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TriCo Bancshares Announces Annual and Quarterly Results

 

TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company of Tri Counties Bank, today announced net income of $28,222,000 for the quarter ended December 31, 2021, compared to $27,422,000 during the trailing quarter ended September 30, 2021 and $23,657,000 during the quarter ended December 31, 2020. Diluted earnings per share were $0.94 for the fourth quarter of 2021, compared to $0.92 for the third quarter of 2021 and $0.79 for the fourth quarter of 2020.

Financial Highlights

Performance highlights and other developments for the Company as of or for the three and twelve months ended December 31, 2021 included the following:

  • For the three and twelve months ended December 31, 2021, the Company’s return on average assets was 1.31% and 1.43%, respectively, and the return on average equity was 11.20% and 12.10%, respectively.
  • Loan growth, excluding PPP, totaled $119.4 million (10.1% annualized) for the current quarter and $419.1 million (9.4% annualized) for the trailing twelve-month period.
  • For the current quarter, net interest margin on a tax equivalent basis was 3.50%, which was consistent with the 3.50% in the trailing quarter and 3.79% for the quarter ended December 31, 2020.
  • The efficiency ratio improved to 53.18% for the twelve months ended December 31, 2021, as compared to 58.40% for the same period of the prior year.
  • As of December 31, 2021, the Company reported total loans, total assets and total deposits of $4.92 billion, $8.61 billion and $7.37 billion, respectively. As a direct result of significant deposit growth in the last year, the loan to deposit ratio has declined to 66.74% as of December 31, 2021, as compared to 73.21% at December 31, 2020.
  • The average rate of interest paid on deposits, including non-interest-bearing deposits, equaled 0.04% during the fourth quarter of 2021, comparing favorably with 0.05% during the trailing quarter, and representing a decrease of 3 basis points from the average rate paid of 0.07% during the same quarter of the prior year.
  • The balance of PPP loans outstanding at December 31, 2021 totaled $63.3 million and the balance of SBA fees remaining to be accreted totaled $2.2 million. Over 90% of all PPP loans originated have been forgiven and repaid by the SBA.
  • Noninterest income related to service charges and fees was $11.3 million and $43.9 million for the three and twelve month periods ended December 31, 2021, an increase of 10.4% and 15.7% when compared to the same periods in 2020.
  • The provision for credit losses for loans and debt securities was approximately $1.0 million during the quarter ended December 31, 2021, as compared to a reversal of provision expense of $1.4 million during the trailing quarter ended September 30, 2021, and a provision expense totaling $4.9 million for the three month period ended December 31, 2020.
  • The allowance for credit losses to total loans was 1.74% as of December 31, 2021, compared to 1.72% as of the trailing quarter end, and 1.93% as of December 31, 2020. Non-performing assets to total assets were 0.38% at December 31, 2021, as compared to 0.37% as of September 30, 2021, and 0.39% at December 31, 2020.

“Fourth Quarter operating results remained strong as net loan growth, excluding PPP, exceeded 10 percent during the quarter. In addition, the performance of our Southern California commercial banking centers that opened in the Summer of 2021 are exceeding our internal forecasts,” commented Rick Smith, President and Chief Executive Officer. Smith added, “We also expect our acquisition of Valley Republic Bank to close in the first quarter of 2022. The Valley Team continues to build loan pipelines and their loan growth remains strong."

Peter Wiese, EVP and Chief Financial Officer also commented, “2021 represented the first year in our history where annual net income exceeded $100 million and total shareholders’ equity grew to over $1.0 billion. We thank our pandemic-weary Team for all of their hard work and efforts over the past year."

Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the period ended December 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 and twelve months ended December 31, 2021, the Company’s return on average assets was 1.31% and 1.43%, respectively, while the return on average equity was 11.20% and 12.10%, respectively. For the three and twelve months ended December 31, 2020, the Company’s return on average assets was 1.24% and 0.91%, respectively, while the return on average equity was 10.37% and 7.18%, respectively.

The following is a summary of the components of the Company’s operating results and performance ratios for the periods indicated:

 

Three months ended

 

 

 

 

 

December 31,

 

September 30,

 

 

 

 

(dollars and shares in thousands)

2021

 

2021

 

$ Change

 

% Change

Net interest income

$

69,783

 

 

$

68,233

 

 

$

1,550

 

 

2.3

%

(Provision for) reversal of credit losses

 

(980

)

 

 

1,435

 

 

 

(2,415

)

 

(168.3

) %

Noninterest income

 

16,502

 

 

 

15,095

 

 

 

1,407

 

 

9.3

%

Noninterest expense

 

(46,679

)

 

 

(45,807

)

 

 

(872

)

 

1.9

%

Provision for income taxes

 

(10,404

)

 

 

(11,534

)

 

 

1,130

 

 

(9.8

) %

Net income

$

28,222

 

 

$

27,422

 

 

$

800

 

 

2.9

%

Diluted earnings per share

$

0.94

 

 

$

0.92

 

 

$

0.02

 

 

2.2

%

Dividends per share

$

0.25

 

 

$

0.25

 

 

$

 

 

%

Average common shares

 

29,724

 

 

 

29,714

 

 

 

10

 

 

%

Average diluted common shares

 

29,870

 

 

 

29,851

 

 

 

19

 

 

0.1

%

Return on average total assets

 

1.31

%

 

 

1.30

%

 

 

 

 

Return on average equity

 

11.20

%

 

 

11.02

%

 

 

 

 

Efficiency ratio

 

54.10

%

 

 

54.97

%

 

 

 

 

 

Three months ended

December 31,

 

 

 

 

(dollars and shares in thousands)

2021

 

2020

 

$ Change

 

% Change

Net interest income

$

69,783

 

 

$

66,422

 

 

$

3,361

 

 

5.1

%

Reversal of credit losses

 

(980

)

 

 

(4,850

)

 

 

3,870

 

 

(79.8

) %

Noninterest income

 

16,502

 

 

 

16,580

 

 

 

(78

)

 

(0.5

) %

Noninterest expense

 

(46,679

)

 

 

(45,745

)

 

 

(934

)

 

2.0

%

Provision for income taxes

 

(10,404

)

 

 

(8,750

)

 

 

(1,654

)

 

18.9

%

Net income

$

28,222

 

 

$

23,657

 

 

$

4,565

 

 

19.3

%

Diluted earnings per share

$

0.94

 

 

$

0.79

 

 

$

0.15

 

 

19.0

%

Dividends per share

$

0.25

 

 

$

0.22

 

 

$

0.03

 

 

13.6

%

Average common shares

 

29,724

 

 

 

29,757

 

 

 

(33

)

 

(0.1

) %

Average diluted common shares

 

29,870

 

 

 

29,863

 

 

 

7

 

 

%

Return on average total assets

 

1.31

%

 

 

1.24

%

 

 

 

 

Return on average equity

 

11.20

%

 

 

10.37

%

 

 

 

 

Efficiency ratio

 

54.10

%

 

 

55.11

%

 

 

 

 

 

Twelve months ended

December 31,

 

 

 

 

(dollars and shares in thousands)

2021

 

2020

 

$ Change

 

% Change

Net interest income

$

271,539

 

 

$

257,727

 

 

$

13,812

 

 

5.4

%

Reversal of (provision for) credit losses

 

6,775

 

 

 

(42,813

)

 

 

49,588

 

 

(115.8

) %

Noninterest income

 

63,664

 

 

 

55,194

 

 

 

8,470

 

 

15.3

%

Noninterest expense

 

(178,275

)

 

 

(182,758

)

 

 

4,483

 

 

(2.5

) %

Provision for income taxes

 

(46,048

)

 

 

(22,536

)

 

 

(23,512

)

 

104.3

%

Net income

$

117,655

 

 

$

64,814

 

 

$

52,841

 

 

81.5

%

Diluted earnings per share

$

3.94

 

 

$

2.16

 

 

$

1.78

 

 

82.4

%

Dividends per share

$

1.00

 

 

$

0.88

 

 

$

0.12

 

 

13.6

%

Average common shares

 

29,721

 

 

 

29,917

 

 

 

(196

)

 

(0.7

) %

Average diluted common shares

 

29,882

 

 

 

30,028

 

 

 

(146

)

 

(0.5

) %

Return on average total assets

 

1.43

%

 

 

0.91

%

 

 

 

 

Return on average equity

 

12.10

%

 

 

7.18

%

 

 

 

 

Efficiency ratio

 

53.18

%

 

 

58.40

%

 

 

 

 

SBA Paycheck Protection Program

In March 2020 (Round 1) and subsequently in December 2020 (Round 2), the Small Business Administration ("SBA") Paycheck Protection Program ("PPP") was created to help small businesses keep workers employed during the COVID-19 crisis. Tri Counties Bank, through its online portal, facilitated the ability for borrowers to open a new deposit account and submit PPP applications during the entirety of the Programs. The SBA ended PPP and did not accept new borrowing applications, effective May 31, 2021.

