4Q24 Financial Highlights

Net income was $29.0 million or $0.88 per diluted share as compared to $29.1 million or $0.88 per diluted share in the trailing quarter
Net interest margin (FTE) was 3.76% in the recent quarter, an increase of 5 basis points over 3.71% in the trailing quarter; net interest income (FTE) was $84.4 million, and increase of $1.5 million over the trailing quarter
Loan balances increased $84.6 million or 5.1% (annualized) from the trailing quarter and decreased $25.9 million or 0.4% from the same quarter of the prior year
Deposit balances increased $50.5 million or 2.5% (annualized) from the trailing quarter and increased $253.5 million or 3.2% from the same quarter of the prior year
Average yield on earning assets was 5.22%, a decrease of 4 basis points over the 5.26% in the trailing quarter; average yield on loans was 5.78%, a decrease of 5 basis points over the 5.83% in the trailing quarter
Non-interest bearing deposits averaged 31.8% of total deposits during the quarter
The average cost of total deposits was 1.46%, a decrease of 6 basis points as compared to 1.52% in the trailing quarter, and an increase of 41 basis points from 1.05% in the same quarter of the prior year

TriCo Bancshares (NASDAQ:TCBK):

Executive Commentary:

"With the close of 2024 representing nearly 50 years of strong and steady value delivery to our stakeholders, we remain focused on our path forward. The next several years may bring a number of changes to the financial services industry and to Tri Counties Bank; however, we believe that these changes will likely create significant opportunity for us to further differentiate and elevate our performance," said Rick Smith, President and CEO.

Peter Wiese, EVP and CFO added, "Both net interest margin and net interest income expanded for the second consecutive quarter despite three Federal Funds rate cuts totaling 100 basis points since mid-September. These benefits were realized primarily through a reduction in funding costs and the deployment of balance sheet cash into higher yielding earning assets."

Selected Financial Highlights

For the quarter ended December 31, 2024, the Company's return on average assets was 1.19%, while the return on average equity was 9.30%; for the trailing quarter ended September 30, 2024, the Company's return on average assets was 1.20%, while the return on average equity was 9.52%
Diluted earnings per share were $0.88 for the fourth quarter of 2024, compared to $0.88 for the trailing quarter and $0.78 during the fourth quarter of 2023
The loan to deposit ratio increased to 83.7% as of December 31, 2024, as compared to 83.2% for the trailing quarter end, as a result of loan growth outpacing deposit growth during the quarter
The efficiency ratio was 59.56% for the quarter ended December 31, 2024, as compared to 60.02% for the trailing quarter
The provision for credit losses was approximately $1.7 million during the quarter ended December 31, 2024, as compared to $0.2 million during the trailing quarter end, and was necessitated by the $84.6 million in loan growth during the quarter
The allowance for credit losses (ACL) to total loans was 1.85% as of December 31, 2024, compared to 1.85% as of the trailing quarter end, and 1.79% as of December 31, 2023. Non-performing assets to total assets were 0.48% on December 31, 2024, as compared to 0.45% as of September 30, 2024, and 0.35% at December 31, 2023. At December 31, 2024, the ACL represented 284% of non-performing loans

The financial results reported in this document are preliminary and unaudited. Final financial results and other disclosures will be reported on Form 10-K for the period ended December 31, 2024, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.

Operating Results and Performance Ratios

	Three months ended
	December 31, 2024			September 30, 2024
(dollars and shares in thousands, except per share data)	December 31, 2024			September 30, 2024			$ Change			% Change
Net interest income	$	84,090		$	82,611		$	1,479		1.8	%
Provision for credit losses		(1,702	)		(220	)		(1,482	)	673.6	%
Noninterest income		16,275			16,495			(220	)	(1.3	)%
Noninterest expense		(59,775	)		(59,487	)		(288	)	0.5	%
Provision for income taxes		(9,854	)		(10,348	)		494		(4.8	)%
Net income	$	29,034		$	29,051		$	(17	)	(0.1	)%
Diluted earnings per share	$	0.88		$	0.88		$	—		—	%
Dividends per share	$	0.33		$	0.33		$	—		—	%
Average common shares		32,994			32,993			1		nm
Average diluted common shares		33,162			33,137			25		0.1	%
Return on average total assets		1.19	%		1.20	%
Return on average equity		9.30	%		9.52	%
Efficiency ratio		59.56	%		60.02	%

	Three months ended December 31,
(dollars and shares in thousands, except per share data)		2024			2023		$ Change			% Change
Net interest income	$	84,090		$	86,617		$	(2,527	)	(2.9	)%
Provision for credit losses		(1,702	)		(5,990	)		4,288		(71.6	)%
Noninterest income		16,275			16,040			235		1.5	%
Noninterest expense		(59,775	)		(60,267	)		492		(0.8	)%
Provision for income taxes		(9,854	)		(10,325	)		471		(4.6	)%
Net income	$	29,034		$	26,075		$	2,959		11.3	%
Diluted earnings per share	$	0.88		$	0.78		$	0.10		12.8	%
Dividends per share	$	0.33		$	0.30		$	0.03		10.0	%
Average common shares		32,994			33,267			(273	)	(0.8	)%
Average diluted common shares		33,162			33,352			(190	)	(0.6	)%
Return on average total assets		1.19	%		1.05	%
Return on average equity		9.30	%		9.43	%
Efficiency ratio		59.56	%		58.71	%

	Twelve months ended December 31,
(dollars and shares in thousands)		2024			2023		$ Change			% Change
Net interest income	$	331,434		$	356,677		$	(25,243	)	(7.1	)%
Provision for credit losses		(6,632	)		(23,990	)		17,358		(72.4	)%
Noninterest income		64,407			61,400			3,007		4.9	%
Noninterest expense		(234,105	)		(233,182	)		(923	)	0.4	%
Provision for income taxes		(40,236	)		(43,515	)		3,279		(7.5	)%
Net income	$	114,868		$	117,390		$	(2,522	)	(2.1	)%
Diluted earnings per share	$	3.46		$	3.52		$	(0.06	)	(1.7	)%
Dividends per share	$	1.32		$	1.20		$	0.12		10.0	%
Average common shares		33,088			33,261			(173	)	(0.5	)%
Average diluted common shares		33,230			33,355			(125	)	(0.4	)%
Return on average total assets		1.18	%		1.19	%
Return on average equity		9.57	%		10.65	%
Efficiency ratio		59.14	%		55.77	%

Balance Sheet Data

Total loans outstanding were $6.8 billion as of December 31, 2024, a decrease of $25.9 million or 0.4% over December 31, 2023, but an increase of $84.6 million or 5.1% annualized as compared to the trailing quarter ended September 30, 2024. Investments decreased by $79.9 million and $269.3 million for the three and twelve month periods ended December 31, 2024, respectively, and ended the quarter with a balance of $2.04 billion or 21.1% of total assets. Quarterly average earning assets to quarterly total average assets was 91.8% on December 31, 2024, compared to 91.6% at December 31, 2023. The loan-to-deposit ratio was 83.7% on December 31, 2024, as compared to 86.7% at December 31, 2023. The Company did not utilize brokered deposits during 2024 or 2023 and continues to rely on organic deposit customers and short-term borrowings to fund cash flow timing differences.

Total shareholders' equity decreased by $18.1 million during the quarter ended December 31, 2024, as net income of $29.0 million was partially offset by a $35.5 million increase in accumulated other comprehensive losses and cash dividend payments on common stock of approximately $10.9 million. As a result, the Company's book value declined to $37.03 per share at December 31, 2024, compared to $37.55 at September 30, 2024. The Company's tangible book value per share, a non-GAAP measure, calculated by subtracting goodwill and other intangible assets from total shareholders' equity and dividing that sum by total shares outstanding, was $27.60 per share at December 31, 2024, as compared to $28.09 at September 30, 2024. Changes in the fair value of available-for-sale investment securities, net of deferred taxes, continue to create moderate levels of volatility in tangible book value per share.

Trailing Quarter Balance Sheet Change

Ending balances	December 31, 2024		September 30, 2024					Annualized % Change
(dollars in thousands)	December 31, 2024		September 30, 2024		$ Change			Annualized % Change
Total assets	$	9,673,728	$	9,823,890	$	(150,162	)	(6.1	)%
Total loans		6,768,523		6,683,891		84,632		5.1
Total investments		2,036,610		2,116,469		(79,859	)	(15.1	)
Total deposits		8,087,576		8,037,091		50,485		2.5
Total other borrowings		89,610		266,767		(177,157	)	(265.6	)

Loans outstanding increased by $84.6 million or 5.1% on an annualized basis during the quarter ended December 31, 2024. During the quarter, loan originations/draws totaled approximately $487.9 million while payoffs/repayments of loans totaled $408.5 million, which compares to originations/draws and payoffs/repayments during the trailing quarter ended of $351.1 million and $418.8 million, respectively. Origination volume was elevated relative to the comparative period in 2023 due in large part to a dip in benchmark interest rates leading to increased borrower demand. The activity within loan payoffs/repayments remains spread amongst numerous borrowers, regions and loan types.

Investment security balances decreased $79.9 million or 15.1% on an annualized basis during the quarter as a result of net decreases in the market value of securities of $53.1 million and net prepayments and maturities, collectively totaling approximating $91.0 million, offset partially by purchases totaling $64.8 million. There were no investment securities sold during the quarter. Investment security purchases were comprised of fixed rate agency mortgage backed securities and fixed rate agency collateralized mortgage obligations. While management intends to primarily utilize cash flows from the investment security portfolio and organic deposit growth to support loan growth, excess liquidity will be utilized for purchases of investment securities to support net interest income growth and net interest margin expansion.

Deposit balances increased by $50.5 million or 2.5% annualized during the period, primarily due to increases in interest-bearing demand deposits and time certificates, partially offset by decreases in savings deposits.

Average Trailing Quarter Balance Sheet Change

Quarterly average balances for the period ended	December 31, 2024		September 30, 2024					Annualized % Change
(dollars in thousands)	December 31, 2024		September 30, 2024		$ Change			Annualized % Change
Total assets	$	9,725,643	$	9,666,979	$	58,664		2.4	%
Total loans		6,720,732		6,690,326		30,406		1.8
Total investments		2,066,437		2,108,359		(41,922	)	(8.0	)
Total deposits		8,118,663		8,020,936		97,727		4.9
Total other borrowings		95,202		175,268		(80,066	)	(182.7	)

Year Over Year Balance Sheet Change

Ending balances	As of December 31,							% Change
(dollars in thousands)		2024		2023	$ Change			% Change
Total assets	$	9,673,728	$	9,910,089	$	(236,361	)	(2.4	)%
Total loans		6,768,523		6,794,470		(25,947	)	(0.4	)
Total investments		2,036,610		2,305,882		(269,272	)	(11.7	)
Total deposits		8,087,576		7,834,038		253,538		3.2
Total other borrowings		89,610		632,582		(542,972	)	(85.8	)

Primary Sources of Liquidity

(dollars in thousands)	December 31, 2024			September 30, 2024			December 31, 2023
Borrowing capacity at correspondent banks and FRB	$	2,821,678		$	2,757,640		$	2,927,065
Less: borrowings outstanding		(75,000	)		(250,000	)		(500,000	)
Unpledged available-for-sale (AFS) investment securities		1,279,422			1,312,745			1,702,265
Cash held or in transit with FRB		96,395			274,908			72,049
Total primary liquidity	$	4,122,495		$	4,095,293		$	4,201,379

Estimated uninsured deposit balances	$	2,584,265		$	2,513,313		$	2,406,552

On 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. 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.

Net Interest Income and Net Interest Margin

The Company's yield on total loans increased 14 basis points to 5.78% for the three months ended December 31, 2024, from 5.64% for the three months ended December 31, 2023. The tax equivalent yield on the Company's investment security portfolio was 3.38% for the quarter ended December 31, 2024, a decrease of 9 basis points from the 3.47% for the three months ended December 31, 2023. The cost of total interest-bearing deposits and total interest-bearing liabilities increased by 53 basis points and 26 basis points, respectively, between the three-month periods ended December 31, 2024 and 2023. In September 2024, the FOMC began reducing short term rates and through December 2024 there were three rate cuts totaling 100 basis points. Net interest income and net interest margin increased in both the third and fourth quarters of 2024. More specifically, the fully tax-equivalent net interest income and net interest margin was $82.3 million and 3.68%, respectively for the quarter ended June 30, 2024, and was $84.4 million and 3.76%, respectively for the quarter ended December 31, 2024.

The Company continues to manage its cost of deposits through the use of various pricing and product mix strategies. As of December 31, 2024 and December 31, 2023, deposits priced utilizing these strategies totaled $1.05 billion and $1.3 billion and carried weighted average rates of 3.59% and 3.60%, respectively.

	Three months ended
	December 31, 2024			September 30, 2024
(dollars in thousands)	December 31, 2024			September 30, 2024			Change			% Change
Interest income	$	116,842		$	117,347		$	(505	)	(0.4	)%
Interest expense		(32,752	)		(34,736	)		1,984		(5.7	)%
Fully tax-equivalent adjustment (FTE) ⁽¹⁾		266			269			(3	)	(1.1	)%
Net interest income (FTE)	$	84,356		$	82,880		$	1,476		1.8	%
Net interest margin (FTE)		3.76	%		3.71	%

Acquired loans discount accretion, net:
Amount (included in interest income)	$	1,129		$	1,018		$	111		10.9	%
Net interest margin less effect of acquired loan discount accretion⁽¹⁾		3.71	%		3.66	%		0.05	%

	Three months ended December 31,
(dollars in thousands)		2024			2023		Change			% Change
Interest income	$	116,842		$	115,909		$	933		0.8	%
Interest expense		(32,752	)		(29,292	)		(3,460	)	11.8	%
Fully tax-equivalent adjustment (FTE) ⁽¹⁾		266			360			(94	)	(26.1	)%
Net interest income (FTE)	$	84,356		$	86,977		$	(2,621	)	(3.0	)%
Net interest margin (FTE)		3.76	%		3.81	%

Acquired loans discount accretion, net:
Amount (included in interest income)	$	1,129		$	1,459		$	(330	)	(22.6	)%
Net interest margin less effect of acquired loan discount accretion⁽¹⁾		3.71	%		3.75	%		(0.04	)%

	Twelve months ended December 31,
(dollars in thousands)		2024			2023		Change			% Change
Interest income	$	466,638		$	438,354		$	28,284		6.5	%
Interest expense		(135,204	)		(81,677	)		(53,527	)	65.5	%
Fully tax-equivalent adjustment (FTE) ⁽¹⁾		1,085			1,536			(451	)	(29.4	)%
Net interest income (FTE)	$	332,519		$	358,213		$	(25,694	)	(7.2	)%
Net interest margin (FTE)		3.71	%		3.96	%

Acquired loans discount accretion, net:
Amount (included in interest income)	$	4,329		$	5,651		$	(1,322	)	(23.4	)%
Net interest margin less effect of acquired loan discount accretion⁽¹⁾		3.66	%		3.90	%		(0.24	)%

(1)

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

Analysis Of Change In Net Interest Margin On Earning Assets

Three months ended

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December 31, 2024

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December 31, 2023

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TriCo Bancshares Reports Fourth Quarter 2024 Net Income of $29.0 Million, Diluted EPS of $0.88