TriCo Bancshares Announces Quarterly Results
TriCo Bancshares (NASDAQ: TCBK) reported a net income of $17.6 million for Q3 2020, up from $7.4 million in Q2 2020 but down from $23.4 million in Q3 2019. The diluted EPS was $0.59, a rise from $0.25 in Q2 but down from $0.76 year-over-year. The Company’s return on average assets was 0.95%, with total loans at $4.83 billion. Net interest margin declined to 3.72% from 4.44% in Q3 2019. The credit provision expense was $7.6 million, a decrease from $22.2 million in Q2 2020, while non-performing assets rose to 0.34%.
- Net income increased to $17.6 million from $7.4 million in Q2 2020.
- Diluted EPS rose to $0.59 from $0.25 in the previous quarter.
- Credit provision expense decreased significantly to $7.6 million from $22.2 million in Q2.
- Non-interest income showed strong growth due to mortgage banking gains.
- Strong deposit growth was noted amidst interest rate challenges.
- Net income decreased compared to $23.4 million in Q3 2019.
- Net interest margin dropped to 3.72%, down from 4.44% in Q3 2019.
- Non-performing assets increased to 0.34% from 0.31% in the previous quarter.
CHICO, Calif.--(BUSINESS WIRE)--TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company of Tri Counties Bank, today announced net income of
Financial Highlights
Performance highlights and other developments for the Company as of or for the three and nine months ended September 30, 2020 included the following:
-
For the three and nine months ended September 30, 2020, the Company’s return on average assets was
0.95% and0.79% , respectively, and the return on average equity was7.79% and6.13% , respectively. -
As of September 30, 2020, the Company reported total loans, total assets and total deposits of
$4.83 billion ,$7.45 billion and$6.34 billion , respectively. -
The loan to deposit ratio was
76.12% as of September 30, 2020, as compared to76.84% at June 30, 2020 and78.98% at September 30, 2019. -
For the current quarter, net interest margin was
3.72% on a tax equivalent basis as compared to4.44% in the quarter ended September 30, 2019, and a decrease of 38 basis points from the4.10% in the trailing quarter. -
Non-interest bearing deposits as a percentage of total deposits were
39.71% at September 30, 2020, as compared to39.81% at June 30, 2020 and33.56% at September 30, 2019. -
The average rate of interest paid on deposits, including non-interest-bearing deposits, decreased to
0.09% for the third quarter of 2020 as compared with0.12% for the trailing quarter, and also decreased by 14 basis points from the average rate paid of0.23% during the same quarter of the prior year. -
Non-performing assets to total assets were
0.34% at September 30, 2020, as compared to0.31% as of June 30, 2020, and0.31% at September 30, 2019. -
Credit provision expense for loans and debt securities was
$7.6 million during the quarter ended September 30, 2020, as compared to provision expense of$22.2 million during the trailing quarter ended June 30, 2020, and a reversal of provision totaling ($0.3) million for the three month period ended September 30, 2019. -
Gain on sale of loans for the three and nine months ended September 30, 2020 totaled
$3.0 million and$5.7 million , as compared to$1.2 million and$2.2 million for the equivalent periods ended September 30, 2019, respectively. -
The efficiency ratio was
59.44% for the third quarter of 2020, as compared to59.69% in the trailing quarter and58.82% in the same quarter of the 2019 year.
President and CEO, Rick Smith commented, “While we continue to operate in a very difficult interest rate environment, there were several positive areas of performance during the quarter. In addition to having non-PPP loan growth, we continue to experience strong deposit growth while at the same time making reductions to our cost of funds. Most importantly, credit quality remained stable if not improved over the prior quarter as illustrated by deferred loans outstanding decreasing from
Smith added, “In addition to normal banking efforts, we continue to operate effectively under the current COVID-19 environment. Our branches are open, and we have made operational enhancements to allow employees the ability to continue to work effectively from either the office or from home. We also experienced numerous wildfires during the quarter burning millions of acres of land around us. Fortunately, our bank and our customers have experienced minimal damage from those fires and currently the fires are controlled.”
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Quarterly Report on Form 10-Q for the period ended September 30, 2020, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.
Summary Results
For the three and nine months ended September 30, 2020 the Company’s return on average assets was
The following is a summary of the components of the Company’s operating results and performance ratios for the periods indicated:
|
Three months ended |
|
|
|
|
||||||||||||||
|
September 30, |
|
June 30, |
|
|
|
|
||||||||||||
(dollars and shares in thousands) |
2020 |
|
2020 |
|
$ Change |
|
% Change |
||||||||||||
Net interest income |
$ |
63,454 |
|
|
|
$ |
64,659 |
|
|
|
$ |
(1,205 |
) |
|
|
(1.9 |
) |
% |
|
Provision for loan losses |
(7,649 |
) |
|
|
(22,244 |
) |
|
|
|
14,595 |
|
|
|
(65.6 |
) |
% |
|||
Noninterest income |
15,137 |
|
|
|
11,657 |
|
|
|
3,480 |
|
|
|
29.9 |
|
% |
||||
Noninterest expense |
(46,714 |
) |
|
|
(45,550 |
) |
|
|
(1,164 |
) |
|
|
2.6 |
|
% |
||||
Provision for income taxes |
(6,622 |
) |
|
|
(1,092 |
) |
|
|
(5,530 |
) |
|
|
506.4 |
|
% |
||||
Net income |
$ |
17,606 |
|
|
|
$ |
7,430 |
|
|
|
$ |
10,176 |
|
|
|
137.0 |
|
% |
|
Diluted earnings per share |
$ |
0.59 |
|
|
|
$ |
0.25 |
|
|
|
$ |
0.34 |
|
|
|
136.0 |
|
% |
|
Dividends per share |
$ |
0.22 |
|
|
|
$ |
0.22 |
|
|
|
$ |
— |
|
|
|
— |
|
% |
|
Average common shares |
29,764 |
|
|
|
29,754 |
|
|
|
10 |
|
|
|
0.0 |
|
% |
||||
Average diluted common shares |
29,844 |
|
|
|
29,883 |
|
|
|
(39 |
) |
|
|
(0.1 |
) |
% |
||||
Return on average total assets |
0.95 |
|
% |
|
0.43 |
|
% |
|
|
|
|
||||||||
Return on average equity |
7.79 |
|
% |
|
3.39 |
|
% |
|
|
|
|
||||||||
Efficiency ratio |
59.44 |
|
% |
|
59.69 |
|
% |
|
|
|
|
||||||||
|
Three months ended
|
|
|
|
|
||||||||||||||
(dollars and shares in thousands) |
2020 |
|
2019 |
|
$ Change |
|
% Change |
||||||||||||
Net interest income |
$ |
63,454 |
|
|
|
$ |
64,688 |
|
|
|
$ |
(1,234 |
) |
|
|
(1.9 |
) |
% |
|
(Provision for) reversal of loan losses |
(7,649 |
) |
|
|
329 |
|
|
|
(7,978 |
) |
|
|
(2,424.9 |
) |
% |
||||
Noninterest income |
15,137 |
|
|
|
14,108 |
|
|
|
1,029 |
|
|
|
7.3 |
|
% |
||||
Noninterest expense |
|
(46,714 |
) |
|
|
|
(46,344 |
) |
|
|
(370 |
) |
|
|
0.8 |
|
% |
||
Provision for income taxes |
(6,622 |
) |
|
|
(9,386 |
) |
|
|
2,764 |
|
|
|
(29.4 |
) |
% |
||||
Net income |
$ |
17,606 |
|
|
|
$ |
23,395 |
|
|
|
$ |
(5,789 |
) |
|
|
(24.7 |
) |
% |
|
Diluted earnings per share |
$ |
0.59 |
|
|
|
$ |
0.76 |
|
|
|
$ |
(0.17 |
) |
|
|
(22.4 |
) |
% |
|
Dividends per share |
$ |
0.22 |
|
|
|
$ |
0.22 |
|
|
|
$ |
— |
|
|
|
— |
|
% |
|
Average common shares |
29,764 |
|
|
|
30,509 |
|
|
|
(745 |
) |
|
|
(2.4 |
) |
% |
||||
Average diluted common shares |
29,844 |
|
|
|
30,629 |
|
|
|
(785 |
) |
|
|
(2.6 |
) |
% |
||||
Return on average total assets |
0.95 |
|
% |
|
1.44 |
|
% |
|
|
|
|
||||||||
Return on average equity |
7.79 |
|
% |
|
10.42 |
|
% |
|
|
|
|
||||||||
Efficiency ratio |
59.44 |
|
% |
|
58.82 |
|
% |
|
|
|
|
||||||||
|
Nine months ended
|
|
|
|
|
||||||||||||||
(dollars and shares in thousands) |
2020 |
|
2019 |
|
$ Change |
|
% Change |
||||||||||||
Net interest income |
$ |
191,305 |
|
|
|
$ |
192,873 |
|
|
|
$ |
(1,568 |
) |
|
|
(0.8 |
) |
% |
|
(Provision for) reversal of loan losses |
(37,963 |
) |
|
|
1,392 |
|
|
|
(39,355 |
) |
|
|
(2,827.2 |
) |
% |
||||
Noninterest income |
38,615 |
|
|
|
39,334 |
|
|
|
(719 |
) |
|
|
(1.8 |
) |
% |
||||
Noninterest expense |
(137,014 |
) |
|
|
(138,493 |
) |
|
|
1,479 |
|
|
|
(1.1 |
) |
% |
||||
Provision for income taxes |
(13,786 |
) |
|
|
(25,924 |
) |
|
|
12,138 |
|
|
|
(46.8 |
) |
% |
||||
Net income |
$ |
41,157 |
|
|
|
$ |
69,182 |
|
|
|
$ |
(28,025 |
) |
|
|
(40.5 |
) |
% |
|
Diluted earnings per share |
$ |
1.37 |
|
|
|
$ |
2.25 |
|
|
|
$ |
(0.88 |
) |
|
|
(39.2 |
) |
% |
|
Dividends per share |
$ |
0.66 |
|
|
|
$ |
0.60 |
|
|
|
$ |
0.06 |
|
|
|
10.0 |
|
% |
|
Average common shares |
29,971 |
|
|
|
30,464 |
|
|
|
(493 |
) |
|
|
(1.6 |
) |
% |
||||
Average diluted common shares |
30,083 |
|
|
|
30,643 |
|
|
|
(560 |
) |
|
|
(1.8 |
) |
% |
||||
Return on average total assets |
0.79 |
|
% |
|
1.44 |
|
% |
|
|
|
|
||||||||
Return on average equity |
6.13 |
|
% |
|
10.67 |
|
% |
|
|
|
|
||||||||
Efficiency ratio |
59.59 |
|
% |
|
59.64 |
|
% |
|
|
|
|
||||||||
SBA Paycheck Protection Program
In March 2020, the SBA Paycheck Protection Program ("PPP") was created to help small businesses keep workers employed during the COVID-19 crisis. As a Small Business Administration (SBA) Preferred Lender, the Company was able to provide PPP loans to small business customers. As of the quarter ended September 30, 2020, the total balance outstanding of PPP loans was
COVID Deferrals
Following the passage of the CARES Act legislation, the "Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus" was issued by federal bank regulators, which offers temporary relief from troubled debt restructuring accounting for loan payment deferrals for certain customers whose businesses are experiencing economic hardship due to Coronavirus. The Company is closely monitoring the effects of the pandemic on our loan and deposit customers. Our management team continues to be focused on assessing the risks in our loan portfolio and working with our customers to mitigate where possible, the risk of potential losses. The Company implemented loan programs to allow certain consumers and businesses impacted by the pandemic to defer loan principal and interest payments.