The following is a summary of PPP loan related information as of the periods indicated:

(dollars in thousands)

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

Total number of PPP loans outstanding

 

450

 

 

1,449

 

 

2,209

 

 

2,484

 

 

2,310

 

 

 

 

 

 

 

 

 

 

PPP loan balance (Round 1 origination), gross

$

2,544

 

$

9,302

 

$

51,547

 

$

193,958

 

$

333,982

PPP loan balance (Round 2 origination), gross

 

60,767

 

 

148,159

 

 

197,035

 

 

176,316

 

 

n/a

Total PPP loans, gross outstanding

$

63,311

 

$

157,461

 

$

248,582

 

$

370,274

 

$

333,982

 

 

 

 

 

 

 

 

 

 

PPP deferred loan fees (Round 1 origination)

$

1

 

$

40

 

$

477

 

$

2,358

 

$

7,212

PPP deferred loan fees (Round 2 origination)

 

2,163

 

 

5,973

 

 

8,513

 

 

7,072

 

 

n/a

Total PPP deferred loan fees outstanding

$

2,164

 

$

6,013

 

$

8,990

 

$

9,430

 

$

7,212

As of December 31, 2021, the total gross balance outstanding of PPP loans was $63,311,000 as compared to total PPP originations of $640,410,000. In connection with the origination of these loans, the Company earned approximately $25,299,000 in loan fees, offset by deferred loan costs of approximately $1,245,000, the net of which will be recognized over the earlier of loan maturity (between 24-60 months), repayment or receipt of forgiveness confirmation. As of December 31, 2021, there was approximately $2,164,000 in net deferred fee income remaining to be recognized. During the three and twelve months ended December 31, 2021, the Company recognized $3,842,000 and $14,148,000, respectively in fees on PPP loans as compared with $4,643,000 and $7,760,000 for the three and twelve months ended December 31, 2020, respectively.

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 following is a summary of COVID related loan customer modifications with outstanding balances as of December 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

$

18,437

 

1.2

%

 

100.0

%

 

%

 

%

 

79.5

%

 

20.5

%

CRE owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

Multifamily

 

 

 

 

 

 

 

 

 

 

 

 

 

Farmland

 

 

 

 

 

 

 

 

 

 

 

 

 

Total commercial real estate loans

 

18,437

 

0.6

 

 

 

 

 

 

 

 

79.5

 

 

20.5

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

Agriculture production

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

Total modifications

$

18,437

 

0.4

%

 

100.0

%

 

%

 

%

 

79.5

%

 

20.5

%

The remaining balance outstanding as of December 31, 2021 are expected to conclude their modification period during the first half of 2022. The COVID deferral relief period under the CARES act legislation ended effective January 1, 2022, as such, any further requests for modification from borrowers will be evaluated in accordance with loan modification accounting guidance.

Balance Sheet

Total loans outstanding, excluding PPP, grew to $4.86 billion as of December 31, 2021, an increase of 9.4% over the prior year, and an annualized increase of 10.1% over the trailing quarter. Investments increased to $2.43 billion as of December 31, 2021, an increase of 16.3% annualized over the trailing quarter. Average earning assets to total average assets continued to increase to 93.0% at December 31, 2021, as compared to 92.9% and 92.4% at September 30, 2021, and December 31, 2020, respectively. The loan to deposit ratio was 66.7% at December 31, 2021, as compared to 67.5% and 73.2% at September 30, 2021, and December 31, 2020, respectively.

Total shareholders' equity increased by $18,170,000 during the quarter ended December 31, 2021, primarily as a result of net income of $28,222,000, offset by a decrease in accumulated other comprehensive income of $2,746,000, and $7,433,000 in cash dividends paid on common stock. As a result, the Company’s book value increased to $33.64 per share at December 31, 2021 as compared to $33.05 and $31.12 at September 30, 2021, and December 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 $25.80 per share at December 31, 2021, as compared to $25.16 and $23.09 at September 30, 2021, and December 31, 2020, respectively.

Trailing Quarter Balance Sheet Change

Ending balances

As of December 31,

 

September 30,

 

 

$ Change

 

Annualized

% Change

(dollars in thousands)

2021

 

2021

 

Total assets

$

8,614,787

 

$

8,458,030

 

$

156,757

 

7.4

%

Total loans

 

4,916,624

 

 

4,887,496

 

 

29,128

 

2.4

%

Total loans, excluding PPP

 

4,855,477

 

 

4,736,048

 

 

119,429

 

10.1

%

Total investments

 

2,427,885

 

 

2,333,015

 

 

94,870

 

16.3

%

Total deposits

$

7,367,159

 

$

7,236,822

 

$

130,337

 

7.2

%

Organic loan growth, excluding PPP, of $119,429,000 or 10.1% on an annualized basis was realized during the quarter ended December 31, 2021, primarily within commercial real estate. In addition, investment security growth was $94,870,000 or 16.3% on an annualized basis as excess liquidity, driven by continued strong deposit growth, was put to use in higher yielding earning assets. Deposit balances increased during the fourth quarter of 2021 by $130,337,000 or 7.2% annualized.

Average Trailing Quarter Balance Sheet Change

Qtrly avg balances for the period ended

December 31,

 

September 30,

 

$ Change

 

Annualized

% Change

(dollars in thousands)

2021

 

2021

 

Total assets

$

8,546,004

 

$

8,348,111

 

$

197,893

 

 

9.5

%

Total loans

 

4,862,457

 

 

4,897,922

 

 

(35,465

)

 

(2.9

) %

Total loans, excluding PPP

 

4,759,294

 

 

4,684,492

 

 

74,802

 

 

6.4

%

Total investments

 

2,402,582

 

 

2,149,311

 

 

253,271

 

 

47.1

%

Total deposits

$

7,304,659

 

$

7,137,263

 

$

167,396

 

 

9.4

%

The decrease in average total loans of $35,465,000, or 2.9% on an annualized basis, during the fourth quarter of 2021, was led by the quarter over quarter decline in net PPP loan balances outstanding totaling $90,301,000. As noted above, 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 December 31,

 

 

 

 

 

(dollars in thousands)

2021

 

2020

 

$ Change

 

 

% Change

Total assets

$

8,614,787

 

$

7,639,529

 

$

975,258

 

 

12.8

%

Total loans

 

4,916,624

 

 

4,763,127

 

 

153,497

 

 

3.2

%

Total loans, excluding PPP

 

4,855,477

 

 

4,436,357

 

 

419,120

 

 

9.4

%

Total investments

 

2,427,885

 

 

1,719,102

 

 

708,783

 

 

41.2

%

Total deposits

$

7,367,159

 

$

6,505,934

 

$

861,225

 

 

13.2

%

Net PPP loan balances outstanding have declined by $265,623,000 during the twelve months ended December 31, 2021, meanwhile, non-PPP loan balances (both organic and purchased) have increased by $419,120,000 during the same period. This has led to a beneficial and meaningful shift in the makeup of the loan portfolio, despite total loan balances increasing modestly during the year ended December 31, 2021, by $153,497,000 or 3.2%. The Company's non-PPP loan originations have increased significantly over the past year but have also been challenged by an acceleration in payoffs. Specifically, during the years ended December 31, 2021 and 2020, loan originations totaled approximately $1.46 billion and $0.79 billion, respectively; while payoffs of loans totaled $1.04 billion and $0.66 billion, respectively. Loan originations are inclusive of those related to the Company's recently opened Southern California loan production offices which contributed $34,742,000 and $38,828,000 during the three and twelve months ended December 31, 2021, respectively. Investment securities increased to $2,427,885,000 at December 31, 2021, a change of $708,783,000 or 41.2% from the prior year.

Net Interest Income and Net Interest Margin

The following is a summary of the components of net interest income for the periods indicated:

 

Three months ended

 

 

 

 

 

December 31,

 

September 30,

 

 

 

 

(dollars in thousands)

2021

 

2021

 

$ Change

 

% Change

Interest income

$

71,024

 

 

$

69,628

 

 

$

1,396

 

 

2.0

%

Interest expense

 

(1,241

)

 

 

(1,395

)

 

 

154

 

 

(11.0

) %

Fully tax-equivalent adjustment (FTE) (1)

 

274

 

 

 

265

 

 

 

9

 

 

3.4

%

Net interest income (FTE)

$

70,057

 

 

$

68,498

 

 

$

1,559

 

 

2.3

%

Net interest margin (FTE)

 

3.50

%

 

 

3.50

%

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

1,780

 

 

$

2,034

 

 

$

(254

)

 

 

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

 

3.41

%

 

 

3.40

%

 

 

 

0.01

%

PPP loans yield, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

4,094

 

 

$

3,507

 

 

$

587

 

 

 

Net interest margin less effect of PPP loan yield (1)

 

3.34

%

 

 

3.42

%

 

 

 

(0.08

) %

Acquired loans discount accretion and PPP loan yield, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

5,874

 

 

$

5,541

 

 

$

333

 

 

 

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

 

3.25

%

 

 

3.31

%

 

 

 

(0.06

) %

 

Three months ended

December 31,

 

 

 

 

(dollars in thousands)

2021

 

2020

 

$ Change

 

