2Q24 Financial Highlights

  • Net income increased to $29.0 million or $0.87 per diluted share as compared to $27.7 million or $0.83 per diluted share in the trailing quarter
  • Deposit balances increased $62.6 million or 3.1% (annualized) from the trailing quarter
  • Average yield on earning assets was 5.24%, an increase of 11 basis points over the 5.13% in the trailing quarter
  • Net interest margin (FTE) was 3.68% in the recent quarter, unchanged from the trailing quarter
  • Non-interest bearing deposits averaged 32.0% of total deposits during the quarter
  • The average cost of total deposits was 1.45%, an increase of 24 basis points as compared to 1.21% in the trailing quarter, and an increase of 87 basis points from 0.58% in the same quarter of the prior year; the Company's total cost of deposits have increased 141 basis points since FOMC rate actions began in March 2022, which translates to a cycle-to-date deposit beta of 26.9%

TriCo Bancshares (NASDAQ: TCBK):

Executive Commentary:

“Our results for the second quarter continued to demonstrate TriCo’s stability and ability to operate effectively under various and changing economic environments. Our focus on core deposit growth and relationship banking continues to provide positive traction for our Bank," said Rick Smith, President and CEO. Smith further commented; "Our loan portfolio risk trends remain strong as the credit cycle continues to normalize as compared to the past several years. Borrowers continue to be responsive and supportive of our proactive efforts to manage credit risk.”

Peter Wiese, EVP and CFO added, “Our net interest margin was unchanged from the trailing quarter, a positive indicator that net interest income is poised to gain momentum in the second half of 2024. Our balance sheet strategies around deposit growth and borrowing reductions continue to be successful, and despite the modest increase in non-interest expenses during the second quarter, our full year outlook remains unchanged. In addition, our use of capital, including a cash dividend and share repurchase activities, illustrate our commitment to building shareholder value and our forward-looking confidence in the Company.”

Selected Financial Highlights

  • For the quarter ended June 30, 2024, the Company’s return on average assets was 1.19%, while the return on average equity was 9.99%; for the trailing quarter ended March 31, 2024, the Company’s return on average assets was 1.13%, while the return on average equity was 9.50%.
  • Diluted earnings per share were $0.87 for the second quarter of 2024, compared to $0.83 for the trailing quarter and $0.75 during the second quarter of 2023.
  • The loan to deposit ratio decreased to 83.8% as of June 30, 2024, as compared to 85.1% for the trailing quarter end, as a result of both deposit growth and loan contraction during the quarter.
  • The efficiency ratio was 59.61% for the quarter ended June 30, 2024, as compared to 57.36% for the trailing quarter.
  • The provision for credit losses was approximately $0.4 million during the quarter ended June 30, 2024, as compared to $4.3 million during the trailing quarter end, reflecting the continued risks associated with general economic trends and forecasts, partially offset by a decline in specific reserves and loan balances.
  • The allowance for credit losses (ACL) to total loans was 1.83% as of June 30, 2024, compared to 1.83% as of the trailing quarter end, and 1.80% as of June 30, 2023. Non-performing assets to total assets were 0.36% on June 30, 2024, as compared to 0.37% as of March 31, 2024, and 0.41% at June 30, 2023. At June 30, 2024, the ACL represented 377% of non-performing loans.

Financial results reported in this document are preliminary and unaudited. Final financial results and other disclosures will be reported on Form 10-Q for the period ended June 30, 2024, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.

Operating Results and Performance Ratios

 

Three months ended

 

 

 

 

 

June 30, 2024

 

March 31, 2024

 

 

 

 

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

 

 

$ Change

 

% Change

Net interest income

$

81,997

 

 

$

82,736

 

 

$

(739

)

 

(0.9

)%

Provision for credit losses

 

(405

)

 

 

(4,305

)

 

 

3,900

 

 

(90.6

)%

Noninterest income

 

15,866

 

 

 

15,771

 

 

 

95

 

 

0.6

%

Noninterest expense

 

(58,339

)

 

 

(56,504

)

 

 

(1,835

)

 

3.2

%

Provision for income taxes

 

(10,085

)

 

 

(9,949

)

 

 

(136

)

 

1.4

%

Net income

$

29,034

 

 

$

27,749

 

 

$

1,285

 

 

4.6

%

Diluted earnings per share

$

0.87

 

 

$

0.83

 

 

$

0.04

 

 

4.8

%

Dividends per share

$

0.33

 

 

$

0.33

 

 

$

—

 

 

—

%

Average common shares

 

33,121

 

 

 

33,245

 

 

 

(124

)

 

(0.4

)%

Average diluted common shares

 

33,244

 

 

 

33,370

 

 

 

(126

)

 

(0.4

)%

Return on average total assets

 

1.19

%

 

 

1.13

%

 

 

 

 

Return on average equity

 

9.99

%

 

 

9.50

%

 

 

 

 

Efficiency ratio

 

59.61

%

 

 

57.36

%

 

 

 

 

 

Three months ended June 30,

 

 

 

 

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

 

2024

 

 

 

2023

 

 

$ Change

 

% Change

Net interest income

$

81,997

 

 

$

88,601

 

 

$

(6,604

)

 

(7.5

)%

Provision for credit losses

 

(405

)

 

 

(9,650

)

 

 

9,245

 

 

(95.8

)%

Noninterest income

 

15,866

 

 

 

15,741

 

 

 

125

 

 

0.8

%

Noninterest expense

 

(58,339

)

 

 

(61,243

)

 

 

2,904

 

 

(4.7

)%

Provision for income taxes

 

(10,085

)

 

 

(8,557

)

 

 

(1,528

)

 

17.9

%

Net income

$

29,034

 

 

$

24,892

 

 

$

4,142

 

 

16.6

%

Diluted earnings per share

$

0.87

 

 

$

0.75

 

 

$

0.12

 

 

16.0

%

Dividends per share

$

0.33

 

 

$

0.30

 

 

$

0.03

 

 

10.0

%

Average common shares

 

33,121

 

 

 

33,219

 

 

 

(98

)

 

(0.3

)%

Average diluted common shares

 

33,244

 

 

 

33,302

 

 

 

(58

)

 

(0.2

)%

Return on average total assets

 

1.19

%

 

 

1.01

%

 

 

 

 

Return on average equity

 

9.99

%

 

 

8.98

%

 

 

 

 

Efficiency ratio

 

59.61

%

 

 

58.69

%

 

 

 

 

 

Six months ended June 30,

 

 

(dollars and shares in thousands)

 

2024

 

 

 

2023

 

 

$ Change

 

% Change

Net interest income

$

164,733

 

 

$

181,937

 

 

$

(17,204

)

 

(9.5

)%

Provision for credit losses

 

(4,710

)

 

 

(13,845

)

 

 

9,135

 

 

(66.0

)%

Noninterest income

 

31,637

 

 

 

29,376

 

 

 

2,261

 

 

7.7

%

Noninterest expense

 

(114,843

)

 

 

(115,037

)

 

 

194

 

 

(0.2

)%

Provision for income taxes

 

(20,034

)

 

 

(21,706

)

 

 

1,672

 

 

(7.7

)%

Net income

$

56,783

 

 

$

60,725

 

 

$

(3,942

)

 

(6.5

)%

Diluted earnings per share

$

1.70

 

 

$

1.82

 

 

$

(0.12

)

 

(6.6

)%

Dividends per share

$

0.66

 

 

$

0.60

 

 

$

0.06

 

 

10.0

%

Average common shares

 

33,183

 

 

 

33,257

 

 

 

(74

)

 

(0.2

)%

Average diluted common shares

 

33,306

 

 

 

33,371

 

 

 

(65

)

 

(0.2

)%

Return on average total assets

 

1.16

%

 

 

1.24

%

 

 

 

 

Return on average equity

 

9.74

%

 

 

11.13

%

 

 

 

 

Efficiency ratio

 

58.48

%

 

 

54.44

%

 

 

 

 

Balance Sheet Data

Total loans outstanding were $6.7 billion as of June 30, 2024, an organic increase of $221.8 million 3.4% over June 30, 2023, but a decrease of $58.2 million or 3.4% annualized as compared to the trailer quarter ended March 31, 2024. As the Company continued with its balance sheet augmentation strategies, investments decreased by $135.5 million and $399.3 million for the three and twelve month periods ended June 30, 2024 and ending the quarter with a balance of $2.09 billion or 21.4% of total assets. Quarterly average earning assets to quarterly total average assets was 92.0% on June 30, 2024, compared to 91.6% at June 30, 2023. The loan-to-deposit ratio was 83.8% on June 30, 2024, as compared to 80.6% at June 30, 2023. The Company did not utilize brokered deposits during 2024 or 2023 and continues to rely on organic deposit customers and short-term borrowings to fund cash flow timing differences.

Total shareholders' equity increased by $12.0 million during the quarter ended June 30, 2024, as net income of $29.0 million and a $2.9 million decrease in accumulated other comprehensive losses was partially offset by cash dividend payments on common stock of approximately $10.9 million and net share repurchases totaling $9.0 million. As a result, the Company’s book value grew to $35.62 per share at June 30, 2024, compared to $32.86 at June 30, 2023. The Company’s tangible book value per share, a non-GAAP measure, calculated by subtracting goodwill and other intangible assets from total shareholders’ equity and dividing that sum by total shares outstanding, was $26.13 per share at June 30, 2024, as compared to $23.30 at June 30, 2023. As noted above, changes in the fair value of available-for-sale investment securities, net of deferred taxes continue to create moderate levels of volatility in tangible book value per share.

