastructure, the systems of third-party vendors or other service providers with whom the Company contracts, and the Company's customers to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and data/security breaches and the cost to defend against and respond to such incidents; the impact of the 2023 cyber security ransomware incident on our operations and reputation; increased data security risks due to work from home arrangements and email vulnerability; failure to safeguard personal information, and any resulting litigation; the effect of a fall in stock market prices on our brokerage and wealth management businesses; the transition from the LIBOR to new interest rate benchmarks; the emergence or continuation of widespread health emergencies or pandemics; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; and our ability to manage the risks involved in the foregoing. There can be no assurance that future developments affecting us will be the same as those anticipated by management. 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, 2023, which has been filed with the Securities and Exchange Commission (the “SEC”) and all subsequent filings with the SEC under Sections 13(a), 13(c), 14, and 15(d) of the Securities Act of 1934, as amended. Such filings are also 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. We undertake no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

TriCo Bancshares—Condensed Consolidated Financial Data (unaudited)
 

(dollars in thousands, except per share data)

Three months ended

 

March 31,

2024

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

Revenue and Expense Data

 

 

 

 

 

 

 

 

 

Interest income

$

115,417

 

 

$

115,909

 

 

$

112,380

 

 

$

107,158

 

 

$

102,907

 

Interest expense

 

32,681

 

 

 

29,292

 

 

 

24,257

 

 

 

18,557

 

 

 

9,571

 

Net interest income

 

82,736

 

 

 

86,617

 

 

 

88,123

 

 

 

88,601

 

 

 

93,336

 

Provision for credit losses

 

4,305

 

 

 

5,990

 

 

 

4,155

 

 

 

9,650

 

 

 

4,195

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Service charges and fees

 

12,637

 

 

 

12,848

 

 

 

13,075

 

 

 

12,968

 

 

 

11,197

 

Loss on sale of investment securities

 

 

 

 

(120

)

 

 

 

 

 

 

 

 

(164

)

Other income

 

3,134

 

 

 

3,312

 

 

 

2,909

 

 

 

2,773

 

 

 

2,602

 

Total noninterest income

 

15,771

 

 

 

16,040

 

 

 

15,984

 

 

 

15,741

 

 

 

13,635

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

34,304

 

 

 

34,055

 

 

 

34,463

 

 

 

34,714

 

 

 

32,563

 

Occupancy and equipment

 

5,307

 

 

 

5,358

 

 

 

5,451

 

 

 

5,427

 

 

 

5,543

 

Data processing and network

 

6,768

 

 

 

6,880

 

 

 

6,852

 

 

 

6,540

 

 

 

5,741

 

Other noninterest expense

 

10,125

 

 

 

13,974

 

 

 

11,112

 

 

 

14,562

 

 

 

9,947

 

Total noninterest expense

 

56,504

 

 

 

60,267

 

 

 

57,878

 

 

 

61,243

 

 

 

53,794

 

Total income before taxes

 

37,698

 

 

 

36,400

 

 

 

42,074

 

 

 

33,449

 

 

 

48,982

 

Provision for income taxes

 

9,949

 

 

 

10,325

 

 

 

11,484

 

 

 

8,557

 

 

 

13,149

 

Net income

$

27,749

 

 

$

26,075

 

 

$

30,590

 

 

$

24,892

 

 

$

35,833

 

Share Data

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.83

 

 

$

0.78

 

 

$

0.92

 

 

$

0.75

 

 

$

1.08

 

Diluted earnings per share

$

0.83

 

 

$

0.78

 

 

$

0.92

 

 

$

0.75

 

 

$

1.07

 

Dividends per share

$

0.33

 

 

$

0.30

 

 

$

0.30

 

 

$

0.30

 

 

$

0.30

 

Book value per common share

$

35.06

 

 

$

34.86

 

 

$

32.18

 

 

$

32.86

 

 

$

32.84

 

Tangible book value per common share (1)

$

25.60

 

 

$

25.39

 

 

$

22.67

 

 

$

23.28

 

 

$

23.22

 

Shares outstanding

 

33,168,770

 

 

 

33,268,102

 

 

 

33,263,324

 

 

 

33,259,260

 

 

 

33,195,250

 

Weighted average shares

 

33,245,377

 

 

 

33,266,959

 

 

 

33,262,798

 

 

 

33,219,168

 

 

