8-K
TRICO BANCSHARES / (TCBK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_______________
FORM 8-K
______________
Current report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 28, 2022
_______________________
(Exact name of registrant as specified in its charter)
_______________________
| California | 0-10661 | 94-2792841 | |
|---|---|---|---|
| (State or other jurisdiction of<br>incorporation or organization) | (Commission File No.) | (I.R.S. Employer<br>Identification No.) | |
| 63 Constitution Drive | Chico, | California | 95973 |
| --- | --- | --- | --- |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (530) 898-0300
_______________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||
|---|---|---|---|---|
| ☐ | Soliciting material pursuant to rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||
| --- | --- | ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| --- | --- | ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange<br>on which registered |
|---|---|---|
| Common Stock, no par value | TCBK | Nasdaq |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company. ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On April 28, 2022, TriCo Bancshares (the "Company") announced its unaudited financial results for the three month period ended March 31, 2022. A copy of the press release is attached as Exhibit 99.1 to this to this Form 8-K and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
The executive officers of the Company intend to use the materials filed herewith, in whole or in part, in one or more presentations, discussions or meetings with investors. A copy of the investor presentation is attached hereto as Exhibit 99.2.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Press release dated April 28, 2022
99.2 Investor Presentation
The information furnished under Item 2.02, Item 7.01 and Item 9.01 of this Current Period on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of TriCo Bancshares under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TRICO BANCSHARES | |
|---|---|
| Date: April 28, 2022 | /s/ Peter G. Wiese |
| Peter G. Wiese, Executive Vice President and Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Document
Exhibit 99.1
| Contact: Peter G. Wiese, EVP & CFO, (530) 898-0300 |
|---|
| For Immediate Release |
TRICO BANCSHARES ANNOUNCES FIRST QUARTER 2022 RESULTS
Notable Items for First Quarter 2022
•Completed the merger and system conversion of Valley Republic Bancorp ("VRB") effective March 25, 2022
•Organic loan growth, excluding PPP, for the quarter of $187.9 million or 15.5% annualized
•Increase in net interest margin less acquired loan discount accretion and PPP loan yield of 0.04% to 3.29%
•Quarterly pre-tax pre-provision net revenues of $36.6 million, inclusive of $4.0 million in merger expenses, as compared to $39.6 million, inclusive of $0.9 million in merger expenses, in the trailing quarter and $40.9 million in the same quarter of the prior year
•A reduction in nonperforming assets of $15.9 million or 48.4% to $17.0 million
"With the legal close, system conversion and substantially all of the integration of the merger behind us, our banking team can be fully focused on growth across our California footprint", noted Rick Smith, President and Chief Executive Officer. Peter Wiese, EVP and Chief Financial Officer added, "Financially speaking, there are a number of metrics that began moving in our favor during late December and we believe those positive trends continued into the first quarter of 2022, the results of which are evidenced in the financial metrics that we have the pleasure of sharing with you today."
CHICO, CA – (April 28, 2022) – TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company of Tri Counties Bank, today announced net income of $20,374,000 for the quarter ended March 31, 2022, compared to $28,222,000 during the trailing quarter ended December 31, 2021, and $33,649,000 during the quarter ended March 31, 2021. Diluted earnings per share were $0.67 for the first quarter of 2022, compared to $0.94 for the fourth quarter of 2021 and $1.13 for the first quarter of 2021.
Financial Highlights
Performance highlights and other developments for the Company as of or for the three months ended March 31, 2022, included the following:
•For the three months ended March 31, 2022, the Company’s return on average assets was 0.94%, and the return on average equity was 8.19%.
•Organic loan growth, excluding PPP and acquired loans, totaled $187.9 million (15.5% annualized) for the current quarter and $437.3 million (9.5% annualized) for the trailing twelve-month period.
•For the current quarter, net interest margin, less effect of acquired loan discount accretion and PPP yields (non-GAAP), on a tax equivalent basis was 3.29%, an increase of 4 basis points from 3.25% in the trailing quarter.
•The efficiency ratio was 55.95% for the three months ended March 31, 2022, as compared to 54.10% for the trailing quarter.
•As of March 31, 2022, the Company reported total loans, total assets and total deposits of $5.9 billion, $10.1 billion and $8.7 billion, respectively. As a direct result of significant deposit growth in the last year, the loan to deposit ratio has declined to 67.15% as of March 31, 2022, as compared to 72.37% at March 31, 2021.
•The average rate of interest paid on deposits, including non-interest-bearing deposits, equaled 0.04% during the first quarter of 2022, consistent with 0.04% during the trailing quarter, and representing a decrease of 2 basis points from the average rate paid of 0.06% during the same quarter of the prior year.
•Noninterest income related to service charges and fees was $11.7 million for the three month period ended March 31, 2022, an increase of 11.6% when compared to the same period in 2021.
•The provision for credit losses for loans and debt securities was approximately $8.3 million during the quarter ended March 31, 2022, as compared to a provision expense of $1.0 million during the trailing quarter ended December 31, 2021, and a reversal of provision expense totaling $6.1 million for the three month period ended March 31, 2021.
•The allowance for credit losses to total loans was 1.64% as of March 31, 2022, compared to 1.74% as of the trailing quarter end, and 1.73% as of March 31, 2021. Non-performing assets to total assets were 0.17% at March 31, 2022, as compared to 0.38% as of December 31, 2021, and 0.39% at March 31, 2021.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Annual Report on Form 10-Q for the period ended March 31, 2022, 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) | 2022 | 2021 | Change | % Change | |||||
| Net interest income | $ | 67,924 | $ | 69,783 | (2.7) | % | |||
| (Provision for) reversal of credit losses | (8,330) | (980) | (7,350) | 750.0 | % | ||||
| Noninterest income | 15,096 | 16,502 | (1,406) | (8.5) | % | ||||
| Noninterest expense | (46,447) | (46,679) | 232 | (0.5) | % | ||||
| Provision for income taxes | (7,869) | (10,404) | 2,535 | (24.4) | % | ||||
| Net income | $ | 20,374 | $ | 28,222 | (27.8) | % | |||
| Diluted earnings per share | $ | 0.67 | $ | 0.94 | (28.7) | % | |||
| Dividends per share | $ | 0.25 | $ | 0.25 | — | % | |||
| Average common shares | 30,050 | 29,724 | 326 | 1.1 | % | ||||
| Average diluted common shares | 30,202 | 29,870 | 332 | 1.1 | % | ||||
| Return on average total assets | 0.94 | % | 1.31 | % | |||||
| Return on average equity | 8.19 | % | 11.20 | % | |||||
| Efficiency ratio | 55.95 | % | 54.10 | % |
All values are in US Dollars.
| Three months ended<br>March 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (dollars and shares in thousands, except per share data) | 2022 | 2021 | Change | % Change | |||||
| Net interest income | $ | 67,924 | $ | 66,440 | 2.2 | % | |||
| (Provision for) reversal of credit losses | (8,330) | 6,060 | (14,390) | (237.5) | % | ||||
| Noninterest income | 15,096 | 16,110 | (1,014) | (6.3) | % | ||||
| Noninterest expense | (46,447) | (41,618) | (4,829) | 11.6 | % | ||||
| Provision for income taxes | (7,869) | (13,343) | 5,474 | (41.0) | % | ||||
| Net income | $ | 20,374 | $ | 33,649 | (39.5) | % | |||
| Diluted earnings per share | $ | 0.67 | $ | 1.13 | (40.7) | % | |||
| Dividends per share | $ | 0.25 | $ | 0.25 | — | % | |||
| Average common shares | 30,050 | 29,727 | 323 | 1.1 | % | ||||
| Average diluted common shares | 30,202 | 29,905 | 297 | 1.0 | % | ||||
| Return on average total assets | 0.94 | % | 1.75 | % | |||||
| Return on average equity | 8.19 | % | 14.51 | % | |||||
| Efficiency ratio | 55.95 | % | 50.42 | % |
All values are in US Dollars.
Merger Update
On March 25, 2022, the Company completed its acquisition of Valley Republic Bancorp, including the merger of Valley Republic Bank (collectively "VRB") into Tri Counties Bank, with Tri Counties Bank as the surviving entity, in accordance with the terms of the merger agreement dated as of July 27, 2021. The cash and stock transaction was valued at approximately $174.0 million in aggregate, based on TriCo's closing stock price of $42.48 on March 25, 2022. Under the terms of the merger agreement, the Company issued approximately 4.1 million shares, in addition to approximately $431,000 in cash paid for the settlement of stock option awards at VRB.
As a result of the merger with VRB, the Company acquired assets consisting primarily of cash totaling $427.3 million, investment securities of $109.7 million, loans totaling $771.4 million (inclusive of $21.4 million in PPP and fair value discounts of $20.4 million), core deposit intangibles of $10.7 million, and liabilities consisting primarily of $1.2 billion in deposits and $47.3 million in subordinated debt (of which $4.4 million was retired as TriCo Bancshares was the counter party).
VRB was headquartered in Bakersfield, California, and had four branch locations in and around Bakersfield, which all now operate as branches for Tri Counties Bank, and a loan production office in Fresno, California. The Company anticipates that Tri Counties Bank's previously existing Bakersfield branch and the VRB loan production office in Fresno will be consolidated, subject to regulatory approval, into the overlapping locations in the near future.
Balance Sheet
Total loans outstanding, excluding PPP, grew to $5.80 billion as of March 31, 2022, an increase of 25.8% over the prior year, of which 9.5% was related to organic loan growth. Investments increased to $2.57 billion as of March 31, 2022, an increase of 30.9% annualized over the prior year. Average earning assets to total average assets remained flat at 92.9% at March 31, 2022, as compared to 93.0% and 92.7% at December 31, 2021, and March 31, 2021, respectively. The loan to deposit ratio was 67.2% at March 31, 2022, as compared to 66.7% and 72.4% at December 31, 2021, and March 31, 2021, respectively.
Total shareholders' equity increased by $108,998,000 during the quarter ended March 31, 2022, as a result of issuing $173,585,000 in common stock associated with the VRB merger and net income of $20,374,000, which was partially offset by a decrease in accumulated other comprehensive income of $78,339,000 and $7,433,000 in cash dividends paid on common stock. As a result, the Company’s book value was $32.78 per share at March 31, 2022 as compared to $33.64 and $31.71 at December 31, 2021, and March 31, 2021, 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 $23.04 per share at March 31, 2022, as compared to $25.80 and $23.72 at December 31, 2021, and March 31, 2021, respectively.
Trailing Quarter Balance Sheet Change
| Ending balances | March 31, | December 31, | Acquired Balances | Organic Change | Annualized Organic<br> % Change | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2022 | 2021 | Change | |||||||
| Total assets | $ | 10,118,328 | $ | 8,614,787 | $ | 1,363,529 | 6.5 | % | ||
| Total loans | 5,851,975 | 4,916,624 | 935,351 | 773,390 | 161,961 | 13.2 | ||||
| Total loans, excluding PPP | 5,795,370 | 4,855,477 | 939,893 | 751,978 | 187,915 | 15.5 | ||||
| Total investments | 2,569,706 | 2,427,885 | 141,821 | 109,716 | 32,105 | 5.3 | ||||
| Total deposits | $ | 8,714,477 | $ | 7,367,159 | $ | 1,215,479 | 7.2 | % |
All values are in US Dollars.