% Change

Interest income

$

71,024

 

 

$

68,081

 

 

$

2,943

 

 

4.3

%

Interest expense

 

(1,241

)

 

 

(1,659

)

 

 

418

 

 

(25.2

) %

Fully tax-equivalent adjustment (FTE) (1)

 

274

 

 

 

258

 

 

 

16

 

 

6.2

%

Net interest income (FTE)

$

70,057

 

 

$

66,680

 

 

$

3,377

 

 

5.1

%

Net interest margin (FTE)

 

3.50

%

 

 

3.79

%

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

1,780

 

 

$

1,960

 

 

$

(180

)

 

 

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

 

3.41

%

 

 

3.68

%

 

 

 

(0.27

) %

PPP loans yield, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

4,094

 

 

$

5,676

 

 

$

(1,582

)

 

 

Net interest margin less effect of PPP loan yield (1)

 

3.34

%

 

 

3.68

%

 

 

 

(0.34

) %

Acquired loans discount accretion and PPP loan yield, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

5,874

 

 

$

7,636

 

 

$

(1,762

)

 

 

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

 

3.25

%

 

 

3.57

%

 

 

 

(0.32

) %

 

Twelve months ended

December 31,

 

 

 

 

(dollars in thousands)

2021

 

2020

 

$ Change

 

% Change

Interest income

$

277,047

 

 

$

267,184

 

 

$

9,863

 

 

3.7

%

Interest expense

 

(5,508

)

 

 

(9,457

)

 

 

3,949

 

 

(41.8

) %

Fully tax-equivalent adjustment (FTE) (1)

 

1,071

 

 

 

1,069

 

 

 

2

 

 

0.2

%

Net interest income (FTE)

$

272,610

 

 

$

258,796

 

 

$

13,814

 

 

5.3

%

Net interest margin (FTE)

 

3.58

%

 

 

3.96

%

 

 

 

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

8,091

 

 

$

8,171

 

 

$

(80

)

 

 

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

 

3.47

%

 

 

3.85

%

 

 

 

(0.38

) %

PPP loans yield, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

16,643

 

 

$

10,635

 

 

$

6,008

 

 

 

Net interest margin less effect of PPP loan yield (1)

 

3.48

%

 

 

3.97

%

 

 

 

(0.49

) %

Acquired loans discount accretion and PPP loan yield, net:

 

 

 

 

 

 

 

Amount (included in interest income)

$

24,734

 

 

$

18,806

 

 

$

5,928

 

 

 

Net interest margin less effect of acquired loans discount and PPP loan yield (1)

 

3.37

%

 

 

3.84

%

 

 

 

(0.47

) %

(1)

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

Loans may be acquired at a premium or discount to par value, in which case, the premium is amortized (subtracted from) or accreted (added to) interest income over the remaining life of the loan. Generally, as time goes on, the dollar impact of loan discount accretion and loan premium amortization decrease as the purchased loans mature or pay off early. Upon the early pay off of a loan, any remaining unaccreted discount or unamortized premium is immediately taken into interest income; and as loan payoffs may vary significantly from quarter to quarter, so may the impact of discount accretion and premium amortization on interest income. As a result of the increase in interest rates, the prepayment rate of portfolio loans, inclusive of those acquired at a premium or discount, declined during the fourth quarter of 2021. During the three months ended December 31, 2021, September 30, 2021, and December 31, 2020, purchased loan discount accretion was $1,780,000, $2,034,000, and $1,960,000, 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

 

December 31, 2021

 

September 30, 2021

 

December 31, 2020

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, excluding PPP

$

4,759,294

 

$

56,710

 

4.73

%

 

$

4,684,492

 

$

57,218

 

4.85

%

 

$

4,363,873

 

$

55,339

 

5.04

%

PPP loans

 

103,163

 

 

4,094

 

15.74

%

 

 

213,430

 

 

3,507

 

6.52

%

 

 

403,842

 

 

5,676

 

5.59

%

Investments-taxable

 

2,261,161

 

 

9,028

 

1.58

%

 

 

2,019,283

 

 

7,741

 

1.52

%

 

 

1,458,856

 

 

6,022

 

1.64

%

Investments-nontaxable (1)

 

141,421

 

 

1,186

 

3.33

%

 

 

130,028

 

 

1,147

 

3.50

%

 

 

113,656

 

 

1,121

 

3.92

%

Total investments

 

2,402,582

 

 

10,214

 

1.69

%

 

 

2,149,311

 

 

8,888

 

1.64

%

 

 

1,572,512

 

 

7,143

 

1.81

%

Cash at Federal Reserve and other banks

 

682,759

 

 

280

 

0.16

%

 

 

710,936

 

 

280

 

0.16

%

 

 

658,355

 

 

181

 

0.11

%

Total earning assets

 

7,947,798

 

 

71,298

 

3.56

%

 

 

7,758,169

 

 

69,893

 

3.57

%

 

 

6,998,582

 

 

68,339

 

3.88

%

Other assets, net

 

598,206

 

 

 

 

 

 

589,942

 

 

 

 

 

 

572,370

 

 

 

 

Total assets

$

8,546,004

 

 

 

 

 

$

8,348,111

 

 

 

 

 

$

7,570,952

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,544,176

 

$

58

 

0.01

%

 

$

1,507,697

 

$

116

 

0.03

%

 

$

1,275,550

 

$

43

 

0.01

%

Savings deposits

 

2,486,532

 

 

291

 

0.05

%

 

 

2,407,368

 

 

328

 

0.05

%

 

 

2,145,543

 

 

405

 

0.08

%

Time deposits

 

315,953

 

 

349

 

0.44

%

 

 

321,381

 

 

411

 

0.51

%

 

 

362,104

 

 

661

 

0.73

%

Total interest-bearing deposits

 

4,346,661

 

 

698

 

0.06

%

 

 

4,236,446

 

 

855

 

0.08

%

 

 

3,783,197

 

 

1,109

 

0.12

%

Other borrowings

 

50,667

 

 

7

 

0.05

%

 

 

48,330

 

 

6

 

0.05

%

 

 

32,504

 

 

4

 

0.05

%

Junior subordinated debt

 

58,004

 

 

536

 

3.67

%

 

 

57,891

 

 

534

 

3.66

%

 

 

57,581

 

 

546

 

3.77

%

Total interest-bearing liabilities

 

4,455,332

 

 

1,241

 

0.11

%

 

 

4,342,667

 

 

1,395

 

0.13

%

 

 

3,873,282

 

 

1,659

 

0.17

%

Noninterest-bearing deposits

 

2,957,998

 

 

 

 

 

 

2,900,817

 

 

 

 

 

 

2,557,978

 

 

 

 

Other liabilities

 

132,910

 

 

 

 

 

 

117,601

 

 

 

 

 

 

232,224

 

 

 

 

Shareholders’ equity

 

999,764

 

 

 

 

 

 

987,026

 

 

 

 

 

 

907,468

 

 

 

 

Total liabilities and shareholders’ equity

$

8,546,004

 

 

 

 

 

$

8,348,111

 

 

 

 

 

$

7,570,952

 

 

 

 

Net interest rate spread (1) (2)

 

 

 

 

3.45

%

 

 

 

 

 

3.45

%

 

 

 

 

 

3.71

%

Net interest income and margin (1) (3)

 

 

$

70,057

 

3.50

%

 

 

 

$

68,498

 

3.50

%

 

 

 

$

66,680

 

3.79

%

(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 December 31, 2021 increased $1,559,000 or 2.3% to $70,057,000 compared to $68,498,000 during the three months ended September 30, 2021. Over the same period, net interest margin remained unchanged at 3.50%, as compared to the trailing quarter. This is attributed to an elevated yield earned from PPP loans during the quarter as a result of fee income accretion following Round 2 PPP loans being forgiven by the SBA and repaid, which was offset by a decline in yield of non-PPP loans totaling 12 basis points.

As compared to the same quarter in the prior year, average loan yields, excluding PPP, decreased 31 basis points from 5.04% during the three months ended December 31, 2020, to 4.73% during the three months ended December 31, 2021. The accretion of discounts from acquired loans added 15 and 17 basis points to loan yields during the quarters ended December 31, 2021 and December 31, 2020, respectively. Therefore, of the 31 basis point decrease in yields on loans during the comparable three month periods ended December 31, 2021 and 2020, 29 basis points was attributable to decreases in market rates, while 2 basis points resulted from less accretion of discounts. 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 rates paid on interest bearing liabilities generally remained flat during the quarter ended December 31, 2021 compared to the trailing quarter. The decline in interest expense when compared to the same quarter from the prior year, however, was primarily attributed to reductions in the rates offered on deposit products. As a result, the cost of interest-bearing deposits decreased by 6 basis points during the quarter ended December 31, 2021, to 0.06% from 0.12% during the same quarter of the prior year. In addition, the level of noninterest-bearing deposits continues to benefit the average cost of total deposits which decreased to 0.04% in the current quarter compared to 0.7% in the fourth quarter of the prior year. Specifically, the ratio of average total noninterest-bearing deposits to total average deposits was 40.5% and 40.6% as of December 31, 2021 and September 30, 2021, respectively, as compared to 40.3% in the quarter ended December 31, 2020.

ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS

(unaudited, dollars in thousands)

 

Twelve months ended December 31, 2021

 

Twelve months ended December 31, 2020

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

 

Average

Balance

 

Income/

Expense

 

Yield/

Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

Loans, excluding PPP

$

4,625,410

 

$

225,626

 

4.88

%

 

$

4,361,679

 

$

223,086

 

5.11

%

PPP loans

 

250,391

 

 

16,643

 

6.65

%

 

 

284,326

 

 

10,635

 

3.74

%

Investments-taxable

 

1,914,788

 

 

30,352

 

1.59

%

 

 

1,302,367

 

 

28,659

 

2.20

%

Investments-nontaxable (1)

 

160,863

 

 

4,639

 

2.88

%

 

 

116,717

 

 

4,636

 

3.97

%

Total investments

 

2,075,651

 

 

34,991

 

1.69

%

 

 

1,419,084

 

 

33,295

 

2.35

%

Cash at Federal Reserve and other banks

 

663,801

 

 

858

 

0.13

%

 

 

467,376

 

 

1,237

 

0.26

%

Total earning assets

 

7,615,253

 

 

278,118

 

3.65

%

 

 

6,532,465

 

 

268,253

 

4.11

%

Other assets, net

 

594,420

 

 

 

 

 

 

590,966

 

 

 

 

Total assets

$

8,209,673

 

 

 

 

 

$

7,123,431

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,493,922

 

$

327

 

0.02

%

 

$

1,313,804

 

$

332

 

0.03

%

Savings deposits

 

2,360,605

 

 

1,256

 

0.05

%

 

 

2,015,134

 

 

2,595

 

0.13

%

Time deposits

 

324,636

 

 

1,735

 

0.53

%

 

 

397,216

 

 

3,958

 

1.00

%

Total interest-bearing deposits

 

4,179,163

 

 

3,318

 

0.08

%

 

 

3,726,154

 

 

6,885

 

0.18

%

Other borrowings

 

43,236

 

 

22

 

0.05

%

 

 

28,863

 

 

17

 

0.06

%

Junior subordinated debt

 

57,844

 

 

2,168

 

3.75

%

 

 

57,426

 

 

2,555

 

4.45

%

Total interest-bearing liabilities

 

4,280,243

 

 

5,508

 

0.13

%

 

 

3,812,443

 

 

9,457

 

0.25

%

Noninterest-bearing deposits

 

2,837,745

 

 

 

 

 

 

2,289,168

 

 

 

 

Other liabilities

 

119,471

 

 

 

 

 

 

119,710

 

 

 

 

Shareholders’ equity

 

972,214

 

 

 

 

 

 

902,110

 

 

 

 

Total liabilities and shareholders’ equity

$

8,209,673

 

 

 

 

 

$

7,123,431

 

 

 

 

Net interest rate spread (1) (2)

 

 

 

 

3.52

%

 

 

 

 

 

3.86

%

Net interest income and margin (1) (3)

 

 

$

272,610

 

3.58

%

 

 

 

$

258,796

 

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.

Interest Rates and Loan Portfolio Composition

During the quarter ended December 31, 2021, market interest rates, including many rates that serve as reference indices for variable rate loans, increased modestly. However, the loan portfolio yield continues to have a downward bias due to the repricing of loans at lower rates and increased market competition stemming from loan to deposit ratios at historic lows. As of December 31, 2021, the Company's loan portfolio consisted of approximately $4.9 billion in outstanding principal with a weighted average coupon rate of 4.28%, inclusive of the PPP program loans. Excluding PPP loans, the Company's loan portfolio has approximately $4.8 billion outstanding with a weighted average coupon rate of 4.32% as of December 31, 2021. Included in the December 31, 2021 loan total, exclusive of PPP loans, are variable rate loans totaling $3.0 billion of which 87.8% or $2.6 billion were at their floor rate. The remaining variable rate loans totaling $365.0 million, which carried a weighted average coupon rate of 4.76% as of December 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 4.23% which would result in the reduction of the weighted average coupon rate of the total loan portfolio, exclusive of PPP loans, from 4.32% to approximately 4.29%.

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 December 31, 2021, the Company recorded a provision for credit losses of $980,000, as compared to a reversal of provision for credit losses of $1,435,000 during the trailing quarter, and a provision expense of $4,850,000 during the last quarter of 2020.

The following table presents details of the provision for credit losses for the periods indicated:

 

Three months ended

(dollars in thousands)

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

Addition to (reversal of) allowance for credit losses

$

715

 

$

(1,495

)

 

$

(145

)

 

$

(6,240

)

 

$

4,450

Addition to (reversal of) reserve for unfunded loan commitments

 

265

 

 

60

 

 

 

(115

)

 

 

180

 

 

 

400

Total provision for credit losses

$

980

 

$

(1,435

)

 

$

(260

)

 

$

(6,060

)

 

$

4,850

The following table presents the activity in the allowance for credit losses on loans for the periods indicated:

 

Three months ended

 

Twelve months ended

(dollars in thousands)

December 31, 2021

 

December 31, 2020

 

December 31, 2021

 

December 31, 2020

Balance, beginning of period

$

84,306

 

 

$

87,575

 

 

$

91,847

 

 

$

30,616

 

Impact from adoption of ASU 2016-13

 

 

 

 

 

 

 

 

 

 

18,913

 

Provision for (reversal of) credit losses

 

715

 

 

 

4,450

 

 

 

(7,165

)

 

 

42,188

 

Loans charged-off

 

(197

)

 

 

(560

)

 

 

(2,392

)

 

 

(1,755

)

Recoveries of previously charged-off loans

 

552

 

 

 

382

 

 

 

3,086

 

 

 

1,885

 

Balance, end of period

$

85,376

 

 

$

91,847

 

 

$

85,376

 

 

$

91,847

 

The allowance for credit losses (ACL) was $85,376,000 as of December 31, 2021, a net increase of $1,070,000 over the immediately preceding quarter. The provision of allowance for credit losses of $715,000 was necessary as net recoveries totaling $355,000 during the quarter were less than the required increases in quantitative and qualitative reserve components. More specifically, the qualitative reserves required under the cohort model increased required reserves by $857,000, while quantitative factors added approximately $213,000.

The Company utilizes a forecast period of approximately eight quarters and obtains the forecast data from publicly available sources as of the balance sheet date. This forecast data continues to evolve and included improving shifts in the magnitude of changes for both the unemployment and GDP factors leading up to the balance sheet date. However, management notes that the majority of economic forecasts utilized in the ACL calculation have remained directionally consistent with preceding quarters, as general economic conditions continue to improve, albeit at a pace slower than expected due to unforeseen disruptions in the supply chain and increasing energy prices. In addition, management notes that the level of governmental assistance provided through PPP as well as other programs during the last several quarters has been unprecedented. As a result, management continues to believe that certain credit weakness are likely present in the overall economy and that it is appropriate to maintain a reserve level that incorporates such risk factors.

Loans past due 30 days or more decreased by $6,207,000 during the quarter ended December 31, 2021 to $4,332,000, as compared to $10,539,000 at September 30, 2021. Non-performing loans were $30,350,000 at December 31, 2021, an increase of $1,560,000 and $3,486,000, respectively, from $28,790,000 and $26,864,000 as of September 30, 2021, and December 31, 2020, respectively.

The following table illustrates the total loans by risk rating and their respective percentage of total loans for the periods presented.

(dollars in thousands)

December 31,

2021

% of Total

Loans

September 30,

2021

% of Total

Loans

December 31,

2020

% of Total

Loans

Risk Rating:

 

 

 

 

 

 

Pass

$

4,787,077

 

97.4

%

$

4,698,475

 

96.1

%

$

4,555,154

 

95.6

%

Special Mention

 

77,461

 

1.5

%

 

138,699

 

2.9

%

 

158,241

 

3.4

%

Substandard

 

52,086

 

1.1

%

 

50,322

 

1.0

%

 

49,732

 

1.0

%

Total

$

4,916,624

 

 

$

4,887,496

 

 

$

4,763,127

 

 

 

 

 

 

 

 

 

Classified loans to total loans

 

1.06

%

 

 

1.03

%

 

 

1.04

%

 

Loans past due 30+ days to total loans

 

0.09

%

 

 

0.22

%

 

 

0.14

%

 

The Company's loan portfolio for non-classified loans (loans graded special mention or better) remains consistent for the quarter ended December 31, 2021, as compared to the trailing quarter September 30, 2021, representing 98.9% and 99.0% of total loans outstanding, respectively. Loans risk graded special mention decreased notably, by approximately $61,238,000 during the current quarter as compared to the trailing quarter, while loans risk graded substandard increased by $1,764,000 over the same period. The improvement in special mention risk graded loans was primarily attributed to a single relationship totaling approximately $56,200,000 being paid off during the quarter.

