Notable Items for First Quarter
2023
- Net income was $35.8 million compared to $36.3 million in
the trailing quarter, and compared to $20.4 million in the same
quarter of the prior year; Pre-tax pre-provision net revenue was
$53.2 million compared to $55.3 million in the trailing quarter,
and compared to $36.6 million in the same quarter of the prior
year
- Balance sheet flexibility anchored in readily accessible
sources of liquidity including undrawn borrowing capacities,
on-balance sheet cash and unpledged investment securities totaling
in excess of $4.4 billion
- Diversified and granular deposit base including
approximately 250,000 accounts which are spread over the Northern
two-thirds of California and having an average account size of just
over $30,000
- Credit quality remains strong and stable with non-performing
assets representing less than 0.2% of total assets and an allowance
for credit losses of 1.69% of total loans or 686% of non-performing
loans
- Average yields on earning assets were 4.64%, an increase of
12 basis points over the 4.52% in the trailing quarter; net
interest margin was 4.21%, a change of 13 basis points from 4.34%
in the trailing quarter
- The average cost of total deposits were 0.25% for the
quarter as compared to 0.10% in the trailing quarter and 0.04% in
the same quarter of the prior year and, as a result, the Company's
total cost of deposits have increased 21 basis points since FOMC
rate actions began, which translates to a cycle to date deposit
beta of 4.42%
- Deposit balances declined by $303.1 million or 3.64% versus
the prior quarter and the Bank did not utilize brokered deposits or
FRB borrowing facilities
"Despite the turmoil and challenges currently facing the
community banking industry we are thankful to have built a
franchise that is anchored by a diverse customer base that
continues to demonstrate their trust in us by allowing us the
privilege to deliver Services with Solutions," explained Rick
Smith, President and Chief Executive Officer. Peter Wiese, EVP and
Chief Financial Officer added, "We believe that TriCo's performance
will be both positive and differentiated amongst our peers and
competitors through a variety of possible economic scenarios."
TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company
of Tri Counties Bank, today announced net income of $35.8 million
for the quarter ended March 31, 2023, compared to $36.3 million
during the trailing quarter ended December 31, 2022, and $20.4
million during the quarter ended March 31, 2022. Diluted earnings
per share were $1.07 for the first quarter of 2023, compared to
$1.09 for the fourth quarter of 2022 and $0.67 during the first
quarter of 2022.
Financial Highlights
Performance highlights for the Company as of or for the three
months ended March 31, 2023, included the following:
- For the quarter ended March 31, 2023, the Company’s return on
average assets was 1.47%, while the return on average equity was
13.36%.
- Deposit balances for the quarter ended March 31, 2023,
decreased by $303.1 million as compared to December 31, 2022. The
deposit contraction during the quarter resulted in the loan to
deposit ratio increasing to 80.0% as of March 31, 2023, as compared
to 77.4% as of the trailing quarter.
- The efficiency ratio was 50.3% for the three months ended March
31, 2023, as compared to 51.8% for the trailing quarter.
- The provision for credit losses for loans and debt securities
was approximately $4.2 million during the quarter ended March 31,
2023, as compared to a provision for credit losses of $4.2 million
during the trailing quarter ended December 31, 2022, and a
provision for credit losses of $8.3 million for the three-month
period ended March 31, 2022.
- The allowance for credit losses to total loans was 1.69% as of
March 31, 2023, compared to 1.64% as of the trailing quarter end,
and 1.64% as of March 31, 2022. Non-performing assets to total
assets were 0.20% at March 31, 2023, as compared to 0.25% as of
December 31, 2022, and 0.17% at March 31, 2022.
Financial results reported in this document are preliminary.
Final financial results and other disclosures will be reported in
our Quarterly Report on Form 10-Q for the period ended March 31,
2023, 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.
Summary Results
The following is a summary of the components of the Company’s
operating results and performance ratios for the periods
indicated:
Three months ended
March 31,
December 31,
(dollars and shares in thousands, except
per share data)
2023
2022
$ Change
% Change
Net interest income
$
93,336
$
98,900
$
(5,564
)
(5.6
)%
Provision for credit losses
(4,195
)
(4,245
)
50
(1.2
)%
Noninterest income
13,635
15,880
(2,245
)
(14.1
)%
Noninterest expense
(53,794
)
(59,469
)
5,675
(9.5
)%
Provision for income taxes
(13,149
)
(14,723
)
1,574
(10.7
)%
Net income
$
35,833
$
36,343
$
(510
)
(1.4
)%
Diluted earnings per share
$
1.07
$
1.09
$
(0.02
)
(1.8
)%
Dividends per share
$
0.30
$
0.30
$
—
—
%
Average common shares
33,296
33,330
(34
)
(0.1
)%
Average diluted common shares
33,438
33,467
(29
)
(0.1
)%
Return on average total assets
1.47
%
1.45
%
Return on average equity
13.36
%
14.19
%
Efficiency ratio
50.29
%
51.81
%
Three months ended March 31,
(dollars and shares in thousands, except
per share data)
2023
2022
$ Change
% Change
Net interest income
$
93,336
$
67,924
$
25,412
37.4
%
Provision for credit losses
(4,195
)
(8,330
)
4,135
(49.6
)%
Noninterest income
13,635
15,096
(1,461
)
(9.7
)%
Noninterest expense
(53,794
)
(46,447
)
(7,347
)
15.8
%
Provision for income taxes
(13,149
)
(7,869
)
(5,280
)
67.1
%
Net income
$
35,833
$
20,374
$
15,459
75.9
%
Diluted earnings per share
$
1.07
$
0.67
$
0.40
59.7
%
Dividends per share
$
0.30
$
0.25
$
0.05
20.0
%
Average common shares
33,296
30,050
3,246
10.8
%
Average diluted common shares
33,438
30,202
3,236
10.7
%
Return on average total assets
1.47
%
0.94
%
Return on average equity
13.36
%
8.19
%
Efficiency ratio
50.29
%
55.95
%
Balance Sheet
Total loans outstanding, excluding PPP, grew to $6.42 billion as
of March 31, 2023, an increase of 10.8% over the prior twelve
months, and is entirely related to organic loan growth. As compared
to December 31, 2022, total loans outstanding declined by $28.0
million or 1.7%. Investments increased to $2.58 billion as of March
31, 2023, an increase of 0.3% over the prior year quarter end.
Quarterly average earning assets to quarterly total average assets
were 91.4% at March 31, 2023, as compared to 91.4% and 92.9% at
December 31, 2022, and March 31, 2022, respectively. The loan to
deposit ratio was 80.0% at March 31, 2023, as compared to 77.4% and
67.2% at December 31, 2022, and March 31, 2022, respectively.
