TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company
of Tri Counties Bank, today announced net income of $33,649,000 for
the quarter ended March 31, 2021, compared to $23,657,000 during
the trailing quarter ended December 31, 2020 and $16,121,000 during
the quarter ended March 31, 2020. Diluted earnings per share were
$1.13 for the first quarter of 2021, compared to $0.79 for the
fourth quarter of 2020 and $0.53 for the first quarter of 2020.
Financial Highlights
Performance highlights and other developments for the Company as
of or for the three months ended March 31, 2021 included the
following:
- For the three months ended March 31, 2021, the Company’s return
on average assets was 1.75% and the return on average equity was
14.51%.
- Organic loan growth, excluding PPP was $68.19 million (6.16%
annualized) for the quarter totaled while total loan growth,
excluding PPP was $169.78 million (15.3% annualized) for the
quarter.
- For the current quarter, net interest margin was 3.74% on a tax
equivalent basis as compared to 4.34% in the quarter ended March
31, 2020, and a decrease of 5 basis points from the 3.79% in the
trailing quarter.
- The efficiency ratio was 50.42% for the first quarter of 2021,
as compared to 55.11% in the trailing quarter and 59.66% in the
same quarter of the prior year.
- As of March 31, 2021, the Company reported total loans, total
assets and total deposits of $4.97 billion, $8.03 billion and $6.86
billion, respectively. As a direct result of the considerable
deposit growth experienced over the last twelve months, the loan to
deposit ratio was 72.37% as of March 31, 2021, as compared to
73.21% at December 31, 2020 and 81.05% at March 31, 2020.
- Non-interest bearing deposits as a percentage of total deposits
were 40.31% at March 31, 2021, as compared to 39.68% at December
31, 2020 and 34.86% at March 31, 2020.
- The average rate of interest paid on deposits, including
non-interest-bearing deposits, decreased to 0.06% for the first
quarter of 2021 as compared with 0.07% for the trailing quarter,
and decreased by 13 basis points from the average rate paid of
0.19% during the same quarter of the prior year.
- Total outstanding loan deferral modifications under the CARES
Act legislation was $48.27 million as of March 31, 2021, of which
$18.0 million related to second deferrals, and an additional $1.9
million related to third deferrals.
- The reversal of provision for credit losses for loans and debt
securities was $6.1 million during the quarter ended March 31,
2021, as compared to a provision expense of $4.9 million during the
trailing quarter ended December 31, 2020, and a provision expense
totaling $8.1 million for the three month period ended March 31,
2020.
- The allowance for credit losses to total loans was 1.73% as of
March 31, 2021, compared to 1.93% as of December 31, 2020, and
1.15% as January 1, 2020, following the Company's adoption of CECL.
Non-performing assets to total assets were 0.39% at March 31, 2021,
as compared to 0.39% as of December 31, 2020, and 0.31% at March
31, 2020.
- Gain on sale of loans for the three months ended March 31, 2021
totaled $3.2 million, as compared to $3.5 million during the
quarter ended December 31, 2020 and $0.9 million for the quarter
ended March 31, 2020.
“We continued to benefit from significant growth in deposits
during the quarter and we effectively deployed that liquidity to
defend net interest income through strong organic and PPP loan
growth, as well as additional purchases of whole loans and
investment securities," commented Peter Wiese, EVP and Chief
Financial Officer. Rick Smith, President and CEO added; "The
actions and activities that we pursued during the second half of
last year continue to benefit Tri Counties Bank as evidenced by the
significant reduction in noninterest expenses and our efficiency
ratio. In addition, we rewarded shareholders with an increase in
our dividend which now equates to $1.00 per year paid in quarterly
amounts of $0.25. Our entire team has become more energized by the
idea and growing ability to return to our offices, as well as the
increasing level of market activity and opportunities that we
continue to pursue."
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Financial results reported in this document are preliminary.
Final financial results and other disclosures will be reported in
our Quarterly Report on Form 10-Q for the period ended March 31,
2021, 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
For the three months ended March 31, 2021, the Company’s return
on average assets was 1.75% and the return on average equity was
14.51%. For the three months ended March 31, 2020, the Company’s
return on average assets was 1.00% and the return on average equity
was 7.14%.
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)
2021
2020
$ Change
% Change
Net interest income
$
66,440
$
66,422
$
18
0.0
%
Reversal of (provision for) credit
losses
6,060
(4,850)
10,910
(224.9)
%
Noninterest income
16,110
16,580
(470)
(2.8)
%
Noninterest expense
(41,618)
(45,745)
4,127
(9.0)
%
Provision for income taxes
(13,343)
(8,750)
(4,593)
52.5
%
Net income
$
33,649
$
23,657
$
9,992
42.2
%
Diluted earnings per share
$
1.13
$
0.79
$
0.34
43.0
%
Dividends per share
$
0.25
$
0.22
$
0.03
13.6
%
Average common shares
29,727
29,757
(30)
(0.1)
%
Average diluted common shares
29,905
29,863
42
0.1
%
Return on average total assets
1.75
%
1.24
%
Return on average equity
14.51
%
10.37
%
Efficiency ratio
50.42
%
55.11
%
Three months ended March 31,
(dollars and shares in thousands)
2021
2020
$ Change
% Change
Net interest income
$
66,440
$
63,192
$
3,248
5.1
%
Reversal of (provision for) credit
losses
6,060
(8,070)
14,130
(175.1)
%
Noninterest income
16,110
11,820
4,290
36.3
%
Noninterest expense
(41,618)
(44,749)
3,131
(7.0)
%
Provision for income taxes
(13,343)
(6,072)
(7,271)
119.7
%
Net income
$
33,649
$
16,121
$
17,528
108.7
%
Diluted earnings per share
$
1.13
$
0.53
$
0.60
113.2
%
Dividends per share
$
0.25
$
0.22
$
0.03
13.6
%
Average common shares
29,727
30,395
(668)
(2.2)
%
Average diluted common shares
29,905
30,523
(618)
(2.0)
%
Return on average total assets
1.75
%
1.00
%
Return on average equity
14.51
%
7.14
%
Efficiency ratio
50.42
%
59.66
%
SBA Paycheck Protection
Program
In March 2020, the Small Business Administration ("SBA")
Paycheck Protection Program ("PPP") was created to help small
businesses keep workers employed during the COVID-19 crisis. In
December 2020, the SBA announced plans for a second round of PPP
lending with streamlined requirements for both borrowers and
lenders. Effective Friday, January 15, 2021, Tri Counties Bank
launched and began accepting applications via an improved on-line
portal which allows borrowers to open a new account and submit PPP
applications under the new PPP guidance.
