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What changed in TRICO BANCSHARES /'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TRICO BANCSHARES /'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+354 added−312 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-29)

Top changes in TRICO BANCSHARES /'s 2024 10-K

354 paragraphs added · 312 removed · 242 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

52 edited+27 added−14 removed115 unchanged
Biggest changeThis statement does not apply to cannabis-related business; thus, the statement only pertains to customers who are lawfully growing or cultivating hemp and are not otherwise engaged in unlawful or suspicious activity. 8 TriCo Bancshares 2023 10-K Table of Contents Failure to comply with these requirements could have serious financial, legal and reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.
Biggest changeFailure to comply with these requirements could have serious financial, legal and reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required. Office of Foreign Assets Control Regulation The U.S.
The agencies may elect to initiate enforcement actions in certain cases rather than relying on a plan, particularly where and institution has failed to comply with an acceptable plan or where a failure to meet one or more of the standards could threaten the safe and sound operation of the institution.
The agencies may elect to initiate enforcement actions in certain cases rather than relying on a plan, particularly where an institution has failed to comply with an acceptable plan or where a failure to meet one or more of the standards could threaten the safe and sound operation of the institution.
Pursuant to the Dodd-Frank Act, in 2023, effective October 2, 2023, the Nasdaq Stock Market adopted a rule requiring listed companies to adopt policies to recover or "clawback" of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Pursuant to the Dodd-Frank Act, in 2023, effective October 2, 2023, the Nasdaq Stock Market adopted a rule requiring listed companies to adopt policies to recover or "clawback" excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy. Among other initiatives, the Executive Order encouraged the federal banking agencies to review their current merger oversight practices under the BHC Act and the Bank Merger Act and adopt a plan for revitalization of such practices.
On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy (Executive Order 14036). Among other initiatives, the Executive Order encouraged the federal banking agencies to review their current merger oversight practices under the BHC Act and the Bank Merger Act and adopt a plan for revitalization of such practices.
Activities that are financial in nature include securities underwriting and dealing, insurance underwriting and agency, and making merchant banking investments. The Company currently has not elected to become a financial holding company. As a bank holding company, TriCo is required to file reports with the FRB and the FRB periodically examines the Company.
Activities that are financial in nature include securities underwriting and dealing, insurance underwriting and agency, and making merchant banking investments. The Company has not elected to become a financial holding company. As a bank holding company, TriCo is required to file reports with the FRB and the FRB periodically examines the Company.
State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and many states, including California, have also recently implemented or modified their data breach notification, information security and data privacy requirements.
State regulators have been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and many states, including California, have recently implemented or modified their data breach notification, information security and data privacy requirements.
Full time equivalent employees numbered 1,207. Additionally, we at times will utilize temporary personnel to supplement our workforce. None of our employees are presently represented by a union or covered under a collective bargaining agreement. Management believes that its employee relations are good.
Full time equivalent employees numbered 1,172. Additionally, we at times will utilize temporary personnel to supplement our workforce. None of our employees are presently represented by a union or covered under a collective bargaining agreement. Management believes that its employee relations are good.
We believe that we were in compliance with the requirements of the Basel III capital rules applicable to us as of December 31, 2023. For a discussion of the regulatory capital requirements, see “Note 26 – Regulatory Matters” to the consolidated financial statements at Part II, Item 8 of this report.
We believe that we were in compliance with the requirements of the Basel III capital rules applicable to us as of December 31, 2024. For a discussion of the regulatory capital requirements, see “Note 26 – Regulatory Matters” to the consolidated financial statements at Part II, Item 8 of this report.
Our employees are critical to our success and competition for qualified banking personnel has historically been intense; therefore our corporate culture is an important element of our board of director's oversight of risk. Senior management is responsible for embodying, maintaining, and communicating our culture to employees.
Our employees are critical to our success and competition for qualified banking personnel has historically been intense; therefore, our corporate culture is an important element of our board of directors' oversight of risk. Senior management is responsible for embodying, maintaining, and communicating our culture to employees.
The program must, at a minimum: (1) provide for a system of internal controls to assure ongoing compliance; (2) provide for independent testing for compliance; (3) designate an individual responsible for coordinating and monitoring day-to-day compliance; and (4) provide training for appropriate personnel.
The program must, at a minimum: (1) provide for a system of internal controls to assure ongoing compliance; (2) provide for independent testing for compliance; (3) designate an individual responsible for coordinating and monitoring day-to-day compliance; and (4) provide training fo r appropriate personnel.
Consumer Protection Laws and Supervision The Bank is subject to many federal consumer protection statutes and regulations, some of which are discussed below. • The Equal Credit Opportunity Act generally prohibits discrimination in any credit transaction, whether for consumer or business purposes, on the basis of race, color, religion, national origin, sex, marital status, age (except in limited circumstances), receipt of income from public assistance programs, or good faith exercise of any rights under the Consumer Credit Protection Act. • The Truth-in-Lending Act is designed to ensure that credit terms are disclosed in a meaningful way so that consumers may compare credit terms more readily and knowledgeably. • The Fair Housing Act regulates many practices, including making it unlawful for any lender to discriminate in its housing-related lending activities against any person because of race, color, religion, national origin, sex, handicap or familial status. • The Home Mortgage Disclosure Act, which includes a “fair lending” aspect, requires the collection and disclosure of data about applicant and borrower characteristics as a way of identifying possible discriminatory lending patterns and enforcing anti-discrimination statutes. • The Real Estate Settlement Procedures Act requires lenders to provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits certain abusive practices, such as kickbacks, and places limitations on the amount of escrow accounts.
Consumer Protection Laws and Supervision The Bank is subject to many federal consumer protection statutes and regulations, some of which are discussed below. • The Equal Credit Opportunity Act generally prohibits discrimination in any credit transaction, whether for consumer or business purposes, on the basis of race, color, religion, national origin, sex, marital status, age (except in limited circumstances), receipt of income from public assistance programs, or good faith exercise of any rights under the Consumer Credit Protection Act. • The Truth-in-Lending Act is designed to ensure that credit terms are disclosed in a meaningful way so that consumers may compare credit terms more readily and knowledgeably. • The Fair Housing Act regulates many practices, including making it unlawful for any lender to discriminate in its housing-related lending activities against any person because of race, color, religion, national origin, sex, handicap or familial status. • The Home Mortgage Disclosure Act, which includes a “fair lending” aspect, requires the collection and disclosure of data about applicant and borrower characteristics as a way of identifying possible discriminatory lending patterns and enforcing anti-discrimination statutes. 5 TriCo Bancshares 2024 10-K T a ble of Contents • The Real Estate Settlement Procedures Act requires lenders to provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits certain abusive practices, such as kickbacks, and places limitations on the amount of escrow accounts.
The primary source of funds for payment of dividends by TriCo to its shareholders has been and will be the receipt of dividends and management fees from the Bank. TriCo’s ability to receive dividends from the Bank is limited by applicable state and federal law.
The primary source of funds for payment of dividends by TriCo to its shareholders has been and will be the receipt of dividends. TriCo’s ability to receive dividends from the Bank is limited by applicable state and federal law.
In that regard, our culture is designed to promote our commitment to improving the livelihood of our employees and guides us in making decisions throughout the Company. Our culture is designed to adhere to TriCo’s values of trust, respect, integrity, communication and opportunity.
In that regard, our culture is designed to promote our commitment to improving the livelihood of our employees and guides us in making decisions throughout the Company. Our culture adheres to TriCo’s values of trust, respect, integrity, communication and opportunity.
At December 31, 2023, the Company had $9.9 billion in total assets. See the Risk Factors section for a discussion of some of the risks the Bank will encounter when it exceeds $10 billion in assets as of a December 31 annual measurement date.
At December 31, 2024, the Company had $9.7 billion in total assets. See the Risk Factors section for a discussion of some of the risks the Bank will encounter when it exceeds $10 billion in assets as of a December 31 annual measurement date.
The information on our website is not part this annual report. Tri Counties Bank The Bank was organized in 1975 and had total assets of approximately $9.9 billion at December 31, 2023.
The information on our website is not part this annual report. Tri Counties Bank The Bank was organized in 1975 and had total assets of approximately $9.7 billion at December 31, 2024.
In keeping with that culture, we expect our people to treat each other and our customers with the highest level of honesty and respect and to do the right thing. We strive to be a force for good in everyday life.
We expect our people to treat each other and our customers with the highest level of honesty and respect and to do the right thing. We strive to be a force for good in everyday life.
The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion) and will be assessed at a quarterly rate of 3.36 basis points over eight quarterly assessment periods, beginning in the first quarter of 2024.
The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion of deposits at an institution) and was assessed at a quarterly rate of 3.36 basis points over eight quarterly assessment periods, beginning in the first quarter of 2024.
Office of Foreign Assets Control Regulation The U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC, administers and enforces economic and trade sanctions against targeted foreign countries and regimes, under authority of various laws, including designated foreign countries, nationals and others. OFAC publishes lists of specially designated targets and countries.
Treasury Department’s Office of Foreign Assets Control, or OFAC, administers and enforces economic and trade sanctions against targeted foreign countries and regimes, under authority of various laws, including designated foreign countries, nationals and others. OFAC publishes lists of specially designated targets and countries.
The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines for specified regulated entities having at least $1 billion in total assets, such as us, to prohibit incentive-based payment arrangements that encourage inappropriate risk taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or 9 TriCo Bancshares 2023 10-K Table of Contents that could lead to material financial loss to the entity.
The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines for specified regulated entities having at least $1 billion in total assets, such as us, to prohibit incentive-based payment arrangements that encourage inappropriate risk taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.
Cybersecurity Under a rule adopted by federal banking agencies in 2021, banking organizations are required to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.
Banking organizations are required to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.
The description is qualified in its entirety by reference to the applicable laws and regulations. Regulatory Agencies 3 TriCo Bancshares 2023 10-K Table of Contents The Company is a legal entity separate and distinct from the Bank and its other subsidiaries.
The description is qualified in its entirety by reference to the applicable laws and regulations. 3 TriCo Bancshares 2024 10-K T a ble of Contents Regulatory Agencies The Company is a legal entity separate and distinct from the Bank and its other subsidiaries.
At the time of the acquisition, VRB merged with and into the Bank. VRB was headquartered in Bakersfield, California, and operated four branch locations in and around Bakersfield, and a loan production office in Fresno, California. Human Capital Resources 2 TriCo Bancshares 2023 10-K Table of Contents At December 31, 2023, we employed 1,231 persons.
At the time of the acquisition, VRB merged with and into the Bank. VRB was headquartered in Bakersfield, California, and operated four branch locations in and around Bakersfield, and a loan production office in Fresno, California. 2 TriCo Bancshares 2024 10-K T a ble of Contents Human Capital Resources At December 31, 2024, we employed 1,201 persons.
In addition, on November 16, 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the DIF incurred as a result of recent bank failures and the FDIC's use of the systemic risk exception to cover certain deposits that were otherwise uninsured.
In November 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the DIF incurred as a result of bank failures earlier that year and the FDIC's use of the systemic risk exception to cover certain deposits that were otherwise uninsured.
Under Basel III, the Company (on a consolidated basis) and the Bank are each subject to the following minimum capital ratios: (1) common equity Tier 1 capital or “CET1” to risk‑weighted assets of 4.5%; (2) Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk‑weighted assets of 6.0%; (3) Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk‑weighted assets of 8%; and (4) a leverage ratio (Tier 1 capital to average consolidated assets as reported on regulatory financial statements) of 4.0%.
Under Basel III, the Company (on a consolidated basis) and the Bank are each subject to the following minimum capital ratios: (1) common equity Tier 1 capital or “CET1” to risk‑weighted assets of 4.5%; (2) Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk‑weighted assets of 6.0%; (3) Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk‑weighted assets of 8%; and (4) a leverage ratio (Tier 1 7 TriCo Bancshares 2024 10-K T a ble of Contents capital to average consolidated assets as reported on regulatory financial statements) of 4.0%.
Dividends, Distributions and Stock Repurchases A California corporation such as TriCo may make a distribution to its shareholders to the extent that either the corporation’s retained earnings meet or exceed the amount of the proposed distribution or the value of the corporation’s assets exceed the amount of its liabilities plus the amount of shareholders preferences, if any, and certain other conditions are met.
Dividends, Distributions and Stock Repurchases 4 TriCo Bancshares 2024 10-K T a ble of Contents A California corporation such as TriCo may make a distribution to its shareholders to the extent that either the corporation’s retained earnings meet or exceed the amount of the proposed distribution or the value of the corporation’s assets exceed the amount of its liabilities plus the amount of shareholders preferences, if any, and certain other conditions are met.
Among other things, financial institutions are expected to design multiple layers of security controls to establish lines of defense and ensure that their risk management processes address the risks 6 TriCo Bancshares 2023 10-K Table of Contents posed by compromised customer credentials, including security measures to authenticate customers accessing internet-based services.
Among other things, financial institutions are expected to design multiple layers of security controls to establish lines of defense and ensure that their risk management processes address the risks posed by compromised customer credentials, including security measures to authenticate customers accessing internet-based services.
The CFPB has promulgated 5 TriCo Bancshares 2023 10-K Table of Contents many mortgage-related rules, including rules related to requirements for "qualified mortgages," standards by which lenders must satisfy themselves of a borrower's ability to repay a mortgage loan, mortgage servicing standards, disclosure requirements, loan originator compensation standards, high-cost mortgage requirements, HMDA requirements, and appraisal and escrow standards for higher priced mortgages.
The CFPB has promulgated many mortgage-related rules, including rules related to requirements for "qualified mortgages," standards by which lenders must satisfy themselves of a borrower's ability to repay a mortgage loan, mortgage servicing standards, disclosure requirements, loan originator compensation standards, high-cost mortgage requirements, HMDA requirements, and appraisal and escrow standards for higher priced mortgages.
It is the FRB’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention 4 TriCo Bancshares 2023 10-K Table of Contents is consistent with the organization’s expected future needs and financial condition.
It is the FRB’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition.
The CCPA gives consumers the right to request disclosure of information collected about them, and whether that information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights.
The CCPA gives consumers the right to request disclosure of information collected about them, and whether that 6 TriCo Bancshares 2024 10-K T a ble of Contents information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights.
In October 2023, the Federal Reserve issued a proposed rule under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction. Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents.
In October 2023, the Federal Reserve issued a proposed rule under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction.
An institution’s risk classification is assigned based on a combination of its financial ratios and supervisory ratings, reflecting, among other things, its capital levels and the level of supervisory concern that the institution poses to the regulators.
An institution’s risk classification is assigned based on a combination of its financial ratios and supervisory ratings, reflecting, among other things, its capital levels and the level of supervisory concern that the institution poses to the regulators. In addition, the FDIC can impose special assessments in certain instances.
The final rule is intended, among other things, to adapt to changes in the banking industry, including the expanded role of mobile and online banking, and to tailor performance standards to account for differences in bank size and business models.
On October 24, 2023, the FRB, OCC and FDIC issued a joint final rule to modernize the CRA regulatory framework. The final rule is intended, among other things, to adapt to changes in the banking industry, including the expanded role of mobile and online banking, and to tailor performance standards to account for differences in bank size and business models.
The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the FRB from large debit card issuers.
Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents per debit card transaction. The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the FRB from large debit card issuers.
Bank Secrecy Act / Anti-Money Laundering The Bank Secrecy Act of 1970 and the USA Patriot Act of 2001 require financial institutions to develop policies, procedures, and practices to prevent and deter money laundering ("BSA/AML"), and mandate that every bank have a written, board-approved program that is reasonably designed to assure and monitor compliance with the BSA/AML laws.
As of December 31, 2024, our C&D concentration as a percentage of capital totaled 22.2% and our CRE concentration, net of owner-occupied loans, as a percentage of capital totaled 296.2% Bank Secrecy Act / Anti-Money Laundering The Bank Secrecy Act of 1970 and the USA Patriot Act of 2001 require financial institutions to develop policies, procedures, and practices to prevent and deter money laundering ("BSA/AML"), and mandate that every bank have a written, board-approved program that is reasonably designed to assure and monitor compliance with the BSA/AML laws.
We encourage our team members to share their talents in their communities through volunteer activities in education, economic development, human and health services, and community reinvestment.
In addition, we offer a portfolio of additional services and tools to support our employees’ health and well-being. We encourage our team members to share their talents in their communities through volunteer activities in education, economic development, human and health services, and community reinvestment.
At December 31, 2023, the Bank’s consumer loans net of deferred fees outstanding were $1.3 billion (19.3%), commercial and industrial loans outstanding were $586.5 million (8.6%), real estate construction loans of $347.2 million (5.1%), and commercial real estate loans were $4.4 billion (64.7%) of total loans.
At December 31, 2024, the Bank’s consumer loans net of deferred fees outstanding were $1.3 billion (18.9%), commercial and industrial loans outstanding were $471.3 million (7.1%), real estate construction loans of $279.9 million (4.1%), and commercial real estate loans were $4.6 billion (67.6%) of total loans.
Regulation W requires that certain transactions between the Bank and its affiliates, including its holding company, be on terms substantially the same, or at least as favorable to the Bank, as those prevailing at the time for comparable transactions with or involving non-affiliated companies or, in the absence of comparable transactions, on terms and under circumstances, including credit standards, that in good faith would be offered to or would apply to non-affiliated companies.
Regulation W requires that certain transactions between the Bank and its affiliates, including its holding company, be on terms substantially the same, or at least as favorable to the Bank, as those prevailing at the time for comparable transactions with or involving non-affiliated companies or, in the absence of comparable transactions, on terms and under circumstances, including credit standards, that in good faith would be offered to or would apply to non-affiliated companies. 9 TriCo Bancshares 2024 10-K T a ble of Contents Source of Strength Doctrine Federal Reserve Board policy and federal law require bank holding companies to act as a source of financial and managerial strength to their subsidiary banks.
The Bank is currently not subject to these restrictions or those proposed, however if our assets exceed $10 billion or more at December 31, 2024, these rules would be applicable to the Bank in July 2025.
The Bank is currently not subject to these restrictions or those proposed, however if our assets exceed $10 billion or more at December 31, 2025, these rules, if adopted, would be applicable to the Bank in July 2026. The extent to which any such proposed changes in permissible interchange fees will impact our future revenues is currently uncertain.
Additionally, many of our suppliers and business partners may be subject to similar requirements, which may augment or create additional risks, including risks that may not be known to us.
Disclosure requirements imposed by different regulators may not always be uniform, which may result in increased complexity, and cost, for compliance. Additionally, many of our suppliers and business partners may be subject to similar requirements, which may augment or create additional risks, including risks that may not be known to us.
Depositor Preference The FDIA provides that, in the event of the "liquidation or other resolution" of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors. and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution.
The termination of deposit insurance for the Bank would also result in the revocation of the Bank’s charter by the DPFI. 8 TriCo Bancshares 2024 10-K T a ble of Contents Depositor Preference The FDIA provides that, in the event of the "liquidation or other resolution" of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors. and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution.
Penalties for violations of the above laws may include fines, reimbursements, injunctive relief and other penalties. Privacy and Data Protection We are subject to a number of U.S. federal, state, local and foreign laws and regulations relating to consumer privacy and data protection.
Privacy and Data Protection We are subject to a number of U.S. federal, state, local and foreign laws and regulations relating to consumer privacy and data protection.
If the Company or its service providers fail to comply with applicable regulations and contractual requirements, the Company could be exposed to lawsuits, governmental proceedings or the imposition of fines, among other consequences.
Further, our service providers have obligations to safeguard their systems and sensitive information and we may be bound contractually and/or by regulation to comply with the same requirements. If the Company or its service providers fail to comply with applicable regulations and contractual requirements, we could be exposed to lawsuits, governmental proceedings or the imposition of fines, among other consequences.
Under the final rule, the estimated loss pursuant to the systemic risk determination will be periodically adjusted, and the FDIC has retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis.
This updated assessment was made under the FDIC’s final rule whereby the estimated loss pursuant to the systemic risk determination can be periodically adjusted. The FDIC has also retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment. The special assessments are tax deductible.
During 2023, our team members logged more than 11,000 volunteer hours, supporting nearly 400 organizations, and more than 3,700 of those hours were for the benefit of community development efforts to support programs and services to low- or moderate-income communities.