During the current quarter and throughout the 2022 year, the
Company held no brokered deposits and relied solely on short-term
borrowings to fund cash flow timing differences.
Total shareholders' equity increased by $43.8 million during the
quarter ended March 31, 2023, as a result of an improvement in
accumulated other comprehensive losses of $24.4 million and net
income of $35.8 million, partially offset by cash dividend payments
on common stock of approximately $9.9 million. As a result, the
Company’s book value was $32.84 per share at March 31, 2023, as
compared to $31.39 and $32.78 at December 31, 2022, and March 31,
2022, respectively. 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 $23.22 per share at March 31,
2023, as compared to $21.76 and $23.04 at December 31, 2022, and
March 31, 2022, respectively.
Trailing Quarter Balance Sheet Change
Ending balances
March 31,
December 31,
Annualized
(dollars in thousands)
2023
2022
$ Change
% Change
Total assets
$
9,842,394
$
9,930,986
$
(88,592
)
(3.6
)%
Total loans
6,422,421
6,450,447
(28,026
)
(1.7
)
Total investments
2,577,769
2,633,269
(55,500
)
(8.4
)
Total deposits
8,025,865
8,329,013
(303,148
)
(14.6
)
Total other borrowings
$
434,140
$
264,605
$
169,535
256.3
%
Loans outstanding declined by $28.0 million or 1.7% on an
annualized basis during the quarter ended March 31, 2023. During
the quarter, loan originations/draws totaled approximately $357.0
million while payoffs/repayments of loans totaled $389.0 million,
which compares to originations/draws and payoffs/repayments during
the trailing quarter ended of $470.0 million and $343.0 million,
respectively. While management believes the loan pipeline remains
sufficient to support the Company's objectives, origination
activity continues to moderate due to customer sensitivity from the
rising interest rate environment and the Company's continued focus
on disciplined underwriting. Investment security balances decreased
$55.5 million or 8.4% on an annualized basis as the result of
prepayments/maturities totaling approximating $65.8 million and
proceeds from sale of $24.2 million, partially offset by increases
in the market value of securities of $34.6 million. Management
seeks to utilize excess cash flows from the investment security
portfolio to support loan growth or reduce borrowings thus
resulting in an improved mix of earning assets. Deposit balances
decreased by $303.1 million or 14.6% annualized during the period.
Cash flow needs were supported by net increases in short-term FHLB
advances which totaled $434.1 million as of the quarter ended March
31, 2023.
Average Trailing Quarter Balance Sheet Change
Quarterly average balances for the period
ended
March 31,
December 31,
Annualized
(dollars in thousands)
2023
2022
$ Change
% Change
Total assets
$
9,878,927
$
9,932,931
$
(54,004
)
(2.2
)%
Total loans
6,413,958
6,358,998
54,960
3.5
Total investments
2,587,285
2,624,062
(36,777
)
(5.6
)
Total deposits
8,218,576
8,545,172
(326,596
)
(15.3
)
Total other borrowings
$
277,632
$
85,927
$
191,705
892.4
%
Year Over Year Balance Sheet Change
Ending balances
As of March 31,
(dollars in thousands)
2023
2022
$ Change
% Change
Total assets
$
9,842,394
$
10,118,328
$
(275,934
)
(2.7
)%
Total loans
6,422,421
5,851,975
570,446
9.7
Total loans, excluding PPP
6,420,903
5,795,370
625,533
10.8
Total investments
2,577,769
2,569,706
8,063
0.3
Total deposits
8,025,865
8,714,477
(688,612
)
(7.9
)
Total other borrowings
$
434,140
$
36,184
$
397,956
1,099.8
%
Non-PPP loan balances increased as a result of organic
activities by approximately $625.5 million or 10.8% during the
twelve-month period ending March 31, 2023. Over the same period
deposit balances have declined by $688.6 million or 7.9%. The
Company has offset these declines through the deployment of excess
cash balances and proceeds from short-term FHLB borrowings. As of
March 31, 2023, short-term borrowings from the FHLB totaled $394.1
million and had an interest rate of 5.11%.
Liquidity
The Company's primary sources of liquidity include the following
for the periods indicated:
(dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Borrowing capacity at correspondent banks
and FRB
$
2,853,219
2,815,594
$
2,540,995
Less: borrowings outstanding
(394,095
)
(216,700
)
—
Unpledged available-for-sale (AFS)
investment securities
1,883,353
1,990,451
2,036,202
Cash held or in transit with FRB
67,468
56,910
969,558
Total primary liquidity
$
4,409,945
$
4,862,738.3
$
5,546,755
At March 31, 2023, the Company's primary sources of liquidity
represented 54.9% of total deposits and 190.7% of estimated total
uninsured deposits, respectively. As a secondary source of
liquidity, the Company's held-to-maturity investment securities had
a fair value of $142.1 million, including approximately $9.9
million in net unrealized losses or 0.6% of after tax total
shareholders' equity.
Net Interest Income and Net Interest
Margin
During the twelve-month period ended March 31, 2023, the Federal
Open Market Committee's (FOMC) actions have resulted in nine rate
hike events for a cumulative increase in the Fed Funds Rate of
4.75%. During the same period the Company's yield on total loans
(excluding PPP) increased 56 basis points to 5.21% for the three
months ended March 31, 2023, from 4.65% for the three months ended
March 31, 2022. Moreover, the tax equivalent yield on the Company's
investment security portfolio increased by 1.34% to 3.23% during
the twelve months ended March 31, 2023. The cost of total
interest-bearing deposits and total interest-bearing liabilities
increased by 37 basis points and 63 basis points respectively
between the three-month periods ended March 31, 2023 and 2022.
Since FOMC rate actions began, the Company's total cost of deposits
has increased 21 basis points which translates to a cycle to date
deposit beta of 4.42%.
The Company continues to manage its cost of deposits through the
use of pricing strategies and delayed changes to the deposit rates
offered to the general public. As of March 31, 2023, and December
31, 2022, total deposits priced utilizing these strategies totaled
$731.9 million and $579.1 million, respectively, and carried
weighted average rates of 2.68% and 1.64%, respectively.