The following is a summary of PPP loan related activity as of
the periods indicated:
(dollars in thousands)
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
Total number of PPP loans outstanding
2,484
2,310
2,924
2,900
PPP loan balance (Round 1 origination),
gross
$
193,958
$
333,982
$
437,793
$
436,731
PPP loan balance (Round 2 origination),
gross
176,316
n/a
n/a
n/a
Total PPP loans, gross
$
370,274
$
333,982
$
437,793
$
436,731
PPP deferred loan fees (Round 1
origination)
$
2,358
$
7,212
$
11,846
$
13,300
PPP deferred loan fees (Round 2
origination)
7,072
n/a
n/a
n/a
Total PPP deferred loan fees
$
9,430
$
7,212
$
11,846
$
13,300
As of March 31, 2021, the total gross balance outstanding of PPP
loans (Round 1) was $193,958,000 (948 loans) as compared to total
round 1 PPP originations of $438,510,000. Included in the balance
of outstanding PPP loans as of March 31, 2021 are approximately 115
loans totaling $75,669,000 that have been submitted to and are
pending forgiveness by the SBA. In connection with the origination
of these loans, the Company earned approximately $15,735,000 in
loan fees, offset by deferred loan costs of approximately $763,000,
the net of which will be recognized over the earlier of loan
maturity (generally 24 months), repayment or receipt of forgiveness
confirmation. As of March 31, 2021 there was approximately
$2,358,000 in net deferred fee income remaining to be recognized.
During the three months ended March 31, 2021, the Company
recognized $4,854,000 in fees on round 1 PPP loans.
As of March 31, 2021, the total gross balance outstanding of PPP
loans (Round 2) was $176,316,000 (1,536 loans) as compared to round
2 originations of the same amount. In connection with the
origination of these loans, the Company earned approximately
$7,850,000 in loan fees, offset by deferred loan costs of
approximately $400,000, the net of which will be recognized over
the earlier of loan maturity (generally 60 months), repayment or
receipt of forgiveness confirmation. As of March 31, 2021 there was
approximately $7,072,000 in net deferred fee income remaining to be
recognized. During the three months ended March 31, 2021, the
Company recognized $378,000 in fees on round 2 PPP loans. Based on
application and approval activity occurring subsequent to March 31,
2021, management anticipates that total round 2 PPP originations
will approximate 1,700 loans for $190,215,000 and which are
expected generate $9,055,000 in fees from the SBA.
COVID Deferrals
Following the passage of the CARES Act legislation, the
"Interagency Statement on Loan Modifications and Reporting for
Financial Institutions Working with Customers Affected by the
Coronavirus" was issued by federal bank regulators, which offers
temporary relief from troubled debt restructuring accounting for
loan payment deferrals for certain customers whose businesses are
experiencing economic hardship due to Coronavirus. The applicable
period for this relief, originally expected to expire on December
31, 2020, was extended through 2021 by way of the Consolidated
Appropriations Act. The Company continues to closely monitor the
effects of the pandemic on our loan and deposit customers. Our
management team continues to be focused on assessing the risks in
our loan portfolio and working with our customers to mitigate where
possible, the risk of potential losses. Beginning in April 2020,
the Company implemented loan programs to allow certain consumers
and businesses impacted by the pandemic to defer loan principal and
interest payments.
The following is a summary of COVID related loan customer
modifications with outstanding balances as of March 31, 2021:
Modification Type
Deferral Term
(dollars in thousands)
Modified Loan Balances
Outstanding
% of Total Category of Loans
Interest Only Deferral
Principal and Interest
Deferral
90 Days
180 Days
Other
Commercial real estate:
CRE non-owner occupied
$
41,848
2.69
%
95.6
%
4.4
%
26.6
%
57.9
%
15.6
%
CRE owner occupied
5,148
0.80
100.0
—
—
75.1
24.9
Multifamily
—
—
—
—
—
—
—
Farmland
—
—
—
—
—
—
—
Total commercial real estate loans
46,996
1.5
96.1
3.9
23.7
59.7
16.6
Consumer:
SFR 1-4 1st lien
457
0.1
100.0
—
—
100.0
—
SFR HELOCs and junior liens
97
—
—
100.0
100.0
—
—
Other
—
—
—
—
—
—
—
Total consumer loans
554
0.1
82.6
17.4
17.4
82.6
—
Commercial and industrial
716
0.1
78.8
21.2
—
21.2
—
Construction
—
—
—
—
—
—
—
Agriculture production
—
—
—
—
—
—
—
Leases
—
—
—
—
—
—
—
Total modifications
$
48,266
1.0
%
95.7
%
4.3
%
23.3
%
59.4
%
17.3
%
Since inception, total loan modifications associated with CARES
Act legislation totaled approximately $439,346,000, of which
$48,266,000 and $48,358,000 remained outstanding under their
modified terms as of March 31, 2021 and December 31, 2020,
respectively. Of the remaining balance outstanding as of March 31,
2021, $18,039,000 is related to second deferrals which are expected
to conclude their modification period by August, 2021 and
$1,845,000 is related to third deferrals expected to conclude in
October, 2021. The Company has elected to forgo the CARES Act
Relief guidance for loans totaling $2,160,000 and including all
borrowers requesting third deferrals and has deemed such loans
along with a limited number of other loans to be impaired under
traditional TDR guidance. The remaining balance of loans with
modified terms are expected to conclude their modification period
during fiscal 2021, however, as long as the current pandemic and
recessionary economic conditions continue, it is anticipated that
additional borrowers may request an initial or subsequent
modification to their loan terms.
Management believes that its analysis of each borrower receiving
a loan modification supports the ability of that borrower to return
to their normal payment terms at the conclusion of the modification
period. However, management determined that risk rating downgrades
for each credit receiving a deferral modification was prudent until
such time that the borrower's actual payment performance supported
an upgrade to the pre-modification risk grade.
Balance Sheet
Total loans outstanding, excluding PPP, grew to $4.61 billion as
of March 31, 2021, an increase of 5.2% over the same quarter of the
prior year, and an annualized increase of 15.3% over the trailing
quarter. Investments outstanding increased to $1.96 billion as of
March 31, 2021, an increase of 56.7% annualized over the trailing
quarter. Average earning assets to total average assets continued
to increase to 92.7% at March 31, 2021, as compared to 92.4% and
90.4% at December 31, 2020, and March 31, 2020, respectively. The
Company's loan to deposit ratio was 72.4% at March 31, 2021, as
compared to 73.2% and 81.1% at December 31, 2020, and March 31,
2020, respectively.
Total shareholders' equity increased by $17,425,000 during the
quarter ended March 31, 2021, primarily as a result of net income
of $33,649,000, partially offset by a decrease in accumulated other
comprehensive income of $9,319,000, and by $7,432,000 in cash
dividends paid on common stock. As a result, the Company’s book
value increased to $31.71 per share at March 31, 2021 as compared
to $31.12 and $28.91 at December 31, 2020, and March 31, 2020,
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 $23.72 per share at March 31,
2021, as compared to $23.09 and $20.80 at December 31, 2020, and
March 31, 2020, respectively.
Trailing Quarter Balance Sheet Change
Ending balances
As of March 31,
December 31,
$ Change
Annualized % Change
(dollars in thousands)
2021
2020
Total assets
$
8,031,612
$
7,639,529
$
392,083
20.5
%
Total loans
4,966,977
4,763,127
203,850
17.1
%
Total loans, excluding PPP
4,606,133
4,436,357
169,776
15.3
%
Total investments
1,962,780
1,719,102
243,678
56.7
%
Total deposits
$
6,863,400
$
6,505,934
$
357,466
22.0
%
The growth of deposit balances continued during the first
quarter of 2021, increasing by $357,466,000 or 22.0% annualized.