 

33,295,750

 

Weighted average diluted shares

 

33,370,118

 

 

 

33,351,737

 

 

 

33,319,291

 

 

 

33,301,548

 

 

 

33,437,680

 

Credit Quality

 

 

 

 

 

 

 

 

 

Allowance for credit losses to gross loans

 

1.83

%

 

 

1.79

%

 

 

1.73

%

 

 

1.80

%

 

 

1.69

%

Loans past due 30 days or more

$

16,474

 

 

$

19,415

 

 

$

8,072

 

 

$

9,483

 

 

$

7,891

 

Total nonperforming loans

$

34,242

 

 

$

31,891

 

 

$

29,799

 

 

$

37,592

 

 

$

16,025

 

Total nonperforming assets

$

36,735

 

 

$

34,595

 

 

$

32,651

 

 

$

40,506

 

 

$

19,464

 

Loans charged-off

$

1,275

 

 

$

749

 

 

$

5,357

 

 

$

276

 

 

$

1,758

 

Loans recovered

$

132

 

 

$

419

 

 

$

720

 

 

$

218

 

 

$

170

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

Return on average total assets

 

1.13

%

 

 

1.05

%

 

 

1.23

%

 

 

1.01

%

 

 

1.47

%

Return on average equity

 

9.50

%

 

 

9.43

%

 

 

10.91

%

 

 

8.98

%

 

 

13.36

%

Average yield on loans

 

5.72

%

 

 

5.64

%

 

 

5.52

%

 

 

5.38

%

 

 

5.21

%

Average yield on interest-earning assets

 

5.13

%

 

 

5.09

%

 

 

4.94

%

 

 

4.78

%

 

 

4.63

%

Average rate on interest-bearing deposits

 

1.83

%

 

 

1.62

%

 

 

1.36

%

 

 

0.95

%

 

 

0.43

%

Average cost of total deposits

 

1.21

%

 

 

1.05

%

 

 

0.86

%

 

 

0.58

%

 

 

0.25

%

Average cost of total deposits and other borrowings

 

1.47

%

 

 

1.28

%

 

 

1.05

%

 

 

0.80

%

 

 

0.38

%

Average rate on borrowings & subordinated debt

 

5.35

%

 

 

5.26

%

 

 

4.96

%

 

 

4.92

%

 

 

4.74

%

Average rate on interest-bearing liabilities

 

2.24

%

 

 

2.01

%

 

 

1.71

%

 

 

1.37

%

 

 

0.74

%

Net interest margin (fully tax-equivalent) (1)

 

3.68

%

 

 

3.81

%

 

 

3.88

%

 

 

3.96

%

 

 

4.20

%

Loans to deposits

 

85.14

%

 

 

86.73

%

 

 

83.76

%

 

 

80.55

%

 

 

80.02

%

Efficiency ratio

 

57.36

%

 

 

58.71

%

 

 

55.59

%

 

 

58.69

%

 

 

50.29

%

Supplemental Loan Interest Income Data

 

 

 

 

 

 

 

 

 

Discount accretion on acquired loans

$

1,332

 

 

$

1,459

 

 

$

1,324

 

 

$

1,471

 

 

$

1,397

 

All other loan interest income (1)

$

95,153

 

 

$

94,382

 

 

$

90,383

 

 

$

85,276

 

 

$

81,018

 

Total loan interest income (1)

$

96,485

 

 

$

95,841

 

 

$

91,707

 

 

$

86,747

 

 

$

82,415

 

 

(1) Non-GAAP measure

 
TriCo Bancshares—Condensed Consolidated Financial Data (unaudited)
 

(dollars in thousands, except per share data)

 

Balance Sheet Data

March 31,

2024

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

Cash and due from banks

$

82,836

 

 

$

98,701

 

 

$

111,099

 

 

$

118,792

 

 

$

110,335

 

Securities, available for sale, net

 

2,076,494

 

 

 

2,155,138

 

 

 

2,176,854

 

 

 

2,323,011

 

 

 

2,408,452

 

Securities, held to maturity, net

 

127,811

 

 

 

133,494

 

 

 

139,058

 

 

 

145,117

 

 

 

152,067

 

Restricted equity securities

 

17,250

 

 

 

17,250

 

 

 

17,250

 

 

 

17,250

 

 

 

17,250

 

Loans held for sale

 