The following is a summary of the components of net interest
income for the periods indicated:
Three months ended
March 31,
December 31,
(dollars in thousands)
2023
2022
Change
% Change
Interest income
$
102,907
$
102,989
$
(82
)
(0.1
)%
Interest expense
(9,571
)
(4,089
)
(5,482
)
134.1
%
Fully tax-equivalent adjustment (FTE)
(1)
392
440
(48
)
(10.9
)%
Net interest income (FTE)
$
93,728
$
99,340
$
(5,612
)
(5.6
)%
Net interest margin (FTE)
4.21
%
4.34
%
Acquired loans discount accretion,
net:
Amount (included in interest income)
$
1,397
$
1,751
$
(354
)
(20.2
)%
Net interest margin less effect of
acquired loan discount accretion(1)
4.15
%
4.27
%
(0.12
) %
PPP loans yield, net:
Amount (included in interest income)
$
5
$
16
$
(11
)
(68.8
)%
Net interest margin less effect of PPP
loan yield (1)
4.21
%
4.34
%
(0.13
) %
Acquired loans discount accretion and PPP
loan yield, net:
Amount (included in interest income)
$
1,402
$
1,767
$
(365
)
(20.7
)%
Net interest margin less effect of
acquired loan discount accretion and PPP loan yield (1)
4.15
%
4.27
%
(0.12
) %
Three months ended March 31,
(dollars in thousands)
2023
2022
Change
% Change
Interest income
$
102,907
$
69,195
$
33,712
48.7
%
Interest expense
(9,571
)
(1,271
)
(8,300
)
653.0
%
Fully tax-equivalent adjustment (FTE)
(1)
392
283
109
38.5
%
Net interest income (FTE)
$
93,728
$
68,207
$
25,521
37.4
%
Net interest margin (FTE)
4.21
%
3.39
%
Acquired loans discount accretion,
net:
Amount (included in interest income)
$
1,397
$
1,323
$
74
5.6
%
Net interest margin less effect of
acquired loan discount accretion(1)
4.15
%
3.32
%
0.83
%
PPP loans yield, net:
Amount (included in interest income)
$
5
$
1,097
$
(1,092
)
(99.5
)%
Net interest margin less effect of PPP
loan yield (1)
4.21
%
3.36
%
0.85
%
Acquired loans discount accretion and PPP
loan yield, net:
Amount (included in interest income)
$
1,402
$
2,420
$
(1,018
)
(42.1
)%
Net interest margin less effect of
acquired loan discount accretion and PPP loan yield (1)
4.15
%
3.29
%
0.86
%
(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.
Loans may be acquired at a premium or discount to par value, in
which case, the premium is amortized (subtracted from) or the
discount is accreted (added to) interest income over the remaining
life of the loan. The dollar impact of loan discount accretion and
loan premium amortization decrease as the purchased loans mature or
pay off early. Upon the early pay off of a loan, any remaining
unaccreted discount or unamortized premium is immediately taken
into interest income; and as loan payoffs may vary significantly
from quarter to quarter, so may the impact of discount accretion
and premium amortization on interest income. As a result of the
increase in interest rates, the prepayment rate of portfolio loans,
inclusive of those acquired at a premium or discount, declined
during 2023 as compared to 2022. During the three months ended
March 31, 2023, December 31, 2022, and March 31, 2022, purchased
loan discount accretion was $1.4 million, $1.8 million, and $1.3
million, respectively.
The following table shows the components of net interest income
and net interest margin on a fully tax-equivalent (FTE) basis for
the quarterly periods indicated:
ANALYSIS OF CHANGE IN NET
INTEREST MARGIN ON EARNING ASSETS
(unaudited, dollars in
thousands)
Three months ended
Three months ended
Three months ended
March 31, 2023
December 31, 2022
March 31, 2022
Average Balance
Income/ Expense
Yield/ Rate
Average Balance
Income/ Expense
Yield/ Rate
Average Balance
Income/ Expense
Yield/ Rate
Assets
Loans, excluding PPP
$
6,412,386
$
82,410
5.21
%
$
6,357,250
$
81,740
5.10
%
$
4,937,865
$
56,648
4.65
%
PPP loans
1,572
5
1.29
%
1,748
16
3.63
%
50,695
1,097
8.78
%
Investments-taxable
2,398,235
18,916
3.20
%
2,414,236
18,804
3.09
%
2,313,204
10,223
1.79
%
Investments-nontaxable (1)
189,050
1,699
3.64
%
209,826
1,906
3.60
%
143,873
1,225
3.45
%
Total investments
2,587,285
20,615
3.23
%
2,624,062
20,710
3.13
%
2,457,077
11,448
1.89
%
Cash at Federal Reserve and other
banks
26,818
269
4.07
%
93,390
963
4.09
%
707,563
285
0.16
%
Total earning assets
9,028,061
103,299
4.64
%
9,076,450
103,429
4.52
%
8,153,200
69,478
3.46
%
Other assets, net
850,866
856,481
625,056
Total assets
$
9,878,927
$
9,932,931
$
8,778,256
Liabilities and shareholders’ equity
Interest-bearing demand deposits
$
1,673,114
$
387
0.09
%
$
1,709,494
$
150
0.03
%
$
1,597,309
$
84
0.02
%
Savings deposits
2,898,463
4,154
0.58
%
2,921,935
1,815
0.25
%
2,571,023
327
0.05
%
Time deposits
274,805
604
0.89
%
251,218
205
0.32
%
301,499
268
0.36
%
Total interest-bearing deposits
4,846,382
5,145
0.43
%
4,882,647
2,170
0.18
%
4,469,831
679
0.06
%
Other borrowings
277,632
2,809
4.10
%
85,927
406
1.87
%
44,731
5
0.05
%
Junior subordinated debt
101,044
1,617
6.49
%
101,030
1,513
5.94
%
60,971
587
3.90
%
Total interest-bearing liabilities
5,225,058
9,571
0.74
%
5,069,604
4,089
0.32
%
4,575,533
1,271
0.11
%
Noninterest-bearing deposits
3,372,194
3,662,525
3,052,099
Other liabilities
194,202
184,334
141,400
Shareholders’ equity
1,087,473
1,016,468
1,009,224
Total liabilities and shareholders’
equity
$
9,878,927
$
9,932,931
$
8,778,256
Net interest rate spread (1) (2)
3.90
%
4.20
%
3.35
%
Net interest income and margin (1) (3)
$
93,728
4.21
%
$
99,340
4.34
%
$
68,207
3.39
%
(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, 2023, decreased $5.6 million or 5.6% to $93.7 million compared
to $99.3 million during the three months ended December 31, 2022.
In addition, net interest margin declined 13 basis points to 4.21%,
compared to the trailing quarter. The decrease in net interest
income is primarily attributed to an additional $3.0 million in
deposit interest expense and $2.4 million in additional interest
expense on other borrowings, both due to increases in interest
rates as compared to the trailing quarter, respectively. Total
interest income was effectively unchanged as compared to the
trailing quarter, down $0.1 million or 0.1%.