The following is a summary of COVID related loan customer modifications with outstanding balances as of September 30, 2020:
|
|
|
|
|
Modification Type |
|
Deferral Term |
|||||||||||
(dollars in thousands) |
Modified Loan
|
|
% of Total
|
|
Interest Only
|
|
Principal and
|
|
90 Days |
|
180 Days |
|||||||
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
CRE non-owner occupied |
$ |
80,314 |
|
5.0 |
% |
|
96.0 |
% |
|
4.0 |
% |
|
— |
% |
|
100.0 |
% |
|
CRE owner occupied |
12,959 |
|
2.2 |
|
|
64.3 |
|
|
35.7 |
|
|
10.2 |
|
|
89.8 |
|
||
Multifamily |
8,996 |
|
1.5 |
|
|
75.7 |
|
|
24.3 |
|
|
24.3 |
|
|
75.7 |
|
||
Farmland |
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||
Total commercial real estate loans |
102,269 |
|
3.5 |
|
|
90.2 |
|
|
9.8 |
|
|
3.4 |
|
|
96.6 |
|
||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
SFR 1-4 1st lien |
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||
SFR HELOCs and junior liens |
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||
Other |
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||
Total consumer loans |
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||
Commercial and industrial |
4,493 |
|
0.7 |
|
|
98.8 |
|
|
1.2 |
|
|
1.4 |
|
|
98.6 |
|
||
Construction |
24,176 |
|
8.5 |
|
|
100.0 |
|
|
— |
|
|
— |
|
|
100.0 |
|
||
Agriculture production |
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||
Leases |
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||
Total modifications |
$ |
130,938 |
|
2.71 |
% |
|
92.32 |
% |
|
7.68 |
% |
|
2.73 |
% |
|
97.27 |
% |
|
Total loan modifications associated with CARES Act legislation made during the nine months ended September 30, 2020 totaled approximately
The total loan modifications made under the CARES Act during 2020 are inclusive of seven borrowers with loan balances totaling approximately
Management believes that its analysis of each borrower receiving a loan modification supports the ability of that borrower to return to their normal payment terms at the conclusion of the modification period. As such management determined that a risk downgrade to each credit receiving a deferral modification was prudent until such time that the borrower's actual payment performance supported an upgrade to the pre-modification risk grade.
Balance Sheet
Total loans outstanding grew to
Total shareholders' equity increased by
Trailing Quarter Balance Sheet Change
Ending balances |
As of September 30, |
|
As of June 30, |
|
$ Change |
|
Annualized
|
||||||||
(dollars in thousands) |
2020 |
|
2020 |
|
|||||||||||
Total assets |
$ |
7,449,799 |
|
|
$ |
7,360,071 |
|
|
$ |
89,728 |
|
|
4.9 |
% |
|
Total loans |
4,826,338 |
|
|
4,801,405 |
|
|
24,933 |
|
|
2.1 |
% |
||||
Total loans, excluding PPP |
4,400,390 |
|
|
4,377,974 |
|
|
22,416 |
|
|
2.0 |
% |
||||
Total investments |
1,473,935 |
|
|
1,353,728 |
|
|
|
120,207 |
|
|
35.5 |
% |
|||
Total deposits |
$ |
6,340,588 |
|
|
$ |
6,248,258 |
|
|
$ |
92,330 |
|
|
5.9 |
% |
|
The growth of deposit balances continued during the third quarter of 2020, increasing by
Average Trailing Quarter Balance Sheet Change
Qtrly avg balances |
As of September 30, |
|
As of June 30, |
|
$ Change |
|
Annualized
|
||||||||
(dollars in thousands) |
2020 |
|
2020 |
|
|||||||||||
Total assets |
$ |
7,380,961 |
|
|
$ |
7,027,735 |
|
|
$ |
353,226 |
|
|
20.1 |
% |
|
Total loans |
4,827,564 |
|
|
4,656,050 |
|
|
171,514 |
|
|
14.7 |
% |
||||
Total loans, excluding PPP |
4,389,672 |
|
|
4,363,481 |
|
|
26,191 |
|
|
2.4 |
% |
||||
Total investments |
1,376,212 |
|
|
1,371,733 |
|
|
4,479 |
|
|
1.3 |
% |
||||
Total deposits |
$ |
6,278,638 |
|
|
$ |
5,937,294 |
|
|
$ |
341,344 |
|
|
23.0 |
% |
|
The growth in average loans of
Year Over Year Balance Sheet Change
Ending balances |
As of September 30, |
|
|
|
|
||||||||||
(dollars in thousands) |
2020 |
|
2019 |
|
$ Change |
|
% Change |
||||||||
Total assets |
$ |
7,449,799 |
|
|
$ |
6,384,883 |
|
|
$ |
1,064,916 |
|
|
16.7 |
% |
|
Total loans |
4,826,338 |
|
|
4,182,348 |
|
|
643,990 |
|
|
15.4 |
% |
||||
Total loans, excluding PPP |
4,400,390 |
|
|
4,182,348 |
|
|
218,042 |
|
|
5.2 |
% |
||||
Total investments |
1,473,935 |
|
|
1,397,753 |
|
|
76,182 |
|
|
5.5 |
% |
||||
Total deposits |
$ |
6,340,588 |
|
|
$ |
5,295,407 |
|
|
$ |
1,045,181 |
|
|
19.7 |
% |
|
As discussed above, the PPP program generated significant increases in volume during the nine months ended September 30, 2020 for loan and deposit balances. Excess deposit proceeds have been temporarily allocated to cash and due from banks, which increased to
Net Interest Income and Net Interest Margin
The following is a summary of the components of net interest income for the periods indicated:
|
Three months ended |
|
|
|
|
||||||||||||||
|
September 30, |
|
June 30, |
|
|
|
|
||||||||||||
(dollars in thousands) |
2020 |
|
2020 |
|
$ Change |
|
% Change |
||||||||||||
Interest income |
$ |
65,438 |
|
|
|
$ |
67,148 |
|
|
|
$ |
(1,710 |
) |
|
|
(2.5 |
) |
% |
|
Interest expense |
(1,984 |
) |
|
|
(2,489 |
) |
|
|
505 |
|
|
|
(20.3 |
) |
% |
||||
Fully tax-equivalent adjustment (FTE) (1) |
254 |
|
|
|
286 |
|
|
|
(32 |
) |
|
|
(11.2 |
) |
% |
||||
Net interest income (FTE) |
$ |
63,708 |
|
|
|
$ |
64,945 |
|
|
|
$ |
(1,237 |
) |
|
|
(1.9 |
) |
% |
|
Net interest margin (FTE) |
3.72 |
|
% |
|
4.10 |
|
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||||||
Acquired loans discount accretion, net: |
|
|
|
|
|
|
|
||||||||||||
Amount (included in interest income) |
$ |
1,876 |
|
|
|
$ |
2,587 |
|
|
|
$ |
(711 |
) |
|
|
|
|||
Net interest margin less effect of acquired loan discount accretion |
3.61 |
|
% |
|
3.94 |
|
% |
|
|
|
(0.33 |
) |
% |
||||||
PPP loans yield, net: |
|
|
|
|
|
|
|
||||||||||||
Amount (included in interest income) |
$ |
2,603 |
|
|
|
$ |
2,356 |
|
|
|
$ |
247 |
|
|
|
|
|||
Net interest margin less effect of PPP loan yield (1) |
3.81 |
|
% |
|
4.14 |
|
% |
|
|
|
(0.33 |
) |
% |
||||||
Acquired loans discount accretion and PPP loan yield, net: (1) |
|
|
|
|
|
|
|
||||||||||||
Amount (included in interest income) |
$ |
4,479 |
|
|
|
$ |
4,943 |
|
|
|
$ |
(464 |
) |
|
|
|
|||
Net interest margin less effect of acquired loan discount accretion and PPP loan yield (1) |
3.69 |
|
% |
|
3.97 |
|
% |
|
|
|
(0.28 |
) |
% |
||||||
|
Three months ended
|
|
|
|
|
||||||||||||||
(dollars in thousands) |
2020 |
|
2019 |
|
$ Change |
|
% Change |
||||||||||||
Interest income |
$ |
65,438 |
|
|
|
$ |
68,889 |
|
|
|
$ |
(3,451 |
) |
|
|
(5.0 |
) |
% |
|