Organic loan growth, excluding PPP, of $187,915,000 or 15.5% on an annualized basis was realized during the quarter ended March 31, 2022, primarily within commercial real estate and commercial and industrial. In addition, investment security organic growth was $32,105,000 or 5.3% on an annualized basis as excess liquidity, driven by continued strong deposit growth, was put to use in higher yielding earning assets. Deposit balances continue to increase, with an organic change of $131,839,000 or 7.2% annualized during the period, which provides management with opportunities to deploy excess cash within the investment portfolio or other interest earnings assets. During the three months ended March 31, 2022 and excluding PPP balance changes, loan originations totaled approximately $396 million while payoffs of loans totaled $225 million which compares to origination and payoff activity during the three months ended December 31, 2021 of $412 million and $297 million, respectively. Investment securities increased to $2,569,706,000 at March 31, 2022, an organic change of $497,210,000 or 25.3% from the prior year.
Average Trailing Quarter Balance Sheet Change
| Quarterly average balances for the period ended | March 31, | December 31, | Annualized % Change | ||||
|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2022 | 2021 | Change | ||||
| Total assets | $ | 8,778,256 | $ | 8,546,004 | 10.9 | % | |
| Total loans | 4,988,560 | 4,862,457 | 126,103 | 10.4 | |||
| Total loans, excluding PPP | 4,937,865 | 4,759,294 | 178,571 | 15.0 | |||
| Total investments | 2,457,077 | 2,402,582 | 54,495 | 9.1 | |||
| Total deposits | $ | 7,521,930 | $ | 7,304,659 | 11.9 | % |
All values are in US Dollars.
As a result of the timing of the merger with VRB being close to quarter end, there was an immaterial impact from the acquired balances on the quarterly averages reflected above, therefore the average balance impact of the acquired balances have not been provided.
Year Over Year Balance Sheet Change
| Ending balances | As of March 31, | Acquired | Organic Change | Organic<br> % Change | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2022 | 2021 | Change | Balances | ||||||
| Total assets | $ | 10,118,328 | $ | 8,031,612 | $ | 1,363,529 | 9.0 | % | ||
| Total loans | 5,851,975 | 4,966,977 | 884,998 | 773,390 | 111,608 | 2.2 | ||||
| Total loans, excluding PPP | 5,795,370 | 4,606,133 | 1,189,237 | 751,978 | 437,259 | 9.5 | ||||
| Total investments | 2,569,706 | 1,962,780 | 606,926 | 109,716 | 497,210 | 25.3 | ||||
| Total deposits | $ | 8,714,477 | $ | 6,863,400 | $ | 1,215,479 | 9.3 | % |
All values are in US Dollars.
PPP loan balances outstanding, net of related deferred fees, have declined by $304,239,000 during the twelve months ended March 31, 2022, meanwhile, non-PPP loan balances have increased as a result of organic activities by approximately $437,259,000 during the same period. This has led to a long-term beneficial and meaningful shift in the makeup of the loan portfolio, despite total loan balances increasing modestly during the 12 month period ended March 31, 2022, by $111,608,000 or 2.2%. The Company's non-
PPP loan originations have increased significantly over the past year but have also been challenged by an acceleration in payoffs. Specifically, during the twelve months ended March 31, 2022 and excluding PPP balance changes, loan originations totaled approximately $1.40 billion while payoffs of loans totaled $0.91 billion. Investment securities increased to $2,569,706,000 at March 31, 2022, an organic change of $497,210,000 or 25.3% from the prior year.
Net Interest Income and Net Interest Margin
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) | 2022 | 2021 | Change | % Change | |||||||
| Interest income | $ | 69,195 | $ | 71,024 | $ | (1,829) | (2.6) | % | |||
| Interest expense | (1,271) | (1,241) | (30) | 2.4 | % | ||||||
| Fully tax-equivalent adjustment (FTE) (1) | 283 | 274 | 9 | 3.3 | % | ||||||
| Net interest income (FTE) | $ | 68,207 | $ | 70,057 | $ | (1,850) | (2.6) | % | |||
| Net interest margin (FTE) | 3.39 | % | 3.50 | % | |||||||
| Acquired loans discount accretion, net: | |||||||||||
| Amount (included in interest income) | $ | 1,323 | $ | 1,780 | $ | (457) | (25.7) | % | |||
| Net interest margin less effect of acquired loan discount accretion(1) | 3.32 | % | 3.41 | % | (0.09) | % | |||||
| PPP loans yield, net: | |||||||||||
| Amount (included in interest income) | $ | 1,097 | $ | 4,094 | $ | (2,997) | (73.2) | % | |||
| Net interest margin less effect of PPP loan yield (1) | 3.36 | % | 3.34 | % | 0.02 | % | |||||
| Acquired loans discount accretion and PPP loan yield, net: | |||||||||||
| Amount (included in interest income) | $ | 2,420 | $ | 5,874 | $ | (3,454) | (58.8) | % | |||
| Net interest margin less effect of acquired loan discount accretion and PPP loan yield (1) | 3.29 | % | 3.25 | % | 0.04 | % | |||||
| Three months ended<br>March 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (dollars in thousands) | 2022 | 2021 | Change | % Change | |||||||
| Interest income | $ | 69,195 | $ | 67,916 | $ | 1,279 | 1.9 | % | |||
| Interest expense | (1,271) | (1,476) | 205 | (13.9) | % | ||||||
| Fully tax-equivalent adjustment (FTE) (1) | 283 | 277 | 6 | 2.2 | % | ||||||
| Net interest income (FTE) | $ | 68,207 | $ | 66,717 | $ | 1,490 | 2.2 | % | |||
| Net interest margin (FTE) | 3.39 | % | 3.74 | % | |||||||
| Acquired loans discount accretion, net: | |||||||||||
| Amount (included in interest income) | $ | 1,323 | $ | 1,712 | $ | (389) | (22.7) | % | |||
| Net interest margin less effect of acquired loan discount accretion(1) | 3.32 | % | 3.64 | % | (0.32) | % | |||||
| PPP loans yield, net: | |||||||||||
| Amount (included in interest income) | $ | 1,097 | $ | 5,863 | $ | (4,766) | (81.3) | % | |||
| Net interest margin less effect of PPP loan yield (1) | 3.36 | % | 3.59 | % | (0.23) | % | |||||
| Acquired loans discount accretion and PPP loan yield, net: | |||||||||||
| Amount (included in interest income) | $ | 2,420 | $ | 7,575 | $ | (5,155) | (68.1) | % | |||
| Net interest margin less effect of acquired loan discount accretion and PPP loan yield (1) | 3.29 | % | 3.48 | % | (0.19) | % |
(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. Generally, as time goes on, 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 the first quarter of 2022. During the three months ended March 31, 2022, December 31, 2021, and March 31, 2021, purchased loan discount accretion was $1,323,000, $1,780,000, and $1,712,000, 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, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||||||||
| Average<br>Balance | Income/<br>Expense | Yield/<br>Rate | Average<br>Balance | Income/<br>Expense | Yield/<br>Rate | Average<br>Balance | Income/<br>Expense | Yield/<br>Rate | ||||||||||
| Assets | ||||||||||||||||||
| Loans, excluding PPP | $ | 4,937,865 | $ | 56,648 | 4.65 | % | $ | 4,759,294 | $ | 56,710 | 4.73 | % | $ | 4,407,150 | $ | 54,573 | 5.02 | % |
| PPP loans | 50,695 | 1,097 | 8.78 | % | 103,163 | 4,094 | 15.74 | % | 355,875 | 5,863 | 6.68 | % | ||||||
| Investments-taxable | 2,313,204 | 10,223 | 1.79 | % | 2,261,161 | 9,028 | 1.58 | % | 1,649,980 | 6,394 | 1.57 | % | ||||||
| Investments-nontaxable (1) | 143,873 | 1,225 | 3.45 | % | 141,421 | 1,186 | 3.33 | % | 125,055 | 1,200 | 3.89 | % | ||||||
| Total investments | 2,457,077 | 11,448 | 1.89 | % | 2,402,582 | 10,214 | 1.69 | % | 1,775,035 | 7,594 | 1.74 | % | ||||||
| Cash at Federal Reserve and other banks | 707,563 | 285 | 0.16 | % | 682,759 | 280 | 0.16 | % | 701,666 | 163 | 0.09 | % | ||||||
| Total earning assets | 8,153,200 | 69,478 | 3.46 | % | 7,947,798 | 71,298 | 3.56 | % | 7,239,726 | 68,193 | 3.82 | % | ||||||
| Other assets, net | 625,056 | 598,206 | 569,186 | |||||||||||||||
| Total assets | $ | 8,778,256 | $ | 8,546,004 | $ | 7,808,912 | ||||||||||||
| Liabilities and shareholders’ equity | ||||||||||||||||||
| Interest-bearing demand deposits | $ | 1,597,309 | $ | 84 | 0.02 | % | $ | 1,544,176 | $ | 58 | 0.01 | % | $ | 1,430,943 | $ | 76 | 0.02 | % |
| Savings deposits | 2,571,023 | 327 | 0.05 | % | 2,486,532 | 291 | 0.05 | % | 2,228,281 | 329 | 0.06 | % | ||||||
| Time deposits | 301,499 | 268 | 0.36 | % | 315,953 | 349 | 0.44 | % | 336,605 | 532 | 0.64 | % | ||||||
| Total interest-bearing deposits | 4,469,831 | 679 | 0.06 | % | 4,346,661 | 698 | 0.06 | % | 3,995,829 | 937 | 0.10 | % | ||||||
| Other borrowings | 44,731 | 5 | 0.05 | % | 50,667 | 7 | 0.05 | % | 32,709 | 4 | 0.05 | % | ||||||
| Junior subordinated debt | 60,971 | 587 | 3.90 | % | 58,004 | 536 | 3.67 | % | 57,688 | 535 | 3.76 | % | ||||||
| Total interest-bearing liabilities | 4,575,533 | 1,271 | 0.11 | % | 4,455,332 | 1,241 | 0.11 | % | 4,086,226 | 1,476 | 0.15 | % | ||||||
| Noninterest-bearing deposits | 3,052,099 | 2,957,998 | 2,657,925 | |||||||||||||||
| Other liabilities | 141,400 | 132,910 | 123,986 | |||||||||||||||
| Shareholders’ equity | 1,009,224 | 999,764 | 940,775 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 8,778,256 | $ | 8,546,004 | $ | 7,808,912 | ||||||||||||
| Net interest rate spread (1) (2) | 3.35 | % | 3.45 | % | 3.67 | % | ||||||||||||
| Net interest income and margin (1) (3) | $ | 68,207 | 3.39 | % | $ | 70,057 | 3.50 | % | $ | 66,717 | 3.74 | % |
(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, 2022 decreased $1,850,000 or 2.6% to $68,207,000 compared to $70,057,000 during the three months ended December 31, 2021. Over the same period, net interest margin declined 11 basis points to 3.39%, as compared to the trailing quarter. The decline in net interest income is attributed to a reduction of $2,997,000 in the revenues recognized from PPP loans, partially offset by increases in average volume and rates on investment securities which increased interest income by $1,234,000 over the trailing quarter.
As compared to the same quarter in the prior year, average loan yields, excluding PPP, decreased 37 basis points from 5.02% during the three months ended March 31, 2021, to 4.65% during the three months ended March 31, 2022. The accretion of discounts from acquired loans added 7 and 10 basis points to loan yields during the quarters ended March 31, 2022 and March 31, 2021, respectively. Therefore, of the 37 basis point decrease in yields on loans during the comparable three month periods ended March 31, 2022 and 2021, 34 basis points was attributable to decreases in market rates, while 3 basis points resulted from less accretion of discounts.