As compared to the same quarter in the prior year, average loan
yields, excluding PPP, increased 56 basis points from 4.65% during
the three months ended March 31, 2022, to 5.21% during the three
months ended March 31, 2023. The accretion of discounts from
acquired loans added 9 and 7 basis points to loan yields during the
quarters ended March 31, 2023 and March 31, 2022, respectively.
The rates paid on interest bearing deposits increased by 25
basis points during the quarter ended March 31, 2023, compared to
the trailing quarter. The cost of interest-bearing deposits
increased by 37 basis points between the quarter ended March 31,
2023, and the same quarter of the prior year. In addition, the
level of noninterest-bearing deposits decreased by $290.3 million
quarter over quarter but remains $320.1 million above quarter ended
March 31, 2022. As of March 31, 2023, the ratio of average total
noninterest-bearing deposits to total average deposits was 41.0%,
as compared to 42.9% and 40.6% at December 31, 2022 and March 31,
2022, respectively.
Interest Rates and Earning Asset
Composition
During the quarter ended March 31, 2023, market interest rates,
including many rates that serve as reference indices for variable
rate loans and investment securities continued to increase. As
noted above, these rate increases have continued to benefit growth
in total interest income. As of March 31, 2023, the Company's loan
portfolio consisted of approximately $6.4 billion in outstanding
principal with a weighted average coupon rate of 5.0%. During the
three-month periods ending March 31, 2023, December 31, 2022, and
September 30, 2022, the weighted average coupon on loan production
in the quarter was 6.55%, 6.25%, and 5.24%, respectively. Included
in the March 31, 2023 loan total are variable rate loans totaling
$3.6 billion, of which, $810.8 million are considered floating
based on the Wall Street Prime index. In addition, the Company
holds certain investment securities totaling $384.1 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, 2023, the Company
recorded a provision for credit losses of $4.2 million, as compared
to $4.2 million during the trailing quarter, and $8.3 million
during the first quarter of 2022.
The following table presents details of the provision for credit
losses for the periods indicated:
Three months ended
(dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Addition to allowance for credit
losses
$
4,315
$
4,300
$
8,205
Addition to (reversal of) reserve for
unfunded loan commitments
(120
)
(55
)
125
Total provision for credit losses
$
4,195
$
4,245
$
8,330
The following table presents the activity in the allowance for
credit losses on loans for the periods indicated:
Three months ended
(dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Balance, beginning of period
$
105,680
$
101,488
$
85,376
ACL at acquisition for PCD loans
—
—
2,037
Provision for credit losses
4,315
4,300
8,205
Loans charged-off
(1,758
)
(174
)
(743
)
Recoveries of previously charged-off
loans
170
66
1,174
Balance, end of period
$
108,407
$
105,680
$
96,049
The allowance for credit losses (ACL) was $108.4 million as of
March 31, 2023, a net increase of $2.7 million over the immediately
preceding quarter. The provision for credit losses of $4.3 million
during the recent quarter was the net effect of increases in
required reserves due to qualitative factors, individually analyzed
credits and quantitative reserves under the cohort model. On a
comparative basis, the provision for credit losses of $8.2 million
during the three months ended March 31, 2022 was largely the result
of day 1 required reserves from loans acquired in connection with
the Valley Republic Bank merger in the same period. For the current
quarter, the qualitative components of the ACL resulted in a net
increase in required reserves totaling approximately $4.7 million
due to increased uncertainty in US economic policy, and the
ramifications on local and statewide unemployment rates. Meanwhile,
the quantitative component of the ACL decreased reserve
requirements by approximately $1.9 million over the trailing
quarter due to improvement in needed in specific reserves on
loans.
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 included improving shifts in the magnitude of changes
for both the unemployment and GDP factors leading up to the balance
sheet date, particularly CA unemployment trends. As compared to
historical norms, inflation remains elevated from continued
disruptions in the supply chain, wage pressures, and higher living
costs such as housing and food prices Despite the expected
continued benefit to the net interest income of the Company from
the elevated rate environment, Management notes the rapid intervals
of rate increases by the Federal Reserve and flattening or
inversion of the yield curve, have boosted expectations of the US
entering a recession within 12 months. As a result, management
continues to believe that certain credit weakness are likely
present in the overall economy and that it is appropriate to
cautiously maintain a reserve level that incorporates such risk
factors.
Loans past due 30 days or more increased by $2.9 million during
the quarter ended March 31, 2023, to $7.9 million, as compared to
$4.9 million at December 31, 2022. Non-performing loans were $16.0
million at March 31, 2023, a decrease of $5.3 million from $21.3
million as of December 31, 2022, and a decrease of $1.9 million
from $14.1 million as of March 31, 2022. Of the $16.0 million loans
designated as non-performing, approximately $10.2 million are less
than 30 days past due as of March 31, 2023.
The following table illustrates the total loans by risk rating
and their respective percentage of total loans for the periods
presented:
March 31,
% of Loans
December 31,
% of Loans
March 31,
% of Loans
(dollars in thousands)
2023
Outstanding
2022
Outstanding
2022
Outstanding
Risk Rating:
Pass
$
6,232,962
97.0
%
$
6,251,945
96.9
%
$
5,682,026
97.1
%
Special Mention
125,492
2.0
%
127,000
2.0
%
120,684
2.1
%
Substandard
63,967
1.0
%
71,502
1.1
%
49,265
0.8
%
Total
$
6,422,421
$
6,450,447
$
5,851,975
Classified loans to total loans
1.00
%
1.11
%
0.84
%
Loans past due 30+ days to total loans
0.12
%
0.08
%
0.14
%
The ratio of classified loans decreased to 1.00% as of March 31,
2023, as compared to 1.11% in the trailing quarter, but increased
by 16 basis points from the equivalent period in 2022. The
Company's criticized loan balances decreased during the current
quarter by $9.0 million to $189.5 million as of March 31, 2023.
There were no changes to Other Real Estate Owned balances during
the first quarter of 2023. As of March 31, 2023, other real estate
owned consisted of nine properties with a carrying value of
approximately $3.4 million.
Non-performing assets of $19.5 million at March 31, 2023,
represented 0.20% of total assets, generally in line with the $24.8
million or 0.25% and $17.0 million or 0.17% as of December 31, 2022
and March 31, 2022, respectively.