Interest expense |
(1,984 |
) |
|
|
(4,201 |
) |
|
|
2,217 |
|
|
|
(52.8 |
) |
% |
||||
Fully tax-equivalent adjustment (FTE) (1) |
254 |
|
|
|
289 |
|
|
|
(35 |
) |
|
|
(12.1 |
) |
% |
||||
Net interest income (FTE) |
$ |
63,708 |
|
|
|
$ |
64,977 |
|
|
|
$ |
(1,269 |
) |
|
|
(2.0 |
) |
% |
|
Net interest margin (FTE) |
3.72 |
|
% |
|
4.44 |
|
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||||||
Acquired loans discount accretion, net: |
|
|
|
|
|
|
|
||||||||||||
Amount (included in interest income) |
$ |
1,876 |
|
|
|
$ |
2,360 |
|
|
|
$ |
(484 |
) |
|
|
|
|||
Net interest margin less effect of acquired loan discount accretion |
3.61 |
|
% |
|
4.28 |
|
% |
|
|
|
(0.67 |
) |
% |
||||||
|
Nine months ended
|
|
|
|
|
||||||||||||||
(dollars in thousands) |
2020 |
|
2019 |
|
$ Change |
|
% Change |
||||||||||||
Interest income |
$ |
199,103 |
|
|
|
$ |
204,526 |
|
|
|
$ |
(5,423 |
) |
|
|
(2.7 |
) |
% |
|
Interest expense |
(7,798 |
) |
|
|
(11,653 |
) |
|
|
3,855 |
|
|
|
(33.1 |
) |
% |
||||
Fully tax-equivalent adjustment (FTE) (1) |
811 |
|
|
|
929 |
|
|
|
(118 |
) |
|
|
(12.7 |
) |
% |
||||
Net interest income (FTE) |
$ |
192,116 |
|
|
|
$ |
193,802 |
|
|
|
$ |
(1,686 |
) |
|
|
(0.9 |
) |
% |
|
Net interest margin (FTE) |
4.02 |
|
% |
|
4.48 |
|
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||||||
Acquired loans discount accretion, net: |
|
|
|
|
|
|
|
||||||||||||
Amount (included in interest income) |
$ |
6,211 |
|
|
|
$ |
5,919 |
|
|
|
$ |
292 |
|
|
|
|
|||
Net interest margin less effect of acquired loan discount accretion |
3.82 |
|
% |
|
4.40 |
|
% |
|
|
|
(0.58 |
) |
% |
||||||
PPP loans yield, net: |
|
|
|
|
|
|
|
||||||||||||
Amount (included in interest income) |
$ |
4,959 |
|
|
|
— |
|
|
$ |
4,959 |
|
|
|
|
|||||
Net interest margin less effect of PPP loan yield (1) |
4.08 |
|
% |
|
— |
|
|
|
|
4.08 |
|
% |
|||||||
Acquired loans discount accretion and PPP loan yield, net: |
|
|
|
|
|
|
|
||||||||||||
Amount (included in interest income) |
$ |
11,170 |
|
|
|
$ |
5,919 |
|
|
|
$ |
5,251 |
|
|
|
|
|||
Net interest margin less effect of acquired loans discount and PPP loan yield (1) |
3.88 |
|
% |
|
4.40 |
|
% |
|
|
|
(0.52 |
) |
% |
||||||
(1) |
Information is presented on a fully tax-equivalent (FTE) basis. The Company believes the use of this non-generally accepted accounting principles (non-GAAP) measure provides additional clarity in assessing its results, and the presentation of these measures on a FTE basis is a common practice within the banking industry. |
Loans may be acquired at a premium or discount to par value, in which case, the premium is amortized (subtracted from) or accreted (added to) interest income over the remaining life of the loan. Generally, as time goes on, the effects of loan discount accretion and loan premium amortization decrease as the purchased loans mature or pay off early. Upon the early pay off of a loan, any remaining (unaccreted) discount or (unamortized) premium is immediately taken into interest income; and as loan payoffs may vary significantly from quarter to quarter, so may the impact of discount accretion and premium amortization on interest income. As a result of the uncertain economic environment and corresponding rate volatility, the prepayment rate of portfolio loans, inclusive of those acquired at a premium or discount, increased during the third quarter of 2020. During the three months ended September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, purchased loan discount accretion was
The following table shows the components of net interest income and net interest margin on a fully tax-equivalent (FTE) basis for the quarterly periods indicated:
ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS |
|||||||||||||||||||||||||||||||||
(unaudited, dollars in thousands) |
|||||||||||||||||||||||||||||||||
|
Three months ended |
|
Three months ended |
|
Three months ended |
||||||||||||||||||||||||||||
|
September 30, 2020 |
|
June 30, 2020 |
|
September 30, 2019 |
||||||||||||||||||||||||||||
|
Average
|
|
Income/
|
|
Yield/
|
|
Average
|
|
Income/
|
|
Yield/
|
|
Average
|
|
Income/
|
|
Yield/
|
||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Loans, excluding PPP |
$ |
4,389,672 |
|
|
$ |
55,436 |
|
|
5.02 |
% |
|
$ |
4,363,481 |
|
|
$ |
56,053 |
|
|
5.17 |
% |
|
$ |
4,142,602 |
|
|
$ |
56,999 |
|
|
5.46 |
% |
|
PPP loans |
437,892 |
|
|
2,603 |
|
|
2.36 |
% |
|
292,569 |
|
|
2,356 |
|
|
3.24 |
% |
|
— |
|
|
— |
|
|
— |
% |
|||||||
Investments-taxable |
1,261,793 |
|
|
6,376 |
|
|
2.01 |
% |
|
1,251,873 |
|
|
7,689 |
|
|
2.47 |
% |
|
1,403,653 |
|
|
10,172 |
|
|
2.88 |
% |
|||||||
Investments-nontaxable (1) |
114,419 |
|
|
1,102 |
|
|
3.83 |
% |
|
119,860 |
|
|
1,238 |
|
|
4.15 |
% |
|
133,038 |
|
|
1,250 |
|
|
3.73 |
% |
|||||||
Total investments |
1,376,212 |
|
|
7,478 |
|
|
2.16 |
% |
|
1,371,733 |
|
|
8,927 |
|
|
2.62 |
% |
|
1,536,691 |
|
|
11,422 |
|
|
2.95 |
% |
|||||||
Cash at Federal Reserve and other banks |
611,719 |
|
|
175 |
|
|
0.11 |
% |
|
338,082 |
|
|
98 |
|
|
0.12 |
% |
|
130,955 |
|
|
757 |
|
|
2.29 |
% |
|||||||
Total earning assets |
6,815,495 |
|
|
65,692 |
|
|
3.83 |
% |
|
6,365,865 |
|
|
67,434 |
|
|
4.26 |
% |
|
5,810,248 |
|
|
69,178 |
|
|
4.72 |
% |
|||||||
Other assets, net |
565,466 |
|
|
|
|
|
|
661,870 |
|
|
|
|
|
|
642,222 |
|
|
|
|
|
|||||||||||||
Total assets |
$ |
7,380,961 |
|
|
|
|
|
|
$ |
7,027,735 |
|
|
|
|
|
|
$ |
6,452,470 |
|
|
|
|
|
||||||||||
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest-bearing demand deposits |
$ |
1,339,797 |
|
|
56 |
|
|
0.02 |
% |
|
$ |
1,293,007 |
|
|
64 |
|
|
0.02 |
% |
|
$ |
1,240,548 |
|
|
$ |
284 |
|
|
0.09 |
% |
|||
Savings deposits |
2,075,077 |
|
|
484 |
|
|
0.09 |
% |
|
1,968,374 |
|
|
644 |
|
|
0.13 |
% |
|
1,861,166 |
|
|
1,192 |
|
|
0.25 |
% |
|||||||
Time deposits |
387,922 |
|
|
872 |
|
|
0.89 |
% |
|
409,242 |
|
|
1,105 |
|
|
1.09 |
% |
|
447,669 |
|
|
1,574 |
|
|
1.39 |
% |
|||||||
Total interest-bearing deposits |
3,802,796 |
|
|
1,412 |
|
|
0.15 |
% |
|
3,670,623 |
|
|
1,813 |
|
|
0.20 |
% |
|
3,549,383 |
|
|
3,050 |
|
|
0.34 |
% |
|||||||
Other borrowings |
33,750 |
|
|
4 |
|
|
0.05 |
% |
|
26,313 |
|
|
4 |
|
|
0.06 |
% |
|
73,350 |
|
|
334 |
|
|
1.81 |
% |
|||||||
Junior subordinated debt |
57,475 |
|
|
568 |
|
|
3.93 |
% |
|
57,372 |
|
|
672 |
|
|
4.71 |
% |
|
57,156 |
|
|
817 |
|
|
5.67 |
% |
|||||||
Total interest-bearing liabilities |
3,894,021 |
|
|
1,984 |
|
|
0.20 |
% |
|
3,754,308 |
|
|
2,489 |
|
|
0.27 |