The available liquidity from deposit growth was allocated to fund
non-PPP loan and investment growth during the period, which
increased by $169,776,000 and $243,678,000, or 15.3% and 56.7%
annualized, respectively. Approximately $101,466,000 of the non-PPP
loan growth during the quarter is attributed to an acquired pool of
mortgage loans. New originations of the second round of PPP
stimulus more than offset the decline in loans outstanding from the
first round of PPP following SBA forgiveness, resulting in an
increase of total loans during the first quarter of 2021 by
$203,850,000 or 17.1% on an annualized basis as compared to the
trailing quarter.
Average Trailing Quarter Balance Sheet Change
Qtrly avg balances
As of March 31,
As of December 31,
$ Change
Annualized % Change
(dollars in thousands)
2021
2020
Total assets
$
7,808,912
$
7,570,952
$
237,960
12.6
%
Total loans
4,763,025
4,767,715
(4,690)
(0.4)
%
Total loans, excluding PPP
4,407,150
4,363,873
43,277
4.0
%
Total investments
1,775,035
1,572,511
202,524
51.5
%
Total deposits
$
6,653,754
$
6,341,175
$
312,579
19.7
%
The decline in average total loans of $4,690,000, or (0.4)% on
an annualized basis, during the first quarter of 2021 was
inconsistent with the actual period end growth as compared to the
trailing quarter of $203,850,000 or 17.1%, primarily due to the
Company's loan originations occurring in the latter half of the
quarter. In addition, the Company purchased a pool of single family
residential mortgages totaling approximately $101,466,000 on the
final day of the quarter. These purchased loans had at weighted
average coupon of approximately 2.72% and an expected yield of
approximately 2.48%. The significant growth in both ending and
average balances of investment securities was a direct result of
management's focus on the deployment of excess cash balances which
remained elevated due to continued deposit growth during the
quarter.
Year Over Year Balance Sheet Change
Ending balances
As of March 31,
(dollars in thousands)
2021
2020
$ Change
% Change
Total assets
$
8,031,612
$
6,474,309
$
1,557,303
24.1
%
Total loans
4,966,977
4,379,062
587,915
13.4
%
Total loans, excluding PPP
4,606,133
4,379,062
227,071
5.2
%
Total investments
1,962,780
1,382,026
580,754
42.0
%
Total deposits
$
6,863,400
$
5,402,698
$
1,460,702
27.0
%
As discussed in previous quarters, the PPP program generated
significant increases in volume during the twelve months ended
March 31, 2021 for both loan and deposit balances. Other forms of
stimulus payments have further elevated deposit levels during the
same period. While excess deposit proceeds are ratably being
allocated to the purchase of investment securities with medium term
durations to improve overall margin, we expect to maintain above
average levels of liquidity through 2021, as the economic impacts
of COVID-19 and amount of future stimulus both remain uncertain.
Investment securities increased to $1,962,780,000 at March 31,
2021, a change of $580,754,000 or 42.0% from $1,382,026,000 at
March 31, 2020.
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)
2021
2020
$ Change
% Change
Interest income
$
67,916
$
68,081
$
(165)
(0.2)
%
Interest expense
(1,476)
(1,659)
183
(11.0)
%
Fully tax-equivalent adjustment (FTE)
(1)
277
258
19
7.4
%
Net interest income (FTE)
$
66,717
$
66,680
$
37
0.1
%
Net interest margin (FTE)
3.74
%
3.79
%
Acquired loans discount accretion,
net:
Amount (included in interest income)
$
1,712
$
1,960
$
(248)
Net interest margin less effect of
acquired loan discount accretion(1)
3.64
%
3.68
%
(0.04)
%
PPP loans yield, net:
Amount (included in interest income)
$
5,863
$
5,676
$
187
Net interest margin less effect of PPP
loan yield (1)
3.59
%
3.68
%
(0.09)
%
Acquired loans discount accretion and PPP
loan yield, net: (1)
Amount (included in interest income)
$
7,575
$
7,636
$
(61)
Net interest margin less effect of
acquired loan discount accretion and PPP loan yield (1)
3.48
%
3.56
%
(0.08)
%
Three months ended March 31,
(dollars in thousands)
2021
2020
$ Change
% Change
Interest income
$
67,916
$
66,517
$
1,399
2.1
%
Interest expense
(1,476)
(3,325)
1,849
(55.6)
%
Fully tax-equivalent adjustment (FTE)
(1)
277
271
6
2.2
%
Net interest income (FTE)
$
66,717
$
63,463
$
3,254
5.1
%
Net interest margin (FTE)
3.74
%
4.34
%
Acquired loans discount accretion,
net:
Amount (included in interest income)
$
1,712
$
1,748
$
(36)
Net interest margin less effect of
acquired loan discount accretion(1)
3.64
%
4.22
%
(0.58)
%
(1)
Information is presented on a fully
tax-equivalent (FTE) basis. The Company believes the use of this
non-generally accepted accounting principles (non-GAAP) measure
provides additional clarity in assessing its results, and the
presentation of these measures on a FTE basis is a common practice
within the banking industry.
Loans may be acquired at a premium or discount to par value, in
which case, the premium is amortized (subtracted from) or accreted
(added to) interest income over the remaining life of the loan.