Allocation of Credit Loss Reserves by
Loan Type
As of March 31, 2023
As of December 31, 2022
As of March 31, 2022
(dollars in thousands)
Amount
% of Loans Outstanding
Amount
% of Loans Outstanding
Amount
% of Loans Outstanding
Commercial real estate:
CRE - Non Owner Occupied
$
32,963
1.53
%
$
30,962
1.44
%
$
28,055
1.48
%
CRE - Owner Occupied
14,559
1.50
%
14,014
1.42
%
12,071
1.42
%
Multifamily
13,873
1.47
%
13,132
1.39
%
11,987
1.43
%
Farmland
3,542
1.29
%
3,273
1.17
%
2,879
1.15
%
Total commercial real estate loans
64,937
1.49
%
61,381
1.41
%
54,992
1.43
%
Consumer:
SFR 1-4 1st Liens
11,920
1.48
%
11,268
1.43
%
10,669
1.50
%
SFR HELOCs and Junior Liens
10,914
2.91
%
11,413
2.90
%
10,843
2.99
%
Other
2,062
3.76
%
1,958
3.45
%
2,340
3.73
%
Total consumer loans
24,896
2.02
%
24,639
1.99
%
23,852
2.10
%
Commercial and Industrial
12,069
2.18
%
13,597
2.39
%
8,869
1.77
%
Construction
5,655
2.50
%
5,142
2.43
%
7,437
2.45
%
Agricultural Production
833
1.77
%
906
1.48
%
883
1.27
%
Leases
17
0.20
%
15
0.19
%
16
0.20
%
Allowance for credit losses
108,407
1.69
%
105,680
1.64
%
96,049
1.64
%
Reserve for unfunded loan commitments
4,195
4,315
3,915
Total allowance for credit losses
$
112,602
1.75
%
$
109,995
1.71
%
$
99,964
1.71
%
For the periods presented in the table above and for purposes of
calculating the "% of Loans Outstanding", PPP loans are included in
the segment "Commercial and Industrial." PPP loans are fully
guaranteed and therefore would not require any loss reserve
allocation. Excluding the net outstanding balances of PPP loans
from the ratio of the ACL to total loans results in a reserve ratio
of approximately 1.69% as of March 31, 2023. 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, 2023,
the unamortized discount associated with acquired loans totaled
$29.1 million.
Non-interest Income
The following table presents the key components of non-interest
income for the current and trailing quarterly periods
indicated:
Three months ended
(dollars in thousands)
March 31, 2023
December 31, 2022
Change
% Change
ATM and interchange fees
$
6,344
$
6,826
$
(482
)
(7.1
)%
Service charges on deposit accounts
3,431
4,103
(672
)
(16.4
)%
Other service fees
1,166
1,091
75
6.9
%
Mortgage banking service fees
465
465
—
—
%
Change in value of mortgage servicing
rights
(209
)
(142
)
(67
)
47.2
%
Total service charges and fees
11,197
12,343
(1,146
)
(9.3
)%
Increase in cash value of life
insurance
802
809
(7
)
(0.9
)%
Asset management and commission income
934
1,040
(106
)
(10.2
)%
Gain on sale of loans
206
197
9
4.6
%
Lease brokerage income
98
172
(74
)
(43.0
)%
Sale of customer checks
288
296
(8
)
(2.7
)%
Loss on sale of investment securities
(164
)
—
(164
)
—
%
Gain on marketable equity securities
42
6
36
600.0
%
Other income
232
1,017
(785
)
(77.2
)%
Total other non-interest income
2,438
3,537
(1,099
)
(31.1
)%
Total non-interest income
$
13,635
$
15,880
$
(2,245
)
(14.1
)%
Non-interest income decreased $2.2 million or 14.1% to $13.6
million during the three months ended March 31, 2023, compared to
$15.9 million during the quarter ended December 31, 2022. Total
service charges and fees declined by $1.1 million or 9.3% during
the period, of which $0.9 million is due to waived or reversed fees
related to the network outage disclosed in the Company's 8-K filed
with the SEC on February 14, 2023. A loss on the sale of investment
securities totaling $0.2 million was recorded during the quarter in
connection with the Company's strategic sale of $24.3 million in
available-for-sale securities. Other income decreased by $0.8
million, $0.6 million of which was non-recurring income recognized
in the prior period for fees earned from the temporary sale of
deposits.
The following table presents the key components of non-interest
income for the current and prior year periods indicated:
Three months ended March 31,
(dollars in thousands)
2023
2022
Change
% Change
ATM and interchange fees
$
6,344
$
6,243
$
101
1.6
%
Service charges on deposit accounts
3,431
3,834
(403
)
(10.5
)%
Other service fees
1,166
882
284
32.2
%
Mortgage banking service fees
465
463
2
0.4
%
Change in value of mortgage servicing
rights
(209
)
274
(483
)
(176.3
)%
Total service charges and fees
11,197
11,696
(499
)
(4.3
)%
Increase in cash value of life
insurance
802
638
164
25.7
%
Asset management and commission income
934
887
47
5.3
%
Gain on sale of loans
206
1,246
(1,040
)
(83.5
)%
Lease brokerage income
98
158
(60
)
(38.0
)%
Sale of customer checks
288
104
184
176.9
%
Loss on sale of investment securities
(164
)
—
(164
)
—
%
Gain (loss) on marketable equity
securities
42
(137
)
179
(130.7
)%
Other income
232
504
(272
)
(54.0
)%
Total other non-interest income
2,438
3,400
(962
)
(28.3
)%
Total non-interest income
$
13,635
$
15,096
$
(1,461
)
(9.7
)%
Non-interest income decreased $1.5 million or 9.7% to $13.6
million during the three months ended March 31, 2023, compared to
$15.1 million during the quarter ended March 31, 2022. In addition
to a decline in service charges and fees noted above, the declining
mortgage related activity resulting from elevated interest rates
reduced income recorded from the sale of loans by $1.0 million or
83.5%, as compared to the three months ended March 31, 2022.
Non-interest Expense
The following table presents the key components of non-interest
expense for the current and trailing quarterly periods
indicated:
Three months ended
(dollars in thousands)
March 31, 2023
December 31, 2022
Change
% Change
Base salaries, net of deferred loan
origination costs
$
23,000
$
22,099
$
901
4.1
%
Incentive compensation
2,895
6,211
(3,316
)
(53.4
)%
Benefits and other compensation costs
6,668
8,301
(1,633
)
(19.7
)%
Total salaries and benefits expense
32,563
36,611
(4,048
)
(11.1
)%
Occupancy
4,160
3,957
203
5.1
%
Data processing and software
4,032
4,102
(70
)
(1.7
)%
Equipment
1,383
1,525
(142
)
(9.3
)%
Intangible amortization
1,656
1,702
(46
)
(2.7
)%
Advertising
759
1,249
(490
)
(39.2
)%
ATM and POS network charges
1,709
2,134
(425
)
(19.9
)%
Professional fees
1,589
1,111
478
43.0
%
Telecommunications
595
638
(43
)
(6.7
)%
Regulatory assessments and insurance
792
815
(23
)
(2.8
)%
Postage
299
319
(20
)
(6.3
)%
Operational loss
435
235
200
85.1
%
Courier service
339
616
(277
)
(45.0
)%
Gain on sale or acquisition of foreclosed
assets
—
(235
)
235
(100.0
)%
Gain on disposal of fixed assets
—
(1
)
1
(100.0
)%
Other miscellaneous expense
3,483
4,691
(1,208
)
(25.8
)%
Total other non-interest expense
21,231
22,858
(1,627
)
(7.1
)%
Total non-interest expense
$
53,794
$
59,469
$
(5,675
)
(9.5
)%
Average full-time equivalent staff
1,219
1,210
9
0.7
%
Non-interest expense for the quarter ended March 31, 2023,
decreased $5.7 million or 9.5% to $53.8 million as compared to
$59.5 million during the trailing quarter ended December 31, 2022.