Trailing Quarter Balance Sheet Change

Ending balances

June 30, 2024

 

March 31, 2024

 

 

 

Annualized

% Change

(dollars in thousands)

 

 

$ Change

Total assets

$

9,741,399

 

$

9,813,767

 

$

(72,368

)

 

(2.9

)%

Total loans

 

6,742,526

 

 

6,800,695

 

 

(58,169

)

 

(3.4

)

Total investments

 

2,086,090

 

 

2,221,555

 

 

(135,465

)

 

(24.4

)

Total deposits

 

8,050,230

 

 

7,987,658

 

 

62,572

 

 

3.1

 

Total other borrowings

 

247,773

 

 

392,409

 

 

(144,636

)

 

(147.4

)

Loans outstanding decreased by $58.2 million or 3.4% on an annualized basis during the quarter ended June 30, 2024. During the quarter, loan originations/draws totaled approximately $310.1 million while payoffs/repayments of loans totaled $368.7 million, which compares to originations/draws and payoffs/repayments during the trailing quarter ended of $325.5 million and $321.3 million, respectively. Origination volume activity levels remain slightly lower relative to the comparative period in 2023 due in part to disciplined pricing and underwriting, as well as decreased borrower demand given economic uncertainties. The increase in payoffs/repayments as compared to the trailing quarter was spread amongst numerous borrowers, regions and loan types.

Investment security balances decreased $135.5 million or 24.4% on an annualized basis as a result of net prepayments, and maturities, collectively totaling approximating $164.0 million and, to a lesser extent, sales totaling $28.6 million, partially offset by security purchases totaling $53.5 million, in addition to net increases in the market value of securities of $4.1 million. Investment security purchases were comprised of floating rate instruments tied to SOFR with an initial weighted average coupon of 6.77% and a weighted average life of 4.7 years. Investment security sales were primarily comprised of fixed rate instruments with a weighted average coupon of 2.39% and a weighted average life of 3.8 years. While management intends to primarily utilize cash flows from the investment security portfolio and organic deposit growth to support loan growth, excess liquidity will be utilized for purchases of investment securities to support net interest income growth and net interest margin expansion.

Deposit balances increased by $62.6 million or 3.1% annualized during the period, led by growth within time deposits.

Other borrowings totaled $247.8 million at June 30, 2024, representing a net decrease of $144.6 million from the trailing quarter. This quarter over quarter decrease was facilitated by proceeds from the sale, call or maturity of investment securities, and growth in deposits.

Average Trailing Quarter Balance Sheet Change

Quarterly average balances for the period ended

June 30, 2024

 

March 31, 2024

 

 

 

Annualized

% Change

(dollars in thousands)

 

 

$ Change

 

Total assets

$

9,782,228

 

$

9,855,797

 

$

(73,569

)

 

(3.0

)%

Total loans

 

6,792,303

 

 

6,785,840

 

 

6,463

 

 

0.4

 

Total investments

 

2,141,291

 

 

2,266,320

 

 

(125,029

)

 

(22.1

)

Total deposits

 

8,024,441

 

 

7,821,044

 

 

203,397

 

 

10.4

 

Total other borrowings

 

325,604

 

 

584,696

 

 

(259,092

)

 

(177.2

)

Year Over Year Balance Sheet Change

Ending balances

As of June 30,

 

 

 

% Change

(dollars in thousands)

 

2024

 

 

2023

 

$ Change

 

Total assets

$

9,741,399

 

$

9,853,421

 

$

(112,022

)

 

(1.1

)%

Total loans

 

6,742,526

 

 

6,520,740

 

 

221,786

 

 

3.4

 

Total investments

 

2,086,090

 

 

2,485,378

 

 

(399,288

)

 

(16.1

)

Total deposits

 

8,050,230

 

 

8,095,365

 

 

(45,135

)

 

(0.6

)

Total other borrowings

 

247,773

 

 

392,714

 

 

(144,941

)

 

(36.9

)

Loan balances increased as a result of organic activities by approximately $221.8 million or 3.4% during the twelve-month period ending June 30, 2024. Over the same period deposit balances have declined by $45.1 million or 0.6%. The Company has offset these declines through the deployment of excess cash balances and maturity or sale of investment security balances.

Primary Sources of Liquidity

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

June 30, 2023

Borrowing capacity at correspondent banks and FRB

$

2,998,009

 

 

$

2,882,859

 

 

$

2,847,052

 

Less: borrowings outstanding

 

(225,000

)

 

 

(367,000

)

 

 

(350,000

)

Unpledged available-for-sale (AFS) investment securities

 

1,285,185

 

 

 

1,435,990

 

 

 

1,813,894

 

Cash held or in transit with FRB

 

163,809

 

 

 

41,541

 

 

 

79,530

 

Total primary liquidity

$

4,222,003

 

 

$

3,993,390

 

 

$

4,390,476

 

Estimated uninsured deposit balances

$

2,486,910

 

$

2,450,179

 

$

2,522,718

On June 30, 2024, the Company's primary sources of liquidity represented 52% of total deposits and 170% of estimated total uninsured (excluding collateralized municipal deposits and intercompany balances) deposits, respectively. As secondary sources of liquidity, the Company's held-to-maturity investment securities had a fair value of $113.7 million, including approximately $9.0 million in net unrealized losses.

Net Interest Income and Net Interest Margin

During the twelve-month period ended June 30, 2024, the Federal Open Market Committee's (FOMC) actions have resulted in an increase in the Fed Funds Rate by approximately 25 basis points. During the same period the Company's yield on total loans increased 44 basis points to 5.82% for the three months ended June 30, 2024, from 5.38% for the three months ended June 30, 2023. The tax equivalent yield on the Company's investment security portfolio was 3.42% for the quarter ended June 30, 2024, an increase of 18 basis points from the 3.24% for the three months ended June 30, 2023. The cost of total interest-bearing deposits and total interest-bearing liabilities increased by 119 basis points and 102 basis points, respectively, between the three-month periods ended June 30, 2024 and 2023. Since FOMC rate actions began in March 2022, the Company's cost of total deposits has increased 141 basis points which translates to a cycle to date deposit beta of 26.9%.

The Company continues to manage its cost of deposits through the use of various pricing and product mix strategies. As of June 30, 2024, December 31, 2023, and June 30, 2023, deposits priced utilizing these strategies totaled $1.4 billion, $1.3 billion and $1.0 billion, respectively, and carried weighted average rates of 3.80%, 3.60%, and 3.38%, respectively.

 

Three months ended

 

 

 

 

 

June 30, 2024

 

March 31, 2024

 

 

 

 

(dollars in thousands)

 

 

Change

 

% Change

Interest income

$

117,032

 

 

$

115,417

 

 

$

1,615

 

 

1.4

%

Interest expense

 

(35,035

)

 

 

(32,681

)

 

 

(2,354

)

 

7.2

%

Fully tax-equivalent adjustment (FTE) (1)

 

275

 

 

 

275

 

 

 

—

 

 

—

%

Net interest income (FTE)

$

82,272

 

 

$

83,011

 

 

$

(739

)

 

(0.9

)%

Net interest margin (FTE)

 

3.68

%

 

 

3.68

%

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

850

 

 

$

1,332

 

 

$

(482

)

 

(36.2

)%

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

 

3.64

%

 

 

3.62

%

 

 

0.02

%

 

 

 

Three months ended June 30,

 

 

 

 

(dollars in thousands)

 

2024

 

 

 

2023

 

 

Change

 

% Change

Interest income

$

117,032

 

 

$

107,158

 

 

$

9,874

 

 

9.2

%

Interest expense

 

(35,035

)

 

 

(18,557

)

 

 

(16,478

)

 

88.8

%

Fully tax-equivalent adjustment (FTE) (1)

 

275

 

 

 

379

 

 

 

(104

)

 

(27.4

)%

Net interest income (FTE)

$

82,272

 

 

$

88,980

 

 

$

(6,708

)

 

(7.5

)%

Net interest margin (FTE)

 

3.68

%

 

 

3.96

%

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

850

 

 

$

1,471

 

 

$

(621

)

 

(42.2

)%

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

 

3.64

%

 

 

3.89

%

 

 

(0.25

)%

 

 

 

Six months ended June 30,

 

 

 

 

(dollars in thousands)

 

2024

 

 

 

2023

 

 

Change

 

% Change

Interest income

$

232,449

 

 

$

210,065

 

 

$

22,384

 

 

10.7

%

Interest expense

 

(67,716

)

 

 

(28,128

)

 

 

(39,588

)

 

140.7

%

Fully tax-equivalent adjustment (FTE) (1)

 

550

 

 

 

770

 

 

 

(220

)

 

(28.6

)%

Net interest income (FTE)

$

165,283

 

 

$

182,707

 

 

$

(17,424

)

 

(9.5

)%

Net interest margin (FTE)

 

3.68

%

 

 

4.08

%

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

2,182

 

 

$

2,868

 

 

$

(686

)

 

(23.9

)%

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

 

3.63

%

 

 

4.02

%

 

 

(0.39

)%

 

 

(1)

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

Analysis Of Change In Net Interest Margin On Earning Assets

Three months ended

 

Three months ended

 

Three months ended

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

June 30, 2023

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

6,792,303

 

$

98,229

 

5.82

%

 

$

6,785,840

 

$

96,485

 

5.72

%

 

$

6,467,381

 

$

86,747

 

5.38

%

Investments-taxable

 

2,003,124

 

 

17,004

 

3.41

%

 

 

2,127,420

 

 

17,829

 

3.37

%

 

 

2,343,511

 

 

18,775

 

3.21

%

Investments-nontaxable (1)

 

138,167

 

 

1,190

 

3.46

%

 

 

138,900

 

 

1,192

 

3.45

%

 

 

181,823

 

 

1,641

 

3.62

%

Total investments

 

2,141,291

 

 

18,194

 

3.42

%

 