There was one addition to other real estate owned totaling $503,000 during the quarter ended December 31, 2021, and there was one sale for approximately $582,000, which generated a net gain of $22,000 for the quarter. As of December 31, 2021, other real estate owned consisted of six properties with a carrying value of approximately $2,594,000.

Allocation of Credit Loss Reserves by Loan Type

 

As of December 31, 2021

 

As of December 31, 2020

(dollars in thousands)

Amount

 

% of Loans

Outstanding

 

Amount

 

% of Loans

Outstanding

Commercial real estate:

 

 

 

 

 

 

 

CRE - Non Owner Occupied

$

25,739

 

1.61

%

 

$

29,380

 

1.91

%

CRE - Owner Occupied

 

10,691

 

1.51

%

 

 

10,861

 

1.74

%

Multifamily

 

12,395

 

1.51

%

 

 

11,472

 

1.79

%

Farmland

 

2,315

 

1.34

%

 

 

1,980

 

1.30

%

Total commercial real estate loans

 

51,140

 

1.55

%

 

 

53,693

 

1.82

%

Consumer:

 

 

 

 

 

 

 

SFR 1-4 1st Liens

 

10,723

 

1.60

%

 

 

10,117

 

1.83

%

SFR HELOCs and Junior Liens

 

10,510

 

3.11

%

 

 

11,771

 

3.59

%

Other

 

2,241

 

3.34

%

 

 

3,260

 

4.20

%

Total consumer loans

 

23,474

 

2.19

%

 

 

25,148

 

2.62

%

 

 

 

 

 

 

 

 

Commercial and Industrial

 

3,862

 

1.49

%

 

 

4,252

 

0.81

%

Construction

 

5,667

 

2.55

%

 

 

7,540

 

2.65

%

Agricultural Production

 

1,215

 

2.39

%

 

 

1,209

 

2.74

%

Leases

 

18

 

0.27

%

 

 

5

 

0.13

%

Allowance for credit losses

 

85,376

 

1.74

%

 

 

91,847

 

1.93

%

Reserve for unfunded loan commitments

 

3,790

 

 

 

 

3,400

 

 

Total allowance for credit losses

$

89,166

 

1.81

%

 

$

95,247

 

2.00

%

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 1.76% as of December 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 December 31, 2021, the unamortized discount associated with acquired loans totaled $16,107,000 and, if aggregated with the ACL, would collectively represent 2.06% of total gross loans and 2.09% 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)

December 31, 2021

 

September 30, 2021

 

$ Change

 

% Change

ATM and interchange fees

$

6,421

 

 

$

6,516

 

 

$

(95

)

 

(1.5

) %

Service charges on deposit accounts

 

3,674

 

 

 

3,608

 

 

 

66

 

 

1.8

%

Other service fees

 

888

 

 

 

897

 

 

 

(9

)

 

(1.0

) %

Mortgage banking service fees

 

475

 

 

 

476

 

 

 

(1

)

 

(0.2

) %

Change in value of mortgage servicing rights

 

(181

)

 

 

(232

)

 

 

51

 

 

(22.0

) %

Total service charges and fees

 

11,277

 

 

 

11,265

 

 

 

12

 

 

0.1

%

Increase in cash value of life insurance

 

713

 

 

 

644

 

 

 

69

 

 

10.7

%

Asset management and commission income

 

930

 

 

 

957

 

 

 

(27

)

 

(2.8

) %

Gain on sale of loans

 

1,672

 

 

 

1,814

 

 

 

(142

)

 

(7.8

) %

Lease brokerage income

 

204

 

 

 

183

 

 

 

21

 

 

11.5

%

Sale of customer checks

 

117

 

 

 

107

 

 

 

10

 

 

9.3

%

Gain on sale of investment securities

 

 

 

 

 

 

 

 

 

n/m

 

Loss on marketable equity securities

 

(27

)

 

 

(14

)

 

 

(13

)

 

92.9

%

Other

 

1,616

 

 

 

139

 

 

 

1,477

 

 

1,062.6

%

Total other non-interest income

 

5,225

 

 

 

3,830

 

 

 

1,395

 

 

36.4

%

Total non-interest income

$

16,502

 

 

$

15,095

 

 

$

1,407

 

 

9.3

%

Non-interest income increased $1,407,000 or 9.3% to $16,502,000 during the three months ended December 31, 2021, compared to $15,095,000 during the trailing quarter September 30, 2021. This was largely the result of death benefits totaling $702,000 being realized and an increase in the fair value of certain equity investments totaling approximately $804,000, both recorded within other non-interest income. As a partial offset, gain on sale of mortgage loans declined by $142,000 or 7.8% during the quarter ended December 31, 2021, as interest rates continued to trend higher, contributing to a decline in total mortgage origination and refinance activity.

The following table presents the key components of non-interest income for the current and prior year periods indicated:

 

Three months ended December 31,

 

 

 

 

(dollars in thousands)

2021

 

2020

 

$ Change

 

% Change

ATM and interchange fees

$

6,421

 

 

$

5,747

 

 

$

674

 

 

11.7

%

Service charges on deposit accounts

 

3,674

 

 

 

3,518

 

 

 

156

 

 

4.4

%

Other service fees

 

888

 

 

 

860

 

 

 

28

 

 

3.3

%

Mortgage banking service fees

 

475

 

 

 

469

 

 

 

6

 

 

1.3

%

Change in value of mortgage servicing rights

 

(181

)

 

 

(376

)

 

 

195

 

 

(51.9

) %

Total service charges and fees

 

11,277

 

 

 

10,218

 

 

 

1,059

 

 

10.4

%

Increase in cash value of life insurance

 

713

 

 

 

746

 

 

 

(33

)

 

(4.4

) %

Asset management and commission income

 

930

 

 

 

745

 

 

 

185

 

 

24.8

%

Gain on sale of loans

 

1,672

 

 

 

3,460

 

 

 

(1,788

)

 

(51.7

) %

Lease brokerage income

 

204

 

 

 

173

 

 

 

31

 

 

17.9

%

Sale of customer checks

 

117

 

 

 

111

 

 

 

6

 

 

5.4

%

Gain on sale of investment securities

 

 

 

 

 

 

 

 

 

n/m

Loss on marketable equity securities

 

(27

)

 

 

(8

)

 

 

(19

)

 

237.5

%

Other

 

1,616

 

 

 

1,135

 

 

 

481

 

 

42.4

%

Total other non-interest income

 

5,225

 

 

 

6,362

 

 

 

(1,137

)

 

(17.9

) %

Total non-interest income

$

16,502

 

 

$

16,580

 

 

$

(78

)

 

(0.5

) %

In addition to the discussion above within the non-interest income for the three months ended December 31, 2021, ATM and interchange fees improved $674,000 or 11.7% as a result of increased usage due to relaxed social distancing guidelines during the quarter December 31, 2021 when compared to the same period in the prior year. During the quarters ended December 31, 2021 and 2020, death benefits totaling $702,00 and $498,000, respectively, were realized.

The following table presents the key components of non-interest income for the current and prior year periods indicated:

 

Twelve months ended December 31,

 

 

 

 

(dollars in thousands)

2021

 

2020

 

$ Change

 

% Change

ATM and interchange fees

$

25,356

 

 

$

21,660

 

 

$

3,696

 

 

17.1

%

Service charges on deposit accounts

 

14,013

 

 

 

13,944

 

 

 

69

 

 

0.5

%

Other service fees

 

3,570

 

 

 

3,156

 

 

 

414

 

 

13.1

%

Mortgage banking service fees

 

1,881

 

 

 

1,855

 

 

 

26

 

 

1.4

%

Change in value of mortgage servicing rights

 

(872

)

 

 

(2,634

)

 

 

1,762

 

 

(66.9

) %

Total service charges and fees

 

43,948

 

 

 

37,981

 

 

 

5,967

 

 

15.7

%

Increase in cash value of life insurance

 

2,775

 

 

 

2,949

 

 

 

(174

)

 

(5.9

) %

Asset management and commission income

 

3,668

 

 

 

2,989

 

 

 

679

 

 

22.7

%

Gain on sale of loans

 

9,580

 

 

 

9,122

 

 

 

458

 

 

5.0

%

Lease brokerage income

 

746

 

 

 

668

 

 

 

78

 

 

11.7

%

Sale of customer checks

 

459

 

 

 

414

 

 

 

45

 

 

10.9

%

Gain on sale of investment securities

 

 

 

 

7

 

 

 

(7

)

 

n/m

Gain (loss) on marketable equity securities

 

(86

)

 

 

64

 

 

 

(150

)

 

(234.4

) %

Other

 

2,574

 

 

 

1,000

 

 

 

1,574

 

 

157.4

%

Total other non-interest income

 

19,716

 

 

 

17,213

 

 

 

2,503

 

 

14.5

%

Total non-interest income

$

63,664

 

 

$

55,194

 

 

$

8,470

 

 

15.3

%

Total non-interest income increased by $8,470,000 or 15.3% to $63,664,000 during the twelve months ended December 31, 2021, compared to $55,194,000 during the same period ended December 31, 2020. Generally, the changes in non-interest income for the year ended December 31, 2021 and 2020 are consistent with the changes already discussed. Additionally, during the year ended 2020, there was substantial downward pressure on interest rates following the COVID-19 pandemic, resulting in a decline in the fair value of mortgage servicing rights totaling $2,634,000 during the period.