Total salaries and benefits expense decreased by $4.0 million or
11.1%, led primarily by a $3.3 million reduction in incentive
compensation expense. The Company also recorded approximately $2.0
million less in benefits and other compensation costs as compared
to the trailing quarter, following the amendments to certain
retirement plans announced in December of 2022. Advertising costs
decreased $0.5 million or 39.2% during the quarter, connected to a
decrease in media advertising for promotional campaigns. ATM and
point of service network charges decreased $0.4 million or 19.9% to
$1.7 million, primarily due to one-time card processing equipment
conversion expenses of $0.3 million in the previous quarter.
Professional fees increased by $0.5 million and included $0.7
million associated with the network outage disclosed in the
Company's 8-K filed with the SEC on February 14, 2023. Finally,
other miscellaneous expenses decreased $1.2 million or 25.8%,
largely from $0.7 million less in appraisal and other loan
costs.
The following table presents the key components of non-interest
expense for the current and prior year quarterly periods
indicated:
Three months ended March 31,
(dollars in thousands)
2023
2022
Change
% Change
Base salaries, net of deferred loan
origination costs
$
23,000
$
18,216
$
4,784
26.3
%
Incentive compensation
2,895
2,583
312
12.1
%
Benefits and other compensation costs
6,668
5,972
696
11.7
%
Total salaries and benefits expense
32,563
26,771
5,792
21.6
%
Occupancy
4,160
3,575
585
16.4
%
Data processing and software
4,032
3,513
519
14.8
%
Equipment
1,383
1,333
50
3.8
%
Intangible amortization
1,656
1,228
428
34.9
%
Advertising
759
637
122
19.2
%
ATM and POS network charges
1,709
1,375
334
24.3
%
Professional fees
1,589
876
713
81.4
%
Telecommunications
595
521
74
14.2
%
Regulatory assessments and insurance
792
720
72
10.0
%
Merger and acquisition expenses
—
4,032
(4,032
)
(100.0
)%
Postage
299
228
71
31.1
%
Operational loss
435
(183
)
618
(337.7
)%
Courier service
339
414
(75
)
(18.1
)%
Loss on disposal of fixed assets
—
(1,078
)
1,078
(100.0
)%
Other miscellaneous expense
3,483
2,485
998
40.2
%
Total other non-interest expense
21,231
19,676
1,555
7.9
%
Total non-interest expense
$
53,794
$
46,447
$
7,347
15.8
%
Average full-time equivalent staff
1,219
1,084
135
12.5
%
Generally, the increases in recurring non-interest expense items
reflect the VRB merger closing on March 25, 2022, and therefore,
related expenses for the combined entities, less certain realized
cost savings, are largely only being captured within the most
recent three months ended March 31, 2023. Total non-interest
expense increased $7.3 million or 15.8% to $53.8 million during the
three months ended March 31, 2023 as compared to $46.4 million for
the quarter ended March 31, 2022. Total salaries and benefits
expense increased by $5.8 million or 21.6% to $32.6 million,
largely from a net increase of 135 full-time equivalent positions,
99 of which resulted from the aforementioned merger with VRB.
Professional fees increased by $0.7 million which was directly
associated with the network outage disclosed in the Company's 8-K
filed with the SEC on February 14, 2023.
Provision for Income
Taxes
The Company’s effective tax rate was 26.8% for the quarter ended
March 31, 2023, as compared to 27.9% for the year ended December
31, 2022. 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. There can be no assurance that
future developments affecting us will be the same as those
anticipated by management. 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 strength of the United
States economy in general and the strength of the local economies
in which we conduct operations; the effects of, and changes in,
trade, monetary and fiscal policies and laws, including interest
rate policies of the Board of Governors of the Federal Reserve
System; inflation, interest rate, market and monetary fluctuations
impacts on the Company's business condition and financial operating
results; the impact of changes in financial services industry
policies, laws and regulations; regulatory restrictions on our
ability to successfully market and price our products to consumers;
technological changes; weather, natural disasters and other
catastrophic events that may or may not be caused by climate change
and their effects on economic and business environments in which
the Company operates; the continuing adverse impact on the U.S.