 

2,266,320

 

 

19,021

 

3.38

%

 

 

2,525,334

 

 

20,416

 

3.24

%

Cash at Fed Reserve and other banks

 

68,080

 

 

884

 

5.22

%

 

 

14,377

 

 

186

 

5.20

%

 

 

29,349

 

 

374

 

5.11

%

Total earning assets

 

9,001,674

 

 

117,307

 

5.24

%

 

 

9,066,537

 

 

115,692

 

5.13

%

 

 

9,022,064

 

 

107,537

 

4.78

%

Other assets, net

 

780,554

 

 

 

 

 

 

789,260

 

 

 

 

 

 

826,127

 

 

 

 

Total assets

$

9,782,228

 

 

 

 

 

$

9,855,797

 

 

 

 

 

$

9,848,191

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,769,370

 

$

6,215

 

1.41

%

 

$

1,710,844

 

$

4,947

 

1.16

%

 

$

1,657,714

 

$

2,173

 

0.53

%

Savings deposits

 

2,673,272

 

 

12,260

 

1.84

%

 

 

2,651,917

 

 

10,900

 

1.65

%

 

 

2,768,981

 

 

6,936

 

1.00

%

Time deposits

 

1,016,190

 

 

10,546

 

4.17

%

 

 

811,894

 

 

7,682

 

3.81

%

 

 

426,689

 

 

2,348

 

2.21

%

Total interest-bearing deposits

 

5,458,832

 

 

29,021

 

2.14

%

 

 

5,174,655

 

 

23,529

 

1.83

%

 

 

4,853,384

 

 

11,457

 

0.95

%

Other borrowings

 

325,604

 

 

4,118

 

5.09

%

 

 

584,696

 

 

7,378

 

5.08

%

 

 

477,256

 

 

5,404

 

4.54

%

Junior subordinated debt

 

101,128

 

 

1,896

 

7.54

%

 

 

101,106

 

 

1,774

 

7.06

%

 

 

101,056

 

 

1,696

 

6.73

%

Total interest-bearing liabilities

 

5,885,564

 

 

35,035

 

2.39

%

 

 

5,860,457

 

 

32,681

 

2.24

%

 

 

5,431,696

 

 

18,557

 

1.37

%

Noninterest-bearing deposits

 

2,565,609

 

 

 

 

 

 

2,646,389

 

 

 

 

 

 

3,128,131

 

 

 

 

Other liabilities

 

161,731

 

 

 

 

 

 

174,359

 

 

 

 

 

 

176,141

 

 

 

 

Shareholders’ equity

 

1,169,324

 

 

 

 

 

 

1,174,592

 

 

 

 

 

 

1,112,223

 

 

 

 

Total liabilities and shareholders’ equity

$

9,782,228

 

 

 

 

 

$

9,855,797

 

 

 

 

 

$

9,848,191

 

 

 

 

Net interest rate spread (1) (2)

 

 

 

 

2.85

%

 

 

 

 

 

2.89

%

 

 

 

 

 

3.41

%

Net interest income and margin (1) (3)

 

 

$

82,272

 

3.68

%

 

 

 

$

83,011

 

3.68

%

 

 

 

$

88,980

 

3.96

%

(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 June 30, 2024, decreased $0.7 million or 0.9% to $82.3 million compared to $83.0 million during the three months ended March 31, 2024. Net interest margin of 3.68% remained consistent with the trailing quarter. The decrease in net interest income is primarily attributed to an additional $5.5 million or 23.3% increase in deposit interest expense due to changes in product mix, as customers continue to migrate towards higher yielding term deposit accounts. Deposit cost increases during the current quarter were also influenced by continued competitive pricing pressures. These increases in deposit costs were partially offset by a $3.3 million reduction in interest expense on other borrowings costs as the average balance of those borrowings decreased by $259.1 million during the period. Additionally, interest and fee income on loans increased $1.7 million as both rates and average balances on loans increased when compared to the trailing quarter.

As compared to the same quarter in the prior year, average loan yields increased 44 basis points from 5.38% during the three months ended June 30, 2023, to 5.82% during the three months ended June 30, 2024. The accretion of discounts from acquired loans added 5 basis points and 9 basis points to loan yields during the quarters ended June 30, 2024 and June 30, 2023, respectively. The cost of interest-bearing deposits increased by 119 basis points between the quarter ended June 30, 2024, and the same quarter of the prior year. In addition, the average balance of noninterest-bearing deposits decreased by $562.5 million from the three-month average for the period ended June 30, 2023 amidst a continued migration of customer funds to interest-bearing products.

For the quarter ended June 30, 2024, the ratio of average total noninterest-bearing deposits to total average deposits was 32.0%, as compared to 33.8% and 39.2% for the quarters ended March 31, 2024 and June 30, 2023, respectively.

(dollars in thousands)

Six months ended June 30, 2024

 

Six months ended June 30, 2023

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

Loans

$

6,789,072

 

$

194,713

 

5.77

%

 

$

6,440,817

 

$

169,161

 

5.30

%

Investments-taxable

 

2,065,412

 

 

34,833

 

3.39

%

 

 

2,370,722

 

 

37,691

 

3.21

%

Investments-nontaxable (1)

 

138,534

 

 

2,382

 

3.46

%

 

 

185,417

 

 

3,340

 

3.63

%

Total investments

 

2,203,946

 

 

37,215

 

3.40

%

 

 

2,556,139

 

 

41,031

 

3.24

%

Cash at Fed Reserve and other banks

 

41,229

 

 

1,071

 

5.22

%

 

 

28,090

 

 

643

 

4.62

%

Total earning assets

 

9,034,247

 

 

232,999

 

5.19

%

 

 

9,025,046

 

 

210,835

 

4.71

%

Other assets, net

 

784,765

 

 

 

 

 

 

838,425

 

 

 

 

Total assets

$

9,819,012

 

 

 

 

 

$

9,863,471

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,740,107

 

$

11,162

 

1.29

%

 

$

1,665,371

 

$

2,560

 

0.31

%

Savings deposits

 

2,662,595

 

 

23,159

 

1.75

%

 

 

2,833,365

 

 

11,090

 

0.79

%

Time deposits

 

914,042

 

 

18,229

 

4.01

%

 

 

351,166

 

 

2,952

 

1.70

%

Total interest-bearing deposits

 

5,316,744

 

 

52,550

 

1.99

%

 

 

4,849,902

 

 

16,602

 

0.69

%

Other borrowings

 

455,150

 

 

11,496

 

5.08

%

 

 

377,995

 

 

8,213

 

4.38

%

Junior subordinated debt

 

101,117

 

 

3,670

 

7.30

%

 

 

101,050

 

 

3,313

 

6.61

%

Total interest-bearing liabilities

 

5,873,011

 

 

67,716

 

2.32

%

 

 

5,328,947

 

 

28,128

 

1.06

%

Noninterest-bearing deposits

 

2,605,999

 

 

 

 

 

 

3,249,488

 

 

 

 

Other liabilities

 

168,044

 

 

 

 

 

 

185,123

 

 

 

 

Shareholders’ equity

 

1,171,958

 

 

 

 

 

 

1,099,913

 

 

 

 

Total liabilities and shareholders’ equity

$

9,819,012

 

 

 

 

 

$

9,863,471

 

 

 

 

Net interest rate spread (1) (2)

 

 

 

 

2.87

%

 

 

 

 

 

3.65

%

Net interest income and margin (1) (3)

 

 

$

165,283

 

3.68

%

 

 

 

$

182,707

 

4.08

%

(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.

Interest Rates and Earning Asset Composition

As of June 30, 2024, the Company's loan portfolio consisted of approximately $6.8 billion in outstanding principal with a weighted average coupon rate of 5.47%. During the three-month periods ending June 30, 2024, March 31, 2024, and June 30, 2023, the weighted average coupon on loan production in the quarter was 7.98%, 7.78% and 6.85%, respectively. Included in the June 30, 2024 total loans are adjustable rate loans totaling $4.2 billion, of which, $921.0 million are considered floating based on the Wall Street Prime index. In addition, the Company holds certain investment securities with fair values totaling $339.9 million which are subject to repricing on not less than a quarterly basis.

Asset Quality and Credit Loss Provisioning

During the three months ended June 30, 2024, the Company recorded a provision for credit losses of $0.4 million, as compared to $4.3 million during the trailing quarter, and $9.7 million during the second quarter of 2023.

 

Three months ended

 

Six months ended

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Addition to allowance for credit losses

$

335

 

$

4,015

 

$

8,980

 

$

4,350

 

$

13,295

Addition to (reversal of) reserve for unfunded loan commitments

 

70

 

 

290

 

 

670

 

 

360

 

 

550

Total provision for credit losses

$

405

 

$

4,305

 

$

9,650

 

$

4,710

 

$

13,845

The provision for credit losses on loans of $0.3 million during the recent quarter was the result of net charge-offs approximating $1.2 million and increases in reserves for qualitative factors, partially offset by a $0.5 million decrease in specific reserves for individually evaluated credits and other decreases in quantitative reserve requirements driven primarily by a decline in loan balances. The provision for credit losses was needed to partially replenish the allowance for credit losses on loans subsequent to processing net charge-offs during the quarter and to account for ongoing risks associated with the qualitative components of the ACL model, as compared to any significant deterioration in credit quality on the existing loan portfolio.