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)

December 31, 2021

 

September 30, 2021

 

$ Change

 

% Change

Base salaries, net of deferred loan origination costs

$

19,123

 

 

$

17,673

 

 

$

1,450

 

 

8.2

%

Incentive compensation

 

3,932

 

 

 

3,123

 

 

 

809

 

 

25.9

%

Benefits and other compensation costs

 

4,611

 

 

 

5,478

 

 

 

(867

)

 

(15.8

) %

Total salaries and benefits expense

 

27,666

 

 

 

26,274

 

 

 

1,392

 

 

5.3

%

Occupancy

 

3,713

 

 

 

3,771

 

 

 

(58

)

 

(1.5

) %

Data processing and software

 

3,893

 

 

 

3,689

 

 

 

204

 

 

5.5

%

Equipment

 

1,298

 

 

 

1,336

 

 

 

(38

)

 

(2.8

) %

Intangible amortization

 

1,193

 

 

 

1,409

 

 

 

(216

)

 

(15.3

) %

Advertising

 

819

 

 

 

966

 

 

 

(147

)

 

(15.2

) %

ATM and POS network charges

 

1,551

 

 

 

1,692

 

 

 

(141

)

 

(8.3

) %

Professional fees

 

927

 

 

 

1,090

 

 

 

(163

)

 

(15.0

) %

Telecommunications

 

534

 

 

 

574

 

 

 

(40

)

 

(7.0

) %

Regulatory assessments and insurance

 

678

 

 

 

673

 

 

 

5

 

 

0.7

%

Merger and acquisition expenses

 

872

 

 

 

651

 

 

 

221

 

 

33.9

%

Postage

 

232

 

 

 

156

 

 

 

76

 

 

48.7

%

Operational losses

 

299

 

 

 

244

 

 

 

55

 

 

22.5

%

Courier service

 

346

 

 

 

286

 

 

 

60

 

 

21.0

%

Gain on sale or acquisition of foreclosed assets

 

(23

)

 

 

(144

)

 

 

121

 

 

(84.0

) %

(Gain) loss on disposal of fixed assets

 

6

 

 

 

(19

)

 

 

25

 

 

(131.6

) %

Other miscellaneous expense

 

2,675

 

 

 

3,159

 

 

 

(484

)

 

(15.3

) %

Total other non-interest expense

 

19,013

 

 

 

19,533

 

 

 

(520

)

 

(2.7

) %

Total non-interest expense

$

46,679

 

 

$

45,807

 

 

$

872

 

 

1.9

%

Average full-time equivalent staff

 

1,074

 

 

 

1,049

 

 

 

25

 

 

2.4

%

Non-interest expense for the quarter ended December 31, 2021 increased $872,000 or 1.9% to $46,679,000 as compared to $45,807,000 during the trailing quarter ended September 30, 2021. Total salaries and benefits expense increased by $1,392,000 or 5.3%, led by wage related increases of $1,450,000 or 8.2% to $19,123,000. More specifically, the wage related change in the quarter was substantially due to growth in average full-time equivalent staff and additionally by transitory items caused by the COVID-19 pandemic, overtime and non-incentive stipends associated with special projects. Incentive compensation increased by $809,000 or 25.9%, while benefits and other compensation costs decreased by $867,000 or 15.8%, respectively, during the quarter ended December 31, 2021, both due to metrics that were impacted by the results of individual employee and Company-wide performance benchmarks for growth and profitability. Merger and acquisition expenses associated with the proposed merger with Valley Republic Bancorp, which is pending regulatory approval, totaled $872,000 during the current quarter. In addition, during the three months ended December 31, 2021, and September 30, 2021 expenses totaling approximately $800,000 and $710,000, respectively are attributable to the Company's recently opened loan production offices, of which approximately $606,000 and $598,00, respectively relates to salaries and benefits.

The following table presents the key components of non-interest expense for the current and prior year quarterly periods indicated:

 

Three months ended December 31,

 

 

 

 

(dollars in thousands)

2021

 

2020

 

$ Change

 

% Change

Base salaries, net of deferred loan origination costs

$

19,123

 

 

$

16,510

 

 

$

2,613

 

 

15.8

%

Incentive compensation

 

3,932

 

 

 

2,342

 

 

 

1,590

 

 

67.9

%

Benefits and other compensation costs

 

4,611

 

 

 

9,621

 

 

 

(5,010

)

 

(52.1

) %

Total salaries and benefits expense

 

27,666

 

 

 

28,473

 

 

 

(807

)

 

(2.8

) %

Occupancy

 

3,713

 

 

 

3,815

 

 

 

(102

)

 

(2.7

) %

Data processing and software

 

3,893

 

 

 

2,919

 

 

 

974

 

 

33.4

%

Equipment

 

1,298

 

 

 

1,293

 

 

 

5

 

 

0.4

%

Intangible amortization

 

1,193

 

 

 

1,430

 

 

 

(237

)

 

(16.6

) %

Advertising

 

819

 

 

 

762

 

 

 

57

 

 

7.5

%

ATM and POS network charges

 

1,551

 

 

 

1,536

 

 

 

15

 

 

1.0

%

Professional fees

 

927

 

 

 

823

 

 

 

104

 

 

12.6

%

Telecommunications

 

534

 

 

 

618

 

 

 

(84

)

 

(13.6

) %

Regulatory assessments and insurance

 

678

 

 

 

601

 

 

 

77

 

 

12.8

%

Merger and acquisition expenses

 

872

 

 

 

 

 

 

872

 

 

n/m

Postage

 

232

 

 

 

377

 

 

 

(145

)

 

(38.5

) %

Operational losses

 

299

 

 

 

609

 

 

 

(310

)

 

(50.9

) %

Courier service

 

346

 

 

 

401

 

 

 

(55

)

 

(13.7

) %

Gain on sale or acquisition of foreclosed assets

 

(23

)

 

 

(177

)

 

 

154

 

 

(87.0

) %

Loss on disposal of fixed assets

 

6

 

 

 

30

 

 

 

(24

)

 

(80.0

) %

Other miscellaneous expense

 

2,675

 

 

 

2,235

 

 

 

440

 

 

19.7

%

Total other non-interest expense

 

19,013

 

 

 

17,272

 

 

 

1,741

 

 

10.1

%

Total non-interest expense

$

46,679

 

 

$

45,745

 

 

$

934

 

 

2.0

%

Average full-time equivalent staff

 

1,074

 

 

 

1,030

 

 

 

44

 

 

4.3

%

Non-interest expense increased by $934,000 or 2.0% to $46,679,000 during the three months ended December 31, 2021 as compared to $45,745,000 for the three months ended December 31, 2020. The change in total salaries and benefits expense was modest with a decrease of $807,000 or 2.8%, however, the individual components did experience significant volatility that was largely offset. The increases in salary and wage related matters of $2,613,000 or 15.8% and incentive compensation of $1,590,000 or 67.9% during the three months ended December 31, 2021 are attributed to the factors discussed above. The significant decline in benefits and compensation costs equaling $5,010,000 or 52.1% reflects a normalization of retirement obligations and insurance costs that were elevated during the comparative period during 2020. Other miscellaneous expenses increased by $440,000 or 19.7% during the quarter due to increasing volume of routine business related activities, such as credit appraisal fees and business travel.

The following table presents the key components of non-interest expense for the current and prior year periods indicated:

 

Twelve months ended December 31,

 

 

 

 

(dollars in thousands)

2021

 

2020

 

$ Change

 

% Change

Base salaries, net of deferred loan origination costs

$

69,844

 

 

$

70,164

 

 

$

(320

)

 

(0.5

) %

Incentive compensation

 

14,957

 

 

 

10,022

 

 

 

4,935

 

 

49.2

%

Benefits and other compensation costs

 

21,550

 

 

 

31,935

 

 

 

(10,385

)

 

(32.5

) %

Total salaries and benefits expense

 

106,351

 

 

 

112,121

 

 

 

(5,770

)

 

(5.1

) %

Occupancy

 

14,910

 

 

 

14,528

 

 

 

382

 

 

2.6

%

Data processing and software

 

13,985

 

 

 

13,504

 

 

 

481

 

 

3.6

%

Equipment

 

5,358

 

 

 

5,704

 

 

 

(346

)

 

(6.1

) %

Intangible amortization

 

5,464

 

 

 

5,723

 

 

 

(259

)

 

(4.5

) %

Advertising

 

2,899

 

 

 

2,827

 

 

 

72

 

 

2.5

%

ATM and POS network charges

 

6,040

 

 

 

5,433

 

 

 

607

 

 

11.2

%

Professional fees

 

3,657

 

 

 

3,222

 

 

 

435

 

 

13.5

%

Telecommunications

 

2,253

 

 

 

2,601

 

 

 

(348

)