economy, including the markets in which we operate due to the
lingering effects of the COVID-19 global pandemic; the impact of a
slowing U.S. economy and potentially increased unemployment on the
performance of our loan portfolio, the market value of our
investment securities, 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, terrorism or geopolitical events; the
quality and quantity of our deposits; 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 mergers, acquisitions or
dispositions, or identify and complete favorable transactions in
the future, and/or realize the contemplated financial business
benefits associated with any such activities; 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 lending 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 timing and effects of
the implementation of the 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 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; possible other-than-temporary impairment of securities
held by us due to changes in credit quality or rates; 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; our
noninterest expense and the efficiency ratio; competition and
innovation with respect to financial products and services by
banks, financial institutions and non-traditional providers
including retail businesses and technology companies; the
challenges of attracting, integrating and retaining key employees;
the costs and effects of litigation and of unexpected or adverse
outcomes in such litigation; 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; increased
data security risks due to work from home arrangements and email
vulnerability; failure to safeguard personal information; changes
to U.S. tax policies, including our effective income tax rate; the
effect of a fall in stock market prices on our brokerage and wealth
management businesses; the transition away from the London
Interbank Offered Rate toward new interest rate benchmarks; and our
ability to manage the risks involved in the foregoing. 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, 2022, 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 share data)
Three months ended
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
Revenue and Expense Data
Interest income
$
102,907
$
102,989
$
96,366
$
86,955
$
69,195
Interest expense
9,571
4,089
2,260
1,909
1,271
Net interest income
93,336
98,900
94,106
85,046
67,924
Provision for credit losses
4,195
4,245
3,795
2,100
8,330
Noninterest income:
Service charges and fees
11,197
12,343
12,682
13,044
11,696
Loss on sale of investment securities
(164
)
—
—
—
—
Other income
2,602
3,537
2,958
3,386
3,400
Total noninterest income
13,635
15,880
15,640
16,430
15,096
Noninterest expense (2):
Salaries and benefits
32,563
36,611
33,528
34,370
28,597
Occupancy and equipment
5,543
5,482
5,387
5,449
4,925
Data processing and network
5,741
6,236
5,143
5,468
5,089
Other noninterest expense
9,947
11,140
10,407
10,977
7,836
Total noninterest expense
53,794
59,469
54,465
56,264
46,447
Total income before taxes
48,982
51,066
51,486
43,112
28,243
Provision for income taxes
13,149
14,723
14,148
11,748
7,869
Net income
$
35,833
$
36,343
$
37,338
$
31,364
$
20,374
Share Data
Basic earnings per share
$
1.08
$
1.09
$
1.12
$
0.93
$
0.68
Diluted earnings per share
$
1.07
$
1.09
$
1.12
$
0.93
$
0.67
Dividends per share
$
0.30
$
0.30
$
0.30
$
0.25
$
0.25
Book value per common share
$
32.84
$
31.39
$
29.71
$
31.25
$
32.78
Tangible book value per common share
(1)
$
23.22
$
21.76
$
19.92
$
21.41
$
23.04
Shares outstanding
33,195,250
33,331,513
33,332,189
33,350,974
33,837,935
Weighted average shares
33,295,750
33,330,029
33,348,322
33,561,389
30,049,919
Weighted average diluted shares
33,437,680
33,467,393
33,463,364
33,705,280
30,201,698
Credit Quality
Allowance for credit losses to gross
loans
1.69
%
1.64
%
1.61
%
1.60
%
1.64
%
Loans past due 30 days or more
$
7,891
$
4,947
$
6,471
$
5,920
$
8,402
Total nonperforming loans
$
16,025
$
21,321
$
17,471
$
11,925
$
14,088
Total nonperforming assets
$
19,464
$
24,760
$
20,912
$
15,304
$
16,995
Loans charged-off
$
1,758
$
174
$
267
$
401
$
743
Loans recovered
$
170
$
66
$
311
$
356
$
1,174
Selected Financial Ratios
Return on average total assets
1.47
%
1.45
%
1.46
%
1.24
%
0.94
%
Return on average equity
13.36
%
14.19
%
13.78
%
11.53
%
8.19
%
Average yield on loans, excluding PPP
5.21
%
5.10
%
4.87
%
4.70
%
4.65
%
Average yield on interest-earning
assets
4.64
%
4.52
%
4.12
%
3.76
%
3.46
%
Average rate on interest-bearing
deposits
0.43
%
0.18
%
0.08
%
0.07
%
0.06
%
Average cost of total deposits
0.25
%
0.10
%
0.04
%
0.04
%
0.04
%
Average cost of total deposits and other
borrowings
0.38
%
0.12
%
0.04
%
0.02
%
0.02
%
Average rate on borrowings &
subordinated debt
4.74
%
4.07
%
3.60
%
3.12
%
2.27
%
Average rate on interest-bearing
liabilities
0.74
%
0.32
%
0.17
%
0.15
%
0.11
%
Net interest margin (fully tax-equivalent)
(1)
4.21
%
4.34
%
4.02
%
3.67
%
3.39
%
Loans to deposits
80.02
%
77.45
%
72.95
%
69.81
%
67.15
%
Efficiency ratio
50.29
%
51.81
%
49.63
%
55.45
%
55.95
%
Supplemental Loan Interest Income
Data
Discount accretion on acquired loans
$
1,397
$
1,751
$
714
$
1,677
$
1,323
All other loan interest income (excluding
PPP) (1)
$
81,013
$
79,989
$
74,929
$
67,277
$
55,325
Total loan interest income (excluding PPP)
(1)
$
82,410
$
81,740
$
75,643
$
68,954
$
56,648
(1)
Non-GAAP measure
(2)
Inclusive of merger related expenses
TRICO BANCSHARES—CONDENSED
CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in
thousands)
Balance Sheet Data
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
Cash and due from banks
$
110,335
$
107,230
$
246,509
$
488,868
$
1,035,683
Securities, available for sale, net
2,408,452
2,455,036
2,482,857
2,608,771
2,365,708
Securities, held to maturity, net
152,067
160,983
168,038
176,794
186,748
Restricted equity securities
17,250
17,250
17,250
17,250
17,250
Loans held for sale
226
1,846
247
1,216
1,030
Loans:
Commercial real estate
4,353,959
4,359,083
4,238,930
4,049,893
3,832,974
Consumer
1,233,797
1,240,743
1,217,297
1,162,989
1,136,712
Commercial and industrial
553,098
569,921
534,960
507,685
500,882
Construction
225,996
211,560
243,571
313,646
303,960
Agriculture production
47,062
61,414
71,599
71,373
69,339
Leases
8,509
7,726
7,933
7,835
8,108
Total loans, gross
6,422,421
6,450,447
6,314,290
6,113,421
5,851,975
Allowance for credit losses
(108,407
)
(105,680
)
(101,488
)
(97,944
)
(96,049
)
Total loans, net
6,314,014
6,344,767
6,212,802
6,015,477
5,755,926
Premises and equipment