1,346

 

 

 

458

 

 

 

644

 

 

 

1,058

 

 

 

226

 

Loans:

 

 

 

 

 

 

 

 

 

Commercial real estate

 

4,443,768

 

 

 

4,394,802

 

 

 

4,367,445

 

 

 

4,343,924

 

 

 

4,353,959

 

Consumer

 

1,303,757

 

 

 

1,313,268

 

 

 

1,288,810

 

 

 

1,252,225

 

 

 

1,233,797

 

Commercial and industrial

 

549,780

 

 

 

586,455

 

 

 

599,757

 

 

 

576,247

 

 

 

553,098

 

Construction

 

348,981

 

 

 

347,198

 

 

 

320,963

 

 

 

278,425

 

 

 

225,996

 

Agriculture production

 

145,159

 

 

 

144,497

 

 

 

123,472

 

 

 

61,337

 

 

 

47,062

 

Leases

 

9,250

 

 

 

8,250

 

 

 

8,219

 

 

 

8,582

 

 

 

8,509

 

Total loans, gross

 

6,800,695

 

 

 

6,794,470

 

 

 

6,708,666

 

 

 

6,520,740

 

 

 

6,422,421

 

Allowance for credit losses

 

(124,394

)

 

 

(121,522

)

 

 

(115,812

)

 

 

(117,329

)

 

 

(108,407

)

Total loans, net

 

6,676,301

 

 

 

6,672,948

 

 

 

6,592,854

 

 

 

6,403,411

 

 

 

6,314,014

 

Premises and equipment

 

71,001

 

 

 

71,347

 

 

 

71,760

 

 

 

72,619

 

 

 

72,096

 

Cash value of life insurance

 

137,695

 

 

 

136,892

 

 

 

136,016

 

 

 

135,332

 

 

 

134,544

 

Accrued interest receivable

 

35,783

 

 

 

36,768

 

 

 

34,595

 

 

 

32,835

 

 

 

31,388

 

Goodwill

 

304,442

 

 

 

304,442

 

 

 

304,442

 

 

 

304,442

 

 

 

304,442

 

Other intangible assets

 

9,522

 

 

 

10,552

 

 

 

11,768

 

 

 

13,358

 

 

 

15,014

 

Operating leases, right-of-use

 

26,240

 

 

 

26,133

 

 

 

27,363

 

 

 

29,140

 

 

 

30,000

 

Other assets

 

247,046

 

 

 

245,966

 

 

 

273,303

 

 

 

257,056

 

 

 

252,566

 

Total assets

$

9,813,767

 

 

$

9,910,089

 

 

$

9,897,006

 

 

$

9,853,421

 

 

$

9,842,394

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

$

2,600,448

 

 

$

2,722,689

 

 

$

2,857,512

 

 

$

3,073,353

 

 

$

3,236,696

 

Interest-bearing demand deposits

 

1,742,875

 

 

 

1,731,814

 

 

 

1,746,882

 

 

 

1,751,998

 

 

 

1,635,706

 

Savings deposits

 

2,672,537

 

 

 

2,682,068

 

 

 

2,816,816

 

 

 

2,778,118

 

 

 

2,807,796

 

Time certificates

 

971,798

 

 

 

697,467

 

 

 

588,433

 

 

 

491,896

 

 

 

345,667

 

Total deposits

 

7,987,658

 

 

 

7,834,038

 

 

 

8,009,643

 

 

 

8,095,365

 

 

 

8,025,865

 

Accrued interest payable

 

10,224

 

 

 

8,445

 

 

 

6,688

 

 

 

3,655

 

 

 

1,643

 

Operating lease liability

 

28,299

 

 

 

28,261

 

 

 

29,527

 

 

 

31,377

 

 

 

32,228

 

Other liabilities

 

131,006

 

 

 

145,982

 

 

 

141,692

 

 

 

136,464

 

 

 

157,222

 

Other borrowings

 

392,409

 

 

 

632,582

 

 

 

537,975

 

 

 

392,714

 

 

 

434,140

 

Junior subordinated debt

 

101,120

 

 

 

101,099

 

 

 

101,080

 

 

 

101,065

 

 

 

101,051

 

Total liabilities

 

8,650,716

 

 

 

8,750,407

 

 

 

8,826,605

 

 

 

8,760,640

 

 

 

8,752,149

 