During 2024, our team members logged more than 11,000 volunteer hours, supporting more than 350 organizations, and almost 4,700 of those hours were for the benefit of community development efforts to support programs and services to low- or moderate-income communities. We strive to have a workforce that reflects the communities we serve and continue to promote diversity in leadership roles.
In October 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning on January 1, 2023. The FDIC also concurrently maintained the Designated Reserve Ratio for the DIF at 2%.
In October 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning with the first quarterly assessment period of 2023.
Source of Strength Doctrine Federal Reserve Board policy and federal law require bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. Under this requirement, the Company is expected to commit resources to support the Bank, including at times when the Company may not be in a financial position to provide such resources.
Under this requirement, the Company is expected to commit resources to support the Bank, including at times when the Company may not be in a financial position to provide such resources.
We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which our customers are located.
We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which our customers are located. Cybersecurity The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions.
The Climate-Related Financial Risk Act mandates U.S. businesses with annual revenues over $500 million doing business in California to bi-annually disclose climate-related financial risks and their mitigation strategies beginning January 1, 2026. Disclosure requirements imposed by different regulators may not always be uniform, which may result in increased complexity, and cost, for compliance.
The Climate-Related Financial Risk Act 10 TriCo Bancshares 2024 10-K T a ble of Contents mandates U.S. businesses with annual revenues over $500 million doing business in California to bi-annually disclose climate-related financial risks and their mitigation strategies beginning January 1, 2026.
The CFPB’ rules and policies have impacted, and will continue to impact, the business practices of mortgage lenders, including the Bank. We are also subject to certain state consumer protection laws and state attorneys general and other state officials are empowered to enforce certain federal consumer protection laws and regulations.
The CFPB’ rules and policies have impacted, and will continue to impact, the business practices of mortgage lenders, including the Bank.
Competition The banking business in California generally is highly competitive with respect to both loans and deposits.
We are dedicated to providing an inclusive, supportive, and discrimination-free workplace. We recognize employees based on their individual and departmental results, as well as overall Company results. Competition The banking business in California generally is highly competitive with respect to both loans and deposits.
We dedicate resources to promote a safe and inclusive workplace; attract, develop and retain talented, diverse employees; promote our values; and reward and recognize employees for both the results they deliver and, importantly, how they deliver them.
We dedicate resources to provide a safe and inclusive workplace; promoting diversity of thought and perspective, attracting and retaining diverse talent, and promoting our values by recognizing employees for both the results they deliver and how they achieve them. We offer professional growth opportunities through various training and development programs.
Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027. We continue to evaluate and adapt as necessary for the impact of the changes.
Most provisions of the final rule were to become effective on January 1, 2026, and the data reporting requirements were to become effective on January 1, 2027. Several banking industry groups filed a lawsuit seeking to invalidate the CRA final rule, in which they argued that the federal banking agencies exceeded their statutory authority in adopting the CRA final rule.
Removed
We provide a wide variety of opportunities for professional growth for all employees with a focus on in-classroom and on-line trainings, on-the-job experience, internal and external development opportunities and education tuition assistance.
Added
We aim to engage our workforce through proactive listening, career conversations, performance discussions, and employee surveys. We attract and retain employees by offering competitive compensation and benefit programs, considering the position’s location and responsibilities. Our benefits include employer subsidized health insurance, wellness initiatives, employee assistance programs, tuition reimbursement, a 401(k) retirement plan and an employee stock ownership plan.
Removed
We seek to create an engaged workforce through proactive listening, forward-looking career conversation and constructive dialogue through frequent and ongoing performance discussions as well as employee engagement and exit surveys. We focus on attracting and retaining employees by providing compensation and benefits packages that we believe are competitive within the applicable market, taking into account the position’s location and responsibilities.
Added
As of the date of this filing, Executive Order 14036 has not been revoked; however, it is uncertain how this order will be administered under the Trump Administration.
Removed
We provide competitive health and other benefits focused on physical and financial health, including employer subsidized health insurance, robust wellness initiatives, employee assistance programs, a 401(k) retirement plan and an employee stock ownership plan. In addition, we offer a portfolio of additional services and tools to support our employees’ health and well-being.
Added
In March 2024, a federal judge granted an injunction to extend the CRA final rule’s effective date, originally set for April 1, 2024. The effective date will be extended each day the injunction remains in place, pending the resolution of the lawsuit.
Removed
While we believe that the diversity of our employees generally represents and reflects the communities which we serve, we recognize and continue to promote the need for diversity enhancements in leadership roles throughout the Company.
Added
In October 2024, the CFPB issued a final rule that requires a provider of payment accounts or products, such as a bank, to make data available to consumers, free upon request, regarding the products or services they obtain from the provider.
Removed
We are dedicated to providing a workplace for our employees that is inclusive, supportive, and free of any form of discrimination or harassment; rewarding and recognizing our employees based on their individual results and performance as well as that of their department and the Company overall; and recognizing and respecting all of the characteristics and differences that make each of our employees unique.
Added
Any such data provider is also required to make such data available to third parties, with the consumer’s express authorization and through an interface that satisfies formatting, performance, and security standards, for the purpose of such third parties providing the consumer with financial products or services requested by the consumer.
Removed
As of its most recent CRA examination, the Bank’s CRA rating was “Satisfactory." On October 24, 2023, the FRB, OCC and FDIC issued a joint final rule to modernize the CRA regulatory framework.
Added
Data required to be made available under the rule includes transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data. The final rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products or services.
Removed
Further, our service providers have obligations to safeguard their systems and sensitive information and the Company may be bound contractually and/or by regulation to comply with the same requirements.
Added
Banks with over $10 billion and less than $250 billion in total assets must comply with the new requirements by April 1, 2027.
Removed
In addition, the FDIC can impose special assessments in certain instances. 7 TriCo Bancshares 2023 10-K Table of Contents The FDIC, as required under the FDIA, established a plan on September 15, 2020, to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years.
Added
In December 2024, the CFPB issued a final rule that amends Regulation Z, which implements the Truth in Lending Act, to apply to overdraft credit provided by insured depository institutions with more than $10 billion in total assets. The final rule is scheduled to go into effect on October 1, 2025.
Removed
This plan did not include an increase in the deposit insurance assessment rate. Based on the FDIC’s recent projections, however, the FDIC determined that the DIF reserve ratio is at risk of not reaching the statutory minimum by the statutory deadline of September 30, 2028 without increasing the deposit insurance assessment rates.
Added
Under the final rule, covered institutions, including the Bank, would be allowed to choose to offer overdrafts as a courtesy overdraft service or as a line of credit.
Removed
The Bank’s uninsured deposits were below the threshold and therefore is not required to pay the special assessment.
Added
If the courtesy overdraft option is chosen, overdrafts would remain exempt from Regulation Z, as long as fees charged are based on the higher of an institutions breakeven point derived from its own costs and losses, or a benchmark fee of $5 established by the CFPB.
Removed
The termination of deposit insurance for the Bank would also result in the revocation of the Bank’s charter by the DPFI.
Added
If the overdraft line of credit option is chosen, overdrafts would be considered a loan subject to Regulation Z, and therefore, subject to account opening and loan disclosures, required to be held in an account separate from the customer’s checking or transaction account, and may not be conditioned on preauthorized electronic funds transfers.
Removed
As of December 31, 2023, our C&D concentration as a percentage of capital totaled 29.9% and our CRE concentration, net of owner-occupied loans, as a percentage of capital totaled 328.6%.
Added
Several banking industry groups filed a lawsuit seeking to invalidate the final rule, in which they argued that the CFPB exceeded its statutory authority in adopting the final rule. The court has not yet ruled on the merits of the lawsuit nor granted a preliminary injunction.
Removed
For example, in March 2022, the SEC issued a proposed rule on the enhancement and standardization of climate-related disclosures for investors. The proposed rule would require public issuers, including us, to significantly expand the scope of climate-related disclosures in their SEC filings.
Added
We continue to evaluate this rulemaking and assess its potential impact on the Company and the Bank in the event we exceed $10 billion in total assets. We are also subject to certain state consumer protection laws and state attorneys general and other state officials are empowered to enforce certain federal consumer protection laws and regulations.
Removed
The SEC has also announced plans to propose rules to require enhanced disclosure regarding human capital management and board diversity for public issuers.
Added
Penalties for violations of the above laws may include fines, reimbursements, injunctive relief and other penalties. Failure to comply with consumer protection requirements may also result in our failure to obtain any required bank regulatory approval for merger or acquisition transactions we may wish to pursue or our prohibition from engaging in such transactions even if approval is not required.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

75 edited+65 added−34 removed162 unchanged
Biggest changeIf our security systems or those of our third party vendors, contractors and customers are penetrated or circumvented, it could cause serious negative consequences for us, including significant disruption of our operations, misappropriation or theft of our confidential information or that of our customers, or damage our computers or systems and those of our customers and counterparties, and could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure, and harm to our reputation, all of which could have a material adverse effect on us.
Biggest changeA successful penetration or circumvention of the security of our systems or the systems of a vendor, governmental body or another market participant could cause serious negative consequences, including: significant disruption of our operations and those of our clients, customers and counterparties, including: losing access to operational systems; misappropriation of our confidential information or that of our clients, customers, counterparties, employees, regulators, or other individuals; disruption of or damage to our systems and those of our clients, customers and counterparties; the inability, or extended delays in the ability, to fully recover and restore data that has been stolen, manipulated or destroyed or the inability to prevent systems from processing fraudulent transactions; allegations or violations by the Company of applicable privacy and other laws; financial loss to us or to our clients, customers, counterparties, employees, or others; loss of confidence in our cybersecurity and business resiliency measures; dissatisfaction among our clients, customers or counterparties; significant exposure to litigation and regulatory fines, penalties or other sanctions; and harm to our reputation, all of which could have a material adverse effect on us.
ITEM 1A. RISK FACTORS An investment in our securities is subject to certain risks. In addition to the other information in this report, investors should carefully consider the following discussion of significant risk and uncertainties before making investment decisions about our securities.
ITEM 1A. RISK FACTORS An investment in our securities is subject to certain risks. In addition to the other information in this report, investors should carefully consider the following discussion of significant risks and uncertainties before making investment decisions about our securities.
While the information impacted varied by individual, the types of information that were impacted included name, social security number, driver’s license number, state identification number, financial account information, medical information, health insurance information, date of birth, passport number, digital/electronic signature, tax identification number, access credentials, and mother’s maiden name.
While the information impacted varied by individual, the types of information that were impacted included name, social security number, driver’s license number, state identification number, financial account information, medical information, health insurance information, date of birth, passport number, digital/electronic signature, tax information, tax identification number, access credentials, and mother’s maiden name.
Any such inadequacy or lapse could: • hinder the timely escalation of material risk issues to our senior management and the Board of Directors; • lead to business decisions that have negative outcomes for us; • require significant resources and time to remediate; • lead to non-compliance with laws, rules and regulations; • attract heightened regulatory scrutiny; • expose us to regulatory investigations or legal proceedings; • subject us to litigation or regulatory fines, penalties or other sanctions; • harm our reputation; or • otherwise diminish confidence in TriCo.
Any such inadequacy or lapse could: • hinder the timely escalation of material risk issues to our senior management and the Board of Directors; • lead to business decisions that have negative outcomes for us; • require significant resources and time to remediate; • lead to non-compliance with laws, rules and regulations; • attract heightened regulatory scrutiny; • expose us to regulatory investigations or legal proceedings; • subject us to litigation or regulatory fines, penalties or other sanctions; • harm our reputation; or • otherwise diminish confidence in TriCo or the Bank.
When we launch a new product or service, introduce a new platform for the delivery or distribution of products or services (including mobile connectivity and cloud computing), or make changes to an existing product, service or delivery platform, it may not fully appreciate or identify new operational risks that may arise from those changes, or may fail to implement adequate controls to mitigate the risks associated with those changes.
When we launch a new product or service, introduce a new platform for the delivery or distribution of products or services (including mobile connectivity and cloud computing), or make changes to an existing product, service or delivery platform, we may not fully appreciate or identify new operational risks that may arise from those changes, or may fail to implement adequate controls to mitigate the risks associated with those changes.
The outcomes of these matters are inherently unpredictable and subject to significant uncertainties. We establish accruals for those matters when a loss is considered probable and the related amount is reasonably estimable. Additionally, when it is practicable and reasonably possible that it may experience losses in excess of established accruals, the we estimate possible loss contingencies.
The outcomes of these matters are inherently unpredictable and subject to significant uncertainties. We establish accruals for those matters when a loss is considered probable and the related amount is reasonably estimable. Additionally, when it is practicable and reasonably possible that it may experience losses in excess of established accruals, then we estimate possible loss contingencies.
The Company’s and its customers’ exposure to fraud may increase the Company’s financial risk and reputation risk as it may result in unexpected loan losses that exceed those that have been provided for in the allowance for credit losses.
The Company’s and its customers’ exposure to fraud may increase our financial risk and reputation risk as it may result in unexpected loan losses that exceed those that have been provided for in the allowance for credit losses.
These forecasts, assumptions and models are inherently uncertain and are based upon our management’s reasonable judgment in light of information currently available. In addition to periodic reviews completed by management and independent third parties retained by the Bank, Federal and state bank regulatory agencies, as an integral part of their examination process, review our loans and allowance for credit losses.
These forecasts, assumptions and models are inherently uncertain and are based upon our management’s reasonable judgment in light of information currently available. In addition to periodic reviews completed by management and independent third parties retained by us, Federal and state bank regulatory agencies, as an integral part of their examination process, review our loans and allowance for credit losses.
While we may contractually limit our liability in connection with attacks against third-party providers, we remain exposed to the risk of loss associated with such vendors. In addition, a number of our vendors are large national entities with dominant market presence in their respective fields.
While we may contractually limit our liability in connection with attacks against third-party providers, we remain exposed to the risk of loss associated with such vendors. Furthermore, a number of our vendors are large national entities with dominant market presence in their respective fields.
The Bank had slightly less than $10 billion in total assets at December 31, 2023, so it is possible that with only modest growth, the CFPB, instead of the FDIC, may soon have primary examination and enforcement authority over the Bank.
The Bank had slightly less than $10 billion in total assets at December 31, 2024, so it is possible that with only modest growth, the CFPB, instead of the FDIC, may soon have primary examination and enforcement authority over the Bank.
Through its investigation, the Bank determined that an unauthorized actor illegally accessed and acquired data from certain systems, including the personal information of approximately 86,000 individuals, including certain current and former customers, individuals related to current and former customers, current and former employees and their dependents, and others.
Through its investigation, the Bank determined that an unauthorized actor illegally accessed and acquired data from certain systems, including the personal information of approximately 75,000 individuals, including certain current and former customers, individuals related to current and former customers, current and former employees and their dependents, and others.
Deterioration in the economic conditions in California could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows: • problem assets and foreclosures may increase, • demand for our products and services may decline, • low cost or non-interest bearing deposits may continue to decrease, and • collateral for loans made by us, especially real estate, may decline in value, in turn reducing customers’ borrowing power, and reducing the value of assets and collateral associated with our existing loans.
Deterioration in the economic conditions in California could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows: • problem assets and foreclosures may increase, • demand for our products and services may decline, • low cost or non-interest-bearing deposits may continue to decrease, and • collateral for loans made by us, especially real estate, may experience a decline in value and/or cash flows, in turn reducing customers’ borrowing or repayment ability, and reducing the value of assets and collateral associated with our existing loans.
The actual amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates, unemployment and economic conditions that may be beyond our control and these losses may exceed current estimates.
The actual amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates, unemployment and a number of other economic conditions that may be beyond our control and these losses may exceed current estimates.
Our business, as well as the operations and activities of our clients, could be negatively impacted by climate change. Climate change presents both immediate and long-term risks to us and our clients, and these risks are expected to increase over time.
Our business, as well as the operations and activities of our customers, could be negatively impacted by climate change. Climate change presents both immediate and long-term risks to us and our customers and these risks are expected to increase over time.
In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic, which has been a catalyst for the evolution of various remote work options which could impact the long-term performance of some types of office properties within our commercial real estate portfolio.
In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic, which has been a catalyst for the evolution of various remote work options which could impact the vacancy rates and the long-term vacancy performance of some types of office properties within our commercial real estate portfolio.
Although the reduction in value from temporary increases in market rates does not affect our income until the security is sold, it does result in an unrealized loss recorded in other comprehensive income that can reduce our common stockholders’ equity. Further, we must periodically test our investment securities for other-than-temporary impairment in value.
Although the reduction in value from temporary increases in market rates does not affect our income unless the security is sold, it does result in an unrealized loss recorded in accumulated other comprehensive income that can reduce our common stockholders’ equity. Further, we must periodically test our investment securities for other-than-temporary impairment in value.
New lines of business, products or services and technological advancements may subject us to additional risks. From time to time, we implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed.
New lines of business, products or services and technological advancements, like artificial intelligence, may subject us to additional risks. From time to time, we implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed.
The Bank’s deposits decreased by $162 million during this period, which was a decrease of 2%. As a result of these events, customers may choose to maintain deposits with larger financial institutions or in other higher yielding alternatives, which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations.
The Bank’s deposits decreased by $162 million during this period, which was a decrease of 2%. Customers may choose to maintain deposits with larger financial institutions or in other higher yielding alternatives, which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations.
Such events could also affect the stability of our deposit base; impair the ability of borrowers to obtain adequate insurance or repay outstanding loans, impair the value of collateral securing loans and cause significant property damage, result in losses of revenue and/or cause us to incur additional expenses.
Such events could also affect the stability of our deposit base, impact real estate values, impair the ability of borrowers to obtain adequate insurance or repay outstanding loans, impair the value of collateral securing loans and cause significant property damage, result in losses of revenue and/or cause us to incur additional expenses.
The Company’s lending customers may also experience fraud in their businesses which could adversely affect their ability to repay their loans or make use of services.
Our lending customers may also experience fraud in their businesses which could adversely affect their ability to repay their loans or make use of services.
We have supported our growth through the prior issuance of trust preferred securities from special purpose trusts and accompanying junior subordinated debentures. At December 31, 2023, we had outstanding trust preferred securities and accompanying junior subordinated debentures with principal amount of $101.1 million. Payments of the principal and interest on the trust preferred securities are conditionally guaranteed by us.
We have supported our growth through the prior issuance of trust preferred securities from special purpose trusts and accompanying junior subordinated debentures. At December 31, 2024, we had outstanding trust preferred securities and accompanying junior subordinated debentures with principal amount of $98.9 million. Payments of the principal and interest on the trust preferred securities are conditionally guaranteed by us.
Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material adverse impact on our operations, including the cost to conduct business. 15 TriCo Bancshares 2023 10-K Table of Contents Furthermore, The evolving landscape of legislative and regulatory actions, influenced by election cycles, introduces an additional layer of uncertainty for our operations.
Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material adverse impact on our operations, including the cost to conduct business. Furthermore, the evolving landscape of legislative and regulatory actions, influenced by election cycles, introduces an additional layer of uncertainty for our operations.
Our holding company expenses and obligations with respect to our trust preferred securities and corresponding junior subordinated deferrable interest debentures issued by us may limit or impair our ability to declare or pay dividends. 17 TriCo Bancshares 2023 10-K Table of Contents Provisions of our governing documents and federal law may limit the ability of another party to acquire us, which could cause our stock price to decline.
Our holding company expenses and obligations with respect to our trust preferred securities and corresponding junior subordinated deferrable interest debentures issued by us may limit or impair our ability to declare or pay dividends. Provisions of our governing documents and federal law may limit the ability of another party to acquire us, which could cause our stock price to decline.
Notably, the Company’s share price decreased by 17% during the month of March 13 TriCo Bancshares 2023 10-K Table of Contents 2023, consistent with other community banking organizations. According to data published by the FRB, deposits at domestic commercial banks decreased by approximately $280 billion between the end of February 2023 and the week ended March 29, 2023.
Notably, the Company’s share price decreased by 17% during the month of March 2023, consistent with other community banking organizations. According to data published by the FRB, deposits at domestic commercial banks decreased by approximately $280 billion between the end of February 2023 and the week ended March 29, 2023.
In addition, the Company is subject to risk from the conduct of its employees, including the negative impact that can result from employee misconduct or failure by employees to conduct themselves in accordance with the Company’s policies, all of which could damage the Company’s reputation and result in loss of customers or other financial loss or expose the Company to increased regulatory or other risk.