% |
|
3,679,889 |
|
|
4,201 |
|
|
0.45 |
% |
|||||||
Noninterest-bearing deposits |
2,475,842 |
|
|
|
|
|
|
2,266,671 |
|
|
|
|
|
|
1,777,852 |
|
|
|
|
|
|||||||||||||
Other liabilities |
112,112 |
|
|
|
|
|
|
126,351 |
|
|
|
|
|
|
104,062 |
|
|
|
|
|
|||||||||||||
Shareholders’ equity |
898,986 |
|
|
|
|
|
|
880,405 |
|
|
|
|
|
|
890,667 |
|
|
|
|
|
|||||||||||||
Total liabilities and shareholders’ equity |
$ |
7,380,961 |
|
|
|
|
|
|
$ |
7,027,735 |
|
|
|
|
|
|
$ |
6,452,470 |
|
|
|
|
|
||||||||||
Net interest rate spread (1) (2) |
|
|
|
|
3.63 |
% |
|
|
|
|
|
3.99 |
% |
|
|
|
|
|
4.27 |
% |
|||||||||||||
Net interest income and margin (1) (3) |
|
|
$ |
63,708 |
|
|
3.72 |
% |
|
|
|
$ |
64,945 |
|
|
4.10 |
% |
|
|
|
$ |
64,977 |
|
|
4.44 |
% |
|||||||
(1) |
Fully taxable equivalent (FTE). All yields and rates are calculated using specific day counts for the period and year as applicable. |
(2) |
Net interest spread is the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities. |
(3) |
Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets. |
Net interest income (FTE) during the three months ended September 30, 2020 decreased
As compared to the same quarter in the prior year, average loan yields, excluding PPP, decreased 44 basis points from
The decline in interest expense when compared to the trailing quarter is primarily attributed to the reduction in the cost of interest bearing liabilities, which decreased by 7 basis points as of September 30, 2020 to
ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS |
||||||||||||||||||||||
(unaudited, dollars in thousands) |
||||||||||||||||||||||
|
Nine months ended September 30, 2020 |
|
Nine months ended September 30, 2019 |
|||||||||||||||||||
|
Average
|
|
Income/
|
|
Yield/
|
|
Average
|
|
Income/
|
|
Yield/
|
|||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loans, excluding PPP |
$ |
4,360,942 |
|
|
$ |
167,747 |
|
|
5.14 |
% |
|
$ |
4,070,568 |
|
|
$ |
166,888 |
|
|
5.48 |
% |
|
PPP loans |
244,196 |
|
|
4,959 |
|
|
2.71 |
% |
|
— |
|
|
— |
|
|
— |
% |
|||||
Investments-taxable |
1,249,823 |
|
|
22,637 |
|
|
2.42 |
% |
|
1,420,426 |
|
|
31,849 |
|
|
3.00 |
% |
|||||
Investments-nontaxable (1) |
117,745 |
|
|
3,515 |
|
|
3.99 |
% |
|
138,580 |
|
|
4,024 |
|
|
3.88 |
% |
|||||
Total investments |
1,367,568 |
|
|
26,152 |
|
|
2.55 |
% |
|
1,559,006 |
|
|
35,873 |
|
|
3.08 |
% |
|||||
Cash at Federal Reserve and other banks |
403,252 |
|
|
1,056 |
|
|
0.35 |
% |
|
148,995 |
|
|
2,694 |
|
|
2.42 |
% |
|||||
Total earning assets |
6,375,958 |
|
|
199,914 |
|
|
4.19 |
% |
|
5,778,569 |
|
|
205,455 |
|
|
4.75 |
% |
|||||
Other assets, net |
595,617 |
|
|
|
|
|
|
643,130 |
|
|
|
|
|
|||||||||
Total assets |
$ |
6,971,575 |
|
|
|
|
|
|
$ |
6,421,699 |
|
|
|
|
|
|||||||
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest-bearing demand deposits |
$ |
1,293,071 |
|
|
289 |
|
|
0.03 |
% |
|
$ |
1,263,312 |
|
|
860 |
|
|
0.09 |
% |
|||
Savings deposits |
1,971,348 |
|
|
2,190 |
|
|
0.15 |
% |
|
1,892,122 |
|
|
3,631 |
|
|
0.26 |
% |
|||||
Time deposits |
409,005 |
|
|
3,297 |
|
|
1.08 |
% |
|
443,546 |
|
|
4,277 |
|
|
1.29 |
% |
|||||
Total interest-bearing deposits |
3,673,424 |
|
|
5,776 |
|
|
0.21 |
% |
|
3,598,980 |
|
|
8,768 |
|
|
0.33 |
% |
|||||
Other borrowings |
26,223 |
|
|
13 |
|
|
0.07 |
% |
|
35,814 |
|
|
384 |
|
|
1.43 |
% |
|||||
Junior subordinated debt |
57,374 |
|
|
2,009 |
|
|
4.68 |
% |
|
57,109 |
|
|
2,501 |
|
|
5.86 |
% |
|||||
Total interest-bearing liabilities |
3,757,021 |
|
|
7,798 |
|
|
0.28 |
% |
|
3,691,903 |
|
|
11,653 |
|
|
0.42 |
% |
|||||
Noninterest-bearing deposits |
2,197,315 |
|
|
|
|
|
|
1,761,037 |
|
|
|
|
|
|||||||||
Other liabilities |
120,486 |
|
|
|
|
|
|
101,947 |
|
|
|
|
|
|||||||||
Shareholders’ equity |
896,753 |
|
|
|
|
|
|
866,812 |
|
|
|
|
|
|||||||||
Total liabilities and shareholders’ equity |
$ |
6,971,575 |
|
|
|
|
|
|
$ |
6,421,699 |
|
|
|
|
|
|||||||
Net interest rate spread (1) (2) |
|
|
|
|
3.91 |
% |
|
|
|
|
|
4.33 |
% |
|||||||||
Net interest income and margin (1) (3) |
|
|
$ |
192,116 |
|
|
4.02 |
% |
|
|
|
$ |
193,802 |
|
|
4.48 |
% |
|||||
(1) |
Fully taxable equivalent (FTE). All yields and rates are calculated using specific day counts for the period and year as applicable. |
(2) |
Net interest spread is the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities. |
(3) |
Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets. |
Interest Rates and Loan Portfolio Composition
During 2020, declines in several market interest rates, including many rates that serve as reference indices for variable rate loans declined markedly from previous levels. As of September 30, 2020 the Company's loan portfolio consisted of approximately
As of June 30, 2020 the Company's loan portfolio consisted of approximately
Asset Quality and Credit Loss Provisioning
The Company adopted CECL on January 1, 2020. During the three months ended September 30, 2020, the Company recorded a provision for credit losses of
The following table presents details of the provision for credit losses for the periods indicated:
|
Three months ended |
|||||||||||
(dollars in thousands) |
September 30, 2020 |
|
June 30, 2020 |
|
March 31, 2020 |
|||||||
Addition to allowance for credit losses |
$ |
7,649 |
|
|
$ |
22,089 |
|
|
$ |
8,000 |
|
|
Addition to reserve for unfunded loan commitments |
— |
|
|
155 |
|
|
70 |
|
||||
Total provision for credit losses |
$ |
7,649 |
|
|
$ |
22,244 |
|
|
$ |
8,070 |
|
|
The allowance for credit losses (ACL) was
Loans past due 30 days or more decreased by
|
September 30, |
|
% of Total
|
|
June 30, |
|
% of Total
|
|
December 31, |
|
% of Total
|
||||||||||
(in thousands) |
2020 |
|
|
2020 |
|
|
2019 |
|
|||||||||||||
Risk Rating: |
|
|
|
|
|
|
|
|
|||||||||||||
Pass |
$ |
4,630,266 |
|
95.9 |
% |
|
$ |
4,698,393 |
|
97.9 |
% |
|
$ |
4,228,453 |
|
98.2 |
% |
||||
Special Mention |
147,343 |
|
3.1 |
% |
|
61,883 |
|
1.3 |
% |
|
44,217 |
|
1.0 |
% |
|||||||
Substandard |
48,729 |
|
1.0 |
% |
|
41,129 |
|
0.9 |
% |
|
34,696 |
|
0.8 |
% |
|||||||
Total |
$ |
4,826,338 |
|
|
|
$ |
4,801,405 |
|
|
|
$ |
4,307,366 |
|
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
Classified loans to total loans |
1.01 |
% |
|
|
0.86 |
% |
|
|
0.81 |
% |
|
||||||||||
Loans past due 30+ days to total loans |
0.22 |
% |
|
|
0.35 |
% |
|
|
0.25 |
% |
|
||||||||||
The Company's loan portfolio for non-classified loans (loans graded special mention or better) remains generally consistent for the quarter ended September 30, 2020, as compared to the trailing quarter June 30, 2020, representing