 

(13.4

) %

Regulatory assessments and insurance

 

2,581

 

 

 

1,594

 

 

 

987

 

 

61.9

%

Merger and acquisition expenses

 

1,523

 

 

 

 

 

 

1,523

 

 

n/m

 

Postage

 

710

 

 

 

1,068

 

 

 

(358

)

 

(33.5

) %

Operational losses

 

964

 

 

 

1,168

 

 

 

(204

)

 

(17.5

) %

Courier service

 

1,214

 

 

 

1,414

 

 

 

(200

)

 

(14.1

) %

Gain on sale or acquisition of foreclosed assets

 

(233

)

 

 

(234

)

 

 

1

 

 

(0.4

) %

(Gain) loss on disposal of fixed assets

 

(439

)

 

 

67

 

 

 

(506

)

 

(755.2

) %

Other miscellaneous expense

 

11,038

 

 

 

12,018

 

 

 

(980

)

 

(8.2

) %

Total other non-interest expense

 

71,924

 

 

 

70,637

 

 

 

1,287

 

 

1.8

%

Total non-interest expense

$

178,275

 

 

$

182,758

 

 

$

(4,483

)

 

(2.5

) %

Average full-time equivalent staff

 

1,039

 

 

 

1,093

 

 

 

(54

)

 

(4.9

) %

The changes in non-interest expense for the twelve months ended December 31, 2021 and 2020 are generally consistent with the changes in the comparable three month periods discussed above. During the twelve months ended December 31, 2021, expenses totaling approximately $1,745,000 are attributable to the Company's recently opened loan production offices, of which approximately $1,430,000 relates to salaries and benefits. Regulatory assessment and insurance expense increased in the current year to date period primarily due to the expiration of credits during the 2020 year and to a lesser extent, the overall balance sheet growth of the bank. Additionally, the aforementioned merger agreement with Valley Republic Bancorp has contributed $1,523,000 in additional costs during the year ended 2021.

Provision for Income Taxes

The Company’s effective tax rate was 28.1% for the twelve months ended December 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. While the Company has initiated several tax strategies in anticipation of future tax rate increases, it is not anticipated that any will directly impact the Company's effective tax rate until such rate changes have been legislatively approved. 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 on the Company's business condition and financial operating results; the impact of changes in financial services policies, laws and regulations; technological changes; weather, natural disasters and other catastrophic events that may or may not be caused by climate change and their effects on economic and business environments in which the Company operates; the continuing adverse impact on the U.S. economy, including the markets in which we operate due to the COVID-19 global pandemic, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products; adverse developments with respect to U.S. or global economic conditions and other uncertainties, including the impact of supply chain disruptions, inflationary pressures and labor shortages on the economic recovery and our business; the costs or effects of mergers, acquisitions or dispositions we may make, whether we are able to obtain any required governmental approvals in connection with any such mergers, acquisitions or dispositions, and/or our ability to realize the contemplated financial business benefits associated with any such activities; the ability to execute our business plan in new lending markets; the future operating or financial performance of the Company, including our outlook for future growth and changes in the level of our nonperforming assets and charge-offs; the appropriateness of the allowance for credit losses, including the timing and effects of the implementation of the current expected credit losses model; any deterioration in values of California real estate, both residential and commercial; the effect of changes in accounting standards and practices; possible other-than-temporary impairment of securities held by us; changes in consumer spending, borrowing and savings habits; our ability to attract and maintain deposits and other sources of liquidity; changes in the financial performance and/or condition of our borrowers; our noninterest expense and the efficiency ratio; competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional providers including retail businesses and technology companies; the challenges of integrating and retaining key employees; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks and the cost to defend against such attacks; change to U.S. tax policies, including our effective income tax rate; the effect of a fall in stock market prices on our brokerage and wealth management businesses; the discontinuation of the London Interbank Offered Rate and other reference rates; and our ability to manage the risks involved in the foregoing. Additional factors that could cause results to differ materially from those described above can be found in our Annual Report on Form 10-K for the year ended December 31, 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 undertake no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

TRICO BANCSHARES—CONDENSED CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands, except share data)

 

Three months ended

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

Revenue and Expense Data

 

 

 

 

 

 

 

 

 

Interest income

$

71,024

 

 

$

69,628

 

 

$

68,479

 

 

$

67,916

 

 

$

68,081

 

Interest expense

 

1,241

 

 

 

1,395

 

 

 

1,396

 

 

 

1,476

 

 

 

1,659

 

Net interest income

 

69,783

 

 

 

68,233

 

 

 

67,083

 

 

 

66,440

 

 

 

66,422

 

Provision for (benefit from) credit losses

 

980

 

 

 

(1,435

)

 

 

(260

)

 

 

(6,060

)

 

 

4,850

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Service charges and fees

 

11,277

 

 

 

11,265

 

 

 

10,930

 

 

 

10,476

 

 

 

10,218

 

Gain on sale of investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

5,225

 

 

 

3,830

 

 

 

5,027

 

 

 

5,634

 

 

 

6,362

 

Total noninterest income

 

16,502

 

 

 

15,095

 

 

 

15,957

 

 

 

16,110

 

 

 

16,580

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

27,666

 

 

 

26,274

 

 

 

27,081

 

 

 

25,330

 

 

 

28,473

 

Occupancy and equipment

 

5,011

 

 

 

5,107

 

 

 

4,907

 

 

 

5,243

 

 

 

5,108

 

Data processing and network

 

5,444

 

 

 

5,381

 

 

 

4,752

 

 

 

4,448

 

 

 

4,455

 

Other noninterest expense

 

8,558

 

 

 

9,045

 

 

 

7,431

 

 

 

6,597

 

 

 

7,709

 

Total noninterest expense

 

46,679

 

 

 

45,807

 

 

 

44,171

 

 

 

41,618

 

 

 

45,745

 

Total income before taxes

 

38,626

 

 

 

38,956

 

 

 

39,129

 

 

 

46,992

 

 

 

32,407

 

Provision for income taxes

 

10,404

 

 

 

11,534

 

 

 

10,767

 

 

 

13,343

 

 

 

8,750

 

Net income

$

28,222

 

 

$

27,422

 

 

$

28,362

 

 

$

33,649

 

 

$

23,657

 

Share Data

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.95

 

 

$

0.92

 

 

$

0.95

 

 

$

1.13

 

 

$

0.80

 

Diluted earnings per share

$

0.94

 

 

$

0.92

 

 

$

0.95

 

 

$

1.13

 

 

$

0.79

 

Dividends per share

$

0.25

 

 

$

0.25

 

 

$

0.25

 

 

$

0.25

 

 

$

0.22

 

Book value per common share

$

33.64

 

 

$

33.05

 

 

$

32.53

 

 

$

31.71

 

 

$

31.12

 

Tangible book value per common share (1)

$

25.80

 

 

$

25.16

 

 

$

24.60

 

 

$

23.72

 

 

$

23.09

 

Shares outstanding

 

29,730,424

 

 

 

29,714,609

 

 

 

29,716,294

 

 

 

29,727,122

 

 

 

29,727,214

 

Weighted average shares

 

29,723,791

 

 

 

29,713,558

 

 

 

29,718,603

 

 

 

29,727,182

 

 

 

29,756,831

 

Weighted average diluted shares

 

29,870,059

 

 

 

29,850,530

 

 

 

29,903,560

 

 

 

29,904,974

 

 

 

29,863,478

 

Credit Quality

 

 

 

 

 

 

 

 

 

Allowance for credit losses to gross loans

 

1.74

%

 

 

1.72

%

 

 

1.74

%

 

 

1.73

%

 

 

1.93

%

Loans past due 30 days or more

$

4,332

 

 

$

10,539

 

 

$

9,292

 

 

$

10,550

 

 

$

6,767

 

Total nonperforming loans

$

30,350

 

 

$

28,790

 

 

$

32,705

 

 

$

28,941

 

 

$

26,864

 

Total nonperforming assets

$

32,944

 

 

$

31,440

 

 

$

24,952

 

 

$

31,250

 

 

$

29,708

 

Loans charged-off

$

197

 

 

$

1,582

 

 

$

387

 

 

$

226

 

 

$

560

 

Loans recovered

$

552

 

 

$

1,321

 

 

$

653

 

 

$

560

 

 

$

382

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

Return on average total assets

 

1.31

%

 

 

1.30

%

 

 

1.40

%

 

 

1.75

%

 

 

1.24

%

Return on average equity

 

11.20

%

 

 

11.02

%

 

 

11.85

%

 

 

14.51

%

 

 

10.37

%

Average yield on loans, excluding PPP

 

4.73

%

 

 

4.85

%

 

 

4.93

%

 

 

5.02

%

 

 

5.04

%

Average yield on interest-earning assets

 

3.56

%

 

 

3.57

%

 

 

3.65

%

 

 

3.82

%

 

 

3.88

%

Average rate on interest-bearing deposits

 

0.06

%

 

 

0.08

%

 

 

0.08

%

 

 

0.10

%

 

 

0.12

%

Average cost of total deposits

 