In addition, we are subject to risk from the conduct of its employees, including the negative impact that can result from employee misconduct or failure by employees to conduct themselves in accordance with our policies, all of which could damage our reputation and result in loss of customers or other financial loss or expose us to increased regulatory or other risk.
If we are required to sell securities to meet liquidity needs, we could realize significant losses. As a result of increases in interest rates over the last year, the market values of previously issued government and other debt securities have declined in value, resulting in unrealized losses in our securities portfolio.
If we are required to sell securities to meet liquidity needs, we could realize significant losses. As a result of increases in interest rates in 2023 and most of 2024, the market values of previously issued government and other debt securities declined in value, resulting in unrealized losses in our securities portfolio.
Banking regulations or the actions of our banking regulators may limit our growth, earnings and the return to our shareholders by restricting certain of our activities, such as: • the payment of dividends to our shareholders, • possible mergers with or acquisitions of or by other institutions, • desired investments, • loans and interest rates on loans, • interest rates paid on deposits, • service charges on deposit account transactions, • the possible expansion or reduction of branch offices, and • the ability to provide new products or services.
Banking regulations or the actions of our banking regulators may limit our growth, earnings and the return to our shareholders by restricting certain of our activities, such as: • the payment of dividends to our shareholders, • possible mergers with or acquisitions of or by other institutions, • desired investments, 15 TriCo Bancshares 2024 10-K T a ble of Contents • loans and interest rates on loans, • interest rates paid on deposits, • service charges on deposit account transactions, • the possible expansion or reduction of branch offices, and • the ability to provide new products or services.
Any inadequacy or lapse in our risk management framework, governance structure, practices, models or reporting systems could expose us to unexpected losses, and our financial condition or results of operations could be materially and adversely affected.
Our risk management framework may not be effective in identifying and mitigating every risk to us. Any inadequacy or lapse in our risk management framework, governance structure, practices, models or reporting systems could expose us to unexpected losses, and our financial condition or results of operations could be materially and adversely affected.
The Company relies on financial and other data from new and existing customers which could turn out to be fraudulent when accepting such customers, executing their financial transactions and making and purchasing loans and other financial assets. In times of increased economic stress the Company is at increased risk of fraud losses.
We rely on financial and other data from new and existing customers which could turn out to be fraudulent when accepting such customers, executing their financial transactions and making and purchasing loans and other financial assets. In times of increased economic stress we are at increased risk of fraud losses.
Failure to perform in any of these areas could significantly weaken our 12 TriCo Bancshares 2023 10-K Table of Contents competitive position, which could adversely affect our growth and profitability, which, in turn, could have a material adverse effect on our business, financial condition and results of operations. We may be adversely affected by the soundness of other financial institutions.
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a material adverse effect on our business, financial condition and results of operations. We may be adversely affected by the soundness of other financial institutions.
As of December 31, 2023, we had approximately $4.4 billion of commercial real estate loans outstanding, which represented approximately 64.7% of our total loan portfolio. Consequently, commercial real estate-related credit risks are a significant concern for us.
As of December 31, 2024, we had approximately $4.6 billion of commercial real estate loans outstanding, which represented approximately 67.6% of our total loan portfolio. Consequently, commercial real estate-related credit risks are a significant concern for us.
These self-identified issues and voluntary remediation payments could be significant depending on the issue and the number of customers impacted. They also could generate litigation or regulatory investigations that subject us to additional adverse effects on our business, results of operations and financial condition. Climate change could have a material negative impact on us and our clients.
These self-identified issues and voluntary remediation payments could be significant depending on the issue and the number of customers impacted. They also could generate litigation or regulatory investigations that subject us to additional adverse effects on our business, results of operations and financial condition.
However, the Bank’s internal system/server access as well as communication capabilities, including e-mail correspondence and telephones, required approximately one week of time for the restoration process to be completed in a safe and secure environment. The Company restored its systems without paying ransom.
However, the Bank’s internal system/server access as well as communication capabilities, including e-mail correspondence and telephones, required approximately one week of time for the restoration process to be completed in a safe and secure environment.
Any such losses could have a material adverse effect on our financial condition and results of operations. We may need to raise additional capital, but it may not be available on acceptable terms or at all. We are required by federal and state regulators to maintain adequate levels of capital.
Any such losses could have a material adverse effect on our financial condition and results of operations. 13 TriCo Bancshares 2024 10-K T a ble of Contents We may need to raise additional capital, but it may not be available on acceptable terms or at all. We are required by federal and state regulators to maintain adequate levels of capital.
The Company believes it has underwriting and operational controls in place to prevent or detect such fraud, but cannot provide assurance that these controls will be effective in detecting fraud or that the Company will not experience fraud losses or incur costs or other damage related to such fraud, at levels that adversely affect financial results or reputation.
We believe we have underwriting and operational controls in place to prevent or detect such fraud, but cannot provide assurance that these controls will be effective in detecting fraud or that we will not experience fraud losses or incur costs or other damage related to such fraud, at levels that adversely affect financial results or reputation.
In addition, advances in technology such as digital, mobile, telephone, text, and online banking; e-commerce; and self-service automatic teller machines and other equipment, as well as changing customer preferences to access our products and services through digital channels, could decrease the value of our branch network and other assets.
In addition, 21 TriCo Bancshares 2024 10-K T a ble of Contents advances in technology such as digital, mobile, telephone, text, and online banking; e-commerce; and self-service automatic teller machines and other equipment, as well as changing customer preferences to access our products and services through digital channels, could decrease the value of our branch network and other assets.
If personal, confidential or proprietary information of customers or others in the Bank’s or such vendors’ or other third-parties’ possession were to be mishandled or misused, we could suffer significant regulatory consequences, reputational damage and financial loss, as discussed earlier regarding the Bank's 2023 cyberattack.
If personal, confidential or proprietary information of customers or others in the 19 TriCo Bancshares 2024 10-K T a ble of Contents Bank’s or such vendors’ or other third-parties’ possession were to be mishandled or misused, we could suffer significant regulatory consequences, reputational damage and financial loss, as discussed earlier regarding the Bank's 2023 cyberattack.
Any such decline could have a material adverse effect on our business, financial condition and results of operations. We have significant exposure to risks associated with commercial real estate lending. A substantial portion of our loan portfolio consists of commercial real estate loans.
Any such decline could have a material adverse effect on our business, financial condition and results of operations. 12 TriCo Bancshares 2024 10-K T a ble of Contents We have significant exposure to risks associated with commercial real estate lending. A substantial portion of our loan portfolio consists of commercial real estate loans.
In developing and marketing new lines of business and/or new products and services we invest significant time and resources. Initial 21 TriCo Bancshares 2023 10-K Table of Contents timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible.
In developing and marketing new lines of business and/or new products and services we invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible.
See “Item 1. Business - Regulation and Supervision – Restrictions on Dividends and Distributions.” As a holding company with no significant assets other than the Bank, our ability to continue to pay dividends depends in large part upon the Bank’s ability to pay dividends to us.
See “Item 1. Business - Regulation and Supervision – Restrictions on Dividends and Distributions.” 17 TriCo Bancshares 2024 10-K T a ble of Contents As a holding company with no significant assets other than the Bank, our ability to continue to pay dividends depends in large part upon the Bank’s ability to pay dividends to us.
A significant majority of the loans in our portfolio are secured by California real estate and a decline in real estate values could hurt our business. 11 TriCo Bancshares 2023 10-K Table of Contents A downturn in real estate values in the markets which we conduct our business in California could hurt our business because most of our loans are secured by real estate.
A significant majority of the loans in our portfolio are secured by California real estate and a decline in real estate values could hurt our business. A downturn in real estate values in the markets which we conduct our business in California could hurt our business because most of our loans are secured by real estate.
Conditions such as an economic recession, pandemics, rising unemployment, inflation, changes in interest rates, declines in asset values and other factors beyond our control may adversely affect our asset quality, deposit levels and our net income.
Conditions such as an economic recession, pandemics, rising unemployment, adverse immigration policies impacting the labor market (notably agriculture), inflation, changes in interest rates, declines in asset values and other factors beyond our control may adversely affect our asset quality, deposit levels and our net income.
We have underwriting and credit monitoring procedures and credit policies, including the establishment and review of the allowance for credit losses, that we believe appropriately address this risk by assessing the likelihood of nonperformance, tracking loan performance and diversifying our respective loan portfolios.
We have underwriting and credit monitoring procedures and credit policies, including the establishment and review of the allowance for credit losses, 11 TriCo Bancshares 2024 10-K T a ble of Contents that we believe appropriately address this risk by assessing the likelihood of nonperformance, tracking loan performance and diversifying our respective loan portfolios.
The Company’s business exposes it to fraud risk from loan and deposit customers, the parties they do business with, as well as from employees, contractors and vendors.
Our business exposes us to fraud risk from loan and deposit customers, the parties we do business with, as well as from employees, contractors and vendors.
In addition, it is possible that a resolution of one or more such proceedings, including as a result of a settlement, could involve licenses, sanctions, consent decrees, or orders requiring us to make substantial future payments, preventing us from offering certain products or services, requiring us to change our business practices in a manner materially adverse to our business, requiring development of non-infringing or otherwise altered products or technologies, damaging our reputation, or otherwise having a material effect on our operations. 23 TriCo Bancshares 2023 10-K Table of Contents We contest liability and/or the amount of damages as appropriate in each pending matter.
In addition, it is possible that a resolution of one or more such proceedings, including as a result of a settlement, could involve licenses, sanctions, consent decrees, or orders requiring us to make substantial future payments, preventing us from offering certain products or services, requiring us to change our business practices in a manner materially adverse to our business, requiring development of non-infringing or otherwise altered products or technologies, damaging our reputation, or otherwise having a material effect on our operations.
The outcome of pending and future matters could be material to our results of operations, financial condition and cash flows depending on, among other factors, the level of our earnings for that period, and could adversely affect our business and reputation.
We contest liability and/or the amount of damages as appropriate in each pending matter. The outcome of pending and future matters could be material to our results of operations, financial condition and cash flows depending on, among other factors, the level of our earnings for that period, and could adversely affect our business and reputation.
We are subject to certain industry standards regarding our credit/debit card-related services. Failure to meet those standards may significantly impact our ability to offer these services. We are subject to the PCI-DSS, issued by the Payment Card Industry Security Standards Council.
We are subject to certain industry standards regarding our credit/debit card-related services. Failure to meet those standards may significantly impact our ability to offer these services. 20 TriCo Bancshares 2024 10-K T a ble of Contents We are subject to the PCI-DSS, issued by the Payment Card Industry Security Standards Council.
The Bank issued a press release regarding this event and posted notice of this event on its website. 18 TriCo Bancshares 2023 10-K Table of Contents As a result of the 2023 cyberattack, we have incurred and may continue to incur significant costs or experience other material financial impacts, which may not be covered by, or may exceed the coverage limits of, our cyber liability insurance, and such costs and impacts may have a material adverse effect on our business, reputation, financial condition and operating results.
As a result of the 2023 cyberattack, we have incurred and may continue to incur significant costs or experience other material financial impacts, which may not be covered by, or may exceed the coverage limits of, our cyber liability insurance, and such costs and impacts may have a material adverse effect on our business, reputation, financial condition and operating results.
The Bank notified and will continue to notify impacted individuals consistent with state and federal requirements and the Bank is offering impacted individuals credit restoration services and 24 months of credit monitoring services at no cost.
The Bank notified and will continue to notify impacted individuals consistent with state and federal requirements and the Bank is offering impacted individuals credit restoration services and 24 months of credit monitoring services at no cost. The Bank issued a press release regarding this event and posted notice of this event on its website.
Real estate values and real estate markets are generally affected by changes in national, regional or local economic conditions, fluctuations in interest rates and the availability of loans to potential purchasers, changes in tax laws and other governmental statutes, regulations and policies. Real estate values could also be affected by, among other things, earthquakes, drought and national disasters.
Real estate values and real estate markets are generally affected by changes in national, regional or local economic conditions, fluctuations in interest rates and the availability of loans to potential purchasers, changes in tax laws and other governmental statutes, regulations and policies. As real estate prices decline, the value of real estate collateral securing our loans is reduced.
Political events, including elections, can influence consumer and investor sentiment, affecting demand for our products and services and impacting investor confidence, which may influence our stock price and access to capital. Risks Related to Our Growth and Expansion Goodwill resulting from acquisitions may adversely affect our results of operations.
Political events, including elections, can influence consumer and investor sentiment, affecting demand for our products and services and impacting investor confidence, which may influence our stock price and access to capital.
Nevertheless, we may not be able to anticipate, prevent, timely detect and/or effectively remediate all security breaches. 19 TriCo Bancshares 2023 10-K Table of Contents Any inability to prevent or adequately respond to the issues described above could disrupt the Company’s business, inhibit its ability to retain existing customers or attract new customers, otherwise harm its reputation and/or result in financial losses, litigation, increased costs or other adverse consequences that could be material to the Company.
Any inability to prevent or adequately respond to the issues described above could disrupt the Company’s business, inhibit its ability to retain existing customers or attract new customers, otherwise harm its reputation and/or result in financial losses, litigation, increased costs or other adverse consequences that could be material to the Company.
Climate change presents multi-faceted risks, including: operational risk from the physical effects of climate events on the us and our clients’ facilities and other assets; credit risk from borrowers with significant exposure to climate risk; transition risks associated with the transition to a less carbon-dependent economy; and reputational risk from stakeholder concerns about our practices related to climate change, our carbon footprint, and our business relationships with clients who operate in carbon-intensive industries.
Climate change presents multi-faceted risks, including (i) operational risk from the physical effects of climate events on our facilities and other assets as well as those of our customers; (ii) credit risk from borrowers with significant exposure to climate risk; (iii) legal, regulatory and compliance risks arising from the policy, legal and regulatory changes associated with the transition to a less carbon-dependent economy; and (iv) reputational risk from stakeholder concerns about our practices related to climate change, our carbon footprint and our business relationships with customers who operate in carbon-intensive industries, and from negative public opinion related to any of our actions or inaction in response to climate change and our climate change strategy.
As a lender, we face a significant risk that we will sustain losses because borrowers, guarantors or related parties may fail to perform in accordance with the terms of the loans we make or acquire. Our earnings are significantly affected by our ability to properly originate, underwrite and service loans.
Risks Related to the Nature and Geographic Area of Our Business The majority of our assets are loans, which are subject to credits risks. As a lender, we face a significant risk that we will sustain losses because borrowers, guarantors or related parties may fail to perform in accordance with the terms of the loans we make or acquire.
The inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our business, financial condition, or results of operations. Adverse changes in economic or market conditions may hurt our businesses. Our success depends, to a certain extent, upon local, national and global economic and political conditions, as well as governmental monetary policies.
The inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our business, financial condition, or results of operations. Adverse changes in economic or market conditions, including health related events, may hurt our businesses.
General Risk Factors We depend on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects. Furthermore, our business could suffer if we fail to attract and retain skilled people. Our future operating results depend substantially upon the continued service of our executive officers and key personnel.
General Risk Factors 23 TriCo Bancshares 2024 10-K T a ble of Contents We depend on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects. Furthermore, our business could suffer if we fail to attract and retain skilled people.
In addition, ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit, and reputational risks and costs. 24 TriCo Bancshares 2023 10-K Table of Contents
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs, and may subject us to different and potentially conflicting requirements. 25 TriCo Bancshares 2024 10-K T a ble of Contents
As real estate prices decline, the value of real estate collateral securing our loans is reduced. As a result, our ability to recover on defaulted loans by foreclosing and selling the real estate collateral could then be diminished and we would be more likely to suffer losses on defaulted loans.
As a result, our ability to recover on defaulted loans by foreclosing and selling the real estate collateral could then be diminished and we would be more likely to suffer losses on defaulted loans. As of December 31, 2024, approximately 92.8% of the book value of our loan portfolio consisted of loans collateralized by various types of real estate.
As of December 31, 2023, approximately 90.5% of the book value of our loan portfolio consisted of loans collateralized by various types of real estate. Substantially all of our real estate collateral is located in California; therefore, if there is a significant adverse decline in real estate values in California, the collateral for our loans will provide less security.
Substantially all of our real estate collateral is located in California; therefore, if there is a significant adverse decline in real estate values in California, the collateral for our loans will provide less security.
Failure to successfully manage these risks in the development and implementation of new lines of business, new products or services and/or new technologies could have a material adverse effect on our business, financial condition and results of operations. Our failure to comply with anti-money laundering and anti-terrorism financing laws could have significant adverse consequences for us.
Failure to successfully manage these risks in the development and implementation of new lines of business, new products or services and/or new technologies could have a material adverse effect on our business, financial condition and results of operations. We are subject to claims and litigation pertaining to intellectual property.
Our future operating results also depend in significant part upon our ability to attract and retain qualified management, financial, technical, marketing, sales and support personnel. Competition for qualified personnel is intense, including with respect to compensation and emerging workplace practices, accommodations and remote work options, and we cannot ensure success in attracting or retaining qualified personnel.
Competition for qualified personnel is intense, including with respect to compensation and emerging workplace practices, accommodations and remote work options, and we cannot ensure success in attracting or retaining qualified personnel.
Certain of our credit exposures are concentrated in industries that may be more susceptible to the long-term risks of climate change, natural disasters or global pandemics. To the extent that these risks may have a negative impact on the financial condition of borrowers, it could also have a material adverse effect on our business, financial condition and results of operations.
To the extent that these risks may have a negative impact on the financial condition of borrowers, it could also have a material adverse effect on our business, financial condition and results of operations.
Our balance sheet contains a substantial level of goodwill and other intangible assets as a result of our acquisitions, including Valley Republic Bancorp in 2022. Potential impairment of goodwill and amortization of other intangible assets could adversely affect our financial condition and results of operations.
Our balance sheet contains a substantial level of goodwill and other intangible assets as a result of our acquisitions. Potential impairment of goodwill and amortization of other intangible assets could adversely affect our financial condition and results of operations. We assess our goodwill and other intangible assets and long-lived assets for impairment annually and more frequently when required by U.S.
We maintained a balance of $2.3 billion, or approximately 23.2% of our assets, in investment securities at December 31, 2023. Changes in market interest rates can affect the fair value of these investment securities, with increasing interest rates generally resulting in a reduction of value.
Changes in market interest rates can affect the fair value of these investment securities, with increasing interest rates generally resulting in a reduction of value.
Such a change in these practices could materially adversely affect our ability to anticipate business needs and meet regulatory requirements. Further, difficult economic conditions may negatively affect consumer 22 TriCo Bancshares 2023 10-K Table of Contents confidence levels.
Such a change in these practices could materially adversely affect our ability to anticipate business needs and meet regulatory requirements. Further, difficult economic conditions may negatively affect consumer confidence levels. A decrease in consumer confidence levels would likely aggravate the adverse effects of these difficult market conditions on us, our customers and others in the financial institutions industry.
Our inability to use or access these information systems at critical points in time could unfavorably impact the timeliness and efficiency of our business operations.
Our inability to use or access these information systems at critical points in time could unfavorably impact the timeliness and efficiency of our business operations. A breach of customer data security such as the breach of customer data in connection with the February 2023 cyberattack discussed above, may negatively impact our business reputation and cause a loss of customers.
We assess our goodwill and other intangible assets and long-lived assets for impairment annually and more frequently when required by U.S. GAAP. We are required to record an impairment charge if circumstances indicate that the asset carrying values exceed their fair values.
GAAP. We are required to record an impairment charge if circumstances indicate that the asset carrying values exceed their fair values.
The risks associated with climate change are rapidly changing and evolving in an escalating fashion, making them difficult to assess due to limited data and other uncertainties.
The risks associated with climate change are rapidly changing and evolving in an escalating fashion, making them difficult to assess due to limited data. Our business, reputation and ability to attract and retain employees may also be harmed if our response to climate change is perceived to be ineffective or insufficient.
The Bank worked with third-party forensic investigators to understand the nature and scope of the incident and to determine what and how much information was impacted. The Bank determined that its internal computer network had been infected with malware which prevented access to certain files on the network.
The Bank determined that its internal computer network had been infected with malware which prevented access to certain files on the network.
Economic and market conditions may also be affected by political developments in the U.S. and other countries and global conflicts, such as the conflicts in Ukraine and the Middle East.
Economic and market conditions may also be affected by political developments in the U.S. and other countries and global conflicts, such the conflicts in Ukraine and the Middle East. Uncertainty about the federal fiscal policymaking process, the fiscal outlook of the federal government, and future tax rates is a concern for businesses, consumers and investors in the United States.