 

Three months ended June 30,

 

Six months ended June 30,

(dollars in thousands)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Balance, beginning of period

$

124,394

 

 

$

108,407

 

 

$

121,522

 

 

$

105,680

 

Provision for credit losses

 

335

 

 

 

8,980

 

 

 

4,350

 

 

 

13,295

 

Loans charged-off

 

(1,610

)

 

 

(277

)

 

 

(2,885

)

 

 

(2,035

)

Recoveries of previously charged-off loans

 

398

 

 

 

219

 

 

 

530

 

 

 

389

 

Balance, end of period

$

123,517

 

 

$

117,329

 

 

$

123,517

 

 

$

117,329

 

The allowance for credit losses (ACL) was $123.5 million or 1.83% of total loans as of June 30, 2024. For the current quarter, the qualitative components of the ACL that contributed to an increase in required reserves primarily related to uncertainty around US policy and related effects on domestic economic trends that are inconsistent with those desired by the FOMC.

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

Loans past due 30 days or more increased by $13.9 million during the quarter ended June 30, 2024, to $30.4 million, as compared to $16.5 million at March 31, 2024. The majority of loans identified as past due are well-secured by collateral, and approximately $13.3 million is less than 90 days delinquent. Non-performing loans were $32.8 million at June 30, 2024, a decrease of $1.4 million from $34.2 million as of March 31, 2024, and a decrease of $4.8 million from $37.6 million as of June 30, 2023. Management continues to proactively work with these borrowers to identify actionable and appropriate resolution strategies which are customary for the industries. Of the $32.8 million loans designated as non-performing as of June 30, 2024, approximately $11.7 million are current or less than 30 days past due with respect to payments required under their existing loan agreements.

 

June 30,

 

% of Loans Outstanding

 

March 31,

 

% of Loans Outstanding

 

June 30,

 

% of Loans Outstanding

(dollars in thousands)

 

2024

 

 

 

 

2024

 

 

 

 

2023

 

 

Risk Rating:

 

 

 

 

 

 

 

 

 

 

 

Pass

$

6,536,223

 

 

96.9

%

 

$

6,616,294

 

 

97.3

%

 

$

6,299,893

 

 

96.6

%

Special Mention

 

101,324

 

 

1.5

%

 

 

108,073

 

 

1.6

%

 

 

155,678

 

 

2.4

%

Substandard

 

104,979

 

 

1.6

%

 

 

76,328

 

 

1.1

%

 

 

65,169

 

 

1.0

%

Total

$

6,742,526

 

 

 

 

$

6,800,695

 

 

 

 

$

6,520,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified loans to total loans

 

1.56

%

 

 

 

 

1.12

%

 

 

 

 

1.00

%

 

 

Loans past due 30+ days to total loans

 

0.45

%

 

 

 

 

0.24

%

 

 

 

 

0.15

%

 

 

The ratio of classified loans to total loans of 1.56% as of June 30, 2024, increased 44 basis points from March 31, 2024 and increased 56 basis points from the comparative quarter ended 2023. The change in classified loans outstanding as compared to the trailing quarter totaled $21.9 million. Loans with the risk grade classification substandard increased by $28.7 million over the trailing quarter and relate primarily to five loans across two relationships totaling $25.2 million, including $18.0 million in agricultural and farmland loans and $7.2 million in non-owner occupied CRE loans. All loans within these relationships are performing as agreed and have substantial collateral support and borrower guarantees. As a percentage of total loans outstanding, classified assets remain consistent with volumes experienced prior to the recent quantitative easing cycle spurred by the COVID pandemic and reflect management's historically conservative approach to credit risk monitoring. The Company's combined criticized loan balances totaled $206.3 million as of June 30, 2024, an improvement of $14.5 million from June 30, 2023.

Outstanding balances on construction loans, which have historically been associated with elevated levels of risk, experienced balance reductions of $65.6 million during the current quarter. These reductions were primarily associated with $49.1 million in balances that were converted to term loans upon the completion of construction and achievement of stabilized occupancy, $44.0 million in balances that paid down or paid-off, and the offsetting balance representing new draws or originations.

Further, management has taken action to proactively assess the repayment capacity of borrowers that will likely be subject to rate resets in the near term. To date this analysis as well as management's observations of loans that have experienced a rate reset, have not resulted in the need to provide any concessions to borrowers.

As of June 30, 2024, other real estate owned consisted of 10 properties with a carrying value of approximately $2.5 million, which is unchanged from the trailing quarter end. Non-performing assets of $35.3 million at June 30, 2024, represented 0.36% of total assets, a change from the $36.7 million or 0.37% and $40.5 million or 0.41% as of March 31, 2024 and June 30, 2023, respectively.

Allocation of Credit Loss Reserves by Loan Type

 

As of June 30, 2024

 

As of March 31, 2024

 

As of June 30, 2023

(dollars in thousands)

Amount

 

% of Loans Outstanding

 

Amount

 

% of Loans Outstanding

 

Amount

 

% of Loans Outstanding

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

CRE - Non-Owner Occupied

$

37,155

 

1.66

%

 

$

36,687

 

1.65

%

 

$

33,042

 

1.54

%

CRE - Owner Occupied

 

15,873

 

1.67

%

 

 

16,111

 

1.65

%

 

 

20,208

 

2.08

%

Multifamily

 

15,973

 

1.60

%

 

 

15,682

 

1.60

%

 

 

14,075

 

1.48

%

Farmland

 

4,031

 

1.52

%

 

 

3,695

 

1.39

%

 

 

3,691

 

1.33

%

Total commercial real estate loans

 

73,032

 

1.64

%

 

 

72,175

 

1.62

%

 

 

71,016

 

1.63

%

Consumer:

 

 

 

 

 

 

 

 

 

 

 

SFR 1-4 1st Liens

 

14,604

 

1.65

%

 

 

14,140

 

1.60

%

 

 

13,134

 

1.58

%

SFR HELOCs and Junior Liens

 

10,087

 

2.91

%

 

 

9,942

 

2.88

%

 

 

10,608

 

2.92

%

Other

 

2,983

 

4.30

%

 

 

3,359

 

4.48

%

 

 

2,771

 

4.67

%

Total consumer loans

 

27,674

 

2.13

%

 

 

27,441

 

2.10

%

 

 

26,513

 

2.12

%

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

12,128

 

2.21

%

 

 

11,867

 

2.16

%

 

 

11,647

 

2.02

%

Construction

 

7,466

 

2.63

%

 

 

9,162

 

2.63

%

 

 

7,031

 

2.53

%

Agricultural Production

 

3,180

 

2.27

%

 

 

3,708

 

2.55

%

 

 

1,105

 

1.80

%

Leases

 

37

 

0.44

%

 

 

41

 

0.44

%

 

 

17

 

0.20

%

Allowance for credit losses

 

123,517

 

1.83

%

 

 

124,394

 

1.83

%

 

 

117,329

 

1.80

%

Reserve for unfunded loan commitments

 

6,210

 

 

 

 

6,140

 

 

 

 

4,865

 

 

Total allowance for credit losses

$

129,727

 

1.92

%

 

$

130,534

 

1.92

%

 

$

122,194

 

1.87

%

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 June 30, 2024, the unamortized discount associated with acquired loans totaled $22.5 million, which, when combined with the total allowance for credit losses above, represents 2.26% of total loans.

Non-interest Income

 

Three months ended

 

 

 

 

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

Change

 

% Change

ATM and interchange fees

$

6,372

 

 

$

6,169

 

 

$

203

 

 

3.3

%

Service charges on deposit accounts

 

4,847

 

 

 

4,663

 

 

 

184

 

 

3.9

%

Other service fees

 

1,286

 

 

 

1,366

 

 

 

(80

)

 

(5.9

)%

Mortgage banking service fees

 

438

 

 

 

428

 

 

 

10

 

 

2.3

%

Change in value of mortgage servicing rights

 

(147

)

 

 

11

 

 

 

(158

)

 

(1,436.4

)%

Total service charges and fees

 

12,796

 

 

 

12,637

 

 

 

159

 

 

1.3

%

Increase in cash value of life insurance

 

831

 

 

 

803

 

 

 

28

 

 

3.5

%

Asset management and commission income

 

1,359

 

 

 

1,128

 

 

 

231

 

 

20.5

%

Gain on sale of loans

 

388

 

 

 

261

 

 

 

127

 

 

48.7

%

Lease brokerage income

 

154

 

 

 

161

 

 

 

(7

)

 

(4.3

)%

Sale of customer checks

 

301

 

 

 

312

 

 

 

(11

)

 

(3.5

)%

(Loss) gain on sale or exchange of investment securities

 

(45

)

 

 

—

 

 

 

(45

)

 

n/m

 

(Loss) gain on marketable equity securities

 

(121

)

 

 

(28

)

 

 

(93

)

 

332.1

%

Other income

 

203

 

 

 

497

 

 

 

(294

)

 

(59.2

)%

Total other non-interest income

 

3,070

 

 

 

3,134

 

 

 

(64

)

 

(2.0

)%

Total non-interest income

$

15,866

 

 

$

15,771

 

 

$

95

 

 

0.6

%

Total non-interest income increased $0.10 million or 0.6% to $15.9 million during the three months ended June 30, 2024, compared to $15.8 million during the quarter ended March 31, 2024. Increased transactions that drive interchange and service fee income caused revenues from these sources to increase by $0.4 million. Asset management and commission income also increased $0.2 million, or 20.5%, due primarily to increases in assets under management. Net losses related to investment activities were realized, as the Company improved liquidity and future earnings through the sale of investment securities, the losses from which were offset by gains recognized in association with the exchange of Visa Class B shares. Other income declined by $0.3 million or 59.2% during the quarter following $0.2 million in non-recurring realized gains recorded in the trailing quarter from alternative investments.