There was one insignificant addition and no sales of other real estate owned during the three month period ended September 30, 2020. As of September 30, 2020, other real estate owned consisted of four properties with a carrying value of
Allocation of Credit Loss Reserves by Loan Type |
|
|
|
|
|
|
|
|
|
||||||||||||
|
As of September 30, 2020 |
|
As of June 30, 2020 |
|
As of March 31, 2020 |
||||||||||||||||
(dollars in thousands) |
Amount |
|
% of Loans
|
|
Amount |
|
% of Loans
|
|
Amount |
|
% of Loans
|
||||||||||
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CRE - Non Owner Occupied |
$ |
28,847 |
|
|
1.80 |
% |
|
$ |
26,091 |
|
|
1.63 |
% |
|
$ |
18,034 |
|
|
1.10 |
% |
|
CRE - Owner Occupied |
9,625 |
|
|
1.66 |
% |
|
8,710 |
|
|
1.50 |
% |
|
5,366 |
|
|
0.99 |
% |
||||
Multifamily |
10,032 |
|
|
1.67 |
% |
|
8,581 |
|
|
1.49 |
% |
|
5,140 |
|
|
0.92 |
% |
||||
Farmland |
1,790 |
|
|
1.17 |
% |
|
1,468 |
|
|
0.97 |
% |
|
713 |
|
|
0.50 |
% |
||||
Total commercial real estate loans |
|
50,294 |
|
|
1.71 |
% |
|
|
44,850 |
|
|
1.54 |
% |
|
|
29,253 |
|
|
1.01 |
% |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
SFR 1-4 1st Liens |
8,937 |
|
|
1.72 |
% |
|
8,015 |
|
|
1.58 |
% |
|
5,650 |
|
|
1.18 |
% |
||||
SFR HELOCs and Junior Liens |
11,676 |
|
|
3.51 |
% |
|
12,108 |
|
|
3.38 |
% |
|
11,196 |
|
|
3.08 |
% |
||||
Other |
3,394 |
|
|
4.18 |
% |
|
3,042 |
|
|
3.73 |
% |
|
2,746 |
|
|
3.33 |
% |
||||
Total consumer loans |
|
24,007 |
|
|
2.57 |
% |
|
|
23,165 |
|
|
2.45 |
% |
|
|
19,592 |
|
|
2.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and Industrial |
4,534 |
|
|
0.72 |
% |
|
4,018 |
|
|
0.63 |
% |
|
3,867 |
|
|
1.46 |
% |
||||
Construction |
7,640 |
|
|
2.68 |
% |
|
6,775 |
|
|
2.43 |
% |
|
4,595 |
|
|
0.65 |
% |
||||
Agricultural Production |
1,093 |
|
|
2.69 |
% |
|
919 |
|
|
2.59 |
% |
|
593 |
|
|
2.51 |
% |
||||
Leases |
7 |
|
|
0.19 |
% |
|
12 |
|
|
0.68 |
% |
|
11 |
|
|
1.90 |
% |
||||
Allowance for credit losses |
87,575 |
|
|
1.81 |
% |
|
79,739 |
|
|
1.66 |
% |
|
57,911 |
|
|
1.32 |
% |
||||
Reserve for unfunded loan commitments |
3,000 |
|
|
|
|
3,000 |
|
|
|
|
2,845 |
|
|
|
|||||||
Total allowance for credit losses |
$ |
90,575 |
|
|
1.88 |
% |
|
$ |
82,739 |
|
|
1.72 |
% |
|
$ |
60,756 |
|
|
1.39 |
% |
|
As of September 30, 2020 and June 30, 2020, total loans includes PPP loans which are fully guaranteed and therefore would not require any loss reserve allocation. In the table above, PPP loans are included in the segment "Commercial and Industrial" for the periods ended September 30, 2020 and June 30, 2020. There were no PPP loans outstanding as of March 31, 2020. Excluding PPP loan outstanding balances from the ratio of the ACL to total loans results in a reserve ratio of approximately
Non-interest Income
The following table presents the key components of non-interest income for the current and trailing quarterly periods indicated:
|
Three months ended |
|
|
|
|
|||||||||||
(dollars in thousands) |
September 30, 2020 |
|
June 30, 2020 |
|
$ Change |
|
% Change |
|||||||||
ATM and interchange fees |
$ |
5,637 |
|
|
$ |
5,165 |
|
|
$ |
472 |
|
|
9.1 |
|
% |
|
Service charges on deposit accounts |
3,334 |
|
|
3,046 |
|
|
288 |
|
|
9.5 |
|
% |
||||
Other service fees |
805 |
|
|
734 |
|
|
71 |
|
|
9.7 |
|
% |
||||
Mortgage banking service fees |
457 |
|
|
459 |
|
|
(2 |
) |
|
(0.4 |
) |
% |
||||
Change in value of mortgage servicing rights |
236 |
|
|
(1,236 |
) |
|
1,472 |
|
|
(119.1 |
) |
% |
||||
Total service charges and fees |
10,469 |
|
|
8,168 |
|
|
2,301 |
|
|
28.2 |
|
% |
||||
Increase in cash value of life insurance |
773 |
|
|
710 |
|
|
63 |
|
|
8.9 |
|
% |
||||
Asset management and commission income |
667 |
|
|
661 |
|
|
6 |
|
|
0.9 |
|
% |
||||
Gain on sale of loans |
3,035 |
|
|
1,736 |
|
|
1,299 |
|
|
74.8 |
|
% |
||||
Lease brokerage income |
175 |
|
|
127 |
|
|
48 |
|
|
37.8 |
|
% |
||||
Sale of customer checks |
91 |
|
|
88 |
|
|
3 |
|
|
3.4 |
|
% |
||||
Gain on sale of investment securities |
7 |
|
|
— |
|
|
7 |
|
|
n/a |
|
|||||
Gain on marketable equity securities |
— |
|
|
25 |
|
|
(25 |
) |
|
(100.0 |
) |
% |
||||
Other |
(80 |
) |
|
142 |
|
|
(222 |
) |
|
(156.3 |
) |
% |
||||
Total other non-interest income |
4,668 |
|
|
3,489 |
|
|
1,179 |
|
|
33.8 |
|
% |
||||
Total non-interest income |
$ |
15,137 |
|
|
$ |
11,657 |
|
|
$ |
3,480 |
|
|
29.9 |
|
% |
|
Non-interest income increased
The following table presents the key components of non-interest income for the periods indicated:
|
Three months ended
|
|
|
|
|
|||||||||||
(dollars in thousands) |
2020 |
|
2019 |
|
$ Change |
|
% Change |
|||||||||
ATM and interchange fees |
$ |
5,637 |
|
|
$ |
5,427 |
|
|
$ |
210 |
|
|
3.9 |
|
% |
|
Service charges on deposit accounts |
3,334 |
|
|
4,327 |
|
|
(993 |
) |
|
(22.9 |
) |
% |
||||
Other service fees |
805 |
|
|
808 |
|
|
(3 |
) |
|
(0.4 |
) |
% |
||||
Mortgage banking service fees |
457 |
|
|
483 |
|
|
(26 |
) |
|
(5.4 |
) |
% |
||||
Change in value of mortgage servicing rights |
236 |
|
|
(455 |
) |
|
691 |
|
|
(151.9 |
) |
% |
||||
Total service charges and fees |
10,469 |
|
|
10,590 |
|
|
(121 |
) |
|
(1.1 |
) |
% |
||||
Increase in cash value of life insurance |
773 |
|
|
773 |
|
|
— |
|
|
— |
|
% |
||||
Asset management and commission income |
667 |
|
|
721 |
|
|
(54 |
) |
|
(7.5 |
) |
% |
||||
Gain on sale of loans |
3,035 |
|
|
1,236 |
|
|
1,799 |
|
|
145.6 |
|
% |
||||
Lease brokerage income |
175 |
|
|
172 |
|
|
3 |
|
|
1.7 |
|
% |
||||
Sale of customer checks |
91 |
|
|
126 |
|
|
(35 |
) |
|
(27.8 |
) |
% |
||||
Gain on sale of investment securities |
7 |
|
|
107 |
|
|
(100 |
) |
|
(93.5 |
) |
% |
||||
Gain on marketable equity securities |
— |
|
|
22 |
|
|
(22 |
) |
|
n/m |
|
|||||
Other |
(80 |
) |
|
361 |
|
|
(441 |
) |
|
(122.2 |
) |
% |
||||
Total other non-interest income |
4,668 |
|
|
3,518 |
|
|
1,150 |
|
|
32.7 |
|
% |
||||
Total non-interest income |
$ |
15,137 |
|
|
$ |
14,108 |
|
|
$ |
1,029 |
|
|
7.3 |
|
% |
|
In addition to the discussion above within the non-interest income for the three months ended September 30, 2020 and trailing June 30, 2020, fee generating deposit account activity remains depressed as a result of the COVID-19 pandemic, while volumes of e-commerce activity showed improvement from the trailing quarter, the same quarter of the prior year and for the nine month year to date periods (illustrated below).