Interest rates may be affected by many factors that are beyond the control of our management, including general economic conditions and the policies of various governmental and regulatory authorities. The actions of the Federal Reserve influence the rates of interest that we charge on loans and that we pay on borrowings and interest-bearing deposits.
Like most financial institutions, we are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve Board.
Additionally, higher inflation levels could lead to higher oil and gas prices, which may negatively impact the net operating income on the properties which we lend on and could impair a borrower's ability to repay their loans. Elevated inflation and expectations for elevated future inflation can adversely impact economic growth, consumer and business confidence, and our financial condition and results.
Conversely, decreases in interest rates can affect the amount of interest we earn on our loans and investment securities, which could have a material adverse effect on our financial condition and results of operations. Elevated inflation and expectations for elevated future inflation can adversely impact economic growth, consumer and business confidence, and our financial condition and results.
Difficulties associated with potential acquisitions that may result from these factors could have a material adverse effect on our business, financial condition and results of operations. If we cannot attract deposits, our growth may be inhibited. We plan to increase the level of our assets, including our loan portfolio.
Additionally, the banking regulators and applicable laws and regulations may restrict our ability to engage in acquisitions under certain circumstances. If we cannot attract deposits, our growth may be inhibited. We plan to increase the level of our assets, including our loan portfolio.
Our business is subject to interest rate risk and variations in interest rates may negatively affect our financial performance. Although we were successful in generating new loans during 2023, increasing interest rates may adversely affect the demand for new loans and our loan growth.
Risks Related to Interest Rates 14 TriCo Bancshares 2024 10-K T a ble of Contents Our business is subject to interest rate risk and variations in interest rates may negatively affect our financial performance.
Our primary source of income is net interest income, which is the difference between interest earned on loans and leases and investments, and interest paid on deposits and borrowings.
Our profitability is dependent to a large extent on our net interest income, which is the difference between interest income we earn as a result of interest paid to us on loans and investments and interest we pay to third-parties such as our depositors and those from which we borrow funds.
Removed
Risks Related to the Nature and Geographic Area of Our Business 10 TriCo Bancshares 2023 10-K Table of Contents The majority of our assets are loans, which are subject to credits risks.
Added
Our earnings are significantly affected by our ability to properly originate, underwrite and service loans. Certain of our credit exposures are concentrated in industries that may be more susceptible to the long-term risks of climate change, natural disasters or global pandemics.
Removed
Uncertainty about the federal fiscal policymaking process, the fiscal outlook of the federal government, and future tax rates is a concern for businesses, consumers and investors in the United States The COVID-19 pandemic caused, and its lingering impact may continue to cause, disruptions in the U.S. economy at large, and for small businesses in particular, and has resulted in and may continue to result in disruptions to our customers’ businesses, and a decrease in consumer confidence and business generally.
Added
Our success depends, to a certain extent, upon local, national and global economic and political conditions, as well as governmental monetary policies.
Removed
The lingering effects of COVID-19 or a similar health crisis or pandemic, could adversely affect or operations or financial performance.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe IT/Cybersecurity Committee meets at least quarterly (or more frequently as may be required), and receives updates from the CISO on topics with respect to the cybersecurity program. The IT/Cybersecurity Committee reviews and approves our information security and technology budgets and strategies annually.
Biggest changeThe IT/Cybersecurity Committee meets at least quarterly (or more frequently as may be required), and receives updates from the CISO on topics with respect to the cybersecurity program. The IT/Cybersecurity Committee reviews and approves our information security and technology strategies annually. Additionally, the Risk Committee of our board of directors reviews our cyber security risk profile on a quarterly basis.
Further, we deploy technical safeguards that are we believe are designed to help protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, endpoint detection and response, logging, monitoring and alerting, anti-malware functionality, email security, network security monitoring and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.
Further, we deploy technical safeguards that we believe are designed to help protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, endpoint detection and response, logging, monitoring and alerting, anti-malware functionality, email security, network security monitoring and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.
This committee is chaired by the CIO and includes various employees within the enterprise information security department, including the CIO and CISO, and other key departmental managers from throughout the entire company, including information technology, risk, compliance, operations and human resources/training.
This committee is chaired by the CIO and includes various employees within the enterprise information security department, including the CISO, and other key departmental managers from throughout the entire company, including information technology, risk, compliance, operations and human resources/training.
Our CISO, reporting directly to the CIO, has over 35 25 TriCo Bancshares 2023 10-K Table of Contents years of experience in various technology and security leadership positions across multiple industries including banking, healthcare, automotive, mining, education, engineering, construction, and dairy product production.
Our CISO, reporting directly to the CIO, has over 35 26 TriCo Bancshares 2024 10-K T a ble of Contents years of experience in various technology and security leadership positions across multiple industries including banking, healthcare, automotive, mining, education, engineering, construction, and dairy product production.
Additionally, the Risk Committee of our board of directors reviews our cyber security risk profile on a quarterly basis. The management IT/Cybersecurity and Risk Committees each provide reports of their activities to the full board of directors at each board meeting in the event all board members are not present at the relevant board committee meetings.
The management IT/Cybersecurity and Risk Committees each provide reports of their activities to the full board of directors at each board meeting in the event all board members are not present at the relevant board committee meetings.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAll of the Company’s existing facilities are considered to be adequate for the Company’s present and future use. In the opinion of management, all properties are adequately covered by insurance. See “Note 7 – Premises and Equipment” to the consolidated financial statements at Part II, Item 8 of this report.
Biggest changeAll of the Company’s existing facilities are considered to be adequate for the Company’s present and future use. In the opinion of management, all properties are adequately covered by insurance. See “Note 7 – Premises and Equipment” to the consolidated financial statements at Part II, Item 8 of this report. 27 TriCo Bancshares 2024 10-K T a ble of Contents
All offices are constructed and equipped to meet prescribed security requirements. As of December 31, 2023, the Company owned 31 branch office locations, two administrative buildings that include branch locations, and 10 other buildings that are used as either administrative, operational, or loan production offices.
All offices are constructed and equipped to meet prescribed security requirements. As of December 31, 2024, the Company owned 31 branch office locations, two administrative buildings that include branch locations, and 10 other buildings that are used as either administrative, operational, or loan production offices.
PROPERTIES The Company is engaged in the banking business through 63 traditional branches, 6 in-store branches and 8 loan production offices in 31 counties throughout California including the counties of Butte, Colusa, Contra Costa, Del Norte, Fresno, Glenn, Humboldt, Kern, Lake, Los Angeles, Madera, Mendocino, Merced, Nevada, Orange, Placer, Sacramento, San Diego, San Francisco, San Mateo, Santa Clara, Shasta, Siskiyou, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Yolo and Yuba.
PROPERTIES The Company is engaged in the banking business through 64 traditional branches, 4 in-store branches and 8 loan production offices in 31 counties throughout California including the counties of Butte, Colusa, Contra Costa, Del Norte, Fresno, Glenn, Humboldt, Kern, Lake, Los Angeles, Madera, Mendocino, Merced, Nevada, Orange, Placer, Sacramento, San Diego, San Francisco, San Mateo, Santa Clara, Shasta, Siskiyou, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Yolo and Yuba.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLitigation matters range from individual actions involving a single plaintiff to class action lawsuits and can involve claims for substantial or indeterminate alleged damages or for injunctive or other relief. See “Item 1A - Risk Factors” and “Item 1C - Cybersecurity” for a discussion of the Bank’s cybersecurity attack in 2023.
Biggest changeITEM 3. LEGAL PROCEEDINGS TriCo and its subsidiaries are routinely subject to actual or threatened legal proceedings, including litigation and regulatory matters, arising in the ordinary course of business. Litigation matters range from individual actions involving a single plaintiff to class action lawsuits and can involve claims for substantial or indeterminate alleged damages or for injunctive or other relief.
None of those proceedings are currently expected to have a material adverse impact upon the Company’s consolidated financial position, its operations in any material amount not already accrued, after taking into consideration any applicable insurance.
All other legal proceedings are routine and arise out of the ordinary course of the Company's business. None of those proceedings are currently expected to have a material adverse impact upon the Company’s consolidated financial position, its operations in any material amount not already accrued, after taking into consideration any applicable insurance.
Neither the Company nor its subsidiaries are a party to any pending legal proceedings that are material, nor is their property the subject of any other material pending legal proceeding at this time. All other legal proceedings are routine and arise out of the ordinary course of the Company's business.
See “Item 1A - Risk Factors” and “Item 1C - Cybersecurity” for a discussion of the Bank’s cybersecurity attack in 2023. Neither the Company nor its subsidiaries are a party to any pending legal proceedings that are material, nor is their property the subject of any other material pending legal proceeding at this time.
Removed
ITEM 3. LEGAL PROCEEDINGS 26 TriCo Bancshares 2023 10-K Table of Contents TriCo and its subsidiaries are routinely subject to actual or threatened legal proceedings, including litigation and regulatory matters, arising in the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Market Prices and Dividends The Company’s common stock is traded on the Nasdaq under the symbol “TCBK.” As of February 23, 2024, there were approximately 1,814 shareholders of record of the Company’s common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Market Prices and Dividends The Company’s common stock is traded on the Nasdaq under the symbol “TCBK.” As of February 24, 2025, there were approximately 1,720 shareholders of record of the Company’s common stock.
TriCo Bancshares Stock Performance The following graph presents the cumulative total yearly shareholder return from investing $100 on December 31, 2018, in each of TriCo common stock, the Russell 3000 Index, and the S&P Western Bank Index.
TriCo Bancshares Stock Performance The following graph presents the cumulative total yearly shareholder return from investing $100 on December 31, 2019, in each of TriCo common stock, the Russell 3000 Index, and the S&P Western Bank Index.
On February 23, 2024, the closing market price was $33.95 per share. Information regarding restrictions on dividends, as required by this Item, is set forth in Item 1: “Business - Dividends, Distributions and Regulatory Matters” and in Note 26 - “Regulatory Matters” of the Notes to consolidated financial statements and incorporated into this Item by reference.
On February 24, 2025, the closing market price was $43.63 per share. Information regarding restrictions on dividends, as required by this Item, is set forth in Item 1: “Business - Dividends, Distributions and Regulatory Matters” and in Note 26 - “Regulatory Matters” of the Notes to consolidated financial statements and incorporated into this Item by reference.
Removed
Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 TriCo Bancshares 100.00 123.36 109.99 136.99 166.52 144.78 Russell 3000 Index 100.00 129.65 154.05 191.03 151.91 188.30 SNL Western Bank Index 100.00 119.27 86.36 131.33 99.76 96.00
Added
Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 TriCo Bancshares 100.00 89.17 111.05 134.99 117.37 123.34 Russell 3000 Index 100.00 119.18 147.78 117.52 145.67 177.92 S&P Western Bank Index 100.00 72.59 110.39 83.86 80.70 109.09 29 TriCo Bancshares 2024 10-K T a ble of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

101 edited+19 added−20 removed84 unchanged
Biggest changeThe following table summarizes the allocation of the allowance for credit losses between loan types: December 31, (in thousands) 2023 2022 2021 2020 2019 Commercial real estate $ 68,864 $ 61,381 $ 51,140 $ 53,693 $ 11,995 Consumer 27,453 24,639 23,474 25,148 10,084 Commercial and industrial 12,750 13,597 3,862 4,252 4,867 Construction 8,856 5,142 5,667 7,540 3,388 Agriculture production 3,589 906 1,215 1,209 261 Leases 10 15 18 5 21 Total allowance for credit losses $ 121,522 $ 105,680 $ 85,376 $ 91,847 $ 30,616 45 TriCo Bancshares 2023 10-K Table of Contents The following table summarizes the allocation of the allowance for credit losses between loan types as a percentage of the total allowance for credit losses: December 31, 2023 2022 2021 2020 2019 Commercial real estate 56.7 % 58.1 % 59.9 % 58.5 % 39.2 % Consumer 22.6 % 23.3 % 27.5 % 27.4 % 32.9 % Commercial and industrial 10.5 % 12.9 % 4.5 % 4.6 % 15.9 % Construction 7.3 % 4.9 % 6.6 % 8.2 % 11.0 % Agriculture production 3.0 % 0.9 % 1.4 % 1.3 % 0.9 % Leases — % — % 0.1 % — % 0.1 % Total allowance for credit losses 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % The following table summarizes the allocation of the allowance for credit losses between loan types as a percentage of total loans in each of the loan categories listed: December 31, 2023 2022 2021 2020 2019 Commercial real estate 1.57 % 1.41 % 1.55 % 1.82 % 0.42 % Consumer 2.09 % 1.99 % 2.19 % 2.62 % 1.05 % Commercial and industrial 2.17 % 2.39 % 1.49 % 0.81 % 1.81 % Construction 2.55 % 2.43 % 2.55 % 2.65 % 1.36 % Agriculture production 2.48 % 1.48 % 2.39 % 2.74 % 1.82 % Leases 0.12 % 0.19 % 0.27 % 0.13 % 1.63 % Total allowance for credit losses 1.79 % 1.64 % 1.74 % 1.93 % 0.71 % The following tables summarize the net charge-off (recovery) activity in the allowance for credit/loan losses as a percentage of loans for the years indicated (dollars in thousands): Year ended December 31, Ratios: 2023 2022 2021 2020 2019 Net charge-offs (recoveries) during period to average loans outstanding during period Commercial real estate: CRE non-owner occupied — % — % — % 0.01 % (0.09) % CRE owner occupied 0.38 % — % (0.11) % — % 0.13 % Multifamily — % — % — % — % — % Farmland — % 0.01 % 0.07 % 0.12 % — % Consumer: SFR 1-4 1st DT liens (0.02) % — % 0.02 % (0.08) % (0.01) % SFR HELOCs and junior liens (0.01) % — % 0.33 % (0.06) % (0.26) % Other 0.50 % 0.20 % 0.32 % 0.41 % 0.54 % Commercial and industrial 0.60 % 0.17 % 0.28 % 0.04 % 0.64 % Construction — % — % 0.01 % — % — % Agriculture production — % — % (0.05) % (0.05) % (0.02) % Leases — % — % — % — % — % Provision for (benefit from) credit losses to average loans outstanding during period 0.35 % 0.29 % (0.15) % 0.92 % (0.04) % Allowance for credit losses to loans at year-end 1.79 % 1.64 % 1.74 % 1.93 % 0.71 % Generally, losses are triggered by non-performance by the borrower and calculated based on any difference between the current loan amount and the current value of the underlying collateral less any estimated costs associated with the disposition of the collateral. 46 TriCo Bancshares 2023 10-K Table of Contents Foreclosed Assets, Net of Allowance for Losses The following tables detail the components and summarize the activity in foreclosed assets, net of allowances for losses for the years indicated (dollars in thousands): Balance at December 31, 2022 Additions Advances/ Capitalized Costs/Other Sales Valuation Adjustments Balance at December 31, 2023 Land & Construction $ 154 $ — $ — $ — $ — $ 154 Residential real estate 1,709 105 — (127) (14) 1,673 Commercial real estate 1,576 50 — (79) (669) 878 Total foreclosed assets $ 3,439 $ 155 $ — $ (206) $ (683) $ 2,705 Balance at December 31, 2021 Additions Advances/ Capitalized Costs/Other Sales Valuation Adjustments Balance at December 31, 2022 Land & Construction $ 154 $ 313 $ — $ (313) $ — $ 154 Residential real estate 1,257 751 — (392) 93 1,709 Commercial real estate 1,183 283 — — 110 1,576 Total foreclosed assets $ 2,594 $ 1,347 $ — $ (705) $ 203 $ 3,439 Deposit Portfolio Composition The following table shows the Company’s deposit balances at the dates indicated: Year ended December 31, (dollars in thousands) 2023 2022 2021 Noninterest-bearing demand $ 2,722,689 $ 3,502,095 $ 2,979,882 Interest-bearing demand 1,731,814 1,718,541 1,568,682 Savings 2,682,068 2,884,378 2,520,959 Time certificates, over $250,000 250,180 46,350 44,652 Other time certificates 447,287 177,649 252,984 Total deposits $ 7,834,038 $ 8,329,013 $ 7,367,159 Total uninsured deposits were estimated to be approximately $2.4 billion and $2.7 billion at December 31, 2023 and 2022, respectively.
Biggest changeThe following table summarizes the allocation of the allowance for credit losses between loan types: December 31, (in thousands) 2024 2023 2022 2021 2020 Commercial real estate $ 72,849 $ 68,864 $ 61,381 $ 51,140 $ 53,693 Consumer 27,463 27,453 24,639 23,474 25,148 Commercial and industrial 14,397 12,750 13,597 3,862 4,252 Construction 7,224 8,856 5,142 5,667 7,540 Agriculture production 3,403 3,589 906 1,215 1,209 Leases 30 10 15 18 5 Total allowance for credit losses $ 125,366 $ 121,522 $ 105,680 $ 85,376 $ 91,847 The following table summarizes the allocation of the allowance for credit losses between loan types as a percentage of the total allowance for credit losses: December 31, 2024 2023 2022 2021 2020 Commercial real estate 58.1 % 56.7 % 58.0 % 59.9 % 58.5 % Consumer 21.9 % 22.6 % 23.3 % 27.5 % 27.4 % Commercial and industrial 11.5 % 10.5 % 12.9 % 4.5 % 4.6 % Construction 5.8 % 7.3 % 4.9 % 6.6 % 8.2 % Agriculture production 2.7 % 2.9 % 0.9 % 1.4 % 1.3 % Leases — % — % — % 0.1 % — % Total allowance for credit losses 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 46 TriCo Bancshares 2024 10-K T a ble of Contents The following table summarizes the allocation of the allowance for credit losses between loan types as a percentage of total loans in each of the loan categories listed: December 31, 2024 2023 2022 2021 2020 Commercial real estate 1.59 % 1.57 % 1.41 % 1.55 % 1.82 % Consumer 2.14 % 2.09 % 1.99 % 2.19 % 2.62 % Commercial and industrial 3.05 % 2.17 % 2.39 % 1.49 % 0.81 % Construction 2.58 % 2.55 % 2.43 % 2.55 % 2.65 % Agriculture production 2.24 % 2.48 % 1.48 % 2.39 % 2.74 % Leases 0.44 % 0.12 % 0.19 % 0.27 % 0.13 % Total allowance for credit losses 1.85 % 1.79 % 1.64 % 1.74 % 1.93 % The following tables summarize the net charge-off (recovery) activity in the allowance for credit/loan losses as a percentage of loans for the years indicated (dollars in thousands): Year ended December 31, Ratios: 2024 2023 2022 2021 2020 Net charge-offs (recoveries) during period to average loans outstanding during period Commercial real estate: CRE non-owner occupied (0.01) % — % — % — % 0.01 % CRE owner occupied — % 0.38 % — % (0.11) % — % Multifamily — % — % — % — % — % Farmland — % — % 0.01 % 0.07 % 0.12 % Consumer: SFR 1-4 1st DT liens — % (0.02) % — % 0.02 % (0.08) % SFR HELOCs and junior liens 0.10 % (0.01) % — % 0.33 % (0.06) % Other 0.81 % 0.50 % 0.20 % 0.32 % 0.41 % Commercial and industrial 0.23 % 0.60 % 0.17 % 0.28 % 0.04 % Construction — % — % — % 0.01 % — % Agriculture production 0.93 % — % — % (0.05) % (0.05) % Leases — % — % — % — % — % Provision for (benefit from) credit losses to average loans outstanding during period 0.10 % 0.35 % 0.29 % (0.15) % 0.92 % Allowance for credit losses to loans at year-end 1.85 % 1.79 % 1.64 % 1.74 % 1.93 % Generally, losses are triggered by non-performance by the borrower and calculated based on any difference between the current loan amount and the current value of the underlying collateral less any estimated costs associated with the disposition of the collateral.
Mortgage origination related activity has declined year over year due to elevated interest rates, as the income recorded from the sale of loans was down $1.2 million or 50.2%.
Mortgage origination related activity declined year over year due to elevated interest rates, as the income recorded from the sale of loans was down $1.2 million or 50.2%.
The increase in interest expense for the year ended December 31, 2023, as compared to the trailing year, was due to the increased rate environment for both the interest-bearing deposit expense and other borrowings interest expense.
The increase in interest expense for the year ended December 31, 2023, as compared to the trailing year, was due largely to the increased rate environment for both the interest-bearing deposit expense and other borrowings interest expense.