Generally, as time goes on, the effects 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 uptick in interest rates, the prepayment rate of
portfolio loans, inclusive of those acquired at a premium or
discount, decreased during the first quarter of 2021. During the
three months ended March 31, 2021, December 31, 2020, and March 31,
2020, purchased loan discount accretion was $1,712,000, $1,960,000,
and $1,748,000, 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, 2021
December 31, 2020
March 31, 2020
Average Balance
Income/ Expense
Yield/ Rate
Average Balance
Income/ Expense
Yield/ Rate
Average Balance
Income/ Expense
Yield/ Rate
Assets
Loans, excluding PPP
$
4,407,150
$
54,573
5.02
%
$
4,363,873
$
55,339
5.04
%
$
4,329,357
$
56,258
5.23
%
PPP loans
355,875
5,863
6.68
%
403,842
5,676
5.59
%
—
—
—
%
Investments-taxable
1,649,980
6,394
1.57
%
1,458,856
6,022
1.64
%
1,235,672
8,572
2.79
%
Investments-nontaxable (1)
125,055
1,200
3.89
%
113,656
1,121
3.92
%
118,992
1,175
3.97
%
Total investments
1,775,035
7,594
1.74
%
1,572,512
7,143
1.81
%
1,354,664
9,747
2.89
%
Cash at Federal Reserve and other
banks
701,666
163
0.09
%
658,355
181
0.11
%
199,729
783
1.58
%
Total earning assets
7,239,726
68,193
3.82
%
6,998,582
68,339
3.88
%
5,883,750
66,788
4.57
%
Other assets, net
569,186
572,370
622,837
Total assets
$
7,808,912
$
7,570,952
$
6,506,587
Liabilities and shareholders’ equity
Interest-bearing demand deposits
$
1,430,943
$
76
0.02
%
$
1,275,550
$
43
0.01
%
$
1,245,896
$
169
0.05
%
Savings deposits
2,228,281
329
0.06
%
2,145,543
405
0.08
%
1,864,967
1,062
0.23
%
Time deposits
336,605
532
0.64
%
362,104
661
0.73
%
430,064
1,320
1.23
%
Total interest-bearing deposits
3,995,829
937
0.10
%
3,783,197
1,109
0.12
%
3,540,927
2,551
0.29
%
Other borrowings
32,709
4
0.05
%
32,504
4
0.05
%
22,790
5
0.09
%
Junior subordinated debt
57,688
535
3.76
%
57,581
546
3.77
%
57,272
769
5.40
%
Total interest-bearing liabilities
4,086,226
1,476
0.15
%
3,873,282
1,659
0.17
%
3,620,989
3,325
0.37
%
Noninterest-bearing deposits
2,657,925
2,557,978
1,855,006
Other liabilities
123,986
232,224
121,959
Shareholders’ equity
940,775
907,468
908,633
Total liabilities and shareholders’
equity
$
7,808,912
$
7,570,952
$
6,506,587
Net interest rate spread (1) (2)
3.67
%
3.71
%
4.20
%
Net interest income and margin (1) (3)
$
66,717
3.74
%
$
66,680
3.79
%
$
63,463
4.34
%
(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, 2021 increased $37,000 or 0.1% to $66,717,000 compared to
$66,680,000 during the three months ended December 31, 2020. Over
the same period, net interest margin decreased 5 basis points to
3.74% as compared to 3.79% in the trailing quarter. The 5 basis
point decrease is attributed to a 2 basis point decrease in non-PPP
loan yields, and a 7 basis point decline in investment security
yields, which were 1.74% during the three months ended March 31,
2021, as compared to 1.81% during the trailing quarter. Conversely,
those yield declines were partially offset due to a 2 basis point
improvement in the rate paid on interest-bearing liabilities, and
an increase in yields on the PPP loans, which earned 6.68% during
the three months ended March 31, 2021, as compared to 5.59% during
the trailing quarter. The quarterly increase in yield on PPP loans
is due to an acceleration of deferred loan fee accretion resulting
from approximately $140,024,000 in PPP loans being approved by the
SBA for forgiveness during the quarter, as compared to $103,811,000
in forgiven loans during the last quarter of 2020.
As compared to the same quarter in the prior year, average loan
yields, excluding PPP, decreased 21 basis points from 5.23% during
the three months ended March 31, 2020, to 5.02% during the three
months ended March 31, 2021. The 21 basis point decrease in yields
on loans during the comparable three month periods ended March 31,
2021 and 2020 was entirely attributable to decreases in market
rates and loan fees as the accretion of discounts from acquired
loans added 16 basis points to loan yields in both quarterly
periods. The index utilized in a significant portion of the
Company’s variable rate loans, Wall Street Journal Prime, has
remained unchanged at 3.25% since March 15, 2020, when it was
reduced from 4.25%.
The decline in interest expense when compared to both the
trailing quarter and the same quarter from the prior year was
primarily attributed to reductions in the rates offered on deposit
products. As a result, the cost of interest-bearing deposits, which
decreased by 2 basis points as of March 31, 2021, to 0.10% from
0.12% at December 31, 2020.
In addition, the growth of noninterest-bearing deposits
continues to benefit the average cost of total deposits as compared
to historical periods. Specifically, the ratio of average total
noninterest-bearing deposits to total average deposits was 39.9%
and 40.3% as of March 31, 2021 and December 31, 2020, respectively,
as compared to 34.4% in the quarter ended March 31, 2020. As a
result, the average cost of total deposits decreased to 0.06% at
March 31, 2021, compared to 0.19% in the same period of 2020.
Interest Rates and Loan Portfolio
Composition
During the first quarter of 2020, several market interest rates,
including many rates that serve as reference indices for variable
rate loans, declined markedly from previous levels. This prolonged
retraction in rates continued to apply downward pressure on the
portfolio in the first quarter of 2021. As of March 31, 2021, the
Company's loan portfolio consisted of approximately $4.97 billion
in outstanding principal with a weighted average coupon rate of
4.20%, inclusive of the PPP program loans. Excluding PPP loans, the
Company's loan portfolio has approximately $4.60 billion
outstanding with a weighted average coupon rate of 4.46% as of
March 31, 2021. Included in the March 31, 2021 loan total,
exclusive of PPP loans, are variable rate loans totaling $3.01
billion of which 88.3% or $2.66 billion were at their floor rate.
The remaining variable rate loans totaling $351.0 million, which
carried a weighted average coupon rate of 4.91% as of March 31,
2021, are subject to further rate adjustment. If those remaining
variable rate loans were to collectively, through future rate
adjustments, be reduced to their respective floors, they would have
a weighted average coupon rate of approximately 4.29% which would
result in the reduction of the weighted average coupon rate of the
total loan portfolio, exclusive of PPP loans, from 4.46% to
approximately 4.41%.
As of December 31, 2020, the Company's loan portfolio consisted
of approximately $4.80 billion in outstanding principal with a
weighted average coupon rate of 4.35%, inclusive of the PPP program
loans. Excluding PPP loans, the Company's loan portfolio has
approximately $4.47 billion outstanding with a weighted average
coupon rate of 4.60% as of December 31, 2020. Included in the
December 31, 2020 loan total, exclusive of PPP loans, are variable
rate loans totaling $3.02 billion of which 88.2% or $2.66 billion
were at their floor rate. The remaining variable rate loans
totaling $357.0 million, which carried a weighted average coupon
rate of 5.03% as of December 31, 2020, are subject to further rate
adjustment. If those remaining variable rate loans were to
collectively, through future rate adjustments, be reduced to their
respective floors, they would have a weighted average coupon rate
of approximately 4.36% which would result in the reduction of the
weighted average coupon rate of the total loan portfolio, exclusive
of PPP loans, from 4.60% to approximately 4.55%.
Asset Quality and Credit Loss
Provisioning
During the three months ended March 31, 2021, the Company
recorded a reversal of provision for credit losses of $6,060,000,
as compared to a provision expense of $4,850,000 for the trailing
quarter, and a provision expense of $8,070,000 during the first
quarter of 2020.
The following table presents details of the provision for credit
losses for the periods indicated:
Three months ended
(dollars in thousands)
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
Addition to (reversal of) allowance for
credit losses
$
(6,240)
$
4,450
$
7,649
$
22,089
$
8,000
Addition to reserve for unfunded loan
commitments
180
400
—
155
70
Total provision for credit losses
$
(6,060)
$
4,850
$
7,649
$
22,244
$
8,070
The allowance for credit losses (ACL) was $85,941,000 as of
quarter ended March 31, 2021, a net decrease of $5,906,000 over the
immediately preceding quarter. More specifically, the reversal of
allowance for credit losses of $6,240,000 consisted of $5,906,000
in changes relating to qualitative factors, loan volume and changes
in credit quality associated with levels of classified, past due
and non-performing loans, plus net recoveries totaling $334,000
during the quarter. The portfolio-wide qualitative indicator
associated with the forecast levels of US unemployment and the
qualitative factors associated with portfolio concentration risks
contributed approximately $3,540,000 and $2,954,000, respectively,
to the reversal in credit reserves on loans as of March 31, 2021.