The following table presents the key components of non-interest income for the current and prior year nine-month periods indicated:
|
Nine months ended
|
|
|
|
|
|||||||||||
(dollars in thousands) |
2020 |
|
2019 |
|
$ Change |
|
% Change |
|||||||||
ATM and interchange fees |
$ |
15,913 |
|
|
$ |
15,412 |
|
|
$ |
501 |
|
|
3.3 |
|
% |
|
Service charges on deposit accounts |
10,426 |
|
|
12,389 |
|
|
|
(1,963 |
) |
|
(15.8 |
) |
% |
|||
Other service fees |
2,296 |
|
|
2,198 |
|
|
98 |
|
|
4.5 |
|
% |
||||
Mortgage banking service fees |
1,386 |
|
|
1,441 |
|
|
(55 |
) |
|
(3.8 |
) |
% |
||||
Change in value of mortgage servicing rights |
(2,258 |
) |
|
(1,652 |
) |
|
(606 |
) |
|
36.7 |
|
% |
||||
Total service charges and fees |
27,763 |
|
|
29,788 |
|
|
(2,025 |
) |
|
(6.8 |
) |
% |
||||
Increase in cash value of life insurance |
2,203 |
|
|
2,294 |
|
|
(91 |
) |
|
(4.0 |
) |
% |
||||
Asset management and commission income |
2,244 |
|
|
2,102 |
|
|
142 |
|
|
6.8 |
|
% |
||||
Gain on sale of loans |
5,662 |
|
|
2,223 |
|
|
3,439 |
|
|
154.7 |
|
% |
||||
Lease brokerage income |
495 |
|
|
631 |
|
|
(136 |
) |
|
(21.6 |
) |
% |
||||
Sale of customer checks |
303 |
|
|
401 |
|
|
(98 |
) |
|
(24.4 |
) |
% |
||||
Gain on sale of investment securities |
7 |
|
|
107 |
|
|
(100 |
) |
|
(93.5 |
) |
% |
||||
Gain on marketable equity securities |
72 |
|
|
100 |
|
|
(28 |
) |
|
(28.0 |
) |
% |
||||
Other |
(135 |
) |
|
1,688 |
|
|
(1,823 |
) |
|
(108.0 |
) |
% |
||||
Total other non-interest income |
10,851 |
|
|
9,546 |
|
|
1,305 |
|
|
13.7 |
|
% |
||||
Total non-interest income |
$ |
38,614 |
|
|
$ |
39,334 |
|
|
$ |
(720 |
) |
|
(1.8 |
) |
% |
|
Non-interest income decreased
Non-interest Expense
The following table presents the key components of non-interest expense for the current and trailing quarterly periods indicated:
|
Three Months Ended |
|
|
|
|
|||||||||||
(dollars in thousands) |
September 30, 2020 |
|
June 30, 2020 |
|
$ Change |
|
% Change |
|||||||||
Base salaries, net of deferred loan origination costs |
$ |
18,754 |
|
|
$ |
17,277 |
|
|
$ |
1,477 |
|
|
8.5 |
|
% |
|
Incentive compensation |
2,184 |
|
|
2,395 |
|
|
(211 |
) |
|
(8.8 |
) |
% |
||||
Benefits and other compensation costs |
8,383 |
|
|
7,383 |
|
|
1,000 |
|
|
13.5 |
|
% |
||||
Total salaries and benefits expense |
29,321 |
|
|
27,055 |
|
|
2,266 |
|
|
8.4 |
|
% |
||||
Occupancy |
3,440 |
|
|
3,398 |
|
|
42 |
|
|
1.2 |
|
% |
||||
Data processing and software |
3,561 |
|
|
3,657 |
|
|
(96 |
) |
|
(2.6 |
) |
% |
||||
Equipment |
1,549 |
|
|
1,350 |
|
|
199 |
|
|
14.7 |
|
% |
||||
Intangible amortization |
1,431 |
|
|
1,431 |
|
|
— |
|
|
— |
|
% |
||||
Advertising |
869 |
|
|
531 |
|
|
338 |
|
|
63.7 |
|
% |
||||
ATM and POS network charges |
1,314 |
|
|
1,210 |
|
|
104 |
|
|
8.6 |
|
% |
||||
Professional fees |
955 |
|
|
741 |
|
|
214 |
|
|
28.9 |
|
% |
||||
Telecommunications |
619 |
|
|
639 |
|
|
(20 |
) |
|
(3.1 |
) |
% |
||||
Regulatory assessments and insurance |
538 |
|
|
360 |
|
|
178 |
|
|
49.4 |
|
% |
||||
Postage |
118 |
|
|
283 |
|
|
(165 |
) |
|
(58.3 |
) |
% |
||||
Operational losses |
154 |
|
|
184 |
|
|
(30 |
) |
|
(16.3 |
) |
% |
||||
Courier service |
345 |
|
|
337 |
|
|
8 |
|
|
2.4 |
|
% |
||||
Gain on sale of foreclosed assets |
— |
|
|
(16 |
) |
|
16 |
|
|
(100 |
) |
% |
||||
Loss on disposal of fixed assets |
22 |
|
|
15 |
|
|
7 |
|
|
46.7 |
|
% |
||||
Other miscellaneous expense |
2,478 |
|
|
4,375 |
|
|
|
(1,897 |
) |
|
(43.4 |
) |
% |
|||
Total other non-interest expense |
17,393 |
|
|
18,495 |
|
|
(1,102 |
) |
|
(6.0 |
) |
% |
||||
Total non-interest expense |
$ |
46,714 |
|
|
$ |
45,550 |
|
|
$ |
1,164 |
|
|
2.6 |
|
% |
|
Average full-time equivalent staff |
|
1,105 |
|
|
1,139 |
|
|
(34 |
) |
|
(3.0 |
) |
% |
|||
Non-interest expense for the quarter ended September 30, 2020 increased
The following table presents the key components of non-interest expense for the current and prior year quarterly periods indicated:
|
Three months ended September 30, |
|
|
|
|
|||||||||||
(dollars in thousands) |
2020 |
|
2019 |
|
$ Change |
|
% Change |
|||||||||
Base salaries, net of deferred loan origination costs |
$ |
18,754 |
|
|
$ |
17,656 |
|
|
$ |
1,098 |
|
|
6.2 |
|
% |
|
Incentive compensation |
2,184 |
|
|
3,791 |
|
|
(1,607 |
) |
|
(42.4 |
) |
% |
||||
Benefits and other compensation costs |
8,383 |
|
|
5,452 |
|
|
2,931 |
|
|
53.8 |
|
% |
||||
Total salaries and benefits expense |
29,321 |
|
|
26,899 |
|
|
2,422 |
|
|
9.0 |
|
% |
||||
Occupancy |
3,440 |
|
|
3,711 |
|
|
(271 |
) |
|
(7.3 |
) |
% |
||||
Data processing and software |
3,561 |
|
|
3,411 |
|
|
150 |
|
|
4.4 |
|
% |
||||
Equipment |
1,549 |
|
|
1,679 |
|
|
(130 |
) |
|
(7.7 |
) |
% |
||||
Intangible amortization |
1,431 |
|
|
1,431 |
|
|
— |
|
|
— |
|
% |
||||
Advertising |
869 |
|
|
1,358 |
|
|
(489 |
) |
|
(36.0 |
) |
% |
||||
ATM and POS network charges |
1,314 |
|
|
1,343 |
|
|
(29 |
) |
|
(2.2 |
) |
% |
||||
Professional fees |
955 |
|
|
999 |
|
|
(44 |
) |
|
(4.4 |
) |
% |
||||
Telecommunications |
619 |
|
|
867 |
|
|
(248 |
) |
|
(28.6 |
) |
% |
||||
Regulatory assessments and insurance |
538 |
|
|
94 |
|
|
444 |
|
|
472.3 |
|
% |
||||
Postage |
118 |
|
|
438 |
|
|
(320 |
) |
|
(73.1 |
) |
% |
||||
Operational losses |
154 |
|
|
228 |
|
|
(74 |
) |
|
(32.5 |
) |
% |
||||
Courier service |
345 |
|
|
357 |
|
|
(12 |
) |
|
(3.4 |
) |
% |
||||
Gain on sale of foreclosed assets |
— |
|
|
(50 |
) |
|
50 |
|
|
(100.0 |
) |
% |
||||
Loss on disposal of fixed assets |
22 |
|
|
2 |
|
|
20 |
|
|
1000.0 |
|
% |
||||
Other miscellaneous expense |
2,478 |
|
|
3,577 |
|
|
(1,099 |
) |
|
(30.7 |
) |
% |
||||
Total other non-interest expense |
17,393 |
|
|
19,445 |
|
|
|
(2,052 |
) |
|
(10.6 |
) |
% |
|||
Total non-interest expense |
$ |
46,714 |
|
|
$ |
46,344 |
|
|
$ |
370 |
|
|
0.8 |
|
% |
|
Average full-time equivalent staff |
|
1,105 |
|
|
1,160 |
|
|
(55 |
) |
|
(4.7 |
) |
% |
|||
Non-interest expense increased by
The following table presents the key components of non-interest income for the current and prior year nine-month periods indicated:
|
Nine months ended September 30, |
|
|
|
|
|||||||||||
(dollars in thousands) |
2020 |
|
2019 |
|
$ Change |
|
% Change |
|||||||||
Base salaries, net of deferred loan origination costs |
$ |
53,654 |
|
|
$ |
51,624 |
|
|
$ |
2,030 |
|
|
3.9 |
|
% |
|
Incentive compensation |
7,680 |
|
|
10,064 |
|
|
|
(2,384 |
) |
|
(23.7 |
) |
% |
|||
Benefits and other compensation costs |
22,314 |
|
|
17,058 |
|
|
5,256 |
|
|
30.8 |
|
% |
||||
Total salaries and benefits expense |
83,648 |
|
|
78,746 |
|
|
4,902 |
|
|
6.2 |
|
% |
||||
Occupancy |
10,713 |
|
|
11,223 |
|
|
(510 |
) |
|
(4.5 |
) |
% |
||||
Data processing and software |
10,585 |
|
|
10,114 |
|
|
471 |
|
|
4.7 |
|
% |
||||
Equipment |
4,411 |
|
|
5,298 |
|
|
(887 |
) |
|
(16.7 |
) |
% |
||||
Intangible amortization |
4,293 |
|
|
4,293 |
|
|
— |
|
|
— |
|
% |
||||
Advertising |
2,065 |
|
|
4,222 |
|
|
(2,157 |
) |
|
(51.1 |
) |
% |
||||
ATM and POS network charges |
3,897 |
|
|
3,936 |
|
|
(39 |
) |
|
(1.0 |
) |
% |
||||
Professional fees |
2,399 |
|
|
2,895 |
|
|
(496 |
) |
|
(17.1 |
) |
% |
||||
Telecommunications |
1,983 |
|
|
2,437 |
|
|
(454 |
) |
|
(18.6 |
) |
% |
||||
Regulatory assessments and insurance |
993 |
|
|
1,095 |
|
|
(102 |
) |
|
(9.3 |
) |
% |
||||
Postage |
691 |
|
|
1,063 |
|
|
(372 |
) |
|
(35.0 |
) |
% |
||||
Operational losses |
559 |
|
|
679 |
|
|
(120 |
) |
|
(17.7 |
) |
% |
||||
Courier service |
1,013 |
|
|
1,039 |
|
|
(26 |
) |
|
(2.5 |
) |
% |
||||
Gain on sale of foreclosed assets |
(57 |
) |
|
(246 |
) |
|
189 |
|
|
(76.8 |
) |
% |
||||
Loss on disposal of fixed assets |
37 |
|
|
82 |
|
|
(45 |
) |
|
(54.9 |
) |
% |
||||
Other miscellaneous expense |
9,783 |
|
|
11,617 |
|
|
(1,834 |
) |
|
(15.8 |
) |
% |
||||
Total other non-interest expense |
53,365 |
|
|
59,747 |
|
|
(6,382 |
) |
|
(10.7 |
) |
% |
||||
Total non-interest expense |
$ |
137,013 |
|
|
$ |
138,493 |
|
|
$ |
(1,480 |
) |
|
(1.1 |
) |
% |
|
Average full-time equivalent staff |
1,093 |
|
|
1,145 |
|
|
(52 |
) |
|
(4.5 |
) |
% |
||||
Non-interest expense decreased by
Provision for Income Taxes
The Company’s effective tax rate was
About TriCo Bancshares
Established in 1975, Tri Counties Bank is a wholly-owned subsidiary of TriCo Bancshares (NASDAQ: TCBK) headquartered in Chico, California, providing a unique brand of customer Service with Solutions available in traditional stand-alone and in-store bank branches in communities throughout Northern and Central California. Tri Counties Bank provides an extensive and competitive breadth of consumer, small business and commercial banking financial services, along with convenient around-the-clock ATM, online and mobile banking access. Brokerage services are provided by Tri Counties Advisors through affiliation with Raymond James Financial Services, Inc. Visit www.TriCountiesBank.com to learn more.