Depending on economic conditions, interest rate levels, and a variety of other conditions, proceeds from the sale or maturity of investment securities may be used to fund loans, or reduce short-term borrowings. At December 31, 2023, we believe the Company has sufficient liquidity and capital resources to meet its cash flow obligations over the foreseeable future.
Depending on economic conditions, interest rate levels, and a variety of other conditions, proceeds from the sale or maturity of investment securities may be used to fund loans, or reduce short-term borrowings. At December 31, 2024, we believe the Company has sufficient liquidity and capital resources to meet its cash flow obligations over the foreseeable future.
As the 97.9% of the HTM portfolio consisted of investment securities where payment performance has an implicit or explicit guarantee from the U.S. government and where no history of credit losses exist, management believes that indicators for zero loss are present and therefore, no loss reserves were recognized in conjunction with the adoption of the CECL standard.
As the 97.6% of the HTM portfolio consisted of investment securities where payment performance has an implicit or explicit guarantee from the U.S. government and where no history of credit losses exist, management believes that indicators for zero loss are present and therefore, no loss reserves were recognized in conjunction with the adoption of the CECL standard.
The Company emphasizes the solicitation of non-interest bearing demand deposits and money market checking deposits, which are the least sensitive to interest rates. The outlook for deposit balances during 2024 is also subject to actions from the Federal Reserve, heightened competition, the success of the Company’s sales efforts, as well as the delivery of superior customer service and market conditions.
The Company emphasizes the solicitation of non-interest bearing demand deposits and money market checking deposits, which are the least sensitive to interest rates. The outlook for deposit balances during 2025 is also subject to actions from the Federal Reserve, heightened competition, the success of the Company’s sales efforts, as well as the delivery of superior customer service and market conditions.
See Note 11 of the financial statements at Part II, Item 8 of this report for the terms. These commitments do not significantly impact operating results. As of December 31, 2023, commitments to extend credit and commitments related to the Bank’s deposit overdraft privilege product were the Bank’s only financial instruments with off-balance sheet risk.
See Note 11 of the financial statements at Part II, Item 8 of this report for the terms. These commitments do not significantly impact operating results. As of December 31, 2024, commitments to extend credit and commitments related to the Bank’s deposit overdraft privilege product were the Bank’s only financial instruments with off-balance sheet risk.
The following table summarizes the estimated effect on net interest income and market value of equity to changing interest rates as measured against a flat rate (no interest rate change) instantaneous shock scenario over a twelve month period utilizing the Company's specific mix of interest earning assets and interest bearing liabilities as of December 31, 2023.
The following table summarizes the estimated effect on net interest income and market value of equity to changing interest rates as measured against a flat rate (no interest rate change) instantaneous shock scenario over a twelve month period utilizing the Company's specific mix of interest earning assets and interest bearing liabilities as of December 31, 2024.
The low-income housing tax credits and the equity compensation excess tax benefits represent direct reductions in tax expense. The items noted above resulted in an effective combined Federal and State income tax rate that differed from the combined Federal and State statutory income tax rate of approximately 29.6% during the three years ended 2023, 2022 and 2021.
The low-income housing tax credits and the equity compensation excess tax benefits represent direct reductions in tax expense. The items noted above resulted in an effective combined Federal and State income tax rate that differed from the combined Federal and State statutory income tax rate of approximately 29.6% during the three years ended 2024, 2023, and 2022.
Nonperforming assets increased by $9.8 million (39.7%) to $34.6 million at December 31, 2023 from $24.8 million at December 31, 2022.
Nonperforming assets increased by $9.8 million or 39.7% to $34.6 million at December 31, 2023 from $24.8 million at December 31, 2022.
Market Risk Management Overview. The goal for managing the assets and liabilities of the Bank is to maximize shareholder value and earnings while maintaining a high quality balance sheet without exposing the Bank to undue interest rate risk. The Board of Directors has overall responsibility for the Company’s interest rate risk management policies.
The goal for managing the assets and liabilities of the Bank is to maximize shareholder value and earnings while maintaining a high quality balance sheet without exposing the Bank to undue interest rate risk. The Board of Directors has overall responsibility for the Company’s interest rate risk management policies.
Thus, as a result of the significant size of the loan portfolio, the numerous assumptions in the model, and the high degree of potential change in such assumptions, there is a high degree of sensitivity to the reported amounts. Management believes that the ACL was adequate as of December 31, 2023.
Thus, as a result of the significant size of the loan portfolio, the numerous assumptions in the model, and the high degree of potential change in such assumptions, there is a high degree of sensitivity to the reported amounts. Management believes that the ACL was adequate as of December 31, 2024.
The following interest rate sensitivity table shows the Company’s repricing gaps as of December 31, 2023. In this table transaction deposits, which may be repriced at will by the Company, have been included in the less than 3-month category.
The following interest rate sensitivity table shows the Company’s repricing gaps as of December 31, 2024. In this table transaction deposits, which may be repriced at will by the Company, have been included in the less than 3-month category.
The effective tax rate and the statutory federal income tax rate are reconciled as follows: Year Ended December 31, 2023 2022 2021 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 7.9 7.9 7.9 Tax-exempt interest on municipal obligations (0.7) (0.7) (0.5) Tax-exempt life insurance related income (0.4) (0.4) (0.5) Low income housing and other tax credits (6.6) (3.7) (2.6) Low income housing tax credit amortization 5.6 3.6 2.2 Compensation and benefits 0.3 (0.2) (0.1) Non-deductible merger expenses — 0.1 0.1 Other (0.1) 0.3 0.6 Effective Tax Rate 27.0 % 27.9 % 28.1 % The effective tax rate on income was 27.0%, 27.9%, and 28.1% in 2023, 2022, and 2021, respectively.
The effective tax rate and the statutory federal income tax rate are reconciled as follows: Year Ended December 31, 2024 2023 2022 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 7.9 7.9 7.9 Tax-exempt interest on municipal obligations (0.5) (0.7) (0.7) Tax-exempt life insurance related income (0.4) (0.4) (0.4) Low income housing and other tax credits (7.9) (6.6) (3.7) Low income housing tax credit amortization 6.9 5.6 3.6 Compensation and benefits 0.1 0.3 (0.2) Non-deductible merger expenses — — 0.1 Other (1.2) (0.1) 0.3 Effective Tax Rate 25.9 % 27.0 % 27.9 % The effective tax rate on income was 25.9%, 27.0%, and 27.9% in 2024, 2023, and 2022, respectively.
As a result, management continues to believe that certain credit weaknesses are likely present in the overall economy and that it is appropriate to cautiously maintain a reserve level that incorporates such risk factors.
As a result, management continues to believe that certain credit weaknesses are present in the overall economy and that it is appropriate to maintain a reserve level that incorporates such risk factors.
(5) Junior subordinated debt, adjustable rate of three-month SOFR plus 1.33%, callable in whole or in part by the Company on a quarterly basis beginning March 15, 2011, matures March 15, 2036. (6) Junior subordinated debt, fixed rate of 6% until March 29, 2024, then floating rate of three-month SOFR plus 3.52% until maturity in 2029.
(5) Junior subordinated debt, adjustable rate of three-month SOFR plus 1.33%, callable in whole or in part by the Company on a quarterly basis beginning March 15, 2011, matures March 15, 2036. (6) Junior subordinated debt, floating rate of three-month SOFR plus 3.52% until maturity in 2029. Redeemable in whole or in part by the Company beginning March 29, 2024.
During the years ended December 31, 2023 and 2022, no allowance for credit losses nor impairment recognized in earnings related to available for sale investment securities was recorded.
During the years ended December 31, 2024 and 2023, no allowance for credit losses nor impairment recognized in earnings related to available for sale investment securities was recorded.
At December 31, 2023, the overnight Federal funds rate, the rate primarily used in these interest rate shock scenarios, was 5.25%. These scenarios assume that 1) interest rates increase or decrease evenly (in a “ramp” fashion) over a twelve-month period and remain at the new levels beyond twelve months or 2) that interest rates change instantaneously (“shock”).
At December 31, 2024, the overnight Federal funds rate, the rate primarily used in these interest rate shock scenarios, was 4.5%. These scenarios assume that 1) interest rates increase or decrease evenly (in a “ramp” fashion) over a twelve-month period and remain at the new levels beyond twelve months or 2) that interest rates change instantaneously (“shock”).
The decrease in nonperforming assets during 2022 was the result of net paydowns, sales or upgrades of nonperforming loans to performing status totaling $29.4 million, which was partially offset by $22.9 million of additions to non-performing loans and net charge-offs of $1.1 million. 42 TriCo Bancshares 2023 10-K Table of Contents Changes in nonperforming assets during the three months ended December 31, 2023 The following table shows the activity in the balance of nonperforming assets for the quarter ended December 31, 2023: (in thousands) Balance at September 30, 2023 Additions Advances/ Paydowns, net Charge-offs/ Write-downs (1) Transfers to Foreclosed Assets Balance at December 31, 2023 Commercial real estate: CRE non-owner occupied $ 1,105 $ 921 $ (2) $ — $ — $ 2,024 CRE owner occupied 3,898 247 (73) (28) (50) 3,994 Multifamily — — — — — — Farmland 11,707 3,009 (232) — — 14,484 Total commercial real estate loans 16,710 4,177 (307) (28) (50) 20,502 Consumer: SFR 1-4 1st DT 2,884 53 (126) — — 2,811 SFR HELOCs and junior liens 3,158 602 (165) (24) — 3,571 Other 156 16 (51) (16) — 105 Total consumer loans 6,198 671 (342) (40) — 6,487 Commercial and industrial 2,950 685 (546) (576) — 2,513 Construction 71 — (4) — — 67 Agriculture production 3,870 1,000 (2,549) — — 2,321 Leases — — — — — — Total nonperforming loans 29,799 6,533 (3,748) (644) (50) 31,890 Foreclosed assets 2,852 — (197) 50 2,705 Total nonperforming assets $ 32,651 $ 6,533 $ (3,945) $ (644) $ — $ 34,595 (1) Charge-offs and write-downs exclude deposit overdraft charge-offs.
The increase in nonperforming assets during the fourth quarter of 2024 was the result of new nonperforming loans of $6.3 million, that were partially offset by net paydowns, sales or upgrades of nonperforming loans to performing status totaling $3.0 million, and net charge-offs of $0.6 million in non-performing loans. 44 TriCo Bancshares 2024 10-K T a ble of Contents Changes in nonperforming assets during the three months ended December 31, 2023 The following table shows the activity in the balance of nonperforming assets for the quarter ended December 31, 2023: (in thousands) Balance at September 30, 2023 Additions Advances/ Paydowns, net Charge-offs/ Write-downs (1) Transfers to Foreclosed Assets Balance at December 31, 2023 Commercial real estate: CRE non-owner occupied $ 1,105 $ 921 $ (2) $ — $ — $ 2,024 CRE owner occupied 3,898 247 (73) (28) (50) 3,994 Multifamily — — — — — — Farmland 11,707 3,009 (232) — — 14,484 Total commercial real estate loans 16,710 4,177 (307) (28) (50) 20,502 Consumer: SFR 1-4 1st DT 2,884 53 (126) — — 2,811 SFR HELOCs and junior liens 3,158 602 (165) (24) — 3,571 Other 156 16 (51) (16) — 105 Total consumer loans 6,198 671 (342) (40) — 6,487 Commercial and industrial 2,950 685 (546) (576) — 2,513 Construction 71 — (4) — — 67 Agriculture production 3,870 1,000 (2,549) — — 2,321 Leases — — — — — — Total nonperforming loans 29,799 6,533 (3,748) (644) (50) 31,890 Foreclosed assets 2,852 — (197) — 50 2,705 Total nonperforming assets $ 32,651 $ 6,533 $ (3,945) $ (644) $ — $ 34,595 (1) Charge-offs and write-downs exclude deposit overdraft charge-offs.
(3) Net interest margin is computed by dividing net interest income by total average earning assets. 35 TriCo Bancshares 2023 10-K Table of Contents Summary of Changes in Interest Income and Expense due to Changes in Average Asset and Liability Balances and Yields Earned and Rates Paid – Volume/Rate Tables The following table sets forth a summary of the changes in the Company’s interest income and interest expense from changes in average asset and liability balances (volume) and changes in average interest rates for the periods indicated.
(3) Net interest margin is computed by dividing net interest income by total average earning assets. 36 TriCo Bancshares 2024 10-K T a ble of Contents Summary of Changes in Interest Income and Expense due to Changes in Average Asset and Liability Balances and Yields Earned and Rates Paid – Volume/Rate Tables The following table sets forth a summary of the changes in the Company’s interest income and interest expense from changes in average asset and liability balances (volume) and changes in average interest rates for the periods indicated.
See the Tables labeled “Allowance for Credit Losses – December 31, 2023 and 2022” at Note 5 in Item 8 of Part II of this report for the components that make up the provision for credit losses for the years ended December 31, 2023 and 2022.
See the Tables labeled “Allowance for Credit Losses – December 31, 2024 and 2023” at Note 5 in Item 8 of Part II of this report for the components that make up the provision for credit losses for the years ended December 31, 2024 and 2023.
Interest Rate Risk Simulations: Change in Interest Rates (Basis Points) Estimated Change in Net Interest Income (NII) (as % of NII) Estimated Change in Market Value of Equity (MVE) (as % of MVE) +300 (shock) (8.9) % (9.9) % +200 (shock) (6.0) % (7.0) % +100 (shock) (2.8) % (2.5) % + 0 (flat) — — -100 (shock) 0.7 % (2.0) % -200 (shock) 1.1 % (7.1) % -300 (shock) 1.9 % (17.6) % These simulations indicate that given a “flat” balance sheet size scenario, and if interest-bearing checking, savings and money market interest rates track the general interest rate changes by the rate shock values listed above, the Company’s balance sheet is slightly liability sensitive over a twelve month time horizon for both a rates up and rates down shock scenario.
Interest Rate Risk Simulations: Change in Interest Rates (Basis Points) Estimated Change in Net Interest Income (NII) (as % of NII) Estimated Change in Market Value of Equity (MVE) (as % of MVE) +300 (shock) (7.4) % (6.0) % +200 (shock) (5.1) % (4.2) % +100 (shock) (2.4) % (1.2) % + 0 (flat) — — -100 (shock) 0.6 % (1.2) % -200 (shock) 0.9 % (5.9) % -300 (shock) 1.7 % (13.9) % These simulations indicate that given a “flat” balance sheet size scenario, and if interest-bearing checking, savings and money market interest rates track the general interest rate changes by the rate shock values listed above, the Company’s balance sheet is liability sensitive over a twelve month time horizon for both a rates up and rates down shock scenario, with greater sensitivity skewed toward rates up.
Of the 11 basis point decrease in yields on loans, a 3 basis point decline was attributable to decreases in market rates, as well as an 8 basis point benefit from the accretion of purchased loans.
Of the 58 basis point increase in yields on loans, a 3 basis point decline was attributable to decreases in market rates, as well as an 8 basis point benefit from the accretion of purchased loans.
As of December 31, 2023 and 2022, the outstanding carrying value of purchased loans that were not acquired in a business combination totaled $159.1 million and $167.0 million, respectively. Asset Quality and Nonperforming Assets Nonperforming Assets The following tables set forth the amount of the Bank’s nonperforming assets as of the dates indicated.
As of December 31, 2024 and 2023, the outstanding carrying value of purchased loans that were not acquired in a business combination totaled $155.6 million and $159.1 million, respectively. Asset Quality and Nonperforming Assets Nonperforming Assets The following tables set forth the amount of the Bank’s nonperforming assets as of the dates indicated.
Nonperforming assets increased during the fourth quarter by $1.9 million or 5.8% to $34.6 million at December 31, 2023 compared to $32.7 million at September 30, 2023.
Nonperforming assets increased during the fourth quarter of 2023 by $1.9 million or 6.0% to $34.6 million at December 31, 2023 compared to $32.7 million at September 30, 2023.
Therefore, during the year ended December 31, 2023 as 2022, no allowance for credit losses related to HTM securities was recorded. 44 TriCo Bancshares 2023 10-K Table of Contents Allowance for Credit Losses - Unfunded Commitments The estimated credit losses associated with these unfunded lending commitments is calculated using the same models and methodologies noted above and incorporate utilization assumptions at the estimated time of default.
Therefore, during the year ended December 31, 2024 as 2023, no allowance for credit losses related to HTM securities was recorded. 45 TriCo Bancshares 2024 10-K T a ble of Contents Allowance for Credit Losses - Unfunded Commitments The estimated credit losses associated with these unfunded lending commitments is calculated using the same models and methodologies noted above and incorporate utilization assumptions at the estimated time of default.
Instead, the Company relies on the more sophisticated interest rate risk simulation model described above as its primary tool in measuring and managing interest rate risk. 49 TriCo Bancshares 2023 10-K Table of Contents As of December 31, 2023 Repricing within: (dollars in thousands) Less than 3 months 3 - 6 months 6 - 12 months 1 - 5 years Over 5 years Interest-earning assets: Cash at Federal Reserve and other banks $ 17,075 $ — $ — $ — $ — Securities 464,738 100,408 110,049 685,277 925,526 Loans 1,405,589 326,268 614,799 2,446,744 756,731 Total interest-earning assets 1,887,402 426,676 724,848 3,132,021 1,682,257 Interest-bearing liabilities Transaction deposits 4,454,314 — — — — Time 260,580 218,181 148,218 70,488 Other borrowings 632,582 — — — — Junior subordinated debt 101,099 — — — — Total interest-bearing liabilities $ 5,448,575 $ 218,181 $ 148,218 $ 70,488 $ — Interest sensitivity gap $ (3,561,173) $ 208,495 $ 576,630 $ 3,061,533 $ 1,682,257 Cumulative sensitivity gap $ (3,561,173) $ (3,352,678) $ (2,776,048) $ 285,485 $ 1,967,742 As a percentage of earning assets: Interest sensitivity gap (39.4) % 2.3 % 6.4 % 33.9 % 18.6 % Cumulative sensitivity gap (39.4) % (37.1) % (30.7) % 3.2 % 21.8 % Liquidity Liquidity refers to the Company’s ability to provide funds at an acceptable cost to meet loan demand and deposit withdrawals, as well as contingency plans to meet unanticipated funding needs or loss of funding sources.
As of December 31, 2024 Repricing within: (dollars in thousands) Less than 3 months 3 - 6 months 6 - 12 months 1 - 5 years Over 5 years Interest-earning assets: Cash at Federal Reserve and other banks $ 17,075 $ — $ — $ — $ — Securities 464,738 100,408 110,049 685,277 925,526 Loans 1,405,589 326,268 614,799 2,446,744 756,731 Total interest-earning assets 1,887,402 426,676 724,848 3,132,021 1,682,257 Interest-bearing liabilities Transaction deposits 4,454,314 — — — — Time 260,580 218,181 148,218 70,488 Other borrowings 632,582 — — — — Junior subordinated debt 101,099 — — — — Total interest-bearing liabilities $ 5,448,575 $ 218,181 $ 148,218 $ 70,488 $ — Interest sensitivity gap $ (3,561,173) $ 208,495 $ 576,630 $ 3,061,533 $ 1,682,257 Cumulative sensitivity gap $ (3,561,173) $ (3,352,678) $ (2,776,048) $ 285,485 $ 1,967,742 As a percentage of earning assets: Interest sensitivity gap (39.4) % 2.3 % 6.4 % 33.9 % 18.6 % Cumulative sensitivity gap (39.4) % (37.1) % (30.7) % 3.2 % 21.8 % Liquidity Liquidity refers to the Company’s ability to provide funds at an acceptable cost to meet loan demand and deposit withdrawals, as well as contingency plans to meet unanticipated funding needs or loss of funding sources.
The following table shows the Company’s loan balances, including net deferred loan fees, as a percentage of total loans at the dates indicated: Year ended December 31, (dollars in thousands) 2023 2022 2021 Commercial real estate 64.7 % 67.6 % 67.2 % Consumer 19.3 % 19.2 % 21.8 % Commercial and industrial 8.7 % 8.8 % 5.3 % Construction 5.1 % 3.3 % 4.5 % Agriculture production 2.1 % 1.0 % 1.1 % Leases 0.1 % 0.1 % 0.1 % Total loans 100 % 100 % 100 % Allowance for credit losses 1.79 % 1.64 % 1.74 % At December 31, 2023, loans including net deferred loan costs, totaled $6.8 billion which was a 5.3% or $344.0 million increase over the balance at the end of December 31, 2022.
The following table shows the Company’s loan balances, including net deferred loan fees, as a percentage of total loans at the dates indicated: Year ended December 31, (dollars in thousands) 2024 2023 2022 Commercial real estate 67.6 % 64.7 % 67.6 % Consumer 18.9 % 19.3 % 19.2 % Commercial and industrial 7.1 % 8.7 % 8.8 % Construction 4.1 % 5.1 % 3.3 % Agriculture production 2.2 % 2.1 % 1.0 % Leases 0.1 % 0.1 % 0.1 % Total loans 100.0 % 100.0 % 100.0 % Allowance for credit losses 1.85 % 1.79 % 1.64 % At December 31, 2024, loans including net deferred loan fees, totaled $6.8 billion which was a 0.4% or $25.9 million decrease over the balance at the end of December 31, 2023.
The Bank has not entered into any material contracts for financial derivative instruments such as futures, swaps, options, etc. Commitments to extend credit were $2.38 billion and $2.22 billion at December 31, 2023 and 2022, respectively, and represent 35.0% of the total loans outstanding at year-end 2023 versus 34.3% at December 31, 2022.
The Bank has not entered into any material contracts for financial derivative instruments such as futures, swaps, options, etc. Commitments to extend credit were $2.1 billion and $2.2 billion at December 31, 2024 and 2023, respectively, and represent 32.0% of the total loans outstanding at year-end 2024 versus 32.3% at December 31, 2023.
Management has presented these non-GAAP financial measures because it believes that they provide useful and comparative information to assess trends in the Company's core operations reflected in the periods presented 30 TriCo Bancshares 2023 10-K Table of Contents and facilitate the comparison of our performance with the performance of our peers.
Management has presented these non-GAAP financial measures because it believes that they provide useful and comparative information to assess trends in the Company's core operations reflected in the periods presented 31 TriCo Bancshares 2024 10-K T a ble of Contents and facilitate the comparison of our performance with the performance of our peers.
Interest rate sensitivity is a function of the repricing characteristics of the Company’s portfolio of assets and liabilities. One aspect of these repricing characteristics is the time frame within which the interest-bearing assets and liabilities are subject to change in interest rates either at replacement, repricing or maturity.
One aspect of these repricing characteristics is the time frame within which the interest-bearing assets and liabilities are subject to change in interest rates either at replacement, repricing or maturity.
The increase in nonperforming assets during the fourth quarter of 2022 was the result of new nonperforming loans of $10.2 million, that were partially offset by net paydowns, sales or upgrades of nonperforming loans to performing status totaling $6.0 million, and net charge-offs of $0.1 million in non-performing loans.
The increase in nonperforming assets during the fourth quarter of 2023 was the result of new nonperforming loans of $6.5 million, that were partially offset by net paydowns, sales or upgrades of nonperforming loans to performing status totaling $3.7 million, and net charge-offs of $0.6 million in non-performing loans.
As secondary sources of liquidity, the Company's held-to-maturity investment securities had a fair value of $125.1 million, including approximately $8.3 million in net unrealized losses. The Company did not utilize any brokered deposits during 2023 or 2022.
As secondary sources of liquidity, the Company's held-to-maturity investment securities had a fair value of $104.3 million, including approximately $7.5 million in net unrealized losses. The Company did not utilize any brokered deposits during 2024 or 2023.
Allowance for Credit Losses The Company’s method for assessing the appropriateness of the allowance for credit losses includes specific allowances for individually analyzed loans, formula allowance factors for pools of credits, and qualitative considerations which include, among other things, current and 32 TriCo Bancshares 2023 10-K Table of Contents forecast economic and environmental factors (e.g., interest rates, growth, economic conditions, etc.).
Allowance for Credit Losses The Company’s method for assessing the appropriateness of the allowance for credit losses includes specific allowances for individually analyzed loans, formula allowance factors for pools of credits, and qualitative considerations which include, among other things, current and forecasted economic and environmental factors (e.g., interest rates, growth, economic conditions, etc.).
Average loan balances include nonperforming loans. Interest income includes proceeds from loans on nonaccrual loans only to the extent cash payments have been received and applied to interest income.
Interest income includes proceeds from loans on nonaccrual loans only to the extent cash payments have been received and applied to interest income.
Commitments related to the Bank’s deposit overdraft privilege product totaled $121.5 million and $126.6 million at December 31, 2023 and 2022, respectively.
Commitments related to the Bank’s deposit overdraft privilege product totaled $121.0 million and $121.5 million at December 31, 2024 and 2023, respectively.
The Components of the Allowance for Credit Losses The following table sets forth the Bank’s allowance for credit losses related to loans as of the dates indicated (dollars in thousands): December 31, (dollars in thousands) 2023 2022 2021 2020 2019 Allowance for credit losses: Qualitative and forecast factor allowance $ 84,291 $ 70,777 $ 59,855 $ 61,935 $ 12,146 Quantitative (Cohort) model allowance reserves 34,139 32,489 24,539 28,462 17,529 Total allowance for credit losses 118,430 103,266 84,394 90,397 29,675 Allowance for individually evaluated loans 3,092 2,414 982 1,450 935 Allowance for PCI loan losses n/a n/a n/a n/a 6 Total allowance for credit losses $ 121,522 $ 105,680 $ 85,376 $ 91,847 $ 30,616 Ratio of allowance for credit losses to gross loans 1.79 % 1.64 % 1.74 % 1.93 % 0.71 % Based on the current conditions of the loan portfolio, management believes that the $121.5 million allowance for credit losses at December 31, 2023 is adequate to absorb probable losses inherent in the Bank’s loan portfolio.
The Components of the Allowance for Credit Losses The following table sets forth the Bank’s allowance for credit losses related to loans as of the dates indicated (dollars in thousands): December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Allowance for credit losses: Qualitative and forecast factor allowance $ 86,833 $ 84,291 $ 70,777 $ 59,855 $ 61,935 Quantitative (Cohort) model allowance reserves 33,908 34,139 32,489 24,539 28,462 Total allowance for credit losses 120,741 118,430 103,266 84,394 90,397 Allowance for individually evaluated loans 4,625 3,092 2,414 982 1,450 Total allowance for credit losses $ 125,366 $ 121,522 $ 105,680 $ 85,376 $ 91,847 Ratio of allowance for credit losses to gross loans 1.85 % 1.79 % 1.64 % 1.74 % 1.93 % Based on the current conditions of the loan portfolio, management believes that the $125.4 million allowance for credit losses at December 31, 2024 is adequate to absorb probable losses inherent in the Bank’s loan portfolio.
Net charge-offs for the year ended December 31, 2023 totaled $6.6 million, as compared to net recoveries of $0.3 million for the year ended December 31, 2022. Total nonperforming loans increased by 13 basis points to 0.46% of total loans at December 31, 2023 from 0.33% of total loans at December 31, 2022.
Net charge-offs for the year ended December 31, 2024 totaled $2.6 million , as compared to net recoveries of $6.6 million for the year ended December 31, 2023. Total nonperforming loans increased by 19 basis points to 0.65% of total loans at December 31, 2024 from 0.46% of total loans at December 31, 2023.
As of December 31, 2023, the Company's HTM investment portfolio had a carrying value of approximately $133.5 million and was comprised of $130.8 million in obligations backed by U.S. government agencies and $2.7 million in obligations of states and political subdivisions.
As of December 31, 2024, the Company's HTM investment portfolio had a carrying value of approximately $111.9 million and was comprised of $109.2 million in obligations backed by U.S. government agencies and $2.7 million in obligations of states and political subdivisions.
(8) These amounts represent known certain payments to participants under the Company’s deferred compensation and supplemental retirement plans. See Note 22 in the financial statements at Part II, Item 8 of this report for additional information related to the Company’s deferred compensation and supplemental retirement plan liabilitie s.
See Note 22 in the financial statements at Part II, Item 8 of this report for additional information related to the Company’s deferred compensation and supplemental retirement plan liabilitie s.
Summary of Average Balances, Yields/Rates and Interest Differential – Yield Tables The following tables present, for the periods indicated, information regarding the Company’s consolidated average assets, liabilities and 34 TriCo Bancshares 2023 10-K Table of Contents shareholders’ equity, the amounts of interest income from average earning assets and resulting yields, and the amount of interest expense paid on interest-bearing liabilities.
Summary of Average Balances, Yields/Rates and Interest Differential – Yield Tables The following tables present, for the periods indicated, information regarding the Company’s consolidated average assets, liabilities and shareholders’ equity, the amounts of interest income from average earning assets and resulting yields, and the amount of interest expense paid on interest-bearing liabilities. Average loan balances include nonperforming loans.
Non-interest Income The following table summarizes the Company’s non-interest income for the periods indicated (dollars in thousands): Year Ended December 31, 2023 2022 2021 ATM and interchange fees $ 26,459 $ 26,767 $ 25,356 Service charges on deposit accounts 17,595 16,536 14,013 Other service fees 4,732 4,274 3,570 Mortgage banking service fees 1,808 1,887 1,881 Change in value of mortgage loan servicing rights (506) 301 (872) Total service charges and fees 50,088 49,765 43,948 Asset management and commission income 3,150 3,986 3,668 Increase in cash value of life insurance 4,517 2,858 2,775 Gain on sale of loans 1,166 2,342 9,580 Lease brokerage income 441 820 746 Sale of customer checks 1,383 1,167 459 Loss on sale of investment securities (284) — — Gain (loss) on marketable equity securities 36 (340) (86) Other 903 2,448 2,574 Total other non-interest income 11,312 13,281 19,716 Total non-interest income $ 61,400 $ 63,046 $ 63,664 Non-interest income decreased $1.6 million or 2.6% to $61.4 million during the year ended December 31, 2023, as compared to $63.0 million during the year ended December 31, 2022.
Non-interest Income The following table summarizes the Company’s non-interest income for the periods indicated (dollars in thousands): Year Ended December 31, 2024 2023 2022 ATM and interchange fees $ 25,319 $ 26,459 $ 26,767 Service charges on deposit accounts 19,451 17,595 16,536 Other service fees 5,301 4,732 4,274 Mortgage banking service fees 1,739 1,808 1,887 Change in value of mortgage loan servicing rights (480) (506) 301 Total service charges and fees 51,330 50,088 49,765 Increase in cash value of life insurance 3,257 3,150 2,858 Asset management and commission income 5,573 4,517 3,986 Gain on sale of loans 1,532 1,166 2,342 Lease brokerage income 455 441 820 Sale of customer checks 1,216 1,383 1,167 (Loss) gain on sale/exchange of investment securities (43) (284) — (Loss) gain on marketable equity securities 126 36 (340) Other 961 903 2,448 Total other non-interest income 13,077 11,312 13,281 Total non-interest income $ 64,407 $ 61,400 $ 63,046 Non-interest income increased $3.0 million or 4.90% to $64.4 million during the year ended December 31, 2024, as compared to $61.4 million during the year ended December 31, 2023.
Net interest income (FTE) during the year ended December 31, 2022 increased $74.9 million or 27.5% to $347.5 million compared against $272.6 million during the year ended December 31, 2021. The increased amount of net interest income reflects growth in both total average loan and investment balances outstanding and the correlated yields, during 2022.
Net interest income (FTE) during the year ended December 31, 2023 increased $10.7 million or 3.1% to $358.2 million compared against $347.5 million during the year ended December 31, 2022. The increased amount of net interest income reflects growth in both total average loan and investment balances outstanding and the correlated yields, during 2023.
Also, the actual rates of prepayments on loans and investments could vary significantly from the assumptions utilized in deriving the results as presented in the preceding tables. Further, a change in U.S. Treasury rates accompanied by a change in the shape of the treasury yield curve could result in different estimations from those presented herein.
Also, the actual rates of prepayments on loans and investments could vary significantly from the assumptions utilized in deriving the results as presented in the preceding tables. Further, a change in U.S.
The Company's primary sources of remaining available liquidity from available borrowings and in transit items include the following for the periods indicated: (dollars in thousands) December 31, 2023 December 31, 2022 Borrowing capacity at correspondent banks and FRB $ 2,921,525 $ 2,815,574 Less: borrowings outstanding (600,000) (216,700) Unpledged available-for-sale (AFS) investment securities 1,558,506 1,990,451 Cash held or in transit with FRB 51,253 56,910 Total primary liquidity $ 3,931,284 $ 4,646,235 Estimated uninsured deposit balances $ 2,371,000 $ 2,701,000 At December 31, 2023, the Company's primary sources of liquidity represented 50% of total deposits and 166% of estimated total uninsured (excluding collateralized municipal deposits and intercompany balances) deposits, respectively.
The Company's primary sources of remaining available liquidity from available borrowings and in transit items include the following for the periods indicated: (dollars in thousands) December 31, 2024 December 31, 2023 Borrowing capacity at correspondent banks and FRB $ 2,821,678 $ 2,921,525 Less: borrowings outstanding (75,000) (600,000) Unpledged available-for-sale (AFS) investment securities 1,279,422 1,558,506 Cash held or in transit with FRB 96,395 51,253 Total primary liquidity $ 4,122,495 $ 3,931,284 Estimated uninsured deposit balances $ 2,584,265 $ 2,371,000 At December 31, 2024, the Company's primary sources of liquidity represented 51% of total deposits and 160% of estimated total uninsured (excluding collateralized municipal deposits and intercompany balances) deposits, respectively.
Of the 58 basis point increase in loan yields, 7 basis points was attributable to increased volume in average loans outstanding, and 51 basis points from elevated interest rates. There was no change attributed to the accretion of purchased loan fees.
Of the 35 basis point increase in loan yields, 11 basis points was attributable to increased volume in average loans outstanding, and 26 basis points from elevated interest rates. There was a decline of 2 basis points attributed to the accretion of purchased loan fees.
Interest rate risk is the primary market risk associated with asset/liability management. Sensitivity of earnings to interest rate changes arises when yields on assets change in a different time period or in a different amount from that of interest costs on liabilities.
Sensitivity of earnings to interest rate changes arises when yields on assets change in a different time period or in a different amount from that of interest costs on liabilities.
The tangible common equity to tangible assets ratio, a non-GAAP financial measure, was 8.8% at December 31, 2023, up 120 basis points from December 31, 2022, primarily due to an increase in tangible common equity related primarily to the retention of 2023 earnings. 29 TriCo Bancshares 2023 10-K Table of Contents TRICO BANCSHARES Financial Summary (In thousands, except per share amounts; unaudited) Year ended December 31, 2023 2022 2021 Interest income $ 438,354 $ 355,505 $ 277,047 Interest expense (81,677) (9,529) (5,508) Net interest income 356,677 345,976 271,539 (Provision for) benefit from loan losses (23,990) (18,470) 6,775 Noninterest income 61,400 63,046 63,664 Noninterest expense (233,182) (216,645) (178,275) Income before income taxes 160,905 173,907 163,703 Provision for income taxes (43,515) (48,488) (46,048) Net income $ 117,390 $ 125,419 $ 117,655 Share Data Earnings per share: Basic $ 3.53 $ 3.85 $ 3.96 Diluted $ 3.52 $ 3.83 $ 3.94 Per share: Dividends paid $ 1.20 $ 1.10 $ 1.00 Book value at period end $ 34.86 $ 31.39 $ 33.64 Tangible book value at period end (2) $ 25.39 $ 21.76 $ 25.80 Average common shares outstanding 33,267 32,584 29,721 Average diluted common shares outstanding 33,352 32,721 29,882 Shares outstanding at period end 33,268 33,332 29,730 Financial Ratios During the period: Return on average assets 1.19 % 1.28 % 1.43 % Return on average equity 10.65 % 11.67 % 12.10 % Net interest margin(1) 3.96 % 3.88 % 3.58 % Efficiency ratio 55.77 % 52.97 % 53.18 % Average equity to average assets 11.17 % 11.00 % 11.84 % Dividend payout ratio 33.99 % 28.54 % 25.26 % At period end: Equity to assets 11.70 % 10.54 % 11.61 % Total capital to risk-weighted assets 14.70 % 14.19 % 15.42 % Balance Sheet Data Total investments $ 2,305,882 $ 2,633,269 $ 2,427,885 Total loans 6,794,470 6,450,447 4,916,624 Total assets 9,910,089 9,930,986 8,614,787 Total non-interest bearing deposits 2,722,689 3,502,095 2,979,882 Total deposits 7,834,038 8,329,013 7,367,159 Total other borrowings 632,582 264,605 50,087 Total junior subordinated debt 101,099 101,040 58,079 Total shareholders’ equity 1,159,682 1,046,416 1,000,184 Total tangible equity (2) $ 844,688 $ 725,304 $ 766,943 (1) Fully taxable equivalent (FTE) (2) Tangible equity is calculated by subtracting Goodwill and Other intangible assets from total shareholders’ equity.
The tangible common equity to tangible assets ratio, a non-GAAP financial measure, was 9.72% at December 31, 2024, up 92 basis points from December 31, 2023, primarily due to an increase in tangible common equity related primarily to the retention of 2024 earnings. 30 TriCo Bancshares 2024 10-K T a ble of Contents TRICO BANCSHARES Financial Summary (In thousands, except per share amounts; unaudited) Year ended December 31, 2024 2023 2022 Interest income $ 466,638 $ 438,354 $ 355,505 Interest expense (135,204) (81,677) (9,529) Net interest income 331,434 356,677 345,976 (Provision for) benefit from loan losses (6,632) (23,990) (18,470) Noninterest income 64,407 61,400 63,046 Noninterest expense (234,105) (233,182) (216,645) Income before income taxes 155,104 160,905 173,907 Provision for income taxes (40,236) (43,515) (48,488) Net income $ 114,868 $ 117,390 $ 125,419 Share Data Earnings per share: Basic $ 3.47 $ 3.53 $ 3.85 Diluted $ 3.46 $ 3.52 $ 3.83 Per share: Dividends paid $ 1.32 $ 1.20 $ 1.10 Book value at period end $ 37.03 $ 34.86 $ 31.39 Tangible book value at period end (2) $ 27.60 $ 25.39 $ 21.76 Average common shares outstanding 33,088 33,261 32,584 Average diluted common shares outstanding 33,230 33,355 32,721 Shares outstanding at period end 32,970 33,268 33,332 Financial Ratios During the period: Return on average assets 1.18 % 1.19 % 1.28 % Return on average equity 9.57 % 10.65 % 11.67 % Net interest margin(1) 3.71 % 3.96 % 3.88 % Efficiency ratio 59.14 % 55.77 % 52.97 % Average equity to average assets 12.30 % 11.17 % 11.00 % Dividend payout ratio 38.00 % 33.99 % 28.54 % At period end: Equity to assets 12.62 % 11.70 % 10.54 % Total capital to risk-weighted assets 15.71 % 14.73 % 14.19 % Balance Sheet Data Total investments $ 2,036,610 $ 2,305,882 $ 2,633,269 Total loans 6,768,523 6,794,470 6,450,447 Total assets 9,673,728 9,910,089 9,930,986 Total non-interest bearing deposits 2,548,613 2,722,689 3,502,095 Total deposits 8,087,576 7,834,038 8,329,013 Total other borrowings 89,610 632,582 264,605 Total junior subordinated debt 101,191 101,099 101,040 Total shareholders’ equity 1,220,907 1,159,682 1,046,416 Total tangible equity (2) $ 910,033 $ 844,688 $ 725,304 (1) Fully taxable equivalent (FTE) (2) Tangible equity is calculated by subtracting Goodwill and Other intangible assets from total shareholders’ equity.
“Asset sensitive” implies that net interest income increases when interest rates rise and decrease when interest rates decrease. “Liability sensitive” implies that net interest income decreases when interest rates rise and increase when interest rates decrease. “Neutral sensitivity” implies that net interest income does not 48 TriCo Bancshares 2023 10-K Table of Contents change when interest rates change.
“Asset sensitive” implies that net interest income increases when interest rates rise and decrease when interest rates decrease. “Liability sensitive” implies that net interest income decreases when interest rates rise and increase when interest rates decrease. “Neutral sensitivity” implies that net interest income does not change when interest rates change.
In March 2022, the Company closed the acquisition of Valley Republic Bancorp. Historical periods prior to March 25, 2022 reflect results of legacy Trico Bancshares operations. Subsequent to closing, results reflect all post-acquisition activity.
In March 2022, the Company closed the acquisition of Valley Republic Bancorp. Historical periods prior to March 25, 2022 reflect results of legacy Trico Bancshares operations. Subsequent to closing, results reflect all post-acquisition activity. For further information, refer to Note 2 “Business Combinations” of the Notes to Consolidated Financial Statements.
The allowance for credit losses (ACL) was $121.5 million, or 1.79% of total loans and leases, at December 31, 2023, compared to $105.7, or 1.64% of total loans and leases, at December 31, 2022. Noninterest income was $61.4 million, down $1.6 million, or 2.6%, from the prior year.
The allowance for credit losses (ACL) was $125.4 million, or 1.85% of total loans and leases, at December 31, 2024, compared to $121.5 million, or 1.79% of total loans and leases, at December 31, 2023. Noninterest income was $64.4 million, up $3.0 million, or 4.9%, from the prior year.
For further discussion, refer to “—Risk Factors – Risks Related to Interest Rates.” Following is a summary of the Company’s net interest income for the periods indicated (dollars in thousands): Year ended December 31, 2023 2022 2021 Interest income $ 438,354 $ 355,505 $ 277,047 Interest expense (81,677) (9,529) (5,508) Net interest income (not FTE) 356,677 345,976 271,539 FTE adjustment 1,536 1,560 1,071 Net interest income (FTE) $ 358,213 $ 347,536 $ 272,610 Net interest margin (FTE) 3.96 % 3.88 % 3.58 % Acquired loans discount accretion: Purchased loan discount accretion $ 5,651 $ 5,465 $ 8,091 Effect on average loan yield 0.09 % 0.09 % 0.17 % Effect of purchased loan discount accretion on net interest margin (FTE) 0.06 % 0.07 % 0.11 % Net interest income (FTE) during the year ended December 31, 2023 increased $10.7 million or 3.1% to $358.2 million compared against $347.5 million during the year ended December 31, 2022.
For further discussion, refer to “—Risk Factors – Risks Related to Interest Rates.” Following is a summary of the Company’s net interest income for the periods indicated (dollars in thousands): 34 TriCo Bancshares 2024 10-K T a ble of Contents Year ended December 31, 2024 2023 2022 Interest income $ 466,638 $ 438,354 $ 355,505 Interest expense (135,204) (81,677) (9,529) Net interest income (not FTE) 331,434 356,677 345,976 FTE adjustment 1,085 1,536 1,560 Net interest income (FTE) $ 332,519 $ 358,213 $ 347,536 Net interest margin (FTE) 3.71 % 3.96 % 3.88 % Acquired loans discount accretion: Purchased loan discount accretion $ 4,329 $ 5,651 $ 5,465 Effect on average loan yield 0.07 % 0.09 % 0.09 % Effect of purchased loan discount accretion on net interest margin (FTE) 0.05 % 0.06 % 0.07 % Net interest income (FTE) during the year ended December 31, 2024 decreased $25.7 million or 7.2% to $332.5 million compared against $358.2 million during the year ended December 31, 2023.
The Company recorded a provision for credit losses of $18.5 million during the year ended December 31, 2022, versus a reversal of credit losses totaling $6.8 million during the trailing year end.
The Company recorded a provision for credit losses of $6.6 million during the year ended December 31, 2024, versus $24.0 million during the trailing year end.
At December 31, 2022, loans including net deferred loan costs, totaled $6.5 billion, which was a 31.2% or $1.5 billion increase over the balance at the end of December 31, 2021.
At December 31, 2023, loans including net deferred loan fees, totaled $6.8 billion, which was a 5.3% or $344.0 million increase over the balance at the end of December 31, 2022.
During the year ended 2022, the Company acquired loans totaling $773.3 million in connection with the merger with VRB in March of 2022, inclusive of approximately $68.5 million in loans with credit deterioration. During 2021, the Company purchased pools of SFR 1-4 1st DT (consumer) loans totaling approximately $101.5 million inclusive of loan premiums.
During the year ended 2022, the Company acquired loans totaling $773.3 million in connection with the merger with VRB in March of 2022, inclusive of approximately $68.5 million in loans with credit deterioration.
In 2023, operating activities provided cash of $138.9 million, primarily from net income of $117.4 million. In 2022, operating activities provided cash of $162.9 million, primarily from net income of $125.4 million. 50 TriCo Bancshares 2023 10-K Table of Contents Loan demand during 2024 will depend in part on economic and competitive conditions.
In 2024, operating activities provided cash of $109.7 million, primarily from net income of $114.9 million. In 2023, operating activities provided cash of $138.9 million, primarily from net income of $117.4 million. Loan demand during 2025 will depend in part on economic and competitive conditions.
For a reconciliation of these non-GAAP financial measures, see the tables below: Twelve months ended (dollars in thousands) December 31, 2023 December 31, 2022 Net interest margin Acquired loans discount accretion, net: Amount (included in interest income) $5,651 $5,465 Effect on average loan yield 0.09 % 0.09 % Effect on net interest margin (FTE) 0.06 % 0.06 % Net interest margin (FTE) 3.96 % 3.88 % Net interest margin less effect of acquired loan discount accretion (Non-GAAP) 3.90 % 3.81 % PPP loans yield, net: Amount (included in interest income) $12 $2,390 Effect on net interest margin (FTE) — % 0.02 % Net interest margin less effect of PPP loan yield (Non-GAAP) 3.96 % 3.86 % Acquired loan discount accretion and PPP loan yield, net: Amount (included in interest income) $5,663 $7,855 Effect on net interest margin (FTE) 0.06 % 0.08 % Net interest margin less effect of acquired loan discount accretion and PPP yields, net (Non-GAAP) 3.90 % 3.80 % Twelve months ended (dollars in thousands) December 31, 2023 December 31, 2022 Pre-tax pre-provision return on average assets or equity Net income (GAAP) $117,390 $125,419 Exclude provision for income taxes 43,515 48,488 Exclude provision for credit losses 23,990 18,470 Net income before income tax and provision expense (Non-GAAP) $184,895 $192,377 Average assets (GAAP) $9,870,189 $9,771,601 Average equity (GAAP) $1,102,436 $1,074,437 Return on average assets (GAAP) (annualized) 1.19 % 1.28 % Pre-tax pre-provision return on average assets (Non-GAAP) (annualized) 1.87 % 1.97 % Return on average equity (GAAP) (annualized) 10.65 % 11.67 % Pre-tax pre-provision return on average equity (Non-GAAP) (annualized) 16.77 % 17.90 % 31 TriCo Bancshares 2023 10-K Table of Contents Twelve months ended (dollars in thousands) December 31, 2023 December 31, 2022 Return on tangible common equity Average total shareholders' equity $1,102,436 $1,074,437 Exclude average goodwill 304,442 287,904 Exclude average other intangibles 13,611 15,901 Average tangible common equity (Non-GAAP) $784,383 $770,632 Net income (GAAP) $117,390 $125,419 Exclude amortization of intangible assets, net of tax effect 4,309 4,461 Tangible net income available to common shareholders (Non-GAAP) $121,699 $129,880 Return on average equity 10.65 % 11.67 % Return on average tangible common equity (Non-GAAP) 15.52 % 16.85 % Three months ended (dollars in thousands) December 31, 2023 December 31, 2022 Tangible shareholders' equity to tangible assets Shareholders' equity (GAAP) $1,159,682 $1,046,416 Exclude goodwill and other intangible assets, net 314,994 321,112 Tangible shareholders' equity (Non-GAAP) $844,688 $725,304 Total assets (GAAP) $9,910,089 $9,930,986 Exclude goodwill and other intangible assets, net 314,994 321,112 Total tangible assets (Non-GAAP) $9,595,095 $9,609,874 Shareholders' equity to total assets (GAAP) 11.70 % 10.54 % Tangible shareholders' equity to tangible assets (Non-GAAP) 8.80 % 7.55 % Three months ended (dollars in thousands) December 31, 2023 December 31, 2022 Tangible common shareholders' equity per share Tangible shareholders' equity (Non-GAAP) $844,688 $725,304 Common shares outstanding at end of period 33,268,102 33,331,513 Common shareholders' equity (book value) per share (GAAP) $34.86 $31.39 Tangible common shareholders' equity (tangible book value) per share (Non-GAAP) $25.39 $21.76 Critical Accounting Policies and Estimates In preparing the consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period.
For a reconciliation of these non-GAAP financial measures, see the tables below: Twelve months ended (dollars in thousands) December 31, 2024 December 31, 2023 Net interest margin Acquired loans discount accretion, net: Amount (included in interest income) $4,329 $5,651 Effect on average loan yield 0.07 % 0.09 % Effect on net interest margin (FTE) 0.05 % 0.06 % Net interest margin (FTE) 3.71 % 3.96 % Net interest margin less effect of acquired loan discount accretion (Non-GAAP) 3.66 % 3.90 % Twelve months ended (dollars in thousands) December 31, 2024 December 31, 2023 Pre-tax pre-provision return on average assets or equity Net income (GAAP) $114,868 $117,390 Exclude provision for income taxes 40,236 43,515 Exclude provision for credit losses 6,632 23,990 Net income before income tax and provision expense (Non-GAAP) $161,736 $184,895 Average assets (GAAP) $9,757,326 $9,870,189 Average equity (GAAP) $1,200,140 $1,102,436 Return on average assets (GAAP) 1.18 % 1.19 % Pre-tax pre-provision return on average assets (Non-GAAP) 1.66 % 1.87 % Return on average equity (GAAP) 9.57 % 10.65 % Pre-tax pre-provision return on average equity (Non-GAAP) 13.48 % 16.77 % Twelve months ended (dollars in thousands) December 31, 2024 December 31, 2023 Return on tangible common equity Average total shareholders' equity $1,200,140 $1,102,436 Exclude average goodwill 304,442 304,442 Exclude average other intangibles 8,592 13,611 Average tangible common equity (Non-GAAP) $887,106 $784,383 Net income (GAAP) $114,868 $117,390 Exclude amortization of intangible assets, net of tax effect 2,900 4,309 Tangible net income available to common shareholders (Non-GAAP) $117,768 $121,699 Return on average equity 9.57 % 10.65 % Return on average tangible common equity (Non-GAAP) 13.28 % 15.52 % 32 TriCo Bancshares 2024 10-K T a ble of Contents Three months ended (dollars in thousands) December 31, 2024 December 31, 2023 Tangible shareholders' equity to tangible assets Shareholders' equity (GAAP) $1,220,907 $1,159,682 Exclude goodwill and other intangible assets, net 310,874 314,994 Tangible shareholders' equity (Non-GAAP) $910,033 $844,688 Total assets (GAAP) $9,673,728 $9,910,089 Exclude goodwill and other intangible assets, net 310,874 314,994 Total tangible assets (Non-GAAP) $9,362,854 $9,595,095 Shareholders' equity to total assets (GAAP) 12.62 % 11.70 % Tangible shareholders' equity to tangible assets (Non-GAAP) 9.72 % 8.80 % Three months ended (dollars in thousands) December 31, 2024 December 31, 2023 Tangible common shareholders' equity per share Tangible shareholders' equity (Non-GAAP) $910,033 $844,688 Common shares outstanding at end of period 32,970,425 33,268,102 Common shareholders' equity (book value) per share (GAAP) $37.03 $34.86 Tangible common shareholders' equity (tangible book value) per share (Non-GAAP) $27.60 $25.39 Critical Accounting Policies and Estimates In preparing the consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period.
These loans are first reviewed individually to determine if such loans have a unique risk profile that would warrant individual evaluation. Loans where management has concluded that it is probable that the borrower will be unable to pay all amounts due under the original contractual terms are removed from the pools of loans collectively evaluated.
Loans where management has concluded that it is probable that the borrower will be unable to pay all amounts due under the original contractual terms are removed from the pools of loans collectively evaluated.
The costs of total interest bearing liabilities increased 6 basis points to 0.19% during the year ended December 31, 2022, as compared to 0.13% for the year ended December 31, 2021. During the same period, costs associated with interest bearing deposits increased by 2 basis points to 0.10% as compared to 0.08% in the prior year.
Meanwhile, the costs of total interest bearing liabilities increased 85 basis points to 2.33% during the year ended December 31, 2024, as compared to 1.48% for the year ended December 31, 2023. During the same period, costs associated with interest bearing deposits increased by 99 basis points to 2.09% as compared to 1.10% in the prior year.
Other miscellaneous expenses also increased by $4.1 million in 2023 due to, among other things, changes in regulatory requirements which resulted in an estimated $0.8 million in refunds to customers previously charged non-sufficient funds fees, changes in the valuation of other real estate owned which contributed to $0.9 million in variance from the prior year, and other increases generally associated with increased operational costs.
Other miscellaneous expenses also increased by $4.1 million in 2023 due to, among other things, changes in regulatory requirements which resulted in an estimated $0.8 million in refunds to customers previously charged non-sufficient funds fees, changes in the valuation of other real estate owned which contributed to $0.9 million in variance from the prior year, and other increases generally associated with increased operational costs. 39 TriCo Bancshares 2024 10-K T a ble of Contents The provisions for income taxes applicable to income before taxes for the years ended December 31, 2024, 2023, and 2022 differ from amounts computed by applying the statutory Federal income tax rates to income before taxes.
Due to the limitations of gap analysis, as described above, the Company does not actively use gap analysis in managing interest rate risk.
Due to the limitations of gap analysis, as described above, the Company does not actively use gap analysis in managing interest rate risk. Instead, the Company relies on the more sophisticated interest rate risk simulation model described above as its primary tool in measuring and managing interest rate risk.
Financial Condition Restricted Equity Securities Restricted equity securities were $17.2 million at December 31, 2023 and December 31, 2022. The entire balance of restricted equity securities at December 31, 2023 and 2022 represents the Bank’s investment in the Federal Home Loan Bank of San Francisco (“FHLB”).
Financial Condition Restricted Equity Securities Restricted equity securities were $17.3 million at December 31, 2024 and 2023 . The entire balance of restricted equity securities at December 31, 2024 and 2023 represents the Bank’s investment in the Federal Home Loan Bank of San Francisco (“FHLB”). FHLB stock is carried at par and does not have a readily determinable fair value.
Average earning asset growth included an $690.9 million, or 11.7% increase in average loans and leases, offset by a $195.0 million or 7.3% decrease in average securities. The decrease in average securities was driven by the redeployment of liquidity from prepayments and maturities into loans during 2023.
Average earning asset declines included a $308.7 million or 12.6% decrease in average securities, partially offset by an $189.8 million, or 2.9% increase in average loans and leases. The decrease in average securities was driven by the redeployment of liquidity from prepayments and maturities into the pay down of borrowings and loan growth during 2024.
As an offset, increases in interest rates during 2022 led to significant declines in mortgage lending related activity, resulting in a decrease of $7.2 million in gain from the sale of loans, as compared to the trailing year then ended. 37 TriCo Bancshares 2023 10-K Table of Contents Non-interest Expense The following table summarizes the Company’s other non-interest expense for the periods indicated (dollars in thousands): Year Ended December 31, 2023 2022 2021 Base salaries, net of deferred loan origination costs $ 94,564 $ 84,861 $ 69,844 Incentive compensation 15,557 17,908 14,957 Benefits and other compensation costs 25,674 27,083 21,550 Total salaries and benefits expense 135,795 129,852 106,351 Occupancy 16,135 15,493 14,910 Data processing and software 18,933 14,660 13,985 Equipment 5,644 5,733 5,358 Intangible amortization 6,118 6,334 5,464 Advertising 3,531 3,694 2,899 ATM and POS network charges 7,080 6,984 6,040 Professional fees 7,358 4,392 3,657 Telecommunications 2,547 2,298 2,253 Regulatory assessments and insurance 5,276 3,142 2,581 Merger and acquisition expenses — 6,253 1,523 Postage 1,236 1,147 710 Operational losses 2,444 1,000 964 Courier service 1,851 2,013 1,214 Gain on sale or acquisition of foreclosed assets (133) (481) (233) Loss (gain) loss on disposal of fixed assets 23 (1,070) (439) Other miscellaneous expense 19,344 15,201 11,038 Total other non-interest expense 97,387 86,793 71,924 Total non-interest expense $ 233,182 $ 216,645 $ 178,275 Average full-time equivalent staff 1,214 1,169 1,039 Total non-interest expense increased $16.5 million or 7.6% to $233.2 million during the year ended December 31, 2023, as compared to $216.6 million for the comparative period in 2022, for reasons primarily associated with the acquisition of Valley Republic Bank in March of 2022 which resulted in expense increases for nearly every identified category.
Other income declined $1.5 million or 63.1%, $0.6 million of which is attributed to fees from the sale of deposits during 2022. 38 TriCo Bancshares 2024 10-K T a ble of Contents Non-interest Expense The following table summarizes the Company’s other non-interest expense for the periods indicated (dollars in thousands): Year Ended December 31, 2024 2023 2022 Base salaries, net of deferred loan origination costs $ 96,862 $ 94,564 $ 84,861 Incentive compensation 16,897 15,557 17,908 Benefits and other compensation costs 26,822 25,674 27,083 Total salaries and benefits expense 140,581 135,795 129,852 Occupancy 16,411 16,135 15,493 Data processing and software 20,952 18,933 14,660 Equipment 5,424 5,644 5,733 Intangible amortization 4,120 6,118 6,334 Advertising 3,851 3,531 3,694 ATM and POS network charges 7,151 7,080 6,984 Professional fees 6,794 7,358 4,392 Telecommunications 2,053 2,547 2,298 Regulatory assessments and insurance 4,951 5,276 3,142 Merger and acquisition expenses — — 6,253 Postage 1,329 1,236 1,147 Operational losses 1,681 2,444 1,000 Courier service 2,119 1,851 2,013 (Gain) loss on sale or acquisition of foreclosed assets (73) (133) (481) (Gain) loss on disposal of fixed assets 19 23 (1,070) Other miscellaneous expense 16,742 19,344 15,201 Total other non-interest expense 93,524 97,387 86,793 Total non-interest expense $ 234,105 $ 233,182 $ 216,645 Average full-time equivalent staff 1,170 1,214 1,169 Total non-interest expense increased $0.9 million or 0.40% to $234.1 million during the year ended December 31, 2024, as compared to $233.2 million for the comparative period in 2023, This was largely attributed to an increase of $4.8 million or 3.5% in total salaries and benefits expense to $140.6 million, from routine compensation adjustments and other increases in benefits and compensation.
“Performing non-accrual loans” are loans that may be current for both principal and interest payments, or are less than 90 days past due, but for which payment in full of both 40 TriCo Bancshares 2023 10-K Table of Contents principal and interest is not expected, and are not well secured and in the process of collection: December 31, (dollars in thousands) 2023 2022 2021 2019 2018 Performing nonaccrual loans $ 25,380 $ 19,543 $ 27,713 $ 22,896 $ 11,266 Nonperforming nonaccrual loans 6,501 1,770 2,637 3,968 5,579 Total nonaccrual loans 31,881 21,313 30,350 26,864 16,845 Loans 90 days past due and still accruing 10 8 — — 19 Total nonperforming loans 31,891 21,321 30,350 26,864 16,864 Foreclosed assets 2,705 3,439 2,594 2,844 2,541 Total nonperforming assets $ 34,596 $ 24,760 $ 32,944 $ 29,708 $ 19,405 U.S. government, including its agencies and its government-sponsored agencies, guaranteed portion of nonperforming loans $ 877 $ 225 $ 756 $ 811 $ 992 Nonperforming assets to total assets 0.35 % 0.25 % 0.38 % 0.39 % 0.30 % Nonperforming loans to total loans 0.47 % 0.33 % 0.61 % 0.56 % 0.39 % Allowance for credit losses to nonperforming loans 381 % 516 % 281 % 342 % 182 % Changes in nonperforming assets during the year ended December 31, 2023 The following table shows the activity in the balance of nonperforming assets for the year ended December 31, 2023: (in thousands) Balance at December 31, 2022 Additions Advances/ Paydowns, net Charge-offs/ Write-downs Transfers to Foreclosed Assets Balance at December 31, 2023 Commercial real estate: CRE non-owner occupied $ 1,739 $ 1,268 $ (983) $ — $ — $ 2,024 CRE owner occupied 4,938 15,884 (13,142) (3,636) (50) 3,994 Multifamily 125 — (125) — — — Farmland 1,772 14,843 (2,131) — — 14,484 Total commercial real estate loans 8,574 31,995 (16,381) (3,636) (50) 20,502 Consumer: SFR 1-4 1st DT 4,220 943 (2,247) — (105) 2,811 SFR HELOCs and junior liens 3,155 1,979 (1,496) (67) — 3,571 Other 76 345 (134) (182) — 105 Total consumer loans 7,451 3,267 (3,877) (249) (105) 6,487 Commercial and industrial 3,526 9,014 (6,148) (3,879) — 2,513 Construction 491 — (424) — — 67 Agriculture production 1,279 4,340 (3,298) — — 2,321 Leases — — — — — — Total nonperforming loans 21,321 48,616 (30,128) (7,764) (155) 31,890 Foreclosed assets 3,439 65 (323) (631) 155 2,705 Total nonperforming assets $ 24,760 $ 48,681 $ (30,451) $ (8,395) $ — $ 34,595 The table above does not include deposit overdraft charge-offs.
“Performing non-accrual loans” are loans that may be current for both principal and interest payments, or are less than 90 days past due, but for which payment in full of both principal and interest is not expected, and are not well secured and in the process of collection: 41 TriCo Bancshares 2024 10-K T a ble of Contents December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Performing nonaccrual loans $ 19,543 $ 25,380 $ 19,543 $ 27,713 $ 22,896 Nonperforming nonaccrual loans 24,493 6,500 1,770 2,637 3,968 Total nonaccrual loans 44,036 31,880 21,313 30,350 26,864 Loans 90 days past due and still accruing 60 10 8 — — Total nonperforming loans 44,096 31,890 21,321 30,350 26,864 Foreclosed assets 2,786 2,705 3,439 2,594 2,844 Total nonperforming assets $ 46,882 $ 34,595 $ 24,760 $ 32,944 $ 29,708 U.S. government, including its agencies and its government-sponsored agencies, guaranteed portion of nonperforming loans $ 819 $ 877 $ 225 $ 756 $ 811 Nonperforming assets to total assets 0.48 % 0.35 % 0.25 % 0.38 % 0.39 % Nonperforming loans to total loans 0.65 % 0.47 % 0.33 % 0.61 % 0.56 % Allowance for credit losses to nonperforming loans 284 % 381 % 516 % 281 % 342 % Changes in nonperforming assets during the year ended December 31, 2024 The following table shows the activity in the balance of nonperforming assets for the year ended December 31, 2024: (in thousands) Balance at December 31, 2023 Additions Advances/ Paydowns, net Charge-offs/ Write-downs Transfers to Foreclosed Assets Balance at December 31, 2024 Commercial real estate: CRE non-owner occupied $ 2,024 $ 4,211 $ (3,218) $ — $ — $ 3,017 CRE owner occupied 3,994 774 (894) — — 3,874 Multifamily — 502 (22) — — 480 Farmland 14,484 3,712 (2,001) — — 16,195 Total commercial real estate loans 20,502 9,199 (6,135) — — 23,566 Consumer: SFR 1-4 1st DT 2,811 4,060 (641) (26) (225) 5,979 SFR HELOCs and junior liens 3,571 2,138 (1,801) (40) — 3,868 Other 105 511 (43) (369) — 204 Total consumer loans 6,487 6,709 (2,485) (435) (225) 10,051 Commercial and industrial 2,513 11,017 (1,978) (1,787) — 9,765 Construction 67 9 (7) — (12) 57 Agriculture production 2,321 692 (906) (1,450) — 657 Leases — — — — — — Total nonperforming loans 31,890 27,626 (11,511) (3,672) (237) 44,096 Foreclosed assets 2,705 423 (395) (184) 237 2,786 Total nonperforming assets $ 34,595 $ 28,049 $ (11,906) $ (3,856) $ — $ 46,882 The table above does not include deposit overdraft charge-offs.
Within Management’s Discussion and Analysis of Financial Condition and Results of Operations, certain performance measures including interest income, net interest income, net interest yield, and efficiency ratio are generally presented on a fully tax-equivalent (FTE) 33 TriCo Bancshares 2023 10-K Table of Contents basis.
Results of Operations Average balances, including balances used in calculating certain financial ratios, are generally comprised of average daily balances for the Company. Within Management’s Discussion and Analysis of Financial Condition and Results of Operations, certain performance measures including interest income, net interest income, net interest yield, and efficiency ratio are generally presented on a fully tax-equivalent (FTE) basis.
Average loan balances, inclusive of acquisitions, increased by $1.5 billion or 30.4% from December 31, 2021. The yield on interest earning assets was 3.98% and 3.65% for the years ended December 31, 2022 and 2021, respectively.
Average loan balances increased by $690.9 million or 11.8% from December 31, 2022. The yield on interest earning assets was 4.87% and 3.98% for the years ended December 31, 2023 and 2022, respectively.
Redeemable in whole or in part by the Company beginning March 29, 2024. (7) Junior subordinated debt, fixed rate of 5% until August 27, 2025, then floating rate of 90-day average SOFR plus 4.90% until maturity in 2035. Redeemable in whole or in part by the Company beginning August 27, 2025.
(7) Junior subordinated debt, fixed rate of 5% until August 27, 2025, then floating rate of 90-day average SOFR plus 4.90% until maturity in 2035. Redeemable in whole or in part by the Company beginning August 27, 2025. (8) These amounts represent known certain payments to participants under the Company’s deferred compensation and supplemental retirement plans.
Yields on securities and certain loans have been adjusted upward to reflect the effect of income thereon exempt from federal income taxation at the statutory tax rate applicable during the period presented (dollars in thousands): Year ended December 31, 2023 2022 2021 Average Balance Interest Income/ Expense Rates Earned /Paid Average Balance Interest Income/ Expense Rates Earned /Paid Average Balance Interest Income/ Expense Rates Earned /Paid Assets: Loans $ 6,555,886 $ 356,698 5.44 % $ 5,841,770 $ 282,985 4.84 % $ 4,625,410 $ 225,626 4.88 % PPP Loans 1,360 12 0.88 % 24,590 2,390 9.72 % 250,391 16,643 6.65 % Investment securities—taxable 2,272,301 75,203 3.31 % 2,459,032 60,499 2.46 % 1,914,788 30,352 1.59 % Investment securities—nontaxable (1) 181,766 6,656 3.66 % 190,339 6,759 3.55 % 160,863 4,639 2.88 % Total investments 2,454,067 81,859 3.34 % 2,649,371 67,258 2.54 % 2,075,651 34,991 1.69 % Cash at Federal Reserve and other banks 26,469 1,321 4.99 % 452,300 4,432 0.98 % 663,801 858 0.13 % Total interest-earning assets 9,037,782 439,890 4.87 % 8,968,031 357,065 3.98 % 7,615,253 278,118 3.65 % Other assets 832,407 803,570 594,420 Total assets $ 9,870,189 $ 9,771,601 $ 8,209,673 Liabilities and shareholders’ equity: Interest-bearing demand deposits $ 1,709,930 $ 11,190 0.65 % $ 1,720,932 $ 452 0.03 % $ 1,493,922 $ 327 0.02 % Savings deposits 2,805,424 31,444 1.12 % 2,878,189 3,356 0.12 % 2,360,605 1,256 0.05 % Time deposits 473,688 12,453 2.63 % 302,619 881 0.29 % 324,636 1,735 0.53 % Total interest-bearing deposits 4,989,042 55,087 1.10 % 4,901,740 4,689 0.10 % 4,179,163 3,318 0.08 % Other borrowings 430,736 19,712 4.58 % 33,410 421 1.26 % 43,236 22 0.05 % Junior subordinated debt 101,064 6,878 6.81 % 91,138 4,419 4.85 % 57,844 2,168 3.75 % Total interest-bearing liabilities 5,520,842 81,677 1.48 % 5,026,288 9,529 0.19 % 4,280,243 5,508 0.13 % Noninterest-bearing deposits 3,068,839 3,492,713 2,837,745 Other liabilities 178,072 178,163 119,471 Shareholders’ equity 1,102,436 1,074,437 972,214 Total liabilities and shareholders’ equity $ 9,870,189 $ 9,771,601 $ 8,209,673 Net interest spread (2) 3.39 % 3.79 % 3.52 % Net interest income and interest margin (3) $ 358,213 3.96 % $ 347,536 3.88 % $ 272,610 3.58 % (1) The fully-taxable equivalent (FTE) adjustment for interest income of non-taxable investment securities was $1,536, $1,560, and $1,070 for the years ended December 31, 2023, 2022 and 2021, respectively.
Yields on securities and certain loans have been adjusted upward to reflect the effect of income thereon exempt from federal income taxation at the statutory tax rate applicable during the period presented (dollars in thousands): 35 TriCo Bancshares 2024 10-K T a ble of Contents Year ended December 31, 2024 2023 2022 Average Balance Interest Income/ Expense Rates Earned /Paid Average Balance Interest Income/ Expense Rates Earned /Paid Average Balance Interest Income/ Expense Rates Earned /Paid Assets: Loans $ 6,747,072 $ 390,491 5.79 % $ 6,557,246 $ 356,710 5.44 % $ 5,866,360 $ 285,375 4.86 % Investment securities—taxable 2,008,823 68,434 3.41 % 2,272,301 75,203 3.31 % 2,459,032 60,499 2.46 % Investment securities—nontaxable (1) 136,530 4,700 3.44 % 181,766 6,656 3.66 % 190,339 6,759 3.55 % Total investments 2,145,353 73,134 3.41 % 2,454,067 81,859 3.34 % 2,649,371 67,258 2.54 % Cash at Federal Reserve and other banks 80,439 4,098 5.09 % 26,469 1,321 4.99 % 452,300 4,432 0.98 % Total interest-earning assets 8,972,864 467,723 5.21 % 9,037,782 439,890 4.87 % 8,968,031 357,065 3.98 % Other assets 784,462 832,407 803,570 Total assets $ 9,757,326 $ 9,870,189 $ 9,771,601 Liabilities and shareholders’ equity: Interest-bearing demand deposits $ 1,734,900 $ 22,998 1.33 % $ 1,709,930 $ 11,190 0.65 % $ 1,720,932 $ 452 0.03 % Savings deposits 2,677,726 49,028 1.83 % 2,805,424 31,444 1.12 % 2,878,189 3,356 0.12 % Time deposits 999,143 41,100 4.11 % 473,688 12,453 2.63 % 302,619 881 0.29 % Total interest-bearing deposits 5,411,769 113,126 2.09 % 4,989,042 55,087 1.10 % 4,901,740 4,689 0.10 % Other borrowings 294,318 14,706 5.00 % 430,736 19,712 4.58 % 33,410 421 1.26 % Junior subordinated debt 101,139 7,372 7.29 % 101,064 6,878 6.81 % 91,138 4,419 4.85 % Total interest-bearing liabilities 5,807,226 135,204 2.33 % 5,520,842 81,677 1.48 % 5,026,288 9,529 0.19 % Noninterest-bearing deposits 2,584,904 3,068,839 3,492,713 Other liabilities 165,056 178,072 178,163 Shareholders’ equity 1,200,140 1,102,436 1,074,437 Total liabilities and shareholders’ equity $ 9,757,326 $ 9,870,189 $ 9,771,601 Net interest spread (2) 2.88 % 3.39 % 3.79 % Net interest income and interest margin (3) $ 332,519 3.71 % $ 358,213 3.96 % $ 347,536 3.88 % (1) The fully-taxable equivalent (FTE) adjustment for interest income of non-taxable investment securities was $1.1 million, $1.5 million, and $1.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Nonperforming assets increased during the fourth quarter of 2022 by $3.8 million or 18.4% to $24.7 million at December 31, 2022 compared to $20.9 million at September 30, 2022.
Nonperforming assets increased during the fourth quarter by $2.5 million or 5.6% to $46.9 million at December 31, 2024 compared to $44.4 million at September 30, 2024.
The Company does not hold any financial instruments that are not maintained in US dollars and is not party to any contracts that may be settled or repaid in a denomination other than US dollars. Asset/Liability Management. Activities involved in asset/liability management include but are not limited to lending, accepting and placing deposits, investing in securities and issuing debt.
The Company does not hold any financial instruments that are not maintained in US dollars and is not party to any contracts that may be settled or repaid in a denomination other than US dollars. 48 TriCo Bancshares 2024 10-K T a ble of Contents Asset/Liability Management.
The Federal Reserve's anticipated decrease in interest rates is expected to relieve some pressure on deposit margin expense, however, the competitive landscape for attracting and retaining deposit balances will continue to remain challenging during 2024.
The Federal Reserve's recent decrease in Fed Funds rates provided a modest level of relief on deposit margin expense, however, the competitive landscape for attracting and retaining deposit balances will continue to remain challenging during 2025.
The net interest margin expansion was driven by the higher rate environment driving an increase in loan and lease and investment security yields, partially offset by higher cost of funds from both deposits and borrowings.
The net interest margin contraction was driven by the higher rate environment and a liability sensitive balance sheet, resulting in an increase in the higher cost of funds from both deposits and borrowings.
Loan Portfolio Composition 39 TriCo Bancshares 2023 10-K Table of Contents The following table shows the Company’s loan balances, including net deferred loan fees, at the dates indicated: Year ended December 31, (dollars in thousands) 2023 2022 2021 Commercial real estate 4,394,802 $ 4,359,083 $ 3,306,054 Consumer 1,313,268 1,240,743 1,071,551 Commercial and industrial, excluding PPP 585,319 568,319 198,208 SBA PPP loans 1,136 1,602 61,147 Construction 347,198 211,560 222,281 Agriculture production 144,497 61,414 50,811 Leases 8,250 7,726 6,572 Total loans $ 6,794,470 $ 6,450,447 $ 4,916,624 Allowance for credit losses $ (121,522) $ (105,680) $ (85,376) The Company did not purchase any loans during 2023.
The Bank makes loans to borrowers whose applications include a sound purpose, a viable repayment source and a plan of repayment established at inception and generally backed by a secondary source of repayment. 40 TriCo Bancshares 2024 10-K T a ble of Contents Loan Portfolio Composition The following table shows the Company’s loan balances, including net deferred loan fees, at the dates indicated: Year ended December 31, (dollars in thousands) 2024 2023 2022 Commercial real estate 4,577,632 $ 4,394,802 $ 4,359,083 Consumer 1,281,059 1,313,268 1,240,743 Commercial and industrial 471,271 586,455 569,921 Construction 279,933 347,198 211,560 Agriculture production 151,822 144,497 61,414 Leases 6,806 8,250 7,726 Total loans $ 6,768,523 $ 6,794,470 $ 6,450,447 Allowance for credit losses $ (125,366) $ (121,522) $ (105,680) The Company did not purchase any loans during 2024 or 2023.
The following table summarizes the components of the provision for (benefit to) credit losses during the periods indicated (dollars in thousands): Year ended December 31, (dollars in thousands) 2023 2022 2021 Provision for (reversal of) allowance for credit losses $ 22,455 $ 17,945 $ (7,165) Change in reserve for unfunded loan commitments 1,535 525 390 Total provision for (reversal of) credit losses $ 23,990 $ 18,470 $ (6,775) The provision for credit losses is based on management’s evaluation of inherent risks in the loan portfolio and a corresponding analysis of the allowance for credit losses.
For further details of the chan1ge in nonperforming loans during the period ended December 31, 2024 see the Tables, and associated narratives, labeled “Changes in nonperforming assets during the year ended December 31, 2024” and “Changes in nonperforming assets during the three months ended December 31, 2024” under the heading “Asset Quality and Non-Performing Assets ” below. 37 TriCo Bancshares 2024 10-K T a ble of Contents The following table summarizes the components of the provision for credit losses during the periods indicated (dollars in thousands): Year ended December 31, (dollars in thousands) 2024 2023 2022 Provision for allowance for credit losses $ 6,482 $ 22,455 $ 17,945 Change in reserve for unfunded loan commitments 150 1,535 525 Total provision for credit losses $ 6,632 $ 23,990 $ 18,470 The provision for credit losses is based on management’s evaluation of inherent risks in the loan portfolio and a corresponding analysis of the allowance for credit losses.
Management’s determination of whether these investments are impaired is based on its assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value.
While technically these are considered equity securities, there is no market for the FHLB stock. Therefore, the shares are considered as restricted investment securities. Management periodically evaluates FHLB stock for other-than-temporary impairment. Management’s determination of whether these investments are impaired is based on its assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value.
In 2023, financing activities used funds totaling $176.0 million, resulting from a decline of $495.0 million in deposits, $39.9 million in dividend payment outflows, and an additional $9.2 million used toward the repurchase of common stock, partially offset by an increase in cash from short term borrowings totaling $368.0 million.
In 2024, financing activities used funds totaling $348.5 million, resulting from a reduction in short term borrowings of $543.0 million, $43.6 million in dividend payment outflows, and an additional $15.5 million 50 TriCo Bancshares 2024 10-K T a ble of Contents allocated toward the repurchase of common stock, partially offset by an increase in deposits totaling $253.5 million.
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.
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. Core inflation is slowing but prices remain elevated relative to wage increases, as reflected by higher living costs such as housing, energy and general services.
Total average interest-bearing deposits was $5.0 billion and $4.9 billion during 2023 and 2022, respectively, while average other borrowings totaled $430.1 million and $33.4 million, respectively, during the same periods. The increase in net interest expense on average interest-bearing liabilities increased by $72.1 million or 758.9% to $81.7 million during 2023 as compared to 2022.
Total average interest-bearing deposits was $5.4 billion and $5.0 billion during 2024 and 2023, respectively, while average other borrowings totaled $294.3 million and $430.7 million, respectively, during the same periods.
Certain Contractual Obligations The following chart summarizes certain contractual obligations of the Company as of December 31, 2023: (dollars in thousands) Total Less than one year 1-3 years 3-5 years More than 5 years Time deposits $ 697,467 $ 626,979 $ 67,506 $ 2,982 $ — Overnight borrowing at FHLB, fixed rate, as of December 31, 2023 of 5.70%, payable on January 2, 2024 400,000 400,000 — — — Term borrowing at FHLB, fixed rate, as of December 31, 2023 of 4.75%, payable on April 8, 2024 200,000 200,000 — — — Junior subordinated debt: TriCo Trust I(1) 20,619 — — — 20,619 TriCo Trust II(2) 20,619 — — — 20,619 North Valley Trust II(3) 5,602 — — — 5,602 North Valley Trust III(4) 4,472 — — — 4,472 North Valley Trust IV(5) 7,615 — — — 7,615 VRB Subordinated - 6%(6) 17,000 — — — 17,000 VRB Subordinated - 5%(7) 25,172 — — — 25,172 Operating lease obligations 28,261 5,755 13,779 4,319 4,408 Deferred compensation(8) 555 188 367 — — Supplemental retirement plans(8) 14,238 1,794 3,226 3,316 5,902 Total contractual obligations $ 1,441,620 $ 1,234,716 $ 84,878 $ 10,617 $ 111,409 (1) Junior subordinated debt, adjustable rate of three-month SOFR plus 3.05%, callable in whole or in part by the Company on a quarterly basis beginning October 7, 2008, matures October 7, 2033.
Certain Contractual Obligations The following chart summarizes certain contractual obligations of the Company as of December 31, 2024: (dollars in thousands) Total Less than one year 1-3 years 4-5 years More than 5 years Time deposits $ 1,122,485 $ 1,081,409 $ 40,209 $ 867 $ — Term borrowing at FHLB, fixed rate of 5.23%, payable on April 8, 2025 75,000 75,000 — — — Junior subordinated debt: TriCo Trust I(1) 20,619 — — — 20,619 TriCo Trust II(2) 20,619 — — — 20,619 North Valley Trust II(3) 5,713 — — — 5,713 North Valley Trust III(4) 4,571 — — — 4,571 North Valley Trust IV(5) 7,863 — — — 7,863 VRB Subordinated - 6%(6) 16,799 — — — 16,799 VRB Subordinated - 5%(7) 25,007 — — — 25,007 Operating lease obligations 29,128 5,512 12,510 4,300 6,806 Deferred compensation(8) 368 184 184 — — Supplemental retirement plans(8) 18,018 1,768 3,110 3,106 10,034 Total contractual obligations $ 1,346,190 $ 1,163,873 $ 56,013 $ 8,273 $ 118,031 (1) Junior subordinated debt, adjustable rate of three-month SOFR plus 3.05%, callable in whole or in part by the Company on a quarterly basis beginning October 7, 2008, matures October 7, 2033.

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