The rates paid on interest bearing liabilities generally remained flat during the quarter ended March 31, 2022 compared to the trailing quarter. The decline in interest expense when compared to the same quarter from the prior year, however, was primarily attributed to reductions in the rates offered on deposit products. As a result, the cost of interest-bearing deposits decreased by 4 basis points during the quarter ended March 31, 2022, to 0.06% from 0.10% during the same quarter of the prior year. In addition, the level of noninterest-bearing deposits continues to benefit the average cost of total deposits which remained flat at 0.04% in both the current and trailing quarter, compared to 0.6% in the first quarter of the prior year. Specifically, the ratio of average total noninterest-bearing deposits to total average deposits was 40.6% and 40.5% as of March 31, 2022 and December 31, 2021, respectively, as compared to 39.9% for the quarter ended March 31, 2021.
Interest Rates and Loan Portfolio Composition
During the quarter ended March 31, 2022, market interest rates, including many rates that serve as reference indices for variable rate loans, increased modestly. However, the loan portfolio yield continues to have a downward bias due to the repricing of loans at lower rates and increased market competition stemming from loan to deposit ratios being at historic lows. As of March 31, 2022, the Company's loan portfolio consisted of approximately $5.9 billion in outstanding principal with a weighted average coupon rate of 4.24%, inclusive of the PPP program loans. Excluding PPP loans, the Company's loan portfolio has approximately $5.8 billion outstanding with a weighted average coupon rate of 4.27% as of March 31, 2022. Included in the March 31, 2022 loan total, exclusive of PPP loans, are variable rate loans totaling $3.4 billion, of which, $800 million are considered floating based on the Wall Street Prime index.
Asset Quality and Credit Loss Provisioning
During the three months ended March 31, 2022, the Company recorded a provision for credit losses of $8,330,000, as compared to a $980,000 provision during the trailing quarter, and a reversal of provision expense of $6,060,000 during the first quarter of 2021.
The following table presents details of the provision for credit losses for the periods indicated:
| Three months ended | ||||||
|---|---|---|---|---|---|---|
| (dollars in thousands) | March 31, 2022 | December 31, 2021 | March 31, 2021 | |||
| Addition to (reversal of) allowance for credit losses | $ | 8,205 | $ | 715 | $ | (6,240) |
| Addition to reserve for unfunded loan commitments | 125 | 265 | 180 | |||
| Total provision for (reversal of) credit losses | $ | 8,330 | $ | 980 | $ | (6,060) |
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, 2022 | March 31, 2021 | ||
| Balance, beginning of period | $ | 85,376 | $ | 91,847 |
| ACL at acquisition for PCD loans | 2,037 | — | ||
| Provision for (reversal of) credit losses | 8,205 | (6,240) | ||
| Loans charged-off | (743) | (226) | ||
| Recoveries of previously charged-off loans | 1,174 | 560 | ||
| Balance, end of period | $ | 96,049 | $ | 85,941 |
The allowance for credit losses (ACL) was $96,049,000 as of March 31, 2022, a net increase of $10,108,000 over the immediately preceding quarter. The provision for credit losses of $8,205,000 during the quarter was the net effect of increases in required reserves totaling $10,820,000 related to the loan portfolio acquired from VRB totaling $703,848,000, which is net of $68,513,000 in purchase credit deteriorated loans (PCD) and $21,412,000 in PPP loans as of the merger date, partially offset by a decline in required reserves from the Company's organic loan portfolio totaling $2,615,000.
Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using both a discounted cash flow model, and the same methodology as other loans and leases held-for-investment. The ACL recorded as of the VRB merger date for PCD loans totaled $2,037,000.
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. However, management notes that the majority of economic forecasts utilized in the ACL calculation have remained directionally consistent with preceding quarters, as general economic conditions continue to improve, albeit at a pace slower than expected due to unforeseen disruptions in the supply chain and increasing energy prices. In addition, management notes that the actual and forecast increases in inflation that were previously identified by the Federal Reserve Board as "transitory", combined with overseas conflicts and leading to
the likely rise in short-term interest rates and flattening or inversion of the yield curve, may be further indication of future economic contraction. 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 decreased by $4,070,000 during the quarter ended March 31, 2022 to $8,402,000, as compared to $4,332,000 at December 31, 2021. Non-performing loans were $14,088,000 at March 31, 2022, a decrease of $16,262,000 and $14,853,000 from $30,350,000 and $28,941,000 as of December 31, 2021 and March 31, 2021, respectively.
The following table illustrates the total loans by risk rating and their respective percentage of total loans for the periods presented.
| March 31, | % of Total Loans | December 31, | % of Total Loans | March 31 | % of Total Loans | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2022 | 2021 | 2021 | |||||||||||||
| Risk Rating: | ||||||||||||||||
| Pass | $ | 5,682,026 | 97.1 | % | $ | 4,787,077 | 97.4 | % | $ | 4,765,180 | 95.9 | % | ||||
| Special Mention | 120,684 | 2.1 | % | 77,461 | 1.5 | % | 143,677 | 2.9 | % | |||||||
| Substandard | 49,265 | 0.8 | % | 52,086 | 1.1 | % | 58,120 | 1.2 | % | |||||||
| Total | $ | 5,851,975 | $ | 4,916,624 | $ | 4,966,977 | ||||||||||
| Classified loans to total loans | 0.84 | % | 1.06 | % | 1.17 | % | ||||||||||
| Loans past due 30+ days to total loans | 0.14 | % | 0.09 | % | 0.21 | % |
The ratio of classified loans to total loans improved to 0.84% as of March 31, 2022 as compared to both 1.06% and 1.17% for the trailing quarter and same quarter of the prior year, respectively. The Company's criticized loan balances increased during the current quarter by approximately $40,402,000 to $169,949,000 as of March 31, 2022, primarily from the merger with VRB which added approximately $65,556,000 in criticized loans, net of $2,957,000 in purchase discounts. All of the criticized loans acquired from VRB were identified by management as PCD as of the acquisition date. The Company's organic criticized loan balances outstanding improved by approximately $19,100,000 during the quarter ended March 31, 2022, the majority of which was attributed to a sale of substandard loans totaling approximately $12,043,000.
There was one property added to other real estate owned totaling $313,000 during the quarter ended March 31, 2022, and no disposals. As of March 31, 2022, other real estate owned consisted of seven properties with a carrying value of approximately $2,907,000.
Non-performing assets of $16,995,000 at March 31, 2022 represented 0.17% of total assets, a substantial decrease from the $32,944,000 or 0.38% and $31,250,000 or 0.39% as of December 31, 2021 and March 31, 2021, respectively. The improvement in non-performing assets relates primarily to the loan sale discussed above.
Allocation of Credit Loss Reserves by Loan Type
| As of March 31, 2022 | As of December 31, 2021 | As of March 31, 2021 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | Amount | % of Loans Outstanding | Amount | % of Loans Outstanding | Amount | % of Loans Outstanding | |||||||
| Commercial real estate: | |||||||||||||
| CRE - Non Owner Occupied | $ | 28,055 | 1.48 | % | $ | 25,739 | 1.61 | % | $ | 26,434 | 1.70 | % | |
| CRE - Owner Occupied | 12,071 | 1.42 | % | 10,691 | 1.51 | % | 9,874 | 1.54 | % | ||||
| Multifamily | 11,987 | 1.43 | % | 12,395 | 1.51 | % | 12,371 | 1.62 | % | ||||
| Farmland | 2,879 | 1.15 | % | 2,315 | 1.34 | % | 1,724 | 1.17 | % | ||||
| Total commercial real estate loans | 54,992 | 1.43 | % | 51,140 | 1.55 | % | 50,403 | 1.62 | % | ||||
| Consumer: | |||||||||||||
| SFR 1-4 1st Liens | 10,669 | 1.50 | % | 10,723 | 1.60 | % | 10,665 | 1.66 | % | ||||
| SFR HELOCs and Junior Liens | 10,843 | 2.99 | % | 10,510 | 3.11 | % | 11,079 | 3.34 | % | ||||
| Other | 2,340 | 3.73 | % | 2,241 | 3.34 | % | 2,860 | 3.99 | % | ||||
| Total consumer loans | 23,852 | 2.10 | % | 23,474 | 2.19 | % | 24,604 | 2.36 | % | ||||
| Commercial and Industrial | 8,869 | 1.77 | % | 3,862 | 1.49 | % | 4,464 | 0.81 | % | ||||
| Construction | 7,437 | 2.45 | % | 5,667 | 2.55 | % | 5,476 | 2.47 | % | ||||
| Agricultural Production | 883 | 1.27 | % | 1,215 | 2.39 | % | 988 | 2.49 | % | ||||
| Leases | 16 | 0.20 | % | 18 | 0.27 | % | 6 | 0.13 | % | ||||
| Allowance for credit losses | 96,049 | 1.64 | % | 85,376 | 1.74 | % | 85,941 | 1.73 | % | ||||
| Reserve for unfunded loan commitments | 3,915 | 3,790 | 3,586 | ||||||||||
| Total allowance for credit losses | $ | 99,964 | 1.71 | % | $ | 89,166 | 1.81 | % | $ | 89,527 | 1.80 | % |
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 1.66% as of March 31, 2022. 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, 2022, the unamortized discount associated with acquired loans totaled $34,908,000 and, if aggregated with the ACL, would collectively represent 2.22% of total gross loans and 2.26% of total loans less PPP loans.
SBA Paycheck Protection Program
In March 2020 (Round 1) and subsequently in December 2020 (Round 2), the Small Business Administration ("SBA") Paycheck Protection Program ("PPP") was created to help small businesses keep workers employed during the COVID-19 crisis. Tri Counties Bank, through its online portal, facilitated the ability for borrowers to open a new deposit account and submit PPP applications during the entirety of the Programs. The SBA ended PPP and did not accept new borrowing applications, effective May 31, 2021. The following is a summary of PPP loan related information as of the periods indicated:
| (dollars in thousands) | March 31, 2022 | December 31, 2021 | March 31, 2021 | |||
|---|---|---|---|---|---|---|
| Total number of PPP loans outstanding | 243 | 450 | 2,484 | |||
| PPP loan balance (TCBK round 1 origination), gross | $ | 1,323 | $ | 2,544 | $ | 193,958 |
| PPP loan balance (TCBK round 2 origination), gross | 37,305 | 60,767 | 176,316 | |||
| Acquired PPP loan balance (VRB origination), gross | 19,167 | — | — | |||
| Total PPP loans, gross outstanding | $ | 57,795 | $ | 63,311 | $ | 370,274 |
| PPP deferred loan fees (Round 1 origination) | — | 1 | 2,358 | |||
| PPP deferred loan fees (Round 2 origination) | 1,190 | 2,163 | 7,072 | |||
| Total PPP deferred loan fees (costs) outstanding | $ | 1,190 | $ | 2,164 | $ | 9,430 |
As of March 31, 2022, there was approximately $1,190,000 in net deferred fee income remaining to be recognized. During the three months ended March 31, 2022, the Company recognized $974,000 in fees on PPP loans as compared with $3,482,000 and $4,978,000 for the three months ended December 31, 2021 and March 31, 2021, respectively. Based on the payment guarantee provided by the SBA as well as the expected short-term duration of the PPP loans acquired from VRB, the fair value of these loans approximates the principal balance outstanding as of the merger date, and therefore, no purchase discount was recorded.