Forward-Looking Statement
The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond our control. There can be no assurance that future developments affecting us will be the same as those anticipated by management. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the impact of changes in financial services policies, laws and regulations; technological changes; weather, natural disasters and other catastrophic events that may or may not be caused by climate change and their effects on economic and business environments in which the Company operates; the continuing adverse impact on the U.S. economy, including the markets in which we operate, due to the COVID-19 global pandemic, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products; the costs or effects of mergers, acquisitions or dispositions we may make; the future operating or financial performance of the Company, including our outlook for future growth, changes in the level of our nonperforming assets and charge-offs; the appropriateness of the allowance for credit losses including the timing and effects of the implementation of the current expected credit losses model; any deterioration in values of California real estate, both residential and commercial; the effect of changes in accounting standards and practices; possible other-than-temporary impairment of securities held by us; changes in consumer spending, borrowing and savings habits; our ability to attract deposits and other sources of liquidity; changes in the financial performance and/or condition of our borrowers; our noninterest expense and the efficiency ratio; competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional providers including retail businesses and technology companies; the challenges of integrating and retaining key employees; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks and the cost to defend against such attacks; the effect of a fall in stock market prices on our brokerage and wealth management businesses; and our ability to manage the risks involved in the foregoing. Additional factors that could cause results to differ materially from those described above can be found in our Annual Report on Form 10-K for the year ended December 31, 2019, which is on file with the Securities and Exchange Commission (the “SEC”) and available in the “Investor Relations” section of our website, https://www.tcbk.com/investor-relations and in other documents we file with the SEC. Annualized, pro forma, projections and estimates are not forecasts and may not reflect actual results.
TRICO BANCSHARES—CONDENSED CONSOLIDATED FINANCIAL DATA |
||||||||||||||||||||||
(Unaudited. Dollars in thousands, except share data) |
||||||||||||||||||||||
|
Three months ended |
|||||||||||||||||||||
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|||||||||||||
Revenue and Expense Data |
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest income |
$ |
65,438 |
|
|
$ |
67,148 |
|
|
$ |
66,517 |
|
|
$ |
67,918 |
|
|
|
$ |
68,889 |
|
|
|
Interest expense |
1,984 |
|
|
2,489 |
|
|
3,325 |
|
|
3,722 |
|
|
|
4,201 |
|
|
||||||
Net interest income |
63,454 |
|
|
64,659 |
|
|
63,192 |
|
|
64,196 |
|
|
|
64,688 |
|
|
||||||
Provision for (benefit from) credit losses |
7,649 |
|
|
22,244 |
|
|
8,070 |
|
|
(298 |
) |
|
|
(329 |
) |
|
||||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|||||||||||||
Service charges and fees |
10,469 |
|
|
8,168 |
|
|
9,126 |
|
|
10,629 |
|
|
|
10,590 |
|
|
||||||
Gain on sale of investment securities |
7 |
|
|
— |
|
|
— |
|
|
3 |
|
|
|
107 |
|
|
||||||
Other income |
4,661 |
|
|
3,489 |
|
|
2,694 |
|
|
3,554 |
|
|
|
3,411 |
|
|
||||||
Total noninterest income |
15,137 |
|
|
11,657 |
|
|
11,820 |
|
|
14,186 |
|
|
|
14,108 |
|
|
||||||
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|||||||||||||
Salaries and benefits |
29,321 |
|
|
27,055 |
|
|
27,272 |
|
|
27,319 |
|
|
|
26,899 |
|
|
||||||
Occupancy and equipment |
4,989 |
|
|
4,748 |
|
|
5,387 |
|
|
5,394 |
|
|
|
5,390 |
|
|
||||||
Data processing and network |
4,875 |
|
|
4,867 |
|
|
4,740 |
|
|
4,914 |
|
|
|
4,754 |
|
|
||||||
Other noninterest expense |
7,529 |
|
|
8,880 |
|
|
7,350 |
|
|
9,337 |
|
|
|
9,301 |
|
|
||||||
Total noninterest expense |
46,714 |
|
|
45,550 |
|
|
44,749 |
|
|
46,964 |
|
|
|
46,344 |
|
|
||||||
Total income before taxes |
24,228 |
|
|
8,522 |
|
|
22,193 |
|
|
31,716 |
|
|
|
32,781 |
|
|
||||||
Provision for (benefit from) income taxes |
6,622 |
|
|
1,092 |
|
|
6,072 |
|
|
8,826 |
|
|
|
9,386 |
|
|
||||||
Net income |
$ |
17,606 |
|
|
$ |
7,430 |
|
|
$ |
16,121 |
|
|
$ |
22,890 |
|
|
|
$ |
23,395 |
|
|
|
Share Data |
|
|
|
|
|
|
|
|
|
|||||||||||||
Basic earnings per share |
$ |
0.59 |
|
|
$ |
0.25 |
|
|
$ |
0.53 |
|
|
$ |
0.75 |
|
|
|
$ |
0.77 |
|
|
|
Diluted earnings per share |
$ |
0.59 |
|
|
$ |
0.25 |
|
|
$ |
0.53 |
|
|
$ |
0.75 |
|
|
|
$ |
0.76 |
|
|
|
Dividends per share |
$ |
0.22 |
|
|
$ |
0.22 |
|
|
$ |
0.22 |
|
|
$ |
0.22 |
|
|
|
$ |
0.22 |
|
|
|
Book value per common share |
$ |
30.31 |
|
|
$ |
29.76 |
|
|
$ |
28.91 |
|
|
$ |
29.70 |
|
|
|
$ |
29.39 |
|
|
|
Tangible book value per common share (1) |
$ |
22.24 |
|
|
$ |
21.64 |
|
|
$ |
20.80 |
|
|
$ |
21.69 |
|
|
|
$ |
21.33 |
|
|
|
Shares outstanding |
|
29,769,389 |
|
|
|
29,759,209 |
|
|
|
29,973,516 |
|
|
|
30,523,824 |
|
|
|
|
30,512,187 |
|
|
|
Weighted average shares |
29,763,898 |
|
|
29,753,699 |
|
|
30,394,904 |
|
|
30,520,490 |
|
|
|
30,509,057 |
|
|
||||||
Weighted average diluted shares |
29,844,396 |
|
|
29,883,193 |
|
|
30,522,842 |
|
|
30,650,071 |
|
|
|
30,629,027 |
|
|
||||||
Credit Quality |
|
|
|
|
|
|
|
|
|
|||||||||||||
Allowance for credit losses to gross loans |
1.81 |
% |
|
1.66 |
% |
|
1.32 |
% |
|
0.71 |
|
% |
|
0.75 |
|
% |
||||||
Loans past due 30 days or more |
$ |
10,522 |
|
|
$ |
16,622 |
|
|
$ |
28,693 |
|
|
$ |
9,024 |
|
|
|
$ |
8,089 |
|
|
|
Total nonperforming loans |
$ |
22,963 |
|
|
$ |
20,730 |
|
|
$ |
17,955 |
|
|
$ |
16,864 |
|
|
|
$ |
18,565 |
|
|
|
Total nonperforming assets |
$ |
25,020 |
|
|
$ |
22,652 |
|
|
$ |
20,184 |
|
|
$ |
19,405 |
|
|
|
$ |
20,111 |
|
|
|
Loans charged-off |
$ |
194 |
|
|
$ |
491 |
|
|
$ |
510 |
|
|
$ |
1,098 |
|
|
|
$ |
1,522 |
|
|
|
Loans recovered |
$ |
381 |
|
|
$ |
230 |
|
|
$ |
892 |
|
|
$ |
475 |
|
|
|
$ |
520 |
|
|
|
Selected Financial Ratios |
|
|
|
|
|
|
|
|
|
|||||||||||||
Return on average total assets |
0.95 |
% |
|
0.43 |
% |
|
1.00 |
% |
|
1.40 |
|
% |
|
1.44 |
|
% |
||||||
Return on average equity |
7.79 |
% |
|
3.39 |
% |
|
7.14 |
% |
|
10.03 |
|
% |
|
10.42 |
|
% |
||||||
Average yield on loans, excluding PPP |
5.02 |
% |
|
5.17 |
% |
|
5.23 |
% |
|
5.33 |
|
% |
|
5.46 |
|
% |
||||||
Average yield on interest-earning assets |
3.83 |
% |
|
4.26 |
% |
|
4.57 |
% |
|