 

Three months ended June 30,

 

 

 

 

(dollars in thousands)

 

2024

 

 

 

2023

 

 

Change

 

% Change

ATM and interchange fees

$

6,372

 

 

$

6,856

 

 

$

(484

)

 

(7.1

)%

Service charges on deposit accounts

 

4,847

 

 

 

4,581

 

 

 

266

 

 

5.8

%

Other service fees

 

1,286

 

 

 

992

 

 

 

294

 

 

29.6

%

Mortgage banking service fees

 

438

 

 

 

454

 

 

 

(16

)

 

(3.5

)%

Change in value of mortgage servicing rights

 

(147

)

 

 

85

 

 

 

(232

)

 

(272.9

)%

Total service charges and fees

 

12,796

 

 

 

12,968

 

 

 

(172

)

 

(1.3

)%

Increase in cash value of life insurance

 

831

 

 

 

788

 

 

 

43

 

 

5.5

%

Asset management and commission income

 

1,359

 

 

 

1,158

 

 

 

201

 

 

17.4

%

Gain on sale of loans

 

388

 

 

 

295

 

 

 

93

 

 

31.5

%

Lease brokerage income

 

154

 

 

 

74

 

 

 

80

 

 

108.1

%

Sale of customer checks

 

301

 

 

 

407

 

 

 

(106

)

 

(26.0

)%

(Loss) gain on sale or exchange of investment securities

 

(45

)

 

 

—

 

 

 

(45

)

 

n/m

 

(Loss) gain on marketable equity securities

 

(121

)

 

 

(42

)

 

 

(79

)

 

188.1

%

Other income

 

203

 

 

 

93

 

 

 

110

 

 

118.3

%

Total other non-interest income

 

3,070

 

 

 

2,773

 

 

 

297

 

 

10.7

%

Total non-interest income

$

15,866

 

 

$

15,741

 

 

$

125

 

 

0.8

%

Non-interest income increased $0.1 million or 0.8% to $15.9 million during the three months ended June 30, 2024, compared to $15.7 million during the comparative quarter ended June 30, 2023. Interchange fees earned in the second quarter of 2023 were elevated as compared to the comparable 2024 quarter due to increased customer activity. The remaining various components of non-interest income are largely consistent period over period and in-line with commentary provided above.

 

Six months ended June 30,

 

 

 

 

(dollars in thousands)

 

2024

 

 

 

2023

 

 

Change

 

% Change

ATM and interchange fees

$

12,541

 

 

$

13,200

 

 

$

(659

)

 

(5.0

)%

Service charges on deposit accounts

 

9,510

 

 

 

8,012

 

 

 

1,498

 

 

18.7

%

Other service fees

 

2,652

 

 

 

2,158

 

 

 

494

 

 

22.9

%

Mortgage banking service fees

 

866

 

 

 

919

 

 

 

(53

)

 

(5.8

)%

Change in value of mortgage servicing rights

 

(136

)

 

 

(124

)

 

 

(12

)

 

9.7

%

Total service charges and fees

 

25,433

 

 

 

24,165

 

 

 

1,268

 

 

5.2

%

Increase in cash value of life insurance

 

1,634

 

 

 

1,590

 

 

 

44

 

 

2.8

%

Asset management and commission income

 

2,487

 

 

 

2,092

 

 

 

395

 

 

18.9

%

Gain on sale of loans

 

649

 

 

 

501

 

 

 

148

 

 

29.5

%

Lease brokerage income

 

315

 

 

 

172

 

 

 

143

 

 

83.1

%

Sale of customer checks

 

613

 

 

 

695

 

 

 

(82

)

 

(11.8

)%

(Loss) gain on sale or exchange of investment securities

 

(45

)

 

 

(164

)

 

 

119

 

 

(72.6

)%

(Loss) gain on marketable equity securities

 

(149

)

 

 

—

 

 

 

(149

)

 

n/m

 

Other income

 

700

 

 

 

325

 

 

 

375

 

 

115.4

%

Total other non-interest income

 

6,204

 

 

 

5,211

 

 

 

993

 

 

19.1

%

Total non-interest income

$

31,637

 

 

$

29,376

 

 

$

2,261

 

 

7.7

%

Non-interest income increased $2.3 million or 7.7% to $31.6 million during the six months ended June 30, 2024, compared to $29.4 million during the comparative six months ended June 30, 2023. As noted above, interchange fees as driven by customer activities was elevated in the 2023 period and resulted in a decrease of $0.7 million as compared to the six months ended June 30, 2024. Service charges on deposit accounts increased by $1.5 million or 18.7% as compared to the equivalent period in 2023 following $0.9 million in waived or reversed fees as a courtesy to customers in the 2023 year. As noted above, elevated activity within asset management and realized gains from alternative investments contributed to the overall improvement.

Non-interest Expense

 

Three months ended

 

 

 

 

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

Change

 

% Change

Base salaries, net of deferred loan origination costs

$

23,852

 

$

24,020

 

 

$

(168

)

 

(0.7

)%

Incentive compensation

 

4,711

 

 

3,257

 

 

 

1,454

 

 

44.6

%

Benefits and other compensation costs

 

6,838

 

 

7,027

 

 

 

(189

)

 

(2.7

)%

Total salaries and benefits expense

 

35,401

 

 

34,304

 

 

 

1,097

 

 

3.2

%

Occupancy

 

4,063

 

 

3,951

 

 

 

112

 

 

2.8

%

Data processing and software

 

5,094

 

 

5,107

 

 

 

(13

)

 

(0.3

)%

Equipment

 

1,330

 

 

1,356

 

 

 

(26

)

 

(1.9

)%

Intangible amortization

 

1,030

 

 

1,030

 

 

 

—

 

 

—

%

Advertising

 

819

 

 

762

 

 

 

57

 

 

7.5

%

ATM and POS network charges

 

1,987

 

 

1,661

 

 

 

326

 

 

19.6

%

Professional fees

 

1,814

 

 

1,340

 

 

 

474

 

 

35.4

%

Telecommunications

 

558

 

 

511

 

 

 

47

 

 

9.2

%

Regulatory assessments and insurance

 

1,144

 

 

1,251

 

 

 

(107

)

 

(8.6

)%

Postage

 

340

 

 

308

 

 

 

32

 

 

10.4

%

Operational loss

 

244

 

 

352

 

 

 

(108

)

 

(30.7

)%

Courier service

 

559

 

 

480

 

 

 

79

 

 

16.5

%

(Gain) loss on sale or acquisition of foreclosed assets

 

—

 

 

(38

)

 

 

38

 

 

(100.0

)%

(Gain) loss on disposal of fixed assets

 

1

 

 

5

 

 

 

(4

)

 

(80.0

)%

Other miscellaneous expense

 

3,955

 

 

4,124

 

 

 

(169

)

 

(4.1

)%

Total other non-interest expense

 

22,938

 

 

22,200

 

 

 

738

 

 

3.3

%

Total non-interest expense

$

58,339

 

$

56,504

 

 

$

1,835

 

 

3.2

%

Average full-time equivalent staff

 

1,160

 

 

1,188

 

 

 

(28

)

 

(2.4

)%

Total non-interest expense for the quarter ended June 30, 2024, increased $1.8 million or 3.2% to $58.3 million as compared to $56.5 million during the trailing quarter ended March 31, 2024. Total salaries and benefits expense increased by $1.1 million or 3.2%, reflecting the increase of $1.5 million in incentive compensation accruals related to production volumes associated with both loans and deposits, offset by a decrease of $0.4 million in benefits and other routine compensation expenses as it is common to observe seasonally higher benefit costs in the first quarter of any calendar year. Professional fees increased by $0.5 million or 35.4%, primarily due to timing differences related to legal and consulting projects.

 

Three months ended June 30,

 

 

 

 

(dollars in thousands)

 

2024

 

 

2023

 

Change

 

% Change

Base salaries, net of deferred loan origination costs

$

23,852

 

$

24,059

 

$

(207

)

 

(0.9

)%

Incentive compensation

 

4,711

 

 

4,377

 

 

334

 

 

7.6

%

Benefits and other compensation costs

 

6,838

 

 

6,278

 

 

560

 

 

8.9

%

Total salaries and benefits expense

 

35,401

 

 

34,714

 

 

687

 

 

2.0

%

Occupancy

 

4,063

 

 

3,991

 

 

72

 

 

1.8

%

Data processing and software

 

5,094

 

 

4,638

 

 

456

 

 

9.8

%

Equipment

 

1,330

 

 

1,436

 

 

(106

)

 

(7.4

)%

Intangible amortization

 

1,030

 

 

1,656

 

 

(626

)

 

(37.8

)%

Advertising

 

819

 

 

1,016

 

 

(197

)

 

(19.4

)%

ATM and POS network charges

 

1,987

 

 

1,902

 

 

85

 

 

4.5

%

Professional fees

 

1,814

 

 

1,985

 

 

(171

)

 

(8.6

)%

Telecommunications

 

558

 

 

809

 

 

(251

)

 

(31.0

)%

Regulatory assessments and insurance

 

1,144

 

 

1,993

 

 

(849

)

 

(42.6

)%

Postage

 

340

 

 

311

 

 

29

 

 

9.3

%

Operational loss

 

244

 

 

1,090

 

 

(846

)

 

(77.6

)%

Courier service

 

559

 

 

483

 

 

76

 

 

15.7

%

(Gain) loss on disposal of fixed assets

 

1

 

 

18

 

 

(17

)

 

(94.4

)%

Other miscellaneous expense

 

3,955

 

 

5,201

 

 

(1,246

)

 

(24.0

)%

Total other non-interest expense

 

22,938

 

 

26,529

 

 

(3,591

)

 

(13.5

)%

Total non-interest expense

$

58,339

 

$

61,243

 

$

(2,904

)

 

(4.7

)%

Average full-time equivalent staff

 

1,160

 

 

1,210

 

 

(50

)

 

(4.1

)%

Non-interest expense decreased $2.9 million or 4.7% to $58.3 million during the three months ended June 30, 2024, as compared to $61.2 million for the quarter ended June 30, 2023. Regulatory assessment charges decreased $0.8 million or 42.6% following changes in various assessments as compared to the same period of 2023. Additionally, operational losses decreased $0.8 million or 77.6% attributable to a normalized quarterly rate following non-recurring ATM burglary expenses totaling $0.7 million in the comparative period. Finally, other miscellaneous expense declined $1.2 million or 24.0% due to non-recurring charges in the comparative period totaling $0.8 million related to non-sufficient fee refunds and elevated provision expense on real estate owned approximating $0.5 million.