Further reductions in required reserves of approximately $471,000
were associated with historical loss rates which have continued to
remain low despite the recent economic uncertainty. California
Unemployment factors, however, did not demonstrate a similar level
of improvement and added approximately $834,000 to reserves as of
March 31, 2021, as compared to December 31, 2020.
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 significant shifts in the magnitude of
changes for both the unemployment and GDP factors leading up to the
balance sheet date. Management noted that the majority of economic
forecasts utilized in the ACL calculation seem to have rebounded in
the current quarter, coinciding with the widespread availability of
vaccines, continued easing of occupancy and social distancing
restrictions, and continued government stimulus efforts.
Loans past due 30 days or more increased by $3,783,000 during
the quarter ended March 31, 2021 to $10,550,000, as compared to
$6,767,000 at December 31, 2020. Non-performing loans were
$28,941,000 at March 31, 2021, an increase of $2,077,000 and
$10,986,000, respectively, from $26,864,000 and $17,955,000 as of
December 31, 2020, and March 31, 2020, 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)
2021
2020
2020
Risk Rating:
Pass
$
4,765,180
95.9
%
$
4,555,154
95.6
%
$
4,280,031
97.7
%
Special Mention
143,677
2.9
%
158,241
3.4
%
63,169
1.4
%
Substandard
58,120
1.2
%
49,732
1.0
%
35,862
0.9
%
Total
$
4,966,977
$
4,763,127
$
4,379,062
Classified loans to total loans
1.17
%
1.04
%
0.82
%
Loans past due 30+ days to total loans
0.21
%
0.14
%
0.67
%
The Company's loan portfolio for non-classified loans (loans
graded special mention or better) remains generally consistent for
the quarter ended March 31, 2021, as compared to the trailing
quarter December 31, 2020, representing 98.8% and 99.0% of total
loans outstanding, respectively. Loans risk graded special mention
decreased by approximately $14,564,000 during the quarter ended
March 31, 2021 as compared to the trailing quarter, while loans
risk graded substandard increased by approximately $8,388,000
during the same periods. The change in both loan risk rating
categories is largely due to the migration from special mention to
substandard of three loans to separate borrowers, which totaled
approximately $10,380,000. Only one of these loans is considered by
management to be impaired as of March 31, 2021 and management
believes that there is no ultimate risk of loss and therefore, no
specific reserves have been recorded on this loan.
There were no additions to other real estate owned during the
quarter ended March 31, 2021 and there was one sale for proceeds of
approximately $576,000, which generated a gain of $51,000. As of
March 31, 2021, other real estate owned consisted of six properties
with a carrying value of $2,309,000.
Allocation of Credit Loss Reserves by
Loan Type
As of March 31, 2021
As of December 31, 2020
As of September 30, 2020
(dollars in thousands)
Amount
% of Loans Outstanding
Amount
% of Loans Outstanding
Amount
% of Loans Outstanding
Commercial real estate:
CRE - Non Owner Occupied
$
26,434
1.70
%
$
29,380
1.91
%
$
28,847
1.80
%
CRE - Owner Occupied
9,874
1.54
%
10,860
1.74
%
9,625
1.66
%
Multifamily
12,371
1.62
%
11,472
1.79
%
10,032
1.67
%
Farmland
1,724
1.17
%
1,980
1.30
%
1,790
1.17
%
Total commercial real estate loans
50,403
1.62
%
53,692
1.82
%
50,294
1.71
%
Consumer:
SFR 1-4 1st Liens
10,665
1.66
%
10,117
1.83
%
8,937
1.72
%
SFR HELOCs and Junior Liens
11,079
3.34
%
11,771
3.59
%
11,676
3.51
%
Other
2,860
3.99
%
3,261
4.20
%
3,394
4.18
%
Total consumer loans
24,604
2.36
%
25,149
2.62
%
24,007
2.57
%
Commercial and Industrial
4,464
0.81
%
4,252
0.81
%
4,534
0.72
%
Construction
5,476
2.47
%
7,540
2.65
%
7,640
2.68
%
Agricultural Production
988
2.49
%
1,209
2.74
%
1,093
2.69
%
Leases
6
0.13
%
5
0.13
%
7
0.19
%
Allowance for credit losses
85,941
1.73
%
91,847
1.93
%
87,575
1.81
%
Reserve for unfunded loan commitments
3,586
3,400
3,000
Total allowance for credit losses
$
89,527
1.80
%
$
95,247
2.00
%
$
90,575
1.88
%
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 1.87% as of March 31, 2021. 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, 2021,
the unamortized discount associated with acquired loans totaled
$22,652,000 and if aggregated with the ACL would collectively
represent 2.18% of total gross loans and 2.36% of total loans less
PPP loans.
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, 2021
December 31, 2020
$ Change
% Change
ATM and interchange fees
$
5,861
$
5,747
$
114
2.0
%
Service charges on deposit accounts
3,269
3,518
(249)
(7.1)
%
Other service fees
871
860
11
1.3
%
Mortgage banking service fees
463
469
(6)
(1.3)
%
Change in value of mortgage servicing
rights
12
(376)
388
(103.2)
%
Total service charges and fees
10,476
10,218
258
2.5
%
Increase in cash value of life
insurance
673
746
(73)
(9.8)
%
Asset management and commission income
834
745
89
11.9
%
Gain on sale of loans
3,247
3,460
(213)
(6.2)
%
Lease brokerage income
110
173
(63)
(36.4)
%
Sale of customer checks
119
111
8
7.2
%
Gain on sale of investment securities
—
—
—
n/m
Loss on marketable equity securities
(53)
(8)
(45)
n/m
Other
704
1,135
(431)
(38.0)
%
Total other non-interest income
5,634
6,362
(728)
(11.4)
%
Total non-interest income
$
16,110
$
16,580
$
(470)
(2.8)
%
Non-interest income decreased $470,000 or 2.8% to $16,110,000
during the three months ended March 31, 2021 compared to
$16,580,000 during the trailing quarter December 31, 2020. Mortgage
loan origination volume declined slightly during the period ended
March 31, 2021 as a result of an uptick in the interest rate
environment, leading to a decrease in loans originated for sale and
a $213,000 decrease in gain on sale of loans, as compared to the
trailing quarter. Additionally, other non-interest income
contributed $704,000 during the quarter ended March 31, 2021, a
decrease of $431,000 from the trailing quarter. This decrease was
primarily due to an absence of a one-time death benefit totaling
$498,000 realized during the quarter ended December 31, 2020. As an
offset to these decreases in non-interest income, the change in
valuation of mortgage servicing rights increased by $12,000 during
the quarter as the expected duration of loans serviced for others
extended, which represented an improvement of $388,000 as compared
to the trailing quarter ended December 31, 2020.