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, 2022 | December 31, 2021 | Change | % Change | |||
| ATM and interchange fees | $ | 6,243 | $ | 6,421 | (2.8) | % | |
| Service charges on deposit accounts | 3,834 | 3,674 | 160 | 4.4 | % | ||
| Other service fees | 882 | 888 | (6) | (0.7) | % | ||
| Mortgage banking service fees | 463 | 475 | (12) | (2.5) | % | ||
| Change in value of mortgage servicing rights | 274 | (181) | 455 | (251.4) | % | ||
| Total service charges and fees | 11,696 | 11,277 | 419 | 3.7 | % | ||
| Increase in cash value of life insurance | 638 | 713 | (75) | (10.5) | % | ||
| Asset management and commission income | 887 | 930 | (43) | (4.6) | % | ||
| Gain on sale of loans | 1,246 | 1,672 | (426) | (25.5) | % | ||
| Lease brokerage income | 158 | 204 | (46) | (22.5) | % | ||
| Sale of customer checks | 104 | 117 | (13) | (11.1) | % | ||
| Gain on sale of investment securities | — | — | — | n/m | |||
| Loss on marketable equity securities | (137) | (27) | (110) | 407.4 | % | ||
| Other | 504 | 1,616 | (1,112) | (68.8) | % | ||
| Total other non-interest income | 3,400 | 5,225 | (1,825) | (34.9) | % | ||
| Total non-interest income | $ | 15,096 | $ | 16,502 | (8.5) | % |
All values are in US Dollars.
Non-interest income decreased $1,406,000 or 8.5% to $15,096,000 during the three months ended March 31, 2022, compared to $16,502,000 during the quarter ended December 31, 2021. This was largely the result of two items recorded within other non-interest income during the trailing quarter which included, death benefits on life insurance totaling $702,000 and an increase in the fair value of certain equity investments of approximately $804,000 as compared to $225,000 in the current quarter. In addition, a gain on debt extinguishment of $235,000 was recorded in the current quarter. The change in gain on sale of mortgage loans declined by $426,000 or 25.5% during the quarter ended March 31, 2022, with an offset in the change in value or mortgage servicing rights increasing by $455,000 or 251.4%, both attributed to the rapidly rising rate environment.
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) | 2022 | 2021 | Change | % Change | |||
| ATM and interchange fees | $ | 6,243 | $ | 5,861 | 6.5 | % | |
| Service charges on deposit accounts | 3,834 | 3,269 | 565 | 17.3 | % | ||
| Other service fees | 882 | 871 | 11 | 1.3 | % | ||
| Mortgage banking service fees | 463 | 463 | — | — | % | ||
| Change in value of mortgage servicing rights | 274 | 12 | 262 | 2,183.3 | % | ||
| Total service charges and fees | 11,696 | 10,476 | 1,220 | 11.6 | % | ||
| Increase in cash value of life insurance | 638 | 673 | (35) | (5.2) | % | ||
| Asset management and commission income | 887 | 834 | 53 | 6.4 | % | ||
| Gain on sale of loans | 1,246 | 3,247 | (2,001) | (61.6) | % | ||
| Lease brokerage income | 158 | 110 | 48 | 43.6 | % | ||
| Sale of customer checks | 104 | 119 | (15) | (12.6) | % | ||
| Gain on sale of investment securities | — | — | — | n/m | |||
| Loss on marketable equity securities | (137) | (53) | (84) | 158.5 | % | ||
| Other | 504 | 704 | (200) | (28.4) | % | ||
| Total other non-interest income | 3,400 | 5,634 | (2,234) | (39.7) | % | ||
| Total non-interest income | $ | 15,096 | $ | 16,110 | (6.3) | % |
All values are in US Dollars.
In addition to the discussion above within the non-interest income for the three months ended March 31, 2022, ATM and interchange fees improved $382,000 or 6.5%, as did service charges on deposit accounts totaling $565,000 or 17.3%, both as a result of increased usage due to relaxed social distancing guidelines during the quarter March 31, 2022 when compared to the same period in the prior year.
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, 2022 | December 31, 2021 | Change | % Change | |||
| Base salaries, net of deferred loan origination costs | $ | 18,216 | $ | 19,123 | (4.7) | % | |
| Incentive compensation | 2,583 | 3,932 | (1,349) | (34.3) | % | ||
| Benefits and other compensation costs | 5,972 | 4,611 | 1,361 | 29.5 | % | ||
| Total salaries and benefits expense | 26,771 | 27,666 | (895) | (3.2) | % | ||
| Occupancy | 3,575 | 3,713 | (138) | (3.7) | % | ||
| Data processing and software | 3,513 | 3,893 | (380) | (9.8) | % | ||
| Equipment | 1,333 | 1,298 | 35 | 2.7 | % | ||
| Intangible amortization | 1,228 | 1,193 | 35 | 2.9 | % | ||
| Advertising | 637 | 819 | (182) | (22.2) | % | ||
| ATM and POS network charges | 1,375 | 1,551 | (176) | (11.3) | % | ||
| Professional fees | 876 | 927 | (51) | (5.5) | % | ||
| Telecommunications | 521 | 534 | (13) | (2.4) | % | ||
| Regulatory assessments and insurance | 720 | 678 | 42 | 6.2 | % | ||
| Merger and acquisition expenses | 4,032 | 872 | 3,160 | 362.4 | % | ||
| Postage | 228 | 232 | (4) | (1.7) | % | ||
| Operational (gain) loss | (183) | 299 | (482) | (161.2) | % | ||
| Courier service | 414 | 346 | 68 | 19.7 | % | ||
| Gain on sale or acquisition of foreclosed assets | — | (23) | 23 | (100.0) | % | ||
| (Gain) loss on disposal of fixed assets | (1,078) | 6 | (1,084) | (18,066.7) | % | ||
| Other miscellaneous expense | 2,485 | 2,675 | (190) | (7.1) | % | ||
| Total other non-interest expense | 19,676 | 19,013 | 663 | 3.5 | % | ||
| Total non-interest expense | $ | 46,447 | $ | 46,679 | (0.5) | % | |
| Average full-time equivalent staff | 1,084 | 1,074 | 10 | 0.9 | % |
All values are in US Dollars.
Non-interest expense for the quarter ended March 31, 2022 decreased $232,000 or 0.5% to $46,447,000 as compared to $46,679,000 during the trailing quarter ended December 31, 2021. Total salaries and benefits expense decreased by $895,000 or 3.2%, led by wage related decreases of $907,000 or 4.7% to $18,216,000, despite an increase of 10 full-time equivalent positions. As disclosed previously, the trailing quarter wage was elevated partially due to transitory items caused by the COVID-19 pandemic, overtime and non-incentive stipends associated with special projects that did not persist into the three months ended March 31, 2022. Incentive compensation decreased $1,349,000 or 34.3%, attributed to lower commissions and incentive accruals on loan origination activities; meanwhile, benefits and other compensation costs increased by $1,361,000 or 29.5%, respectively, during the quarter ended March 31, 2022, due to the expected seasonal impacts associated with the start of any new fiscal year as well as increases in expenses associated with projected benefit obligations and group insurance costs. Merger and acquisition expenses associated with the merger with Valley Republic Bancorp totaled $4,032,000 during the current quarter. The Company sold a former administrative building and relocated a branch during the quarter resulting in a net gain of approximately $1,078,000 as noted above.
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) | 2022 | 2021 | Change | % Change | |||
| Base salaries, net of deferred loan origination costs | $ | 18,216 | $ | 15,511 | 17.4 | % | |
| Incentive compensation | 2,583 | 3,580 | (997) | (27.8) | % | ||
| Benefits and other compensation costs | 5,972 | 6,239 | (267) | (4.3) | % | ||
| Total salaries and benefits expense | 26,771 | 25,330 | 1,441 | 5.7 | % | ||
| Occupancy | 3,575 | 3,726 | (151) | (4.1) | % | ||
| Data processing and software | 3,513 | 3,202 | 311 | 9.7 | % | ||
| Equipment | 1,333 | 1,517 | (184) | (12.1) | % | ||
| Intangible amortization | 1,228 | 1,431 | (203) | (14.2) | % | ||
| Advertising | 637 | 380 | 257 | 67.6 | % | ||
| ATM and POS network charges | 1,375 | 1,246 | 129 | 10.4 | % | ||
| Professional fees | 876 | 594 | 282 | 47.5 | % | ||
| Telecommunications | 521 | 581 | (60) | (10.3) | % | ||
| Regulatory assessments and insurance | 720 | 612 | 108 | 17.6 | % | ||
| Merger and acquisition expenses | 4,032 | — | 4,032 | n/m | |||
| Postage | 228 | 198 | 30 | 15.2 | % | ||
| Operational (gain) loss | (183) | 209 | (392) | (187.6) | % | ||
| Courier service | 414 | 294 | 120 | 40.8 | % | ||
| Gain on sale or acquisition of foreclosed assets | — | (51) | 51 | (100.0) | % | ||
| (Gain) loss on disposal of fixed assets | (1,078) | — | (1,078) | n/m | |||
| Other miscellaneous expense | 2,485 | 2,349 | 136 | 5.8 | % | ||
| Total other non-interest expense | 19,676 | 16,288 | 3,388 | 20.8 | % | ||
| Total non-interest expense | $ | 46,447 | $ | 41,618 | 11.6 | % | |
| Average full-time equivalent staff | 1,084 | 1,024 | 60 | 5.9 | % |
All values are in US Dollars.