 

Six months ended June 30,

 

 

 

 

(dollars in thousands)

 

2024

 

 

 

2023

 

Change

 

% Change

Base salaries, net of deferred loan origination costs

$

47,872

 

 

$

47,059

 

$

813

 

 

1.7

%

Incentive compensation

 

7,968

 

 

 

7,272

 

 

696

 

 

9.6

%

Benefits and other compensation costs

 

13,865

 

 

 

12,946

 

 

919

 

 

7.1

%

Total salaries and benefits expense

 

69,705

 

 

 

67,277

 

 

2,428

 

 

3.6

%

Occupancy

 

8,014

 

 

 

8,151

 

 

(137

)

 

(1.7

)%

Data processing and software

 

10,201

 

 

 

8,670

 

 

1,531

 

 

17.7

%

Equipment

 

2,686

 

 

 

2,819

 

 

(133

)

 

(4.7

)%

Intangible amortization

 

2,060

 

 

 

3,312

 

 

(1,252

)

 

(37.8

)%

Advertising

 

1,581

 

 

 

1,775

 

 

(194

)

 

(10.9

)%

ATM and POS network charges

 

3,648

 

 

 

3,611

 

 

37

 

 

1.0

%

Professional fees

 

3,154

 

 

 

3,574

 

 

(420

)

 

(11.8

)%

Telecommunications

 

1,069

 

 

 

1,404

 

 

(335

)

 

(23.9

)%

Regulatory assessments and insurance

 

2,395

 

 

 

2,785

 

 

(390

)

 

(14.0

)%

Postage

 

648

 

 

 

610

 

 

38

 

 

6.2

%

Operational loss

 

596

 

 

 

1,525

 

 

(929

)

 

(60.9

)%

Courier service

 

1,039

 

 

 

822

 

 

217

 

 

26.4

%

(Gain) loss on sale or acquisition of foreclosed assets

 

(38

)

 

 

—

 

 

(38

)

 

n/m

 

(Gain) loss on disposal of fixed assets

 

6

 

 

 

18

 

 

(12

)

 

(66.7

)%

Other miscellaneous expense

 

8,079

 

 

 

8,684

 

 

(605

)

 

(7.0

)%

Total other non-interest expense

 

45,138

 

 

 

47,760

 

 

(2,622

)

 

(5.5

)%

Total non-interest expense

$

114,843

 

 

$

115,037

 

$

(194

)

 

(0.2

)%

Average full-time equivalent staff

 

1,174

 

 

 

1,214

 

 

(40

)

 

(3.3

)%

Non-interest expense decreased $0.2 million or 0.2% to $114.8 million during the six months ended June 30, 2024, as compared to $115.0 million for the six months ended June 30, 2023. This was largely attributed to non-cash intangible amortization expense declines of $1.3 million or 37.8% and operational loss decreases of $0.9 million or 60.9% due to reasons described above. These declines were partially offset by an increase of $2.4 million or 3.6% in total salaries and benefits expense to $69.7 million, largely from annual compensation adjustments and other routine increases in benefits and compensation. Salaries expense was also impacted by an increase in average compensation per employee as various strategic talent acquisitions were made in order to further prepare the Company to execute its growth objectives beyond $10 billion in total assets. Finally, data processing and software expenses increased by $1.5 million or 17.7% related to ongoing investments in the Company's data management and security infrastructure.

Provision for Income Taxes

The Company’s effective tax rate was 25.8% for the quarter ended June 30, 2024, as compared to 26.4% for the quarter ended March 31, 2024 and 28.4% for the year ended December 31, 2023. Differences between the Company's effective tax rate and applicable federal and state blended statutory rate of approximately 29.6% are due to the proportion of non-taxable revenues, non-deductible expenses, and benefits from tax credits as compared to the levels of pre-tax earnings.

About TriCo Bancshares

Established in 1975, Tri Counties Bank is a wholly-owned subsidiary of TriCo Bancshares (NASDAQ: TCBK) headquartered in Chico, California, providing a unique brand of customer Service with Solutions available in traditional stand-alone and in-store bank branches and loan production offices in communities throughout California. Tri Counties Bank provides an extensive and competitive breadth of consumer, small business and commercial banking financial services, along with convenient around-the-clock ATMs, online and mobile banking access. Brokerage services are provided by Tri Counties Advisors through affiliation with Raymond James Financial Services, Inc. Visit www.TriCountiesBank.com to learn more.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond our control. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the conditions of the United States economy in general and the strength of the local economies in which we conduct operations; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit or changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; the impacts of inflation, interest rate, market and monetary fluctuations on the Company's business condition and financial operating results; the impact of changes in financial services industry policies, laws and regulations; regulatory restrictions affecting our ability to successfully market and price our products to consumers; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learning; extreme weather, natural disasters and other catastrophic events that may or may not be caused by climate change and their effects on the Company's customers and the economic and business environments in which the Company operates; the impact of a slowing U.S. economy, decreases in housing and commercial real estate prices, and potentially increased unemployment on the performance of our loan portfolio, the market value of our investment securities and possible other-than-temporary impairment of securities held by us due to changes in credit quality or rates; the availability of, and cost of, sources of funding and the demand for our products; adverse developments with respect to U.S. or global economic conditions and other uncertainties, including the impact of supply chain disruptions, commodities prices, inflationary pressures and labor shortages on the economic recovery and our business; the impacts of international hostilities, wars, terrorism or geopolitical events; adverse developments in the financial services industry generally such as the recent bank failures and any related impact on depositor behavior or investor sentiment; risks related to the sufficiency of liquidity; the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; the costs or effects of mergers, acquisitions or dispositions we may make, as well as whether we are able to obtain any required governmental approvals in connection with any such activities, or identify and complete favorable transactions in the future, and/or realize the anticipated financial and business benefits; the regulatory and financial impacts associated with exceeding $10 billion in total assets; the negative impact on our reputation and profitability in the event customers experience economic harm or in the event that regulatory violations are identified; the ability to execute our business plan in new markets; the future operating or financial performance of the Company, including our outlook for future growth and changes in the level and direction of our nonperforming assets and charge-offs; the appropriateness of the allowance for credit losses, including the assumptions made under our current expected credit losses model; any deterioration in values of California real estate, both residential and commercial; the effectiveness of the Company's asset management activities managing the mix of earning assets and in improving, resolving or liquidating lower-quality assets; the effect of changes in the financial performance and/or condition of our borrowers; changes in accounting standards and practices; changes in consumer spending, borrowing and savings habits; our ability to attract and maintain deposits and other sources of liquidity; the effects of changes in the level or cost of checking or savings account deposits on our funding costs and net interest margin; increasing noninterest expense and its impact on our financial performance; competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional competitors including retail businesses and technology companies; the challenges of attracting, integrating and retaining key employees; the vulnerability of the Company's operational or security systems or infrastructure, the systems of third-party vendors or other service providers with whom the Company contracts, and the Company's customers to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and data/security breaches and the cost to defend against and respond to such incidents; the impact of the 2023 cyber security ransomware incident on our operations and reputation; increased data security risks due to work from home arrangements and email vulnerability; failure to safeguard personal information, and any resulting litigation; the effect of a fall in stock market prices on our brokerage and wealth management businesses; the transition from the LIBOR to new interest rate benchmarks; the emergence or continuation of widespread health emergencies or pandemics; the Company’s potential judgments, orders, settlements, penalties, fines and reputational damage resulting from pending or future litigation and regulatory investigations, proceedings and enforcement actions; and our ability to manage the risks involved in the foregoing. There can be no assurance that future developments affecting us will be the same as those anticipated by management. Additional factors that could cause results to differ materially from those described above can be found in our Annual Report on Form 10-K for the year ended December 31, 2023, which has been filed with the Securities and Exchange Commission (the “SEC”) and all subsequent filings with the SEC under Sections 13(a), 13(c), 14, and 15(d) of the Securities Act of 1934, as amended. Such filings are also available in the “Investor Relations” section of our website, https://www.tcbk.com/investor-relations and in other documents we file with the SEC. Annualized, pro forma, projections and estimates are not forecasts and may not reflect actual results. We undertake no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

TriCo Bancshares—Condensed Consolidated Financial Data (unaudited)

(dollars in thousands, except per share data)

Three months ended

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Revenue and Expense Data

 

 

 

 

 

 

 

 

 

Interest income

$

117,032

 

 

$

115,417

 

 

$

115,909

 

 

$

112,380

 

 

$

107,158

 

Interest expense

 

35,035

 

 

 

32,681

 

 

 

29,292

 

 

 

24,257

 

 

 

18,557

 

Net interest income

 

81,997

 

 

 

82,736

 

 

 

86,617

 

 

 

88,123

 

 

 

88,601

 

Provision for credit losses

 

405

 

 

 

4,305

 

 

 

5,990

 

 

 

4,155

 

 

 

9,650

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Service charges and fees

 

12,796

 

 

 

12,637

 

 

 

12,848

 

 

 

13,075

 

 

 

12,968

 

Loss on sale or exchange of investment securities

 

(45

)

 

 

—

 

 

 

(120

)

 

 

—

 

 

 