The following table presents the key components of non-interest
income for the periods indicated:
Three months ended March 31,
(dollars in thousands)
2021
2020
$ Change
% Change
ATM and interchange fees
$
5,861
$
5,111
$
750
14.7
%
Service charges on deposit accounts
3,269
4,046
(777)
(19.2)
%
Other service fees
871
758
113
14.9
%
Mortgage banking service fees
463
469
(6)
(1.3)
%
Change in value of mortgage servicing
rights
12
(1,258)
1,270
(101.0)
%
Total service charges and fees
10,476
9,126
1,350
14.8
%
Increase in cash value of life
insurance
673
720
(47)
(6.5)
%
Asset management and commission income
834
916
(82)
(9.0)
%
Gain on sale of loans
3,247
891
2,356
264.4
%
Lease brokerage income
110
193
(83)
(43.0)
%
Sale of customer checks
119
124
(5)
(4.0)
%
Gain on sale of investment securities
—
—
—
n/m
Gain on marketable equity securities
(53)
47
(100)
(212.8)
%
Other
704
(197)
901
(457.4)
%
Total other non-interest income
5,634
2,694
2,940
109.1
%
Total non-interest income
$
16,110
$
11,820
$
4,290
36.3
%
In addition to the discussion above within the non-interest
income for the three months ended March 31, 2021 and trailing
December 31, 2020, deposit account related fee revenue has declined
$777,000 or 19.2% during the three months ended March 31, 2021 when
compared to the same period in the prior year as a result of the
pandemic related stimulus which has bolstered average deposit
balances and reduced the volume of transactions with fees such as
minimum account balance charges and non-sufficient funds. As an
offset, social distancing guidelines resulted in more online and
debit card payment transactions benefiting ATM and interchange
fees, which increased by $750,000 or 14.7% over the same quarter 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, 2021
December 31, 2020
$ Change
% Change
Base salaries, net of deferred loan
origination costs
$
15,511
$
16,510
$
(999)
(6.1)
%
Incentive compensation
3,580
2,342
1,238
52.9
%
Benefits and other compensation costs
6,239
9,621
(3,382)
(35.2)
%
Total salaries and benefits expense
25,330
28,473
(3,143)
(11.0)
%
Occupancy
3,726
3,815
(89)
(2.3)
%
Data processing and software
3,202
2,919
283
9.7
%
Equipment
1,517
1,293
224
17.3
%
Intangible amortization
1,431
1,430
1
0.1
%
Advertising
380
762
(382)
(50.1)
%
ATM and POS network charges
1,246
1,536
(290)
(18.9)
%
Professional fees
594
823
(229)
(27.8)
%
Telecommunications
581
618
(37)
(6.0)
%
Regulatory assessments and insurance
612
601
11
1.8
%
Postage
198
377
(179)
(47.5)
%
Operational losses
209
609
(400)
(65.7)
%
Courier service
294
401
(107)
(26.7)
%
Gain on sale or acquisition of foreclosed
assets
(51)
(177)
126
n/m
Loss on disposal of fixed assets
—
30
(30)
(100.0)
%
Other miscellaneous expense
2,349
2,235
114
5.1
%
Total other non-interest expense
16,288
17,272
(984)
(5.7)
%
Total non-interest expense
$
41,618
$
45,745
$
(4,127)
(9.0)
%
Average full-time equivalent staff
1,024
1,030
(6)
(0.6)
%
Non-interest expense for the quarter ended March 31, 2021
decreased $4,127,000 or 9.0% to $41,618,000 as compared to
$45,745,000 during the trailing quarter ended December 31, 2020.
Salaries, net of deferred loan origination costs decreased by
$999,000 to $15,511,000 for the three months ended March 31, 2021
due to a decrease in average full-time equivalent staff, in
addition to a $404,000 increase in the total amount of deferred
salaries attributed to loan production. Incentive compensation
increased by $1,238,000 or 52.9% to $3,580,000 during the quarter
ended March 31, 2021 as compared to the trailing period, as a
result of the organic loan growth and strong overall Company
performance during the quarter. Benefits and other compensation
costs decreased by $3,382,000 to $6,239,000 during the quarter,
primarily as a result of decreases in expenses associated with
retirement obligations and group insurance costs.
The following table presents the key components of non-interest
expense for the current and prior year quarterly periods
indicated:
Three months ended March 31,
(dollars in thousands)
2021
2020
$ Change
% Change
Base salaries, net of deferred loan
origination costs
$
15,511
$
17,623
$
(2,112)
(12.0)
%
Incentive compensation
3,580
3,101
479
15.4
%
Benefits and other compensation costs
6,239
6,548
(309)
(4.7)
%
Total salaries and benefits expense
25,330
27,272
(1,942)
(7.1)
%
Occupancy
3,726
3,875
(149)
(3.8)
%
Data processing and software
3,202
3,367
(165)
(4.9)
%
Equipment
1,517
1,512
5
0.3
%
Intangible amortization
1,431
1,431
—
—
%
Advertising
380
665
(285)
(42.9)
%
ATM and POS network charges
1,246
1,373
(127)
(9.2)
%
Professional fees
594
703
(109)
(15.5)
%
Telecommunications
581
725
(144)
(19.9)
%
Regulatory assessments and insurance
612
95
517
544.2
%
Postage
198
290
(92)
(31.7)
%
Operational losses
209
221
(12)
(5.4)
%
Courier service
294
331
(37)
(11.2)
%
Gain on sale or acquisition of foreclosed
assets
(51)
(41)
(10)
24.4
%
Loss on disposal of fixed assets
—
—
—
n/m
Other miscellaneous expense
2,349
2,930
(581)
(19.8)
%
Total other non-interest expense
16,288
17,477
(1,189)
(6.8)
%
Total non-interest expense
$
41,618
$
44,749
$
(3,131)
(7.0)
%
Average full-time equivalent staff
1,024
1,165
(141)
(12.1)
%
Non-interest expense decreased by $3,131,000 or 7.0% to
$41,618,000 during the three months ended March 31, 2021 as
compared to $44,749,000 for the three months ended March 31, 2020.
For reasons similar to those discussed above, salary and benefit
expense decreased by $1,942,000 or 7.1% to $25,330,000 during the
three months ended March 31, 2021 as compared to $27,272,000 for
the same period in 2020. During the three months ended March 31,
2021, the 140 decline in average full-time equivalent employees
benefited employee salary expense by $1,591,000, and increases in
capitalized salary costs from loan origination activities reduced
the expense an additional $445,000, respectively, as compared to
the quarter ended March 31, 2020. Miscellaneous expenses also
decreased during the period by $581,000 or 19.8% to $2,349,000 as
compared to the same period in 2020, which is primarily attributed
to precautionary reductions in travel and outside training expenses
associated that began late in the first quarter of 2020.
Offsetting these decreases were larger regulatory assessment and
insurance costs, which increased to a normalized quarterly rate of
$612,000 during the period, an increase of $517,000 as compared to
the first quarter of 2020, during which the FDIC issued a
regulatory assessment credit of $437,000.