Provision for Income Taxes
The Company’s effective tax rate was 27.9% for the three months ended March 31, 2022, as compared to 28.1% for the year ended December 31, 2021. 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 Statement
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 on the Company's business condition and financial operating results; the impact of changes in financial services policies, laws and regulations; 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 COVID-19 global pandemic, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan portfolio, the market value of our investment securities, the availability 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, inflationary pressures and labor shortages on the economic recovery and our business; the impacts of international hostilities or geopolitical events; the costs or effects of mergers, acquisitions or dispositions we may make, whether we are able to obtain any required governmental approvals in connection with any such mergers, acquisitions or dispositions, and/or our ability to 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 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 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 effect of changes in accounting standards and practices; possible other-than-temporary impairment of securities held by us; changes in consumer spending, borrowing and savings habits; our ability to attract and maintain deposits and other sources of liquidity; changes in the financial performance and/or condition of our borrowers; 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 integrating and retaining key employees; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks and the cost to defend against such attacks; change 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 discontinuation of the London Interbank Offered Rate and other reference rates; 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, 2021, which has been filed with the Securities and Exchange Commission (the “SEC”) and are 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,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | |||||||||||
| Revenue and Expense Data | |||||||||||||||
| Interest income | $ | 69,195 | $ | 71,024 | $ | 69,628 | $ | 68,479 | $ | 67,916 | |||||
| Interest expense | 1,271 | 1,241 | 1,395 | 1,396 | 1,476 | ||||||||||
| Net interest income | 67,924 | 69,783 | 68,233 | 67,083 | 66,440 | ||||||||||
| Provision for (benefit from) credit losses | 8,330 | 980 | (1,435) | (260) | (6,060) | ||||||||||
| Noninterest income: | |||||||||||||||
| Service charges and fees | 11,696 | 11,277 | 11,265 | 10,930 | 10,476 | ||||||||||
| Gain on sale of investment securities | — | — | — | — | — | ||||||||||
| Other income | 3,400 | 5,225 | 3,830 | 5,027 | 5,634 | ||||||||||
| Total noninterest income | 15,096 | 16,502 | 15,095 | 15,957 | 16,110 | ||||||||||
| Noninterest expense (2): | |||||||||||||||
| Salaries and benefits | 28,597 | 27,666 | 26,274 | 27,081 | 25,330 | ||||||||||
| Occupancy and equipment | 4,925 | 5,011 | 5,107 | 4,907 | 5,243 | ||||||||||
| Data processing and network | 5,089 | 5,444 | 5,381 | 4,752 | 4,448 | ||||||||||
| Other noninterest expense | 7,836 | 8,558 | 9,045 | 7,431 | 6,597 | ||||||||||
| Total noninterest expense | 46,447 | 46,679 | 45,807 | 44,171 | 41,618 | ||||||||||
| Total income before taxes | 28,243 | 38,626 | 38,956 | 39,129 | 46,992 | ||||||||||
| Provision for income taxes | 7,869 | 10,404 | 11,534 | 10,767 | 13,343 | ||||||||||
| Net income | $ | 20,374 | $ | 28,222 | $ | 27,422 | $ | 28,362 | $ | 33,649 | |||||
| Share Data | |||||||||||||||
| Basic earnings per share | $ | 0.68 | $ | 0.95 | $ | 0.92 | $ | 0.95 | $ | 1.13 | |||||
| Diluted earnings per share | $ | 0.67 | $ | 0.94 | $ | 0.92 | $ | 0.95 | $ | 1.13 | |||||
| Dividends per share | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | |||||
| Book value per common share | $ | 32.78 | $ | 33.64 | $ | 33.05 | $ | 32.53 | $ | 31.71 | |||||
| Tangible book value per common share (1) | $ | 23.04 | $ | 25.80 | $ | 25.16 | $ | 24.60 | $ | 23.72 | |||||
| Shares outstanding | 33,837,935 | 29,730,424 | 29,714,609 | 29,716,294 | 29,727,122 | ||||||||||
| Weighted average shares | 30,049,919 | 29,723,791 | 29,713,558 | 29,718,603 | 29,727,182 | ||||||||||
| Weighted average diluted shares | 30,201,698 | 29,870,059 | 29,850,530 | 29,903,560 | 29,904,974 | ||||||||||
| Credit Quality | |||||||||||||||
| Allowance for credit losses to gross loans | 1.64 | % | 1.74 | % | 1.72 | % | 1.74 | % | 1.73 | % | |||||
| Loans past due 30 days or more | $ | 8,402 | $ | 4,332 | $ | 10,539 | $ | 9,292 | $ | 10,550 | |||||
| Total nonperforming loans | $ | 14,088 | $ | 30,350 | $ | 28,790 | $ | 32,705 | $ | 28,941 | |||||
| Total nonperforming assets | $ | 16,995 | $ | 32,944 | $ | 31,440 | $ | 24,952 | $ | 31,250 | |||||
| Loans charged-off | $ | 743 | $ | 197 | $ | 1,582 | $ | 387 | $ | 226 | |||||
| Loans recovered | $ | 1,174 | $ | 552 | $ | 1,321 | $ | 653 | $ | 560 | |||||
| Selected Financial Ratios | |||||||||||||||
| Return on average total assets | 0.94 | % | 1.31 | % | 1.30 | % | 1.40 | % | 1.75 | % | |||||
| Return on average equity | 8.19 | % | 11.20 | % | 11.02 | % | 11.85 | % | 14.51 | % | |||||
| Average yield on loans, excluding PPP | 4.65 | % | 4.73 | % | 4.85 | % | 4.93 | % | 5.02 | % | |||||
| Average yield on interest-earning assets | 3.46 | % | 3.56 | % | 3.57 | % | 3.65 | % | 3.82 | % | |||||
| Average rate on interest-bearing deposits | 0.06 | % | 0.06 | % | 0.08 | % | 0.08 | % | 0.10 | % | |||||
| Average cost of total deposits | 0.04 | % | 0.04 | % | 0.05 | % | 0.05 | % | 0.06 | % | |||||
| Average rate on borrowings & subordinated debt | 2.27 | % | 1.98 | % | 2.02 | % | 2.31 | % | 2.42 | % | |||||
| Average rate on interest-bearing liabilities | 0.11 | % | 0.11 | % | 0.13 | % | 0.13 | % | 0.15 | % | |||||
| Net interest margin (fully tax-equivalent) (1) | 3.39 | % | 3.50 | % | 3.50 | % | 3.58 | % | 3.74 | % | |||||
| Loans to deposits | 67.15 | % | 66.74 | % | 67.54 | % | 70.72 | % | 72.37 | % | |||||
| Efficiency ratio | 55.95 | % | 54.10 | % | 54.97 | % | 53.19 | % | 50.42 | % | |||||
| Supplemental Loan Interest Income Data | |||||||||||||||
| Discount accretion on acquired loans | $ | 1,323 | $ | 1,780 | $ | 2,034 | $ | 2,566 | $ | 1,712 | |||||
| All other loan interest income (excluding PPP) (1) | $ | 55,325 | $ | 54,930 | $ | 55,184 | $ | 54,559 | $ | 52,861 | |||||
| Total loan interest income (excluding PPP) (1) | $ | 56,648 | $ | 56,710 | $ | 57,218 | $ | 57,125 | $ | 54,573 |
(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,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash and due from banks | $ | 1,035,683 | $ | 768,421 | $ | 740,236 | $ | 639,740 | $ | 609,522 | |||||
| Securities, available for sale, net | 2,365,708 | 2,210,876 | 2,098,786 | 1,850,547 | 1,685,076 | ||||||||||
| Securities, held to maturity, net | 186,748 | 199,759 | 216,979 | 235,778 | 260,454 | ||||||||||
| Restricted equity securities | 17,250 | 17,250 | 17,250 | 17,250 | 17,250 | ||||||||||
| Loans held for sale | 1,030 | 3,466 | 3,072 | 5,723 | 3,995 | ||||||||||
| Loans: | |||||||||||||||
| Commercial real estate | 3,832,974 | 3,306,054 | 3,222,737 | 3,194,336 | 3,108,624 | ||||||||||
| Consumer | 1,136,712 | 1,071,551 | 1,053,653 | 1,050,609 | 1,041,213 | ||||||||||
| Commercial and industrial | 500,882 | 259,355 | 345,027 | 452,069 | 551,077 | ||||||||||
| Construction | 303,960 | 222,281 | 216,680 | 200,714 | 221,613 | ||||||||||
| Agriculture production | 69,339 | 50,811 | 44,410 | 41,967 | 39,753 | ||||||||||
| Leases | 8,108 | 6,572 | 4,989 | 5,199 | 4,697 | ||||||||||
| Total loans, gross | 5,851,975 | 4,916,624 | 4,887,496 | 4,944,894 | 4,966,977 | ||||||||||
| Allowance for credit losses | (96,049) | (85,376) | (84,306) | (86,062) | (85,941) | ||||||||||
| Total loans, net | 5,755,926 | 4,831,248 | 4,803,190 | 4,858,832 | 4,881,036 | ||||||||||
| Premises and equipment | 73,692 | 78,687 | 78,968 | 79,178 | 82,338 | ||||||||||
| Cash value of life insurance | 132,104 | 117,857 | 120,932 | 120,287 | 119,543 | ||||||||||
| Accrued interest receivable | 22,769 | 19,292 | 18,425 | 18,923 | 19,442 | ||||||||||
| Goodwill | 307,942 | 220,872 | 220,872 | 220,872 | 220,872 | ||||||||||
| Other intangible assets | 21,776 | 12,369 | 13,562 | 14,971 | 16,402 | ||||||||||
| Operating leases, right-of-use | 28,404 | 25,665 | 26,815 | 26,365 | 27,540 | ||||||||||
| Other assets | 169,296 | 109,025 | 98,943 | 81,899 | 88,142 | ||||||||||
| Total assets | $ | 10,118,328 | $ | 8,614,787 | $ | 8,458,030 | $ | 8,170,365 | $ | 8,031,612 | |||||
| Deposits: | |||||||||||||||
| Noninterest-bearing demand deposits | $ | 3,583,269 | $ | 2,979,882 | $ | 2,943,016 | $ | 2,843,783 | $ | 2,766,510 | |||||
| Interest-bearing demand deposits | 1,788,639 | 1,568,682 | 1,519,426 | 1,486,321 | 1,465,915 | ||||||||||
| Savings deposits | 2,993,873 | 2,521,011 | 2,447,706 | 2,337,557 | 2,302,927 | ||||||||||
| Time certificates | 348,696 | 297,584 | 326,674 | 324,392 | 328,048 | ||||||||||
| Total deposits | 8,714,477 | 7,367,159 | 7,236,822 | 6,992,053 | 6,863,400 | ||||||||||
| Accrued interest payable | 653 | 928 | 1,056 | 1,026 | 970 | ||||||||||
| Operating lease liability | 30,500 | 26,280 | 27,290 | 26,707 | 27,780 | ||||||||||
| Other liabilities | 126,348 | 112,070 | 107,282 | 85,388 | 102,955 | ||||||||||
| Other borrowings | 36,184 | 50,087 | 45,601 | 40,559 | 36,226 | ||||||||||
| Junior subordinated debt | 100,984 | 58,079 | 57,965 | 57,852 | 57,742 | ||||||||||
| Total liabilities | 9,009,146 | 7,614,603 | 7,476,016 | 7,203,585 | 7,089,073 | ||||||||||
| Common stock | 706,672 | 532,244 | 531,339 | 531,038 | 531,367 | ||||||||||
| Retained earnings | 479,868 | 466,959 | 446,948 | 427,575 | 408,211 | ||||||||||
| Accum. other comprehensive income (loss) | (77,358) | 981 | 3,727 | 8,167 | 2,961 | ||||||||||
| Total shareholders’ equity | $ | 1,109,182 | $ | 1,000,184 | $ | 982,014 | $ | 966,780 | $ | 942,539 | |||||
| Quarterly Average Balance Data | |||||||||||||||
| Average loans, excluding PPP | $ | 4,937,865 | $ | 4,759,294 | $ | 4,684,492 | $ | 4,646,188 | $ | 4,407,150 | |||||
| Average interest-earning assets | $ | 8,153,200 | $ | 7,947,798 | $ | 7,758,169 | $ | 7,544,581 | $ | 7,239,726 | |||||
| Average total assets | $ | 8,778,256 | $ | 8,546,004 | $ | 8,348,111 | $ | 8,128,674 | $ | 7,808,912 | |||||
| Average deposits | $ | 7,521,930 | $ | 7,304,659 | $ | 7,137,263 | $ | 6,943,081 | $ | 6,653,754 | |||||
| Average borrowings and subordinated debt | $ | 105,702 | $ | 108,671 | $ | 106,221 | $ | 98,774 | $ | 90,397 | |||||
| Average total equity | $ | 1,009,224 | $ | 999,764 | $ | 987,026 | $ | 960,145 | $ | 940,775 | |||||
| Capital Ratio Data | |||||||||||||||
| Total risk-based capital ratio | 15.0 | % | 15.4 | % | 15.4 | % | 15.3 | % | 15.1 | % | |||||
| Tier 1 capital ratio | 13.1 | % | 14.2 | % | 14.2 | % | 14.1 | % | 13.9 | % | |||||
| Tier 1 common equity ratio | 12.3 | % | 13.2 | % | 13.2 | % | 13.0 | % | 12.9 | % | |||||
| Tier 1 leverage ratio | 10.8 | % | 9.9 | % | 9.9 | % | 9.9 | % | 10.0 | % | |||||
| Tangible capital ratio (1) | 8.0 | % | 9.2 | % | 9.1 | % | 9.2 | % | 9.1 | % |
(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 31,2022 | December 31,2021 | March 31,2021 |
| Net interest margin | |||
| Acquired loans discount accretion, net: | |||
| Amount (included in interest income) | 1,323 | 1,780 | 1,712 |
| Effect on average loan yield | 0.11 | 0.15 | 0.16 |
| Effect on net interest margin (FTE) | 0.07 | 0.09 | 0.10 |
| Net interest margin (FTE) | 3.39 | 3.50 | 3.74 |
| Net interest margin less effect of acquired loan discount accretion (Non-GAAP) | 3.32 | 3.41 | 3.64 |
| PPP loans yield, net: | |||
| Amount (included in interest income) | 1,097 | 4,094 | 5,863 |
| Effect on net interest margin (FTE) | 0.03 | 0.16 | 0.15 |
| Net interest margin less effect of PPP loan yield (Non-GAAP) | 3.36 | 3.34 | 3.59 |
| Acquired loan discount accretion and PPP loan yield, net: | |||
| Amount (included in interest income) | 2,420 | 5,874 | 7,575 |
| Effect on net interest margin (FTE) | 0.10 | 0.25 | 0.25 |
| Net interest margin less effect of acquired loan discount accretion and PPP yields, net (Non-GAAP) | 3.29 | 3.25 | 3.48 |
All values are in US Dollars.
| Three months ended | |||
|---|---|---|---|
| (dollars in thousands) | March 31,2022 | December 31,2021 | March 31,2021 |
| Pre-tax pre-provision return on average assets or equity | |||
| Net income (GAAP) | 20,374 | 28,222 | 33,649 |
| Exclude income tax expense | 7,869 | 10,404 | 13,343 |
| Exclude provision (benefit) for credit losses | 8,330 | 980 | (6,060) |
| Net income before income tax and provision expense (Non-GAAP) | 36,573 | 39,606 | 40,932 |
| Average assets (GAAP) | 8,778,256 | 8,546,004 | 7,808,912 |
| Average equity (GAAP) | 1,009,224 | 999,764 | 940,775 |
| Return on average assets (GAAP) (annualized) | 0.94 | 1.31 | 1.75 |
| Pre-tax pre-provision return on average assets (Non-GAAP) (annualized) | 1.69 | 1.84 | 2.13 |
| Return on average equity (GAAP) (annualized) | 8.19 | 11.20 | 14.51 |
| Pre-tax pre-provision return on average equity (Non-GAAP) (annualized) | 14.70 | 15.72 | 17.65 |
All values are in US Dollars.
| Three months ended | |||
|---|---|---|---|
| (dollars in thousands) | March 31,2022 | December 31,2021 | March 31,2021 |
| Return on tangible common equity | |||
| Average total shareholders' equity | 1,009,224 | 999,764 | 940,775 |
| Exclude average goodwill | 226,676 | 220,872 | 220,872 |
| Exclude average other intangibles | 12,604 | 12,966 | 17,118 |
| Average tangible common equity (Non-GAAP) | 769,944 | 765,926 | 702,785 |
| Net income (GAAP) | 20,374 | 28,222 | 33,649 |
| Exclude amortization of intangible assets, net of tax effect | 865 | 840 | 1,008 |
| Tangible net income available to common shareholders (Non-GAAP) | 21,239 | 29,062 | 34,657 |
| Return on average equity | 8.19 | 11.20 | 14.51 |
| Return on average tangible common equity (Non-GAAP) | 11.19 | 15.05 | 20.00 |
All values are in US Dollars.
| Three months ended | |||||
|---|---|---|---|---|---|
| (dollars in thousands) | March 31,2022 | December 31,2021 | September 30,2021 | June 30,2021 | March 31,2021 |
| Tangible common shareholders' equity to tangible assets | |||||
| Shareholders' equity (GAAP) | 1,109,182 | 1,000,184 | 982,014 | 966,780 | 942,539 |
| Exclude goodwill and other intangible assets, net | 329,718 | 233,241 | 234,434 | 235,843 | 237,274 |
| Tangible shareholders' equity (Non-GAAP) | 779,464 | 766,943 | 747,580 | 730,937 | 705,265 |
| Total assets (GAAP) | 10,118,328 | 8,614,787 | 8,458,030 | 8,170,365 | 8,031,612 |
| Exclude goodwill and other intangible assets, net | 329,718 | 233,241 | 234,434 | 235,843 | 237,274 |
| Total tangible assets (Non-GAAP) | 9,788,610 | 8,381,546 | 8,223,596 | 7,934,522 | 7,794,338 |
| Common s/h equity to total assets (GAAP) | 10.96 | 11.61 | 11.61 | 11.83 | 11.74 |
| Tangible common shareholders' equity to tangible assets (Non-GAAP) | 7.96 | 9.15 | 9.09 | 9.21 | 9.05 |
All values are in US Dollars.
| Three months ended | |||||
|---|---|---|---|---|---|
| (dollars in thousands) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 |
| Tangible common shareholders' equity per share | |||||
| Tangible s/h equity (Non-GAAP) | $779,464 | $766,943 | $747,580 | $730,937 | $705,265 |
| Tangible assets (Non-GAAP) | 9,788,610 | 8,381,546 | 8,223,596 | 7,934,522 | 7,794,338 |
| Common shares outstanding at end of period | 33,837,935 | 29,730,424 | 29,714,609 | 29,716,294 | 29,727,122 |
| Common s/h equity (book value) per share (GAAP) | $32.78 | $33.64 | $33.05 | $32.53 | $31.71 |
| Tangible common shareholders' equity (tangible book value) per share (Non-GAAP) | $23.04 | $25.80 | $25.16 | $24.60 | $23.72 |
*****************
16
a2022-03x31investordeckf
Investor Presentation First Quarter 2022 Richard P. Smith, President & Chief Executive Officer John S. Fleshood, EVP & Chief Operating Officer Peter G. Wiese, EVP & Chief Financial Officer Exhibit 99.2
Safe Harbor Statement Investor Presentation | First Quarter 20222 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 on the Company's business condition and financial operating results; the impact of changes in financial services policies, laws and regulations; 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 COVID-19 global pandemic, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan portfolio, the market value of our investment securities, the availability 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, inflationary pressures and labor shortages on the economic recovery and our business; the impacts of international hostilities or geopolitical events; the costs or effects of mergers, acquisitions or dispositions we may make, whether we are able to obtain any required governmental approvals in connection with any such mergers, acquisitions or dispositions, and/or our ability to 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 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 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 effect of changes in accounting standards and practices; possible other-than-temporary impairment of securities held by us; changes in consumer spending, borrowing and savings habits; our ability to attract and maintain deposits and other sources of liquidity; changes in the financial performance and/or condition of our borrowers; 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 integrating and retaining key employees; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks and the cost to defend against such attacks; change 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 discontinuation of the London Interbank Offered Rate and other reference rates; 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, 2021, which has been filed with the Securities and Exchange Commission (the “SEC”) and are 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.
Investor Presentation | First Quarter 20223 • Most Recent Quarter Recap • Company Overview • Lending Overview • Deposit Overview • Financials Agenda
Most Recent Quarter Highlights Investor Presentation | First Quarter 20224 Consistent Profitability • Pre-tax pre-provision ROAA and ROAE were 1.69% and 14.70%, respectively, for the quarter ended March 31, 2022, and 2.13% and 17.65%, respectively, for the same quarter in the prior year • Our efficiency ratio was 56.0% for the quarter ended March 31, 2022, compared to 54.1% and 50.4% for the quarters ended 12/31/2021 and 3/31/2021, respectively • Adjusted for merger related expenses totaling $4.03 million in the quarter, pre-tax pre-provision ROAA would have been 1.88% and efficiency ratio would have been 51.1% Growth to Drive Results • Organic non-PPP net loan growth was $187.9 million, a 15.5% annualized increase over the trailing quarter, non-PPP loan growth over the trailing twelve months was $437.3 million or 9.5% • Recently opened Southern California commercial banking centers contributed $23.4 million and $62.0 million in net loan growth for the three and twelve months ended March 31, 2022 • The merger with Valley Republic Bancorp (VRB) was completed on March 25, 2022, adding $773 million in loans and $1.215 billion in deposits Net Interest Income and Margin • Net interest margin (FTE) of 3.39%, compared to 3.50% in the prior quarter, was influenced by declining income recognition from PPP loans, as well as a continued highly competitive lending environment • The investment securities portfolio experienced growth in both volume and yield (FTE) which increased 20 basis points to 1.89% during the quarter • Net interest margin, less the effect of acquired loan discount accretion and PPP yields (non-GAAP), on a tax equivalent basis was 3.29%, an increase of 4 basis points from 3.25% in the trailing quarter Credit Quality • The allowance for credit losses to total loans was 1.64% as of March 31, 2022, compared to 1.74% as of the trailing quarter end, and 1.73% as of March 31, 2021 • Purchase credit deteriorated loans (PCD) from VRB totaled $68.5 million and included $2.04 million in ACL • Nonperforming assets were reduced by $15.9 million or 48.4% to $17.0 million Diverse Deposit Base • Non-interest-bearing deposits comprise 41.1% of total deposits • Following the merger, TCBK ranks in the top 5 in deposit market share in 14 of the 31 counties in which we operate Capital Strategies • Consistent quarterly dividend payments with a history of periodic increases • Share repurchase program with demonstrated utilization was reactivated after the VRB merger close • Strength in core earnings is key to self-financed and self-funded growth
Company Overview Investor Presentation | First Quarter 20225 Nasdaq: TCBK Headquarters: Chico, California Stock Price*: $40.03 Market Cap.: $1.4 Billion Asset Size: $10.1 Billion Loans: $5.9 Billion Deposits: $8.7 Billion Bank Branches: 72 ATMs: 86 Bank ATMs, with access to over 37,000 network ATMs Market Area: TriCo currently serves 31 counties throughout California. * As of close of business March 31, 2022
Executive Team 6 Rick Smith President & CEO TriCo since 1993 John Fleshood EVP Chief Operating Officer TriCo since 2016 Dan Bailey EVP Chief Banking Officer TriCo since 2007 Craig Carney EVP Chief Credit Officer TriCo since 1996 Peter Wiese EVP Chief Financial Officer TriCo since 2018 Judi Giem SVP Chief HR Officer TriCo since 2020 Greg Gehlmann SVP General Counsel TriCo since 2017