—

 

Other income

 

3,115

 

 

 

3,134

 

 

 

3,312

 

 

 

2,909

 

 

 

2,773

 

Total noninterest income

 

15,866

 

 

 

15,771

 

 

 

16,040

 

 

 

15,984

 

 

 

15,741

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

35,401

 

 

 

34,304

 

 

 

34,055

 

 

 

34,463

 

 

 

34,714

 

Occupancy and equipment

 

5,393

 

 

 

5,307

 

 

 

5,358

 

 

 

5,451

 

 

 

5,427

 

Data processing and network

 

7,081

 

 

 

6,768

 

 

 

6,880

 

 

 

6,852

 

 

 

6,540

 

Other noninterest expense

 

10,464

 

 

 

10,125

 

 

 

13,974

 

 

 

11,112

 

 

 

14,562

 

Total noninterest expense

 

58,339

 

 

 

56,504

 

 

 

60,267

 

 

 

57,878

 

 

 

61,243

 

Total income before taxes

 

39,119

 

 

 

37,698

 

 

 

36,400

 

 

 

42,074

 

 

 

33,449

 

Provision for income taxes

 

10,085

 

 

 

9,949

 

 

 

10,325

 

 

 

11,484

 

 

 

8,557

 

Net income

$

29,034

 

 

$

27,749

 

 

$

26,075

 

 

$

30,590

 

 

$

24,892

 

Share Data

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.88

 

 

$

0.83

 

 

$

0.78

 

 

$

0.92

 

 

$

0.75

 

Diluted earnings per share

$

0.87

 

 

$

0.83

 

 

$

0.78

 

 

$

0.92

 

 

$

0.75

 

Dividends per share

$

0.33

 

 

$

0.33

 

 

$

0.30

 

 

$

0.30

 

 

$

0.30

 

Book value per common share

$

35.62

 

 

$

35.06

 

 

$

34.86

 

 

$

32.18

 

 

$

32.86

 

Tangible book value per common share (1)

$

26.13

 

 

$

25.60

 

 

$

25.39

 

 

$

22.67

 

 

$

23.30

 

Shares outstanding

 

32,989,327

 

 

 

33,168,770

 

 

 

33,268,102

 

 

 

33,263,324

 

 

 

33,259,260

 

Weighted average shares

 

33,121,271

 

 

 

33,245,377

 

 

 

33,266,959

 

 

 

33,262,798

 

 

 

33,219,168

 

Weighted average diluted shares

 

33,243,955

 

 

 

33,370,118

 

 

 

33,351,737

 

 

 

33,319,291

 

 

 

33,301,548

 

Credit Quality

 

 

 

 

 

 

 

 

 

Allowance for credit losses to gross loans

 

1.83

%

 

 

1.83

%

 

 

1.79

%

 

 

1.73

%

 

 

1.80

%

Loans past due 30 days or more

$

30,372

 

 

$

16,474

 

 

$

19,415

 

 

$

8,072

 

 

$

9,483

 

Total nonperforming loans

$

32,774

 

 

$

34,242

 

 

$

31,891

 

 

$

29,799

 

 

$

37,592

 

Total nonperforming assets

$

35,267

 

 

$

36,735

 

 

$

34,595

 

 

$

32,651

 

 

$

40,506

 

Loans charged-off

$

1,610

 

 

$

1,275

 

 

$

749

 

 

$

5,357

 

 

$

276

 

Loans recovered

$

398

 

 

$

132

 

 

$

419

 

 

$

720

 

 

$

218

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

Return on average total assets

 

1.19

%

 

 

1.13

%

 

 

1.05

%

 

 

1.23

%

 

 

1.01

%

Return on average equity

 

9.99

%

 

 

9.50

%

 

 

9.43

%

 

 

10.91

%

 

 

8.98

%

Average yield on loans

 

5.82

%

 

 

5.72

%

 

 

5.64

%

 

 

5.52

%

 

 

5.38

%

Average yield on interest-earning assets

 

5.24

%

 

 

5.13

%

 

 

5.09

%

 

 

4.94

%

 

 

4.78

%

Average rate on interest-bearing deposits

 

2.14

%

 

 

1.83

%

 

 

1.62

%

 

 

1.36

%

 

 

0.95

%

Average cost of total deposits

 

1.45

%

 

 

1.21

%

 

 

1.05

%

 

 

0.86

%

 

 

0.58

%

Average cost of total deposits and other borrowings

 

1.59

%

 

 

1.47

%

 

 

1.28

%

 

 

1.05

%

 

 

0.80

%

Average rate on borrowings & subordinated debt

 

5.65

%

 

 

5.35

%

 

 

5.26

%

 

 

4.96

%

 

 

4.92

%

Average rate on interest-bearing liabilities

 

2.39

%

 

 

2.24

%

 

 

2.01

%

 

 

1.71

%

 

 

1.37

%

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

 

3.68

%

 

 

3.68

%

 

 

3.81

%

 

 

3.88

%

 

 

3.96

%

Loans to deposits

 

83.76

%

 

 

85.14

%

 

 

86.73

%

 

 

83.76

%

 

 

80.55

%

Efficiency ratio

 

59.61

%

 

 

57.36

%

 

 

58.71

%

 

 

55.59

%

 

 

58.69

%

Supplemental Loan Interest Income Data

 

 

 

 

 

 

 

 

 

Discount accretion on acquired loans

$

850

 

 

$

1,332

 

 

$

1,459

 

 

$

1,324

 

 

$

1,471

 

All other loan interest income (1)

$

97,379

 

 

$

95,153

 

 

$

94,382

 

 

$

90,383

 

 

$

85,276

 

Total loan interest income (1)

$

98,229

 

 

$

96,485

 

 

$

95,841

 

 

$

91,707

 

 

$

86,747

 

(1)

Non-GAAP measure

TriCo Bancshares—Condensed Consolidated Financial Data (unaudited)

(dollars in thousands, except per share data)

 

Balance Sheet Data

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Cash and due from banks

$

206,558

 

 

$

82,836

 

 

$

98,701

 

 

$

111,099

 

 

$

118,792

 

Securities, available for sale, net

 

1,946,167

 

 

 

2,076,494

 

 

 

2,155,138

 

 

 

2,176,854

 

 

 

2,323,011

 

Securities, held to maturity, net

 

122,673

 

 

 

127,811

 

 

 

133,494

 

 

 

139,058

 

 

 

145,117

 

Restricted equity securities

 

17,250

 

 

 

17,250

 

 

 

17,250

 

 

 

17,250

 

 

 

17,250

 

Loans held for sale

 

474

 

 

 

1,346

 

 

 

458

 

 

 

644

 

 

 

1,058

 

Loans:

 

 

 

 

 

 

 

 

 

Commercial real estate

 

4,461,111

 

 

 

4,443,768

 

 

 

4,394,802

 

 

 

4,367,445

 

 

 

4,343,924

 

Consumer

 

1,300,727

 

 

 

1,303,757

 

 

 

1,313,268

 

 

 

1,288,810

 

 

 

1,252,225

 

Commercial and industrial

 

548,625

 

 

 

549,780

 

 

 

586,455

 

 

 

599,757

 

 

 

576,247

 

Construction

 

283,374

 

 

 

348,981

 

 

 

347,198

 

 

 

320,963

 

 

 

278,425

 

Agriculture production

 

140,239

 

 

 

145,159

 

 

 

144,497

 

 

 

123,472

 

 

 

61,337

 

Leases

 

8,450

 

 

 

9,250

 

 

 

8,250

 

 

 

8,219

 

 

 

8,582

 

Total loans, gross

 

6,742,526

 

 

 

6,800,695

 

 

 

6,794,470

 

 

 

6,708,666

 

 

 

6,520,740

 

Allowance for credit losses

 

(123,517

)

 

 

(124,394

)

 

 

(121,522

)

 

 

(115,812

)

 

 

(117,329

)

Total loans, net

 

6,619,009

 

 

 

6,676,301

 

 

 

6,672,948

 

 

 

6,592,854

 

 

 

6,403,411

 

Premises and equipment

 

70,621

 

 

 

71,001

 

 

 

71,347

 

 

 

71,760

 

 

 

72,619

 

Cash value of life insurance

 

138,525

 

 

 

137,695

 

 

 

136,892

 

 

 

136,016

 

 

 

135,332

 

Accrued interest receivable

 

35,527

 

 

 

35,783

 

 

 

36,768

 

 

 

34,595

 

 

 

32,835

 

Goodwill

 

304,442

 

 

 

304,442

 

 

 

304,442

 

 

 

304,442

 

 

 

304,442

 

Other intangible assets

 

8,492

 

 

 

9,522

 

 

 

10,552

 

 

 

11,768

 

 

 

13,358

 

Operating leases, right-of-use

 

25,113

 

 

 

26,240

 

 

 

26,133

 

 

 

27,363

 

 

 

29,140

 

Other assets

 

246,548

 

 

 

247,046

 

 

 

245,966

 

 

 

273,303

 

 

 

257,056

 

Total assets

$

9,741,399

 

 

$

9,813,767

 

 

$

9,910,089

 

 

$

9,897,006

 

 

$

9,853,421

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

$

2,557,063

 

 

$

2,600,448

 

 

$

2,722,689

 

 

$

2,857,512

 

 

$

3,073,353

 

Interest-bearing demand deposits

 

1,791,466

 

 

 

1,742,875

 

 

 

1,731,814

 

 

 

1,746,882

 

 

 

1,751,998

 

Savings deposits

 

2,667,006

 

 

 

2,672,537

 

 

 

2,682,068

 

 

 

2,816,816

 

 

 

2,778,118

 

Time certificates

 

1,034,695

 

 

 

971,798

 

 

 

697,467

 