Provision for Income
Taxes
The Company’s effective tax rate was 28.4% for the year ended
March 31, 2021, as compared to 25.8% for the year ended December
31, 2020. The reduced effective tax rate in the prior year was made
possible through the provisions of the Coronavirus Aid, Relief, and
Economic Security Act (“CARES Act”) which provided the Company with
an opportunity to file amended tax returns and generate proposed
refunds of approximately $805,000. Other differences between the
Company's effective tax rate and applicable federal and state
statutory rates are due to the proportion of non-taxable revenue
and low income housing 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 in communities throughout Northern and Central
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;
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;
the costs or effects of mergers, acquisitions or dispositions we
may make; 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, 2020, 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 are under 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, 2021
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
Revenue and Expense Data
Interest income
$
67,916
$
68,081
$
65,438
$
67,148
$
66,517
Interest expense
1,476
1,659
1,984
2,489
3,325
Net interest income
66,440
66,422
63,454
64,659
63,192
Provision for (benefit from) credit
losses
(6,060)
4,850
7,649
22,244
8,070
Noninterest income:
Service charges and fees
10,476
10,218
10,469
8,168
9,126
Gain on sale of investment securities
—
—
7
—
—
Other income
5,634
6,362
4,661
3,489
2,694
Total noninterest income
16,110
16,580
15,137
11,657
11,820
Noninterest expense:
Salaries and benefits
25,330
28,473
29,321
27,055
27,272
Occupancy and equipment
5,243
5,108
4,989
4,748
5,387
Data processing and network
4,448
4,455
4,875
4,867
4,740
Other noninterest expense
6,597
7,709
7,529
8,880
7,350
Total noninterest expense
41,618
45,745
46,714
45,550
44,749
Total income before taxes
46,992
32,407
24,228
8,522
22,193
Provision for income taxes
13,343
8,750
6,622
1,092
6,072
Net income
$
33,649
$
23,657
$
17,606
$
7,430
$
16,121
Share Data
Basic earnings per share
$
1.13
$
0.80
$
0.59
$
0.25
$
0.53
Diluted earnings per share
$
1.13
$
0.79
$
0.59
$
0.25
$
0.53
Dividends per share
$
0.25
$
0.22
$
0.22
$
0.22
$
0.22
Book value per common share
$
31.71
$
31.12
$
30.31
$
29.76
$
28.91
Tangible book value per common share
(1)
$
23.72
$
23.09
$
22.24
$
21.64
$
20.80
Shares outstanding
29,727,122
29,727,214
29,769,389
29,759,209
29,973,516
Weighted average shares
29,727,182
29,756,831
29,763,898
29,753,699
30,394,904
Weighted average diluted shares
29,904,974
29,863,478
29,844,396
29,883,193
30,522,842
Credit Quality
Allowance for credit losses to gross
loans
1.73
%
1.93
%
1.81
%
1.66
%
1.32
%
Loans past due 30 days or more
$
10,550
$
6,767
$
10,522
$
16,622
$
28,693
Total nonperforming loans
$
28,941
$
26,864
$
22,963
$
20,730
$
17,955
Total nonperforming assets
$
31,250
$
29,708
$
25,020
$
22,652
$
20,184
Loans charged-off
$
226
$
560
$
194
$
491
$
510
Loans recovered
$
560
$
382
$
381
$
230
$
892
Selected Financial Ratios
Return on average total assets
1.75
%
1.24
%
0.95
%
0.43
%
1.00
%
Return on average equity
14.51
%
10.37
%
7.79
%
3.39
%
7.14
%
Average yield on loans, excluding PPP
5.02
%
5.04
%
5.02
%
5.17
%
5.23
%
Average yield on interest-earning
assets
3.82
%
3.88
%
3.83
%
4.26
%
4.57
%
Average rate on interest-bearing
deposits
0.10
%
0.12
%
0.15
%
0.20
%
0.29
%
Average cost of total deposits
0.06
%
0.07
%
0.09
%
0.12
%
0.19
%
Average rate on borrowings &
subordinated debt
2.42
%
2.43
%
2.49
%
3.25
%
3.89
%
Average rate on interest-bearing
liabilities
0.15
%
0.17
%
0.20
%
0.27
%
0.37
%
Net interest margin (fully tax-equivalent)
(1)
3.74
%
3.79
%
3.72
%
4.10
%
4.34
%
Loans to deposits
72.37
%
73.21
%
76.12
%
76.84
%
81.05
%
Efficiency ratio
50.42
%
55.11
%
59.44
%
59.69
%
59.66
%
Supplemental Loan Interest Income
Data
Discount accretion on acquired loans
$
1,712
$
1,960
$
1,876
$
2,587
$
1,748
All other loan interest income (excluding
PPP) (1)
$
52,861
$
53,379
$
53,560
$
53,466
$
54,510
Total loan interest income (excluding PPP)
(1)
$
54,573
$
55,339
$
55,436
$
56,053
$
56,258
(1) Non-GAAP measure
TRICO BANCSHARES—CONDENSED
CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in
thousands)
Balance Sheet Data
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
Cash and due from banks
$
609,522
$
669,551
$
652,582
$
705,852
$
185,466
Securities, available for sale, net
1,685,076
1,417,289
1,145,989
999,313
1,005,006
Securities, held to maturity, net
260,454
284,563
310,696
337,165
359,770
Restricted equity securities
17,250
17,250
17,250
17,250
17,250
Loans held for sale
3,995
6,268
6,570
8,352
2,695
Loans:
Commercial loans
590,201
570,202
673,281
667,263
285,830
Consumer loans
382,649
385,451
400,711
416,490
428,313
Real estate mortgage loans
3,772,518
3,522,639
3,466,307
3,437,960
3,422,440
Real estate construction loans
221,609
284,835
286,039
279,692
242,479
Total loans, gross
4,966,977
4,763,127
4,826,338
4,801,405
4,379,062
Allowance for credit losses
(85,941)
(91,847)
(87,575)
(79,739)
(57,911)
Total loans, net
4,881,036
4,671,280
4,738,763
4,721,666
4,321,151
Premises and equipment
82,338
83,731
84,856
85,292
86,304
Cash value of life insurance
119,543
118,870
120,026
119,254
118,543
Accrued interest receivable
19,442
20,004
19,557
20,337
18,575
Goodwill
220,872
220,872
220,872
220,872
220,872
Other intangible assets
16,402
17,833
19,264
20,694
22,126
Operating leases, right-of-use
27,540
27,846
28,879
29,842
30,221
Other assets
88,142
84,172
84,495
74,182
86,330
Total assets
$
8,031,612
$
7,639,529
$
7,449,799
$
7,360,071
$
6,474,309
Deposits:
Noninterest-bearing demand deposits
$
2,766,510
$
2,581,517
$
2,517,819
$
2,487,120
$
1,883,143
Interest-bearing demand deposits
1,465,915
1,414,908
1,346,716
1,318,951
1,243,192
Savings deposits
2,302,927
2,164,942
2,099,780
2,043,593
1,857,684
Time certificates
328,048
344,567
376,273
398,594
418,679
Total deposits
6,863,400
6,505,934
6,340,588
6,248,258
5,402,698
Accrued interest payable
970
1,362
1,571
1,734
1,986
Operating lease liability
27,780
27,973
28,894
29,743
30,007
Other liabilities
102,955
94,597
91,902
98,684
96,560
Other borrowings
36,226
26,914
27,055
38,544
19,309
Junior subordinated debt
57,742
57,635
57,527
57,422
57,323