Common stock

 

696,464

 

 

 

697,349

 

 

 

696,369

 

 

 

695,305

 

 

 

695,168

 

Retained earnings

 

630,954

 

 

 

615,502

 

 

 

599,448

 

 

 

578,852

 

 

 

564,538

 

Accumulated other comprehensive loss, net of tax

 

(164,367

)

 

 

(153,169

)

 

 

(225,416

)

 

 

(181,376

)

 

 

(169,461

)

Total shareholders’ equity

$

1,163,051

 

 

$

1,159,682

 

 

$

1,070,401

 

 

$

1,092,781

 

 

$

1,090,245

 

Quarterly Average Balance Data

 

 

 

 

 

 

 

 

 

Average loans

$

6,785,840

 

 

$

6,746,153

 

 

$

6,597,400

 

 

$

6,467,381

 

 

$

6,413,958

 

Average interest-earning assets

$

9,066,537

 

 

$

9,064,483

 

 

$

9,070,639

 

 

$

9,039,314

 

 

$

9,045,311

 

Average total assets

$

9,855,797

 

 

$

9,879,355

 

 

$

9,874,240

 

 

$

9,848,191

 

 

$

9,878,927

 

Average deposits

$

7,821,044

 

 

$

7,990,993

 

 

$

8,043,101

 

 

$

7,981,515

 

 

$

8,218,576

 

Average borrowings and subordinated debt

$

685,802

 

 

$

617,046

 

 

$

550,344

 

 

$

578,312

 

 

$

378,676

 

Average total equity

$

1,174,592

 

 

$

1,097,431

 

 

$

1,112,404

 

 

$

1,112,223

 

 

$

1,087,473

 

Capital Ratio Data

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

15.0

%

 

 

14.7

%

 

 

14.5

%

 

 

14.5

%

 

 

14.5

%

Tier 1 capital ratio

 

13.2

%

 

 

12.9

%

 

 

12.7

%

 

 

12.7

%

 

 

12.7

%

Tier 1 common equity ratio

 

12.5

%

 

 

12.2

%

 

 

12.0

%

 

 

12.0

%

 

 

12.0

%

Tier 1 leverage ratio

 

11.0

%

 

 

10.7

%

 

 

10.6

%

 

 

10.4

%

 

 

10.2

%

Tangible capital ratio (1)

 

8.9

%

 

 

8.8

%

 

 

7.9

%

 

 

8.1

%

 

 

8.1

%

 

(1) Non-GAAP measure

 

TriCo Bancshares—Non-GAAP Financial Measures (unaudited)

 

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this press release because it believes that they provide useful and comparative information to assess trends in the Company's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below:

 

 

Three months ended

(dollars in thousands)

March 31,

2024

 

December 31,

2023

 

March 31,

2023

Net interest margin

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

Amount (included in interest income)

$

1,332

 

 

$

1,459

 

 

$

1,397

 

Effect on average loan yield

 

0.08

%

 

 

0.09

%

 

 

0.09

%

Effect on net interest margin (FTE)

 

0.06

%

 

 

0.06

%

 

 

0.06

%

Net interest margin (FTE)

 

3.68

%

 

 

3.81

%

 

 

4.20

%

Net interest margin less effect of acquired loan discount accretion (Non-GAAP)

 

3.62

%

 

 

3.75

%

 

 

4.14

%

 

Three months ended

(dollars in thousands)

March 31,

2024

 

December 31,

2023

 

March 31,

2023

Pre-tax pre-provision return on average assets or equity

 

 

 

 

 

Net income (GAAP)

$

27,749

 

 

$

26,075

 

 

$

35,833

 

Exclude provision for income taxes

 

9,949

 

 

 

10,325

 

 

 

13,149

 

Exclude provision for credit losses

 

4,305

 

 

 

5,990

 

 

 

4,195

 

Net income before income tax and provision expense (Non-GAAP)

$

42,003

 

 

$

42,390

 

 

$

53,177

 

 

 

 

 

 

 

Average assets (GAAP)

$

9,855,797

 

 

$

9,879,355

 

 

$

9,878,927

 

Average equity (GAAP)

$

1,174,592

 

 

$

1,097,431

 

 

$

1,087,473

 

 

 

 

 

 

 

Return on average assets (GAAP) (annualized)

 

1.13

%

 

 

1.05

%

 