0.04

%

 

 

0.05

%

 

 

0.05

%

 

 

0.06

%

 

 

0.07

%

Average rate on borrowings & subordinated debt

 

1.98

%

 

 

2.02

%

 

 

2.31

%

 

 

2.42

%

 

 

2.43

%

Average rate on interest-bearing liabilities

 

0.11

%

 

 

0.13

%

 

 

0.13

%

 

 

0.15

%

 

 

0.17

%

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

 

3.50

%

 

 

3.50

%

 

 

3.58

%

 

 

3.74

%

 

 

3.79

%

Loans to deposits

 

66.74

%

 

 

67.54

%

 

 

70.72

%

 

 

72.37

%

 

 

73.21

%

Efficiency ratio

 

54.10

%

 

 

54.97

%

 

 

53.19

%

 

 

50.42

%

 

 

55.11

%

Supplemental Loan Interest Income Data

 

 

 

 

 

 

 

 

 

Discount accretion on acquired loans

$

1,780

 

 

$

2,034

 

 

$

2,566

 

 

$

1,712

 

 

$

1,960

 

All other loan interest income (excluding PPP) (1)

$

54,930

 

 

$

55,184

 

 

$

54,559

 

 

$

52,861

 

 

$

53,379

 

Total loan interest income (excluding PPP) (1)

$

56,710

 

 

$

57,218

 

 

$

57,125

 

 

$

54,573

 

 

$

55,339

 

(1)

Non-GAAP measure.

TRICO BANCSHARES—CONDENSED CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands)

 

 

Balance Sheet Data

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

Cash and due from banks

$

768,421

 

 

$

740,236

 

 

$

639,740

 

 

$

609,522

 

 

$

669,551

 

Securities, available for sale, net

 

2,210,876

 

 

 

2,098,786

 

 

 

1,850,547

 

 

 

1,685,076

 

 

 

1,417,289

 

Securities, held to maturity, net

 

199,759

 

 

 

216,979

 

 

 

235,778

 

 

 

260,454

 

 

 

284,563

 

Restricted equity securities

 

17,250

 

 

 

17,250

 

 

 

17,250

 

 

 

17,250

 

 

 

17,250

 

Loans held for sale

 

3,466

 

 

 

3,072

 

 

 

5,723

 

 

 

3,995

 

 

 

6,268

 

Loans:

 

 

 

 

 

 

 

 

 

Commercial real estate

 

3,306,054

 

 

 

3,222,737

 

 

 

3,194,336

 

 

 

3,108,624

 

 

 

2,951,902

 

Consumer

 

1,071,551

 

 

 

1,053,653

 

 

 

1,050,609

 

 

 

1,041,213

 

 

 

952,108

 

Commercial and industrial

 

259,355

 

 

 

345,027

 

 

 

452,069

 

 

 

551,077

 

 

 

526,327

 

Construction

 

222,281

 

 

 

216,680

 

 

 

200,714

 

 

 

221,613

 

 

 

284,842

 

Agriculture production

 

50,811

 

 

 

44,410

 

 

 

41,967

 

 

 

39,753

 

 

 

44,164

 

Leases

 

6,572

 

 

 

4,989

 

 

 

5,199

 

 

 

4,697

 

 

 

3,784

 

Total loans, gross

 

4,916,624

 

 

 

4,887,496

 

 

 

4,944,894

 

 

 

4,966,977

 

 

 

4,763,127

 

Allowance for credit losses

 

(85,376

)

 

 

(84,306

)

 

 

(86,062

)

 

 

(85,941

)

 

 

(91,847

)

Total loans, net

 

4,831,248

 

 

 

4,803,190

 

 

 

4,858,832

 

 

 

4,881,036

 

 

 

4,671,280

 

Premises and equipment

 

78,687

 

 

 

78,968

 

 

 

79,178

 

 

 

82,338

 

 

 

83,731

 

Cash value of life insurance

 

117,857

 

 

 

120,932

 

 

 

120,287

 

 

 

119,543

 

 

 

118,870

 

Accrued interest receivable

 

19,292

 

 

 

18,425

 

 

 

18,923

 

 

 

19,442

 

 

 

20,004

 

Goodwill

 

220,872

 

 

 

220,872

 

 

 

220,872

 

 

 

220,872

 

 

 

220,872

 

Other intangible assets

 

12,369

 

 

 

13,562

 

 

 

14,971

 

 

 

16,402

 

 

 

17,833

 

Operating leases, right-of-use

 

25,665

 

 

 

26,815

 

 

 

26,365

 

 

 

27,540

 

 

 

27,846

 

Other assets

 

109,025

 

 

 

98,943

 

 

 

81,899

 

 

 

88,142

 

 

 

84,172

 

Total assets

$

8,614,787

 

 

$

8,458,030

 

 

$

8,170,365

 

 

$

8,031,612

 

 

$

7,639,529

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

$

2,979,882

 

 

$

2,943,016

 

 

$

2,843,783

 

 

$

2,766,510

 

 

$

2,581,517

 

Interest-bearing demand deposits

 

1,568,682

 

 

 

1,519,426

 

 

 

1,486,321

 

 

 

1,465,915

 

 

 

1,414,908

 

Savings deposits

 

2,521,011

 

 

 

2,447,706

 

 

 

2,337,557

 

 

 

2,302,927

 

 

 

2,164,942

 

Time certificates

 

297,584

 

 

 

326,674

 

 

 

324,392

 

 

 

328,048

 

 

 

344,567

 

Total deposits

 

7,367,159

 

 

 

7,236,822

 

 

 

6,992,053

 

 

 

6,863,400

 

 

 

6,505,934

 

Accrued interest payable

 

928

 

 

 

1,056

 

 

 

1,026

 

 

 

970

 

 

 

1,362

 

Operating lease liability

 

26,280

 

 

 

27,290

 

 

 

26,707

 

 

 

27,780

 

 

 

27,973

 

Other liabilities

 

112,070

 

 

 

107,282

 

 

 

85,388

 

 

 

102,955

 

 

 

94,597

 

Other borrowings

 

50,087

 

 

 

45,601

 

 

 

40,559

 

 

 

36,226

 

 

 

26,914

 

Junior subordinated debt

 

58,079

 

 

 

57,965

 

 

 

57,852

 

 

 

57,742

 

 

 

57,635

 

Total liabilities

 

7,614,603

 

 

 

7,476,016

 

 

 

7,203,585

 

 

 

7,089,073

 

 

 

6,714,415

 

Common stock

 

532,244

 

 

 

531,339

 

 

 

531,038

 

 

 

531,367

 

 

 

530,835

 

Retained earnings

 

466,959

 

 

 

446,948

 

 

 

427,575

 

 

 

408,211

 

 

 

381,999

 

Accum. other comprehensive income (loss)

 

981

 

 

 

3,727

 

 

 

8,167

 

 

 

2,961

 

 

 

12,280

 

Total shareholders’ equity

$

1,000,184

 

 

$

982,014

 

 

$

966,780

 

 

$

942,539

 

 

$

925,114

 

Quarterly Average Balance Data

 

 

 

 

 

 

 

 

 

Average loans, excluding PPP

$

4,759,294

 

 

$

4,684,492

 

 

$

4,646,188

 

 

$

4,407,150

 

 

$

4,363,873

 

Average interest-earning assets

$

7,947,798

 

 

$

7,758,169

 

 

$

7,544,581

 

 

$

7,239,726

 

 

$

6,998,582

 

Average total assets

$

8,546,004

 

 

$

8,348,111

 

 

$

8,128,674

 

 

$

7,808,912

 

 

$

7,570,952

 

Average deposits

$

7,304,659

 

 

$

7,137,263

 

 

$

6,943,081

 

 

$

6,653,754

 

 

$

6,341,175

 

Average borrowings and subordinated debt

$

108,671

 

 

$

106,221

 

 

$

98,774

 

 

$

90,397

 

 

$

90,085

 

Average total equity

$

999,764

 

 

$

987,026

 

 

$

960,145

 

 

$

940,775

 

 

$

907,468

 

Capital Ratio Data

 

 

 

 

 

 

 

 

 

Total risk based capital ratio

 

15.4

%

 

 

15.4

%

 

 

15.3

%

 

 

15.1

%

 

 

15.2

%

Tier 1 capital ratio

 

14.2

%

 

 

14.2

%

 

 

14.1

%

 

 

13.9

%

 

 

14.0

%

Tier 1 common equity ratio

 

13.2

%

 

 

13.2

%

 

 

13.0

%

 

 

12.9

%

 

 

12.9

%

Tier 1 leverage ratio

 

9.9

%

 

 

9.9

%

 

 

9.9

%

 

 

10.0

%

 

 

9.9

%

Tangible capital ratio (1)

 

9.2

%

 

 

9.1

%

 

 

9.2

%

 

 

9.1

%

 

 

9.3

%

(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

 

Twelve months ended

(dollars in thousands)

December 31,

2021

 

September 30,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

Net interest margin

 

 

 

 

 

 

 

 

 

Acquired loans discount accretion, net: