TriBancshares(TCBK) - 2024 Q4 - Annual Results

Financial Highlights & Executive Commentary This section provides an overview of TriCo Bancshares' financial performance and strategic commentary from its leadership Executive Commentary and Selected Financial Highlights TriCo Bancshares reported a stable fourth quarter for 2024, with net income of $29.0 million and diluted EPS of $0.88, consistent with the previous quarter, driven by expanded net interest margin and income due to reduced funding costs and effective asset deployment - CEO Rick Smith emphasized the company's focus on navigating industry changes to create significant opportunities for performance elevation as it approaches its 50th anniversary[2] - CFO Peter Wiese noted that net interest margin and income expanded for the second straight quarter, driven by lower funding costs and deploying cash into higher-yielding assets, despite three Federal Funds rate cuts[3] Q4 2024 Key Financial Metrics | Metric | Q4 2024 Value | Change vs. Q3 2024 | Change vs. Q4 2023 | | :--- | :--- | :--- | :--- | | Net Income | $29.0 million | -$0.1 million | +$3.0 million | | Diluted EPS | $0.88 | Unchanged | +$0.10 | | Net Interest Margin (FTE) | 3.76% | +5 bps | -5 bps | | Loan Balances (in billions) | $6.77 | +$84.6 million (5.1% ann.) | -$25.9 million (-0.4%) | | Deposit Balances (in billions) | $8.09 | +$50.5 million (2.5% ann.) | +$253.5 million (3.2%) | | Return on Average Assets | 1.19% | -1 bp | +14 bps | | Return on Average Equity | 9.30% | -22 bps | -13 bps | | Efficiency Ratio | 59.56% | -46 bps | +85 bps | | ACL to Total Loans | 1.85% | Unchanged | +6 bps | Financial Performance Analysis This section details the company's operating results, balance sheet changes, net interest income, asset quality, and expense management Operating Results and Performance Ratios In Q4 2024, net income was $29.0 million, nearly flat compared to Q3 2024 but up 11.3% from Q4 2023, with diluted EPS remaining at $0.88 QoQ and increasing by 12.8% YoY, while the full year 2024 net income slightly decreased by 2.1% to $114.9 million Q4 2024 vs. Q3 2024 Performance | Metric | Q4 2024 (in millions) | Q3 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $84.09 | $82.611 | $1.479 | 1.8% | | Provision for Credit Losses | $1.702 | $0.22 | $1.482 | 673.6% | | Net Income | $29.034 | $29.051 | ($0.017) | (0.1)% | | Diluted EPS | $0.88 | $0.88 | $0.00 | 0.0% | Q4 2024 vs. Q4 2023 Performance | Metric | Q4 2024 (in millions) | Q4 2023 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | $29.034 | $26.075 | $2.959 | 11.3% | | Diluted EPS | $0.88 | $0.78 | $0.10 | 12.8% | | Provision for Credit Losses | $1.702 | $5.99 | ($4.288) | (71.6)% | | Dividends per share | $0.33 | $0.30 | $0.03 | 10.0% | Full Year 2024 vs. 2023 Performance | Metric | FY 2024 (in millions) | FY 2023 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $331.434 | $356.677 | ($25.243) | (7.1)% | | Net Income | $114.868 | $117.39 | ($2.522) | (2.1)% | | Diluted EPS | $3.46 | $3.52 | ($0.06) | (1.7)% | | Dividends per share | $1.32 | $1.20 | $0.12 | 10.0% | Balance Sheet Analysis As of December 31, 2024, total assets stood at $9.67 billion, a 2.4% decrease year-over-year, with total loans stable at $6.8 billion and deposits growing 3.2% YoY to $8.09 billion, while primary liquidity remained strong at $4.1 billion, covering 160% of estimated uninsured deposits Balance Sheet Changes (Q4 2024 vs Q3 2024) | Balance Sheet Item | Dec 31, 2024 (in billions) | Sep 30, 2024 (in billions) | $ Change (in millions) | Annualized % Change | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $9.674 | $9.824 | ($150.162) | (6.1)% | | Total Loans | $6.769 | $6.684 | $84.632 | 5.1% | | Total Deposits | $8.088 | $8.037 | $50.485 | 2.5% | | Total Other Borrowings (in millions) | $89.61 | $266.767 | ($177.157) | (265.6)% | Balance Sheet Changes (Year-Over-Year) | Balance Sheet Item | Dec 31, 2024 (in billions) | Dec 31, 2023 (in billions) | $ Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $9.674 | $9.91 | ($236.361) | (2.4)% | | Total Loans | $6.769 | $6.794 | ($25.947) | (0.4)% | | Total Investments (in billions) | $2.037 | $2.306 | ($269.272) | (11.7)% | | Total Deposits | $8.088 | $7.834 | $253.538 | 3.2% | | Total Other Borrowings (in millions) | $89.61 | $632.582 | ($542.972) | (85.8)% | - Shareholders' equity decreased by $18.1 million in Q4 2024 due to a $35.5 million increase in accumulated other comprehensive losses and $10.9 million in dividends, which offset the $29.0 million in net income, resulting in a decrease in book value per share from $37.55 to $37.03[9] - Total primary liquidity was $4.12 billion as of December 31, 2024, representing 51% of total deposits and 160% of estimated uninsured deposits, indicating a strong liquidity position[15] Net Interest Income and Net Interest Margin Net interest income (FTE) increased by 1.8% QoQ to $84.4 million in Q4 2024, while the net interest margin (NIM) expanded by 5 basis points to 3.76%, primarily driven by a $2.0 million decrease in interest expense from lower borrowing balances and an improved deposit mix - Net interest income and net interest margin increased for the second consecutive quarter, rising from $82.3 million and 3.68% in Q2 2024 to $84.4 million and 3.76% in Q4 2024[16] Net Interest Income and Margin (FTE) - Quarterly Comparison | Metric | Q4 2024 (in millions) | Q3 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Interest Income | $116.842 | $117.347 | ($0.505) | (0.4)% | | Interest Expense | $32.752 | $34.736 | $1.984 | (5.7)% | | Net Interest Income (FTE) | $84.356 | $82.88 | $1.476 | 1.8% | | Net Interest Margin (FTE) | 3.76% | 3.71% | +0.05% | - | Net Interest Income and Margin (FTE) - Year-Over-Year Comparison | Metric | Q4 2024 (in millions) | Q4 2023 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Interest Income | $116.842 | $115.909 | $0.933 | 0.8% | | Interest Expense | $32.752 | $29.292 | ($3.46) | 11.8% | | Net Interest Income (FTE) | $84.356 | $86.977 | ($2.621) | (3.0)% | | Net Interest Margin (FTE) | 3.76% | 3.81% | (0.05)% | - | - The QoQ increase in net interest income was mainly due to a $1.1 million drop in interest expense on borrowings and a $0.8 million decrease in deposit interest expense, which offset a $0.5 million decline in interest income from earning assets[23] Asset Quality and Credit Loss Provisioning The provision for credit losses was $1.7 million in Q4 2024, up from $0.2 million in Q3 2024 but significantly lower than the $6.0 million in Q4 2023, with the allowance for credit losses (ACL) to total loans ratio remaining stable at 1.85% QoQ Provision for Credit Losses | Metric | Q4 2024 (in thousands) | Q3 2024 (in thousands) | Q4 2023 (in thousands) | | :--- | :--- | :--- | :--- | | Total provision for credit losses | $1,702 | $220 | $5,990 | Allowance for Credit Losses (ACL) Roll-Forward (Quarterly) | Metric | Q4 2024 (in thousands) | Q4 2023 (in thousands) | | :--- | :--- | :--- | | Balance, beginning of period | $123,760 | $115,812 | | Provision for credit losses | $1,812 | $6,040 | | Loans charged-off | ($722) | ($749) | | Recoveries | $516 | $419 | | Balance, end of period | $125,366 | $121,522 | - Non-performing loans increased by $2.5 million during the quarter to $44.1 million and non-performing assets to total assets rose to 0.48% from 0.45% in the prior quarter[32][35] - The ratio of classified loans to total loans was 1.74% at year-end, up from 1.29% a year prior, but remains consistent with pre-pandemic levels and reflects a conservative approach to credit risk monitoring[33] Non-interest Income Total non-interest income for Q4 2024 was $16.3 million, a slight decrease of 1.3% from Q3 2024, primarily due to a $0.4 million decline in the value of equity securities, while year-over-year, non-interest income increased by 1.5% Non-interest Income Comparison (Q4 2024 vs. Q3 2024) | Metric | Q4 2024 (in thousands) | Q3 2024 (in thousands) | Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total service charges and fees | $13,115 | $12,782 | $333 | 2.6% | | (Loss) gain on marketable equity securities | ($81) | $356 | ($437) | (122.8)% | | Total non-interest income | $16,275 | $16,495 | ($220) | (1.3)% | Non-interest Income Comparison (Q4 2024 vs. Q4 2023) | Metric | Q4 2024 (in thousands) | Q4 2023 (in thousands) | Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Asset management and commission income | $1,584 | $1,284 | $300 | 23.4% | | Total non-interest income | $16,275 | $16,040 | $235 | 1.5% | - For the full year 2024, non-interest income increased by $3.0 million (4.9%) compared to 2023, driven by a $1.9 million increase in service charges on deposit accounts and a $1.1 million increase in asset management income[39] Non-interest Expense Non-interest expense in Q4 2024 was $59.8 million, a marginal increase of 0.5% from Q3 2024, with salaries and benefits, the largest component, decreasing slightly by 0.6% QoQ, while full year 2024 expenses were nearly flat, increasing just 0.4% to $234.1 million Non-interest Expense Comparison (Q4 2024 vs. Q3 2024) | Metric | Q4 2024 (in thousands) | Q3 2024 (in thousands) | Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total salaries and benefits expense | $35,326 | $35,550 | ($224) | (0.6)% | | Data processing and software | $5,493 | $5,258 | $235 | 4.5% | | Total non-interest expense | $59,775 | $59,487 | $288 | 0.5% | Non-interest Expense Comparison (Q4 2024 vs. Q4 2023) | Metric | Q4 2024 (in thousands) | Q4 2023 (in thousands) | Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total salaries and benefits expense | $35,326 | $34,055 | $1,271 | 3.7% | | Other miscellaneous expense | $4,611 | $6,656 | ($2,045) | (30.7)% | | Total non-interest expense | $59,775 | $60,267 | ($492) | (0.8)% | - For the full year 2024, total non-interest expense increased by only 0.4%, as a $4.8 million (3.5%) rise in salaries and benefits and a $2.0 million (10.7%) increase in data processing/software costs were largely offset by a $2.0 million decline in intangible amortization and a $0.8 million reduction in operational losses[43] Provision for Income Taxes The company's effective tax rate was 25.3% for Q4 2024, down from 26.3% in the prior quarter, and 25.9% for the full year 2024, a decrease from 28.4% in 2023, remaining below the blended statutory rate of 29.6% due to non-taxable revenues and tax credits - The effective tax rate was 25.3% for Q4 2024 and 25.9% for the full year 2024, which is lower than the blended statutory rate of approximately 29.6% due to non-taxable revenues and tax credits[44] Supplementary Information This section provides essential background on TriCo Bancshares and its forward-looking statements, along with detailed unaudited financial data and non-GAAP reconciliations About TriCo Bancshares & Forward-Looking Statements This section provides a corporate overview of TriCo Bancshares and its subsidiary, Tri Counties Bank, highlighting its history since 1975 and its range of banking services across California, alongside a standard forward-looking statements disclaimer outlining numerous risks that could cause actual results to differ from expectations - TriCo Bancshares, established in 1975 and headquartered in Chico, California, operates through its subsidiary Tri Counties Bank, offering a wide range of consumer, small business, and commercial banking services throughout California[47] - Key risks identified include economic conditions, interest rate policies of the Federal Reserve, inflation, regulatory changes, credit quality of the loan portfolio, cybersecurity incidents, and competition from traditional and non-traditional financial companies[48] Condensed Consolidated Financial Data (Unaudited) This section provides detailed unaudited financial tables for the past five quarters, including income statement data, per-share metrics, credit quality indicators, key financial ratios, and quarter-end balance sheet figures, offering a granular, comparative view of the company's performance and financial position over time Quarterly Financial Summary (Last 5 Quarters) | Metric | Q4 2024 (in millions) | Q3 2024 (in millions) | Q2 2024 (in millions) | Q1 2024 (in millions) | Q4 2023 (in millions) | | :--- | :--- | :--- | :--- | :--- | :--- | | Income Statement | | | | | | | Net Interest Income | $84.09 | $82.611 | $81.997 | $82.736 | $86.617 | | Net Income | $29.034 | $29.051 | $29.034 | $27.749 | $26.075 | | Diluted EPS | $0.88 | $0.88 | $0.87 | $0.83 | $0.78 | | Balance Sheet (End of Period) | | | | | | | Total Assets (in billions) | $9.674 | $9.824 | $9.741 | $9.814 | $9.91 | | Total Loans, Gross (in billions) | $6.769 | $6.684 | $6.743 | $6.801 | $6.794 | | Total Deposits (in billions) | $8.088 | $8.037 | $8.05 | $7.988 | $7.834 | | Total Shareholders' Equity (in billions) | $1.221 | $1.239 | $1.175 | $1.163 | $1.16 | | Key Ratios | | | | | | | Return on Average Assets | 1.19% | 1.20% | 1.19% | 1.13% | 1.05% | | Net Interest Margin (FTE) | 3.76% | 3.71% | 3.68% | 3.68% | 3.81% | | Efficiency Ratio | 59.56% | 60.02% | 59.61% | 57.36% | 58.71% | | ACL to Gross Loans | 1.85% | 1.85% | 1.83% | 1.83% | 1.79% | Non-GAAP Financial Measures (Unaudited) This section reconciles GAAP to non-GAAP financial measures to provide what management believes is a clearer assessment of core operational trends, with key non-GAAP metrics including tangible book value per share of $27.60 and return on average tangible common equity of 12.73% for Q4 2024 Tangible Book Value Per Share Reconciliation (Non-GAAP) | Metric | Dec 31, 2024 (in thousands) | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :--- | :--- | :--- | :--- | | Shareholders' equity (GAAP) | $1,220,907 | $1,239,015 | $1,159,682 | | Less: Goodwill and other intangibles | $310,874 | $311,904 | $314,994 | | Tangible shareholders' equity (Non-GAAP) | $910,033 | $927,111 | $844,688 | | Common shares outstanding | 32,970,425 | 33,000,508 | 33,268,102 | | Tangible book value per share (Non-GAAP) | $27.60 | $28.09 | $25.39 | Return on Average Tangible Common Equity (Non-GAAP) | Metric (annualized) | Q4 2024 | Q3 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | Return on average equity (GAAP) | 9.30% | 9.52% | 9.43% | | Return on average tangible common equity (Non-GAAP) | 12.73% | 13.13% | 13.67% | - The net interest margin (FTE) of 3.76% for Q4 2024 includes a 5 basis point benefit from the accretion of discounts on acquired loans, with the core NIM being 3.71% excluding this effect[51]