Total liabilities
7,089,073
6,714,415
6,547,537
6,474,385
5,607,883
Common stock
531,367
530,835
531,075
530,422
534,623
Retained earnings
408,211
381,999
365,611
354,645
356,935
Accum. other comprehensive income
(loss)
2,961
12,280
5,576
619
(25,132)
Total shareholders’ equity
$
942,539
$
925,114
$
902,262
$
885,686
$
866,426
Quarterly Average Balance Data
Average loans, excluding PPP
$
4,407,150
$
4,363,873
$
4,389,672
$
4,363,481
$
4,329,357
Average interest-earning assets
$
7,239,726
$
6,998,582
$
6,815,495
$
6,365,865
$
5,883,750
Average total assets
$
7,808,912
$
7,570,952
$
7,380,961
$
7,027,735
$
6,506,587
Average deposits
$
6,653,754
$
6,341,175
$
6,278,638
$
5,937,294
$
5,395,933
Average borrowings and subordinated
debt
$
90,397
$
90,085
$
91,225
$
83,685
$
80,062
Average total equity
$
940,775
$
907,468
$
898,986
$
880,405
$
908,633
Capital Ratio Data
Total risk based capital ratio
15.1
%
15.2
%
15.2
%
15.1
%
15.1
%
Tier 1 capital ratio
13.9
%
14.0
%
14.0
%
13.9
%
13.9
%
Tier 1 common equity ratio
12.9
%
12.9
%
12.9
%
12.8
%
12.8
%
Tier 1 leverage ratio
10.0
%
9.9
%
10.0
%
10.3
%
11.2
%
Tangible capital ratio (1)
9.1
%
9.3
%
9.2
%
9.1
%
10.0
%
(1) Non-GAAP measure
TRICO BANCSHARES—NON-GAAP
FINANCIAL MEASURES
(Unaudited. Dollars in
thousands)
In addition to results presented in
accordance with generally accepted accounting principles in the
United States of America (GAAP), this press release contains
certain non-GAAP financial measures. Management has presented these
non-GAAP financial measures in this press release because it
believes that they provide useful and comparative information to
assess trends in the Company's core operations reflected in the
current quarter's results, and facilitate the comparison of our
performance with the performance of our peers. However, these
non-GAAP financial measures are supplemental and are not a
substitute for any analysis based on GAAP. Where applicable,
comparable earnings information using GAAP financial measures is
also presented. Because not all companies use the same
calculations, our presentation may not be comparable to other
similarly titled measures as calculated by other companies. For a
reconciliation of these non-GAAP financial measures, see the tables
below:
Three months ended
(dollars in thousands)
March 31, 2021
December 31, 2020
March 31, 2020
Net interest margin
Acquired loans discount accretion,
net:
Amount (included in interest income)
$
1,712
$
1,960
$
1,748
Effect on average loan yield
0.16
%
0.18
%
0.16
%
Effect on net interest margin (FTE)
0.10
%
0.11
%
0.12
%
Net interest margin (FTE)
3.74
%
3.79
%
4.34
%
Net interest margin less effect of
acquired loan discount accretion (Non-GAAP)
3.64
%
3.68
%
4.22
%
PPP loans yield, net:
Amount (included in interest income)
$
5,863
$
5,676
none
Effect on net interest margin (FTE)
0.15
%
0.11
%
none
Net interest margin less effect of PPP
loan yield (Non-GAAP)
3.59
%
3.68
%
none
Acquired loan discount accretion and PPP
loan yield, net:
Amount (included in interest income)
$
7,575
$
7,636
$
1,748
Effect on net interest margin (FTE)
0.25
%
0.23
%
0.12
%
Net interest margin less effect of
acquired loan discount accretion and PPP yields, net (Non-GAAP)
3.48
%
3.56
%
4.22
%
Three months ended
(dollars in thousands)
March 31, 2021
December 31, 2020
March 31, 2020
Pre-tax pre-provision return on average
assets or equity
Net income (GAAP)
$
33,649
23,657
$
16,121
Exclude income tax expense
13,343
8,750
6,072
Exclude provision (benefit) for credit
losses
(6,060)
4,850
8,070
Net income before income tax and provision
expense (Non-GAAP)
$
40,932
$
37,257
$
30,263
Average assets (GAAP)
$
7,808,912
$
7,570,952
$
6,506,587
Average equity (GAAP)
940,775
907,468
908,633
Return on average assets (GAAP)
(annualized)
1.75
%
1.24
%
1.00
%
Pre-tax pre-provision return on average
assets (Non-GAAP) (annualized)
2.13
%
1.96
%
1.87
%
Return on average equity (GAAP)
(annualized)
14.51
%
10.37
%
7.14
%
Pre-tax pre-provision return on average
equity (Non-GAAP) (annualized)
17.65
%
16.33
%
13.40
%
Three months ended
(dollars in thousands)
March 31, 2021
December 31, 2020
March 31, 2020
Return on tangible common
equity
Average total shareholders' equity
$
940,775
$
907,468
$
908,633
Exclude average goodwill
220,872
220,872
220,872
Exclude average other intangibles
17,118
18,549
22,842
Average tangible common equity
(Non-GAAP)
$
702,785
$
668,047
$
664,919
Net income (GAAP)
$
33,649
$
23,657
$
16,121
Exclude amortization of intangible assets,
net of tax effect
1,008
1,007
1,008
Tangible net income available to common
shareholders (Non-GAAP)
$
34,657
24,664
$
17,129
Return on average equity
14.51
%
10.37
%
7.14
%
Return on average tangible common equity
(Non-GAAP)
20.00
%
14.69
%
10.36
%
Three months ended
(dollars in thousands)
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
Tangible common shareholders' equity to
tangible assets
Shareholders' equity (GAAP)
$
942,539
$
925,114
$
902,262
$
885,686
$
866,426
Exclude goodwill and other intangible
assets, net
237,274
238,705
240,136
241,566
242,998
Tangible s/h equity (Non-GAAP)
$
705,265
$
686,409
$
662,126
$
644,120
$
623,428
Total assets (GAAP)
$
8,031,612
$
7,639,529
$
7,449,799
$
7,360,071
$
6,474,309
Exclude goodwill and other intangible
assets, net
237,274
238,705
240,136
241,566
242,998
Total tangible assets (Non-GAAP)
$
7,794,338
$
7,400,824
$
7,209,663
$
7,118,505
$
6,231,311
Common s/h equity to total assets
(GAAP)
11.74
%
12.11
%
12.11
%
12.03
%
13.38
%
Tangible common shareholders' equity to
tangible assets (Non-GAAP)
9.05
%
9.27
%
9.18
%
9.05
%
10.00
%
Three months ended
(dollars in thousands)
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
Tangible common shareholders' equity
per share
Tangible s/h equity (Non-GAAP)
$
705,265
$
686,409
$
662,126
$
644,120
$
623,428
Tangible assets (Non-GAAP)
7,794,338
7,400,824
7,209,663
7,118,505
6,231,311
Common shares outstanding at end of
period
29,727,122
29,727,214
29,769,389
29,759,209
29,973,516
Common s/h equity (book value) per share
(GAAP)
$
31.71
$
31.12
$
30.31
$
29.76
$
28.91
Tangible common shareholders' equity
(tangible book value) per share (Non-GAAP)
$
23.72
$
23.09
$
22.24
$
21.64
$
20.80
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428005341/en/
Peter G. Wiese EVP & Chief Financial Officer (530)
898-0300
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