 

1.47

%

Pre-tax pre-provision return on average assets (Non-GAAP) (annualized)

 

1.71

%

 

 

1.70

%

 

 

2.18

%

Return on average equity (GAAP) (annualized)

 

9.50

%

 

 

9.43

%

 

 

13.36

%

Pre-tax pre-provision return on average equity (Non-GAAP) (annualized)

 

14.38

%

 

 

15.32

%

 

 

19.83

%

 

Three months ended

(dollars in thousands)

March 31,

2024

 

December 31,

2023

 

March 31,

2023

Return on tangible common equity

 

 

 

 

 

Average total shareholders' equity

$

1,174,592

 

 

$

1,097,431

 

 

$

1,087,473

 

Exclude average goodwill

 

304,442

 

 

 

304,442

 

 

 

304,442

 

Exclude average other intangibles

 

10,037

 

 

 

11,160

 

 

 

15,842

 

Average tangible common equity (Non-GAAP)

$

860,113

 

 

$

781,829

 

 

$

767,189

 

 

 

 

 

 

 

Net income (GAAP)

$

27,749

 

 

$

26,075

 

 

$

35,833

 

Exclude amortization of intangible assets, net of tax effect

 

725

 

 

 

857

 

 

 

1,166

 

Tangible net income available to common shareholders (Non-GAAP)

$

28,474

 

 

$

26,932

 

 

$

36,999

 

 

 

 

 

 

 

Return on average equity (GAAP) (annualized)

 

9.50

%

 

 

9.43

%

 

 

13.36

%

Return on average tangible common equity (Non-GAAP)

 

13.31

%

 

 

13.67

%

 

 

19.56

%

 

Three months ended

(dollars in thousands)

March 31,

2024

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

Tangible shareholders' equity to tangible assets

 

 

 

 

 

 

 

 

 

Shareholders' equity (GAAP)

$

1,163,051

 

 

$

1,159,682

 

 

$

1,070,401

 

 

$

1,092,781

 

 

$

1,090,245

 

Exclude goodwill and other intangible assets, net

 

313,964

 

 

 

314,994

 

 

 

316,210

 

 

 

317,800

 

 

 

319,456

 

Tangible shareholders' equity (Non-GAAP)

$

849,087

 

 

$

844,688

 

 

$

754,191

 

 

$

774,981

 

 

$

770,789

 

 

 

 

 

 

 

 

 

 

 

Total assets (GAAP)

$

9,813,767

 

 

$

9,910,089

 

 

$

9,897,006

 

 

$

9,853,421

 

 

$

9,842,394

 

Exclude goodwill and other intangible assets, net

 

313,964

 

 

 

314,994

 

 

 

316,210

 

 

 

317,800

 

 

 

319,456

 

Total tangible assets (Non-GAAP)

$

9,499,803

 

 

$

9,595,095

 

 

$

9,580,796

 

 

$

9,535,621

 

 

$

9,522,938

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity to total assets (GAAP)

 

11.85

%

 

 

11.70

%

 

 

10.82

%

 

 

11.09

%

 

 

11.08

%

Tangible shareholders' equity to tangible assets (Non-GAAP)

 

8.94

%

 

 

8.80

%

 

 

7.87

%

 

 

8.13

%

 

 

8.09

%

 

Three months ended

(dollars in thousands)

March 31,

2024

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

Tangible common shareholders' equity per share

 

 

 

 

 

 

 

 

 

Tangible shareholders' equity (Non-GAAP)

$

849,087

 

$

844,688

 

$

754,191

 

$

774,981

 

$

770,789

 

 

 

 

 

 

 

 

 

 

Common shares outstanding at end of period

 

33,168,770

 

 

 

33,268,102

 

 

 

33,263,324

 

 

 

33,259,260

 

 

 

33,195,250

 

 

 

 

 

 

 

 

 

 

 

Common shareholders' equity (book value) per share (GAAP)

$

35.06

 

 

$

34.86

 

 

$

32.18

 

 

$

32.86

 

 

$

32.84

 

Tangible common shareholders' equity (tangible book value) per share (Non-GAAP)

$

25.60

 

 

$

25.39

 

 

$

22.67

 

 

$

23.30

 

 

$

23.22

 

 

Contacts

Investor Contact

Peter G. Wiese, EVP & CFO, (530) 898-0300

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