Positive Earnings Track Record Investor Presentation | First Quarter 20227 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Net Income ($MM) $13.9 $15.0 $16.2 $23.2 $22.7 $23.1 $23.4 $22.9 $16.1 $7.4 $17.6 $23.6 $33.6 $28.4 $27.4 $28.2 $20.4 Qtrly Diluted EPS $0.60 $0.65 $0.53 $0.76 $0.74 $0.75 $0.76 $0.75 $0.53 $0.25 $0.59 $0.79 $1.13 $0.95 $0.92 $0.94 $0.67 $0.00 $0.40 $0.80 $1.20 $0 $4 $8 $12 $16 $20 $24 $28 $32 $36 Q tr ly E P S ( di lu te d) E ar ni n gs ( in M ill io ns )
Shareholder Returns Investor Presentation | First Quarter 20228 Dividends per Share: 10.6% CAGR* Dividends as % of Earnings Return on Avg. Shareholder Equity Diluted EPS $0.15 $0.15 $0.17 $0.19 $0.22 $0.25 $0.25 $0.15 $0.17 $0.17 $0.19 $0.22 $0.25 $0.15 $0.17 $0.17 $0.22 $0.22 $0.25 $0.15 $0.17 $0.19 $0.22 $0.22 $0.25 $0.60 $0.66 $0.70 $0.82 $0.88 $1.00 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 2016 2017 2018 2019 2020 2021 2022 Q1 Q2 Q3 Q4 9.47% 8.10% 10.75% 10.49% 7.18% 12.10% 8.19% 2016 2017 2018 2019 2020 2021 2022 31% 37% 27% 27% 41% 25% 36% 2016 2017 2018 2019 2020 2021 2022 $0.46 $0.52 $0.60 $0.74 $0.53 $1.13 $0.67 $0.41 $0.58 $0.65 $0.75 $0.25 $0.95 $0.53 $0.51 $0.53 $0.76 $0.59 $0.92 $0.54 $0.76 $0.75 $0.79 $0.94 $1.94 $1.74 $2.54 $3.00 $2.16 $3.94 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 2016 2017 2018 2019 2020 2021 2022 Q1 Q2 Q3 Q4
$2.2 $2.2 $2.6 $2.6 $2.7 $3.9 $4.2 $4.5 $4.8 $6.4 $6.5 $7.6 $8.6 $10.1 11.71 11.62 12.49 13.30 14.59 15.31 16.81 17.77 19.01 18.97 21.69 23.09 25.80 23.04 $0.00 $4.00 $8.00 $12.00 $16.00 $20.00 $24.00 $0 $2 $4 $6 $8 $10 $12 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1 2022 Organic Acquired Tangible Book Value per Share May 2010 Acquired Granite Community Bank ($100MM assets) September 2011 Acquired Citizens Bank of Northern California ($288MM assets) January 2014 Acquired North Valley Bank ($931MM assets) March 2016 Acquired 3 Branches from BofA ($164MM assets) July 2018 Acquired FNB Bancorp ($1.2B assets) Consistent Growth Investor Presentation | First Quarter 20229 CAGR 5 yrs. 10 yrs. Total Assets 17.4% 14.9% Organic Growth and Disciplined Acquisitions • Asset Dollars in Billions. March 2022 Acquired Valley Republic Bancorp ($1.4B assets)
Merger – Valley Republic Bancorp Investor Presentation | First Quarter 202210 Acquisition & Conversion Completed in March 2022 • Market share source: S&P Global • Acquired balance sheet figures exclude purchase accounting Market Overview • Three full-service branches in Bakersfield and one in Delano, each converted to a Tri Counties Bank branch • One loan production office in Fresno that will be incorporated into existing overlapping Tri Counties Bank facilities • Combined banks rank 4th in Bakersfield deposit market share at 10.87%, with a 5-year CAGR of 21% Financial Highlights • Branch Locations (4) • Loan Production Office (1) FY 2019 FY 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Acq. Total Assets ($M) 939 1,236 1,350 1,366 1,412 1,380 1,368 Gross Loans ($M) 625 849 988 904 886 829 795 PPP Loans ($M) - 177 247 171 120 41 22 Total Deposits ($M) 829 1,084 1,198 1,212 1,254 1,217 1,216 Gross Loans / Deposits (%) 75.4 78.4 82.5 74.6 70.6 68.1 65.4 Net Income ($M) 9.7 12.5 3.7 4.6 3.4 4.7 ROAA (%) 1.13 1.12 1.15 1.34 0.97 1.31 ROATCE (%) 13.3 14.5 15.5 18.5 12.9 17.3 Efficiency Ratio (%) 56.8 47.9 44.2 40.8 46.6 46.0
Loans and Credit Quality 11Investor Presentation | First Quarter 202211
Consistent Loan Growth Investor Presentation | First Quarter 202212 • Q1 2021 increase includes $98MM Jumbo Mortgage pool purchase • End of period balances are presented net of fees and include LHFS. Yields based on average balance and annualized quarterly interest income. • Acquired VRB Loans of $795MM upon 3/25/2022 with a WAR of 4.31%. VRB total includes $21MM of PPP loans. $4,022 $4,111 $4,381 $4,386 $4,407 $4,443 $4,610 $4,711 $4,739 $4,859 $5,796 $423 $426 $327 $361 $240 $151 $61 $57 5.24% 5.44% 5.23% 5.05% 4.78% 5.09% 5.15% 4.86% 4.92% 4.96% 4.69% 3.50% 4.50% 5.50% 6.50% $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 2018 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1-2022 Axis Title Non-PPP PPP Loans Loan Yield Loan Yield Excl PPP
$144 $200 $229 $349 $178 $199 $165 $250 $464 $285 $303 $412 $396 -$118 -$147 -$139 -$210 -$118 -$139 -$131 -$166 -$241 -$192 -$243 -$250 -$225 -$21 $14 -$15 -$14 $6 -$56 -$20 -$47 -$59 $6 -$33 -$47 $4 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Q1-2022 Origination Payoffs Balance Change net of Originations and Payoffs Gross Production vs. Payoff Investor Presentation | First Quarter 202213 • Outstanding Principal in Millions, excludes PPP • Includes Q1 2021 increase of $98MM and Q4 2020 increase of $40MM in Jumbo Mortgage pool purchases • $800MM in outstanding at close of Q1-2022 related to VRB Acquisitions ($795MM at acquisition) excluded from the chart TCBK originated nearly $1.5 billion in 2021, compared to nearly $0.8 billion in 2020, while facing headwinds of an increased $372 million in payoffs during 2021. In addition to the nearly $0.8 billion in non-PPP loan originations in 2020, TCBK originated over $0.4 billion in PPP loans. TCBK originated over $0.9 billion in loans in 2019, while facing headwinds of outpacing payoffs in excess of $0.6 billion.
$1,634 $1,558 $716 $637 $819 $765 $669 $641 $272 $186 $362 $331 $242 $222 $227 $187 $62 $71 $243 $136 $19 $33 $165 $12 $62 $89 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 C R E N o n - O w n e r O cc u p ie d C R E - O w n e r O cc u p ie d M u lti fa m ily S F R 1 -4 T e rm C o m m e rc i a l & In d u st ri al S F R H E L O C a n d Ju n io r L ie n s C o n st ru ct i o n A g ric u ltu re & F a rm la n d A u to & O th e r TCBK VRB Diversified Loan Portfolio Investor Presentation | First Quarter 202214 • Dollars in millions, Net Book Value at period end, excludes LHFS; • Auto & other includes Leases; PPP Loans of $57 mln 1Q-2022 and $361 mln 1Q-2021. Commercial & Industrial includes six Municipality Loans for $11.5 mln. CRE Non- Owner Occupied 33% CRE-Owner Occupied 15% Multifamily 15% SFR 1-4 Term 12% Commercial & Industrial 8% SFR HELOC and Junior Liens 6% Construction 5% Agriculture & Farmland 5% Auto & Other 1%
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% $0 $25 $50 $75 $100 $125 $150 $175 20222021202020192018201720162015201420132012201120102009>2009 Private Balance (MM) Unfunded (MM) WA Rate 3.79% 3.29% 4.01% 4.40%4.45%4.44%4.37%4.30%4.37%4.60% 4.98% 4.47%4.42%4.62% 3.74% $1,914 $1,575 $845 $769 $360 $328 $429 $187 $860 $644 $715 $643 $307 $225 $325 $188 $60 $70 $158 $113 $46 $35 $558 $511 $552 $384 $36 $36 $288 $226 $121 $63 $9 $11 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 1Q-2022 1Q-2021 CRE Non-Owner Occupied Multifamily SFR HELOC and Junior Liens Commercial & Industrial CRE-Owner Occupied SFR 1-4 Term Construction Agriculture & Farmland Auto & Other Outstanding Principal ($MM) Unfunded Commitment ($MM) Unfunded Loan Commitments Investor Presentation | First Quarter 202215 HELOCs – by vintage, with weighted avg. coupon Outstanding Principal and Commitments exclude unearned fees and discounts/premiums, Leases, DDA Overdraft, and Credit Cards PPP Excluded from C&I includes for $57 million and $370 million in Outstanding Principal as of Q1 2022 and Q1 2021, respectively.
$85 $51 $54 $59 $37 $28 $29 $11 $12 $81$80 $100 $83 $49 $47 $53 $14 $25 $22 $80 52% 34% 40% 55% 44% 35% 67% 30% 36% 50% 0% 2000% 4000% 6000% 8000% 10000% 12000% 14000% 16000% 18000% 20000% Oil & Gas Extraction Construction Consumer Real Estate Wholesale Finance and Insurance Trans and Warehouse Healthcare Retail Trade Other (13 Categories) Outstanding (mln) Unfunded (mln) C&I Utilization Investor Presentation | First Quarter 202216 Excludes PPP loans; Outstanding Principal excludes unearned fees and discounts/premiums ($ millions) $243 $247 $262 $208 $205 $197 $187 $206 $186 $191 $448 $221 $254 $235 $265 $273 $372 $384 $360 $353 $339 $552 52.4% 49.3% 52.7% 44.0% 42.9% 34.5% 32.7% 36.4% 34.5% 36.0% 44.8% 0% 10% 20% 30% 40% 50% 60% $0 $200 $400 $600 $800 $1,000 $1,200 3Q-2019 4Q-2019 1Q-2020 2Q-2020 3Q-2020 4Q-2020 1Q-2021 2Q-2021 3Q-2021 4Q-2021 1Q-2022 Outstanding Principal ($MM) Unfunded Commitment Utilization • Benefits of the VRB merger include increased actual and potential utilization rate and balance growth • Treasury management service integration is key to most of these relationships C&I Utilization by NAICS Industry: 1Q-2022
$800 $310 $228 $301 $427 $666 $617 4.60% 4.63% 5.00% 4.73% 4.29% 4.17% 3.85% 4.33% 4.66% 4.68% 4.92% 5.07% 5.11% 4.34% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% $- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Monthly < 1 Year 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years > 5 Years Variable Loans ($MM) Variable Wtd Avg Rate Variable Wtd Avg Rate if Repriced 3/31/2022 Loan Yield Composition Investor Presentation | First Quarter 202217 Dollars in millions, excludes PPP as well as unearned fees and accretion/amortization therein Wtd Avg Rate (weighted average rate) as of 3/21/2022 and based upon outstanding principal; Next Reprice signifies either the next scheduled reprice date or maturity. 40% of loans repricing monthly are at floor rates, 99% are benchmarked to Prime Loans repricing or maturing in the next 2-5 present upside in yield as exhibited in the difference between the current spread over index vs. the current rate 72% of variable loans repricing 1-2 yrs. are at rate floors, and 77% are benchmarked to 5 Year Treasury $2,534 Fixed 43% $3,350 Variable 57%
Allowance for Credit Losses Investor Presentation | First Quarter 202218 Drivers of Change under CECL Purchased Credit Deteriorated (PCD) loans totaled $68.5 million from Valley Republic (VRB) [1] Continued improvement in Unemployment Rate and low loss experience drive reduce reserve requirements, offset by uncertainty risks in US Policy and Global Economy Total reserve increase of $10.673 million Q1 2022 Gross charge offs $0.743 million Gross recoveries $1.174 million 1.74% of Total Loans 1.64% of Total Loans [1] Acquired balance reflect unpaid principal at 3/25/2022 and does not include purchase accounting discounts and premiums Scaled to reflect $75MM Non-PCD loan acquired from Valley Republic of $723 million, additions to ACL equate to 1.50% reserve rate for this population
Allowance for Credit Losses Investor Presentation | First Quarter 202219 Allocation of Allowance by Segment Municipal loans included in Commercial and industrial segment within the presented table ($ Thousands) Allowance for Credit Losses Loans (Excl LHFS) ACL Amount ACL % of Loans Loans (Excl LHFS) ACL Amount ACL % of Loans Loans (Excl LHFS) ACL Amount ACL % of Loans Commercial real estate: CRE non-owner occupied 1,609,556$ 12,649$ 0.79% 1,603,141$ 25,739$ 1.61% 1,891,021$ 28,055$ 1.48% CRE owner occupied 546,434 4,308 0.79% 706,307 10,691 1.51% 851,434 12,071 1.42% Multifamily 517,725 5,633 1.09% 823,500 12,395 1.51% 839,918 11,987 1.43% Farmland 145,067 1,253 0.86% 173,106 2,315 1.34% 250,600 2,879 1.15% Total commercial real estate loans 2,818,782$ 23,843$ 0.85% 3,306,054$ 51,140$ 1.55% 3,832,973$ 54,992$ 1.43% Consumer: SFR 1-4 1st DT 509,508$ 4,981$ 0.98% 666,960$ 10,723$ 1.61% 711,389$ 10,669$ 1.50% SFR HELOCs and junior liens 362,886 10,821 2.98% 337,513 10,510 3.11% 362,501 10,843 2.99% Other 82,656 2,566 3.10% 67,078 2,241 3.34% 62,822 2,340 3.73% Total consumer loans 955,050$ 18,368$ 1.92% 1,071,551$ 23,474$ 2.19% 1,136,712$ 23,852$ 2.10% Commercial and industrial 249,791$ 2,906$ 1.16% 259,355$ 3,862$ 1.49% 500,883$ 8,869$ 1.77% Construction 249,827 4,321 1.73% 222,281 5,667 2.55% 303,960 7,437 2.45% Agriculture production 32,633 82 0.25% 50,811 1,215 2.39% 69,339 883 1.27% Leases 1,283 9 0.70% 6,572 18 0.27% 8,108 16 0.20% Total Loans and ACL 4,307,366$ 49,529$ 1.15% 4,916,624$ 85,376$ 1.74% 5,851,975$ 96,049$ 1.64% Reserve for Unfunded Loan Commitments 2,775 3,790 3,915 Allowance for Credit Losses 4,307,366$ 52,304$ 1.21% 4,916,624$ 89,166$ 1.81% 5,851,975$ 99,964$ 1.71% Discounts on Acquired Loans 33,033 16,107 34,908 Total ACL Plus Discounts 4,307,366$ 85,337$ 1.98% 4,916,624$ 105,273$ 2.14% 5,851,975$ 134,872$ 2.30% March 31, 2022 CECL Adoption January 1, 2020 December 31, 2021
Risk Grade Migration Investor Presentation | First Quarter 202220 Zero balance in Doubtful and Loss 87.6%89.6%87.2%85.0%84.6%82.1% 9.5%7.8% 9.3%11.2%11.4%13.6% 2.1%1.6%2.5%2.6%2.9%3.3% 0.8%1.1%1.0%1.2%1.2%1.0% 1Q-20224Q-20213Q-20212Q-20211Q-20214Q-2020 % o f L o a n P o rt fo lio O u ts ta n d in g , b y R is k G ra d e Pass Watch Special Mention Substandard Pool % (mln) # Loans % (mln) # Loans (mln) # Loans CRE Non-Ow ner Occupied 3.9% $61.2 24 1.9% $35.3 24 -$25.9 0 CRE-Ow ner Occupied 2.6% $16.4 21 2.8% $23.5 16 $7.1 -5 Multifamily 5.6% $42.8 7 0.0% $0.0 0 -$42.8 -7 Agriculture & Farmland 3.4% $6.4 8 5.2% $16.9 9 $10.5 1 SFR 1-4 Term 0.8% $5.3 26 1.3% $9.6 32 $4.3 6 SFR HELOC and Junior Liens 1.6% $5.2 97 1.1% $4.2 85 -$1.0 -12 Commercial & Industrial 1.9% $3.6 40 1.0% $4.8 31 $1.2 -9 Construction 0.9% $2.1 3 8.4% $25.4 2 $23.3 -1 Auto & Other 1.0% $0.7 151 1.1% $1.0 135 $0.3 -16 Grand Total 3.1% $143.7 377 2.1% $120.7 334 -$23.0 -43 Special Mention (NBV) Q1-2021 Q1-2022 Diff Pool % (mln) # Loans % (mln) # Loans (mln) # Loans CRE Non-Ow ner Occupied 0.9% $13.9 16 0.4% $8.8 13 -$5.1 -3 CRE-Ow ner Occupied 1.1% $6.9 16 0.8% $7.1 11 $0.3 -5 Multifamily 0.6% $4.4 1 0.0% $0.1 1 -$4.2 0 Agriculture & Farmland 4.2% $8.0 16 5.5% $18.4 13 $10.4 -3 SFR 1-4 Term 1.3% $8.3 109 0.9% $6.5 27 -$1.8 -82 SFR HELOC and Junior Liens 2.4% $7.8 126 1.2% $4.5 75 -$3.3 -51 Commercial & Industrial 2.1% $3.8 65 0.6% $2.8 63 -$1.0 -2 Construction 2.1% $4.6 3 0.2% $0.6 22 -$4.0 19 Auto & Other 0.7% $0.5 34 0.6% $0.4 40 -$0.1 6 Grand Total 1.3% $58.1 386 0.8% $49.3 265 -$8.9 -121 Q1-2021 Q1-2022 Diff Substandard/Doubtful/Loss (NBV)
Asset Quality Investor Presentation | First Quarter 202221 Peer group consists of 99 closest peers in terms of asset size, range $4.1-11.5 Billion source: BankRegData.com NPA and NPL ratios displayed are net of guarantees Coverage Ratio: Allowance as % of Non-Performing Loans NPAs have remained below peers while loss coverage has expanded, first with the adoption of CECL, then through the on-going concerns of the pandemic; resulting in an increase in the coverage ratio throughout 2020. Improved rate of 0.17% due to sale of Non-Performing Assets, paired with rising Total Assets post acquisition. Non-Performing Assets as a % of Total Assets 0.45% 0.32% 0.35% 0.30% 0.28% 0.30% 0.31% 0.33% 0.38% 0.38% 0.42% 0.37% 0.38% 0.17% 0.58% 0.59% 0.61% 0.54% 0.47% 0.73% 0.53% 0.58% 0.75% 0.73% 0.68% 0.64% 0.53% 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 TCBK Peers 174% 159% 180% 193% 343% 385% 395% 342% 297% 263% 293% 281% 690% 13 1% 12 9% 14 5% 15 6% 13 9% 20 2% 19 1% 17 9% 18 7% 19 4% 19 7% 21 0% 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 TCBK Peers
Deposits 22Investor Presentation | First Quarter 202222
Deposits: Strength in Funding Investor Presentation | First Quarter 202223 Total Deposits = $8.72 billion 98.5% of Funding Liabilities Liability Mix 03/31/2022 Peer group consists of 99 closest peers in terms of asset size, range $4.7-11.5 Billion; source: BankRegData.com Net Loans includes LHFS and Allowance for Credit Loss; Core Deposits = Total Deposits less CDs > 250k and Brokered Deposits (0.03% Funding Cost) 7 5 .5 7 8 .1 8 0 .6 8 1 .6 8 1 .6 7 6 .9 7 5 .9 7 2 .6 7 1 .8 7 0 .1 6 6 .9 6 6 .0 6 6 .9 0 20 40 60 80 100 120 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 Loans to Core Deposits (%) TCBK Peers 3 2 .4 3 3 .3 3 3 .6 3 4 .1 3 4 .9 3 9 .8 3 9 .7 3 9 .7 4 0 .3 4 0 .7 4 0 .7 4 0 .4 4 1 .1 0 10 20 30 40 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 Non Interest-bearing Deposits as % of Total Deposits TCBK Peers Non Interest- bearing Demand Deposits, 39.8% Interest-bearing Demand & Savings Deposits, 53.1% Time Deposits, 3.9% Borrowings & Subordinated Debt, 1.5% Other liabilities, 1.7%
Cost of Deposits Noninterest-Bearing Demand - - - - - - - - - - - - - Int-Bearing Demand & Savings 0.18% 0.20% 0.19% 0.19% 0.16% 0.09% 0.06% 0.05% 0.04% 0.04% 0.05% 0.03% 0.04% Time Deposits 1.18% 1.28% 1.39% 1.27% 1.23% 1.09% 0.89% 0.68% 0.64% 0.55% 0.52% 0.45% 0.36% Total Deposits 0.20% 0.22% 0.23% 0.22% 0.19% 0.12% 0.09% 0.07% 0.06% 0.05% 0.05% 0.04% 0.04% Interest-bearing Deposits 0.30% 0.33% 0.34% 0.33% 0.29% 0.20% 0.15% 0.12% 0.10% 0.08% 0.08% 0.06% 0.06% Deposits: Strength in Cost of Funds Investor Presentation | First Quarter 202224 Continued growth in the volume of noninterest- bearing deposits both in terms of dollars and as a percent of total deposits. Industry leading cost of total deposits, driven by better than peer mix of non- interest-bearing deposits. Balances presented in millions, end of period $446 $441 $451 $441 $419 $399 $376 $345 $328 $324 $327 $298 $349 $3,223 $3,121 $3,067 $3,094 $3,101 $3,363 $3,446 $3,580 $3,769 $3,824 $3,967 $4,090 $4,783 $1,762 $1,780 $1,777 $1,833 $1,883 $2,487 $2,518 $2,582 $2,767 $2,844 $2,943 $2,980 $3,583 $5,430 $5,342 $5,295 $5,367 $5,403 $6,248 $6,341 $6,506 $6,863 $6,992 $7,237 $7,367 $8,714 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22
Financials 2525 Investor Presentation | First Quarter 2022
Current Operating Metrics Investor Presentation | First Quarter 202226 Net Interest Margin (FTE) PPNR as % of Average Assets Efficiency Ratio ROAA 4.23% 4.22% 4.30% 4.47% 3.96% 3.58% 3.39% 2016 2017 2018 2019 2020 2021 2022 68.7% 65.4% 63.7% 59.7% 58.4% 53.2% 55.9% 51.1% 2016 2017 2018 2019 2020 2021 2022 Adjusted for Merger 1.54% 1.02% 0.89% 1.24% 1.43% 0.91% 1.43% 1.40% 2016 2017 2018 2019 2020 2021 2022 1.88% 1.60% 1.70% 1.73% 1.94% 1.83% 1.91% 1.69% 2016 2017 2018 2019 2020 2021 2022 2022 values QTD through 3/31/2022, annualized Adjusted for Merger values reflect $4.032 million in merger related expenses incurred in Q1 2022, tax effected for ROAA
Well Capitalized Investor Presentation | First Quarter 202227 Tier 1 Capital Ratio Total Risk Based Capital CET1 Ratio Tangible Common Equity Ratio 2022 values at quarter ended 3/31/2022 13.7% 13.2% 13.7% 14.4% 14.0% 14.2% 13.1% 2016 2017 2018 2019 2020 2021 2022 12.2% 11.7% 12.5% 13.3% 12.9% 13.2% 12.3% 2016 2017 2018 2019 2020 2021 2022 14.8% 14.1% 14.4% 15.1% 15.2% 15.4% 15.0% 2016 2017 2018 2019 2020 2021 2022 9.1% 9.3% 9.5% 10.6% 9.3% 9.2% 8.0% 2016 2017 2018 2019 2020 2021 2022
XYZ Investor Presentation | First Quarter 202228 Pending update – no material change to format