 

 

588,433

 

 

 

491,896

 

Total deposits

 

8,050,230

 

 

 

7,987,658

 

 

 

7,834,038

 

 

 

8,009,643

 

 

 

8,095,365

 

Accrued interest payable

 

12,018

 

 

 

10,224

 

 

 

8,445

 

 

 

6,688

 

 

 

3,655

 

Operating lease liability

 

27,122

 

 

 

28,299

 

 

 

28,261

 

 

 

29,527

 

 

 

31,377

 

Other liabilities

 

128,063

 

 

 

131,006

 

 

 

145,982

 

 

 

141,692

 

 

 

136,464

 

Other borrowings

 

247,773

 

 

 

392,409

 

 

 

632,582

 

 

 

537,975

 

 

 

392,714

 

Junior subordinated debt

 

101,143

 

 

 

101,120

 

 

 

101,099

 

 

 

101,080

 

 

 

101,065

 

Total liabilities

 

8,566,349

 

 

 

8,650,716

 

 

 

8,750,407

 

 

 

8,826,605

 

 

 

8,760,640

 

Common stock

 

691,878

 

 

 

696,464

 

 

 

697,349

 

 

 

696,369

 

 

 

695,305

 

Retained earnings

 

644,687

 

 

 

630,954

 

 

 

615,502

 

 

 

599,448

 

 

 

578,852

 

Accumulated other comprehensive loss, net of tax

 

(161,515

)

 

 

(164,367

)

 

 

(153,169

)

 

 

(225,416

)

 

 

(181,376

)

Total shareholders’ equity

$

1,175,050

 

 

$

1,163,051

 

 

$

1,159,682

 

 

$

1,070,401

 

 

$

1,092,781

 

Quarterly Average Balance Data

 

 

 

 

 

 

 

 

 

Average loans

$

6,792,303

 

 

$

6,785,840

 

 

$

6,746,153

 

 

$

6,597,400

 

 

$

6,467,381

 

Average interest-earning assets

$

9,001,674

 

 

$

9,066,537

 

 

$

9,064,483

 

 

$

9,070,639

 

 

$

9,039,314

 

Average total assets

$

9,782,228

 

 

$

9,855,797

 

 

$

9,879,355

 

 

$

9,874,240

 

 

$

9,848,191

 

Average deposits

$

8,024,441

 

 

$

7,821,044

 

 

$

7,990,993

 

 

$

8,043,101

 

 

$

7,981,515

 

Average borrowings and subordinated debt

$

426,732

 

 

$

685,802

 

 

$

617,046

 

 

$

550,344

 

 

$

578,312

 

Average total equity

$

1,169,324

 

 

$

1,174,592

 

 

$

1,097,431

 

 

$

1,112,404

 

 

$

1,112,223

 

Capital Ratio Data

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

15.2

%

 

 

15.0

%

 

 

14.7

%

 

 

14.5

%

 

 

14.5

%

Tier 1 capital ratio

 

13.4

%

 

 

13.2

%

 

 

12.9

%

 

 

12.7

%

 

 

12.7

%

Tier 1 common equity ratio

 

12.7

%

 

 

12.5

%

 

 

12.2

%

 

 

12.0

%

 

 

12.0

%

Tier 1 leverage ratio

 

11.2

%

 

 

11.0

%

 

 

10.7

%

 

 

10.6

%

 

 

10.4

%

Tangible capital ratio (1)

 

9.1

%

 

 

8.9

%

 

 

8.8

%

 

 

7.9

%

 

 

8.1

%

(1)

Non-GAAP measure

TriCo Bancshares—Non-GAAP Financial Measures (unaudited)

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

 

Three months ended

 

Six months ended

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Net interest margin

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

 

 

 

 

Amount (included in interest income)

$

850

 

 

$

1,332

 

 

$

1,471

 

 

$

2,182

 

 

$

2,868

 

Effect on average loan yield

 

0.05

%

 

 

0.08

%

 

 

0.09

%

 

 

0.08

%

 

 

0.09

%

Effect on net interest margin (FTE)

 

0.04

%

 

 

0.06

%

 

 

0.07

%

 

 

0.05

%

 

 

0.06

%

Net interest margin (FTE)

 

3.68

%

 

 

3.68

%

 

 

3.96

%

 

 

3.68

%

 

 

4.08

%

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

 

3.64

%

 

 

3.62

%

 

 

3.89

%

 

 

3.63

%

 

 

4.02

%

 

Three months ended

 

Six months ended

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

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

Net income (GAAP)

$

29,034

 

 

$

27,749

 

 

$

24,892

 

 

$

56,783

 

 

$

60,725

 

Exclude provision for income taxes

 

10,085

 

 

 

9,949

 

 

 

8,557

 

 

 

20,034

 

 

 

21,706

 

Exclude provision for credit losses

 

405

 

 

 

4,305

 

 

 

9,650

 

 

 

4,710

 

 

 

13,845

 

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

$

39,524

 

 

$

42,003

 

 

$

43,099

 

 

$

81,527

 

 

$

96,276

 

 

 

 

 

 

 

 

 

 

 

Average assets (GAAP)

$

9,782,228

 

 

$

9,855,797

 

 

$

9,848,191

 

 

$

9,819,012

 

 

$

9,863,471

 

Average equity (GAAP)

$

1,169,324

 

 

$

1,174,592

 

 

$

1,112,223

 

 

$

1,171,958

 

 

$

1,099,913

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (GAAP) (annualized)

 

1.19

%

 

 

1.13

%

 

 

1.01

%

 

 

1.16

%

 

 

1.24

%

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

 

1.63

%

 

 

1.71

%

 

 

1.76

%

 

 

1.67

%

 

 

1.97

%

Return on average equity (GAAP) (annualized)

 

9.99

%

 

 

9.50

%

 

 

8.98

%

 

 

9.74

%

 

 

11.13

%

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

 

13.59

%

 

 

14.38

%

 

 

15.54

%

 

 

13.95

%

 

 

17.65

%

 

Three months ended

 

Six months ended

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Return on tangible common equity

 

 

 

 

 

 

 

 

 

Average total shareholders' equity

$

1,169,324

 

 

$

1,174,592

 

 

$

1,112,223

 

 

$

1,171,958

 

 

$

1,099,913

 

Exclude average goodwill

 

304,442

 

 

 

304,442

 

 

 

304,442

 

 

 

304,442

 

 

 

334,565

 

Exclude average other intangibles

 

9,007

 

 

 

10,037

 

 

 

14,716

 

 

 

9,522

 

 

 

15,901

 

Average tangible common equity (Non-GAAP)

$

855,875

 

 

$

860,113

 

 

$

793,065

 

 

$

857,994

 

 

$

749,447

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

29,034

 

 

$

27,749

 

 

$

24,892

 

 

$

56,783

 

 

$

60,725

 

Exclude amortization of intangible assets, net of tax effect

 

725

 

 

 

725

 

 

 

1,166

 

 

 

1,451

 

 

 

2,333

 

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

$

29,759

 

 

$

28,474

 

 

$

26,058

 

 

$

58,234

 

 

$

63,058

 

 

 

 

 

 

 

 

 

 

 

Return on average equity (GAAP) (annualized)

 

9.99

%

 

 

9.50

%

 

 

8.98

%

 

 

9.74

%

 

 

11.13

%

Return on average tangible common equity (Non-GAAP)

 

13.98

%

 

 

13.31

%

 

 

13.18

%

 

 

13.65

%

 

 

16.97

%

 

Three months ended

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Tangible shareholders' equity to tangible assets

 

 

 

 

 

 

 

 

 

Shareholders' equity (GAAP)

$

1,175,050

 

 

$

1,163,051

 

 

$

1,159,682

 

 

$

1,070,401

 

 

$

1,092,781

 

Exclude goodwill and other intangible assets, net

 

312,934

 

 

 

313,964

 

 

 

314,994

 

 

 

316,210

 

 

 

317,800

 

Tangible shareholders' equity (Non-GAAP)

$

862,116

 

 

$

849,087

 

 

$

844,688

 

 

$

754,191

 

 

$

774,981

 

 

 

 

 

 

 

 

 

 

 

Total assets (GAAP)

$

9,741,399

 

 

$

9,813,767

 

 

$

9,910,089

 

 

$

9,897,006

 

 

$

9,853,421

 

Exclude goodwill and other intangible assets, net

 

312,934

 

 

 

313,964

 

 

 

314,994

 

 

 

316,210

 

 

 

317,800

 

Total tangible assets (Non-GAAP)

$

9,428,465

 

 

$

9,499,803

 

 

$

9,595,095

 

 

$

9,580,796

 

 

$

9,535,621

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity to total assets (GAAP)

 

12.06

%

 

 

11.85

%

 

 

11.70

%

 

 

10.82

%

 

 

11.09

%

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

 

9.14

%

 

 

8.94

%

 

 

8.80

%

 

 

7.87

%

 

 

8.13

%

 

Three months ended

(dollars in thousands)

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Tangible common shareholders' equity per share

 

 

 

 

 

 

 

 

 

Tangible shareholders' equity (Non-GAAP)

$

862,116

 

$

849,087

 

$

844,688

 

$

754,191

 

$

774,981

 

 

 

 

 

 

 

 

 

 

Common shares outstanding at end of period

 

32,989,327

 

 

33,168,770

 

 

33,268,102

 

 

33,263,324

 

 

33,259,260

 

 

 

 

 

 

 

 

 

 

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

$

35.62

 

$

35.06

 

$

34.86

 

$

32.18

 

$

32.86

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

$

26.13

 

$

25.60

 

$

25.39

 

$

22.67

 

$

23.30

 

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

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TriCo Bancshares (NASDAQ:TCBK)
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