72,096
72,327
73,266
73,811
73,692
Cash value of life insurance
134,544
133,742
132,933
132,857
132,104
Accrued interest receivable
31,388
31,856
27,070
25,861
22,769
Goodwill
304,442
304,442
307,942
307,942
307,942
Other intangible assets
15,014
16,670
18,372
20,074
21,776
Operating leases, right-of-use
30,000
26,862
26,622
27,154
28,404
Other assets
252,566
257,975
262,971
224,536
169,296
Total assets
$
9,842,394
$
9,930,986
$
9,976,879
$
10,120,611
$
10,118,328
Deposits:
Noninterest-bearing demand deposits
$
3,236,696
$
3,502,095
$
3,678,202
$
3,604,237
$
3,583,269
Interest-bearing demand deposits
1,635,706
1,718,541
1,749,123
1,796,580
1,788,639
Savings deposits
2,807,796
2,884,378
2,924,674
3,028,787
2,993,873
Time certificates
345,667
223,999
303,770
327,171
348,696
Total deposits
8,025,865
8,329,013
8,655,769
8,756,775
8,714,477
Accrued interest payable
1,643
1,167
853
755
653
Operating lease liability
32,228
29,004
28,717
29,283
30,500
Other liabilities
157,222
159,741
153,110
155,529
126,348
Other borrowings
434,140
264,605
47,068
35,089
36,184
Junior subordinated debt
101,051
101,040
101,024
101,003
100,984
Total liabilities
8,752,149
8,884,570
8,986,541
9,078,434
9,009,146
Common stock
695,168
697,448
696,348
696,441
706,672
Retained earnings
564,538
542,873
516,699
491,705
479,868
Accum. other comprehensive loss, net of
tax
(169,461
)
(193,905
)
(222,709
)
(145,969
)
(77,358
)
Total shareholders’ equity
$
1,090,245
$
1,046,416
$
990,338
$
1,042,177
$
1,109,182
Quarterly Average Balance Data
Average loans, excluding PPP
$
6,412,386
$
6,357,250
$
6,162,267
$
5,890,578
$
4,937,865
Average interest-earning assets
$
9,028,061
$
9,076,450
$
9,320,152
$
9,330,059
$
8,153,200
Average total assets
$
9,878,927
$
9,932,931
$
10,131,118
$
10,121,714
$
8,778,256
Average deposits
$
8,218,576
$
8,545,172
$
8,752,215
$
8,743,320
$
7,521,930
Average borrowings and subordinated
debt
$
378,676
$
186,957
$
139,919
$
136,244
$
105,702
Average total equity
$
1,087,473
$
1,016,468
$
1,074,776
$
1,091,454
$
1,009,224
Capital Ratio Data
Total risk-based capital ratio
14.5
%
14.2
%
14.0
%
14.1
%
15.0
%
Tier 1 capital ratio
12.7
%
12.4
%
12.2
%
12.3
%
13.1
%
Tier 1 common equity ratio
12.0
%
11.7
%
11.4
%
11.5
%
12.3
%
Tier 1 leverage ratio
10.1
%
10.1
%
9.6
%
9.3
%
10.8
%
Tangible capital ratio (1)
8.1
%
7.6
%
6.9
%
7.3
%
8.0
%
(1)
Non-GAAP measure
TRICO BANCSHARES—NON-GAAP FINANCIAL
MEASURES
(Unaudited. Dollars in thousands)
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, 2023
December 31, 2022
March 31, 2022
Net interest margin
Acquired loans discount accretion,
net:
Amount (included in interest income)
$
1,397
$
1,751
$
1,323
Effect on average loan yield
0.09
%
0.11
%
0.11
%
Effect on net interest margin (FTE)
0.06
%
0.07
%
0.07
%
Net interest margin (FTE)
4.21
%
4.34
%
3.39
%
Net interest margin less effect of
acquired loan discount accretion (Non-GAAP)
4.15
%
4.27
%
3.32
%
PPP loans yield, net:
Amount (included in interest income)
$
5
$
16
$
1,097
Effect on net interest margin (FTE)
—
%
—
%
0.03
%
Net interest margin less effect of PPP
loan yield (Non-GAAP)
4.21
%
4.34
%
3.36
%
Acquired loan discount accretion and PPP
loan yield, net:
Amount (included in interest income)
$
1,402
$
1,767
$
2,420
Effect on net interest margin (FTE)
0.06
%
0.07
%
0.10
%
Net interest margin less effect of
acquired loan discount accretion and PPP yields, net (Non-GAAP)
4.15
%
4.27
%
3.29
%
Three months ended
(dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Pre-tax pre-provision return on average
assets or equity
Net income (GAAP)
$
35,833
$
36,343
$
20,374
Exclude provision for income taxes
13,149
14,723
7,869
Exclude provision (benefit) for credit
losses
4,195
4,245
8,330
Net income before income tax and provision
expense (Non-GAAP)
$
53,177
$
55,311
$
36,573
Average assets (GAAP)
$
9,878,927
$
9,932,931
$
8,778,256
Average equity (GAAP)
$
1,087,473
$
1,016,468
$
1,009,224
Return on average assets (GAAP)
(annualized)
1.47
%
1.45
%
0.94
%
Pre-tax pre-provision return on average
assets (Non-GAAP) (annualized)
2.18
%
2.21
%
1.69
%
Return on average equity (GAAP)
(annualized)
13.36
%
14.19
%
8.19
%
Pre-tax pre-provision return on average
equity (Non-GAAP) (annualized)
19.83
%
21.59
%
14.70
%
Three months ended
(dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Return on tangible common
equity
Average total shareholders' equity
$
1,087,473
$
1,016,468
$
1,009,224
Exclude average goodwill
304,442
306,192
226,676
Exclude average other intangibles
15,842
17,521
12,604
Average tangible common equity
(Non-GAAP)
$
767,189
$
692,755
$
769,944
Net income (GAAP)
$
35,833
$
36,343
$
20,374
Exclude amortization of intangible assets,
net of tax effect
1,166
1,199
865
Tangible net income available to common
shareholders (Non-GAAP)
$
36,999
$
37,542
$
21,239
Return on average equity
13.36
%
14.19
%
8.19
%
Return on average tangible common equity
(Non-GAAP)
19.56
%
21.50
%
11.19
%
Three months ended
(dollars in thousands)
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
Tangible shareholders' equity to
tangible assets
Shareholders' equity (GAAP)
$
1,090,245
$
1,046,416
$
990,338
$
1,042,177
$
1,109,182
Exclude goodwill and other intangible
assets, net
319,456
321,112
326,314
328,016
329,718
Tangible shareholders' equity
(Non-GAAP)
$
770,789
$
725,304
$
664,024
$
714,161
$
779,464
Total assets (GAAP)
$
9,842,394
$
9,930,986
$
9,976,879
$
10,120,611
$
10,118,328
Exclude goodwill and other intangible
assets, net
319,456
321,112
326,314
328,016
329,718
Total tangible assets (Non-GAAP)
$
9,522,938
$
9,609,874
$
9,650,565
$
9,792,595
$
9,788,610
Shareholders' equity to total assets
(GAAP)
11.08
%
10.54
%
9.93
%
10.30
%
10.96
%
Tangible shareholders' equity to tangible
assets (Non-GAAP)
8.09
%
7.55
%
6.88
%
7.29
%
7.96
%
Three months ended
(dollars in thousands)
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
Tangible common shareholders' equity
per share
Tangible s/h equity (Non-GAAP)
$
770,789
$
725,304
$
664,024
$
714,161
$
779,464
Common shares outstanding at end of
period
33,195,250
33,331,513
33,332,189
33,350,974
33,837,935
Common s/h equity (book value) per share
(GAAP)
$
32.84
$
31.39
$
29.71
$
31.25
$
32.78
Tangible common shareholders' equity
(tangible book value) per share (Non-GAAP)
$
23.22
$
21.76
$
19.92
$
21.41
$
23.04
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426005462/en/
Peter G. Wiese, EVP & CFO, (530) 898-0300
TriCo Bancshares (NASDAQ:TCBK)
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