4.65 |
|
% |
|
4.72 |
|
% |
||||||
Average rate on interest-bearing deposits |
0.15 |
% |
|
0.20 |
% |
|
0.29 |
% |
|
0.33 |
|
% |
|
0.34 |
|
% |
||||||
Average cost of total deposits |
0.09 |
% |
|
0.12 |
% |
|
0.19 |
% |
|
0.22 |
|
% |
|
0.23 |
|
% |
||||||
Average rate on borrowings & subordinated debt |
2.49 |
% |
|
3.25 |
% |
|
3.89 |
% |
|
3.96 |
|
% |
|
3.50 |
|
% |
||||||
Average rate on interest-bearing liabilities |
0.20 |
% |
|
0.27 |
% |
|
0.37 |
% |
|
0.41 |
|
% |
|
0.45 |
|
% |
||||||
Net interest margin (fully tax-equivalent) (1) |
3.72 |
% |
|
4.10 |
% |
|
4.34 |
% |
|
4.39 |
|
% |
|
4.44 |
|
% |
||||||
Loans to deposits |
76.12 |
% |
|
76.84 |
% |
|
81.05 |
% |
|
80.26 |
|
% |
|
78.98 |
|
% |
||||||
Efficiency ratio |
59.44 |
% |
|
59.69 |
% |
|
59.66 |
% |
|
59.92 |
|
% |
|
58.82 |
|
% |
||||||
Supplemental Loan Interest Income Data |
|
|
|
|
|
|
|
|
|
|||||||||||||
Discount accretion on acquired loans |
$ |
1,876 |
|
|
$ |
2,587 |
|
|
$ |
1,748 |
|
|
$ |
2,218 |
|
|
|
$ |
2,360 |
|
|
|
All other loan interest income |
$ |
53,560 |
|
|
$ |
53,466 |
|
|
$ |
54,510 |
|
|
$ |
54,644 |
|
|
|
$ |
54,639 |
|
|
|
Total loan interest income |
$ |
55,436 |
|
|
$ |
56,053 |
|
|
$ |
56,258 |
|
|
$ |
56,862 |
|
|
|
$ |
56,999 |
|
|
|
(1) |
Non-GAAP measure |
TRICO BANCSHARES—CONDENSED CONSOLIDATED FINANCIAL DATA |
|||||||||||||||||||||||||
(Unaudited. Dollars in thousands) |
|||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
Balance Sheet Data |
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
||||||||||||||||
Cash and due from banks |
$ |
652,582 |
|
|
|
$ |
705,852 |
|
|
|
$ |
185,466 |
|
|
|
$ |
276,507 |
|
|
|
$ |
259,047 |
|
|
|
Securities, available for sale, net |
1,145,989 |
|
|
|
999,313 |
|
|
|
1,005,006 |
|
|
|
953,098 |
|
|
|
987,054 |
|
|
||||||
Securities, held to maturity, net |
310,696 |
|
|
|
337,165 |
|
|
|
359,770 |
|
|
|
375,606 |
|
|
|
393,449 |
|
|
||||||
Restricted equity securities |
17,250 |
|
|
|
17,250 |
|
|
|
17,250 |
|
|
|
17,250 |
|
|
|
17,250 |
|
|
||||||
Loans held for sale |
6,570 |
|
|
|
8,352 |
|
|
|
2,695 |
|
|
|
5,265 |
|
|
|
7,604 |
|
|
||||||
Loans: |
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commercial loans |
673,281 |
|
|
|
667,263 |
|
|
|
285,830 |
|
|
|
283,707 |
|
|
|
278,458 |
|
|
||||||
Consumer loans |
400,711 |
|
|
|
416,490 |
|
|
|
428,313 |
|
|
|
445,542 |
|
|
|
442,539 |
|
|
||||||
Real estate mortgage loans |
3,466,307 |
|
|
|
3,437,960 |
|
|
|
3,422,440 |
|
|
|
3,328,290 |
|
|
|
3,247,156 |
|
|
||||||
Real estate construction loans |
286,039 |
|
|
|
279,692 |
|
|
|
242,479 |
|
|
|
249,827 |
|
|
|
214,195 |
|
|
||||||
Total loans, gross |
4,826,338 |
|
|
|
4,801,405 |
|
|
|
4,379,062 |
|
|
|
4,307,366 |
|
|
|
4,182,348 |
|
|
||||||
Allowance for credit losses |
(87,575 |
) |
|
|
(79,739 |
) |
|
|
(57,911 |
) |
|
|
(30,616 |
) |
|
|
(31,537 |
) |
|
||||||
Total loans, net |
4,738,763 |
|
|
|
4,721,666 |
|
|
|
4,321,151 |
|
|
|
4,276,750 |
|
|
|
4,150,811 |
|
|
||||||
Premises and equipment |
84,856 |
|
|
|
85,292 |
|
|
|
86,304 |
|
|
|
87,086 |
|
|
|
87,424 |
|
|
||||||
Cash value of life insurance |
120,026 |
|
|
|
119,254 |
|
|
|
118,543 |
|
|
|
117,823 |
|
|
|
117,088 |
|
|
||||||
Accrued interest receivable |
19,557 |
|
|
|
20,337 |
|
|
|
18,575 |
|
|
|
18,897 |
|
|
|
18,205 |
|
|
||||||
Goodwill |
220,872 |
|
|
|
220,872 |
|
|
|
220,872 |
|
|
|
220,872 |
|
|
|
220,872 |
|
|
||||||
Other intangible assets |
19,264 |
|
|
|
20,694 |
|
|
|
22,126 |
|
|
|
23,557 |
|
|
|
24,988 |
|
|
||||||
Operating leases, right-of-use |
28,879 |
|
|
|
29,842 |
|
|
|
30,221 |
|
|
|
27,879 |
|
|
|
28,957 |
|
|
||||||
Other assets |
84,495 |
|
|
|
74,182 |
|
|
|
86,330 |
|
|
|
70,591 |
|
|
|
72,134 |
|
|
||||||
Total assets |
$ |
7,449,799 |
|
|
|
$ |
7,360,071 |
|
|
|
$ |
6,474,309 |
|
|
|
$ |
6,471,181 |
|
|
|
$ |
6,384,883 |
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
||||||||||||||||
Noninterest-bearing demand deposits |
$ |
2,517,819 |
|
|
|
$ |
2,487,120 |
|
|
|
$ |
1,883,143 |
|
|
|
$ |
1,832,665 |
|
|
|
$ |
1,777,357 |
|
|
|
Interest-bearing demand deposits |
1,346,716 |
|
|
|
1,318,951 |
|
|
|
1,243,192 |
|
|
|
1,242,274 |
|
|
|
1,222,955 |
|
|
||||||
Savings deposits |
2,099,780 |
|
|
|
2,043,593 |
|
|
|
1,857,684 |
|
|
|
1,851,549 |
|
|
|
1,843,873 |
|
|
||||||
Time certificates |
376,273 |
|
|
|
398,594 |
|
|
|
418,679 |
|
|
|
440,506 |
|
|
|
451,222 |
|
|
||||||
Total deposits |
6,340,588 |
|
|
|
6,248,258 |
|
|
|
5,402,698 |
|
|
|
5,366,994 |
|
|
|
5,295,407 |
|
|
||||||
Accrued interest payable |
1,571 |
|
|
|
1,734 |
|
|
|
1,986 |
|
|
|
2,407 |
|
|
|
2,847 |
|
|
||||||
Operating lease liability |
28,894 |
|
|
|
29,743 |
|
|
|
30,007 |
|
|
|
27,540 |
|
|
|
28,494 |
|
|
||||||
Other liabilities |
91,902 |
|
|
|
98,684 |
|
|
|
96,560 |
|
|
|
91,984 |
|
|
|
87,867 |
|
|
||||||
Other borrowings |
27,055 |
|
|
|
38,544 |
|
|
|
19,309 |
|
|
|
18,454 |
|
|
|
16,423 |
|
|
||||||
Junior subordinated debt |
57,527 |
|
|
|
57,422 |
|
|
|
57,323 |
|
|
|
57,232 |
|
|
|
57,180 |
|
|
||||||
Total liabilities |
6,547,537 |
|
|
|
6,474,385 |
|
|
|
5,607,883 |
|
|
|
5,564,611 |
|
|
|
5,488,218 |
|
|
||||||
Common stock |
531,075 |
|
|
|
530,422 |
|
|
|
534,623 |
|
|
|
543,998 |
|
|
|
543,415 |
|
|
||||||
Retained earnings |
365,611 |
|
|
|
354,645 |
|
|
|
356,935 |
|
|
|
367,794 |
|
|
|
351,751 |
|
|
||||||
Accum. other comprehensive income (loss) |
5,576 |
|
|
|
619 |
|
|
|
(25,132 |
) |
|
|
(5,222 |
) |
|
|
1,499 |
|
|
||||||
Total shareholders’ equity |
$ |
902,262 |
|
|
|
$ |
885,686 |
|
|
|
$ |
866,426 |
|
|
|
$ |
906,570 |
|
|
|
$ |
896,665 |
|
|
|
Quarterly Average Balance Data |
|
|
|
|
|
|
|
|
|
||||||||||||||||
Average loans, excluding PPP |
$ |
4,389,672 |
|
|
|
$ |
4,363,481 |
|
|
|
$ |
4,329,357 |
|
|
|
$ |
4,231,347 |
|
|
|
$ |
4,142,602 |
|
|
|
Average interest-earning assets |
$ |
6,815,495 |
|
|
|
$ |
6,365,865 |
|
|
|
$ |
5,883,750 |
|
|
|
$ |
5,823,795 |
|
|
|
$ |
5,810,248 |
|
|
|
Average total assets |
$ |
7,380,961 |
|
|
|
$ |
7,027,735 |
|
|
|
$ |
6,506,587 |
|
|
|
$ |
6,482,832 |
|
|
|
$ |
6,452,470 |
|
|
|
Average deposits |
$ |
6,278,638 |
|
|
|
$ |
5,937,294 |
|
|
|
$ |
5,395,933 |
|
|
|
$ |
5,385,190 |
|
|
|
$ |
5,327,235 |
|
|
|
Average borrowings and subordinated debt |
$ |
91,225 |
|
|
|
$ |
83,685 |
|
|
|
$ |
80,062 |
|
|
|
$ |
77,452 |
|
|
|
$ |
130,506 |
|
|
|
Average total equity |
$ |
898,986 |
|
|
|
$ |
880,405 |
|
|
|
$ |
908,633 |
|
|
|
$ |
905,585 |
|
|
|
$ |
890,667 |
|
|
|
Capital Ratio Data |
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total risk based capital ratio |
15.2 |
|
% |
|
15.1 |
|
% |
|
15.1 |
|
% |
|
15.1 |
|
% |
|
15.2 |
|
% |
||||||
Tier 1 capital ratio |
14.0 |
|
% |
|
13.9 |
|
% |
|
13.9 |
|
% |
|
14.4 |
|
% |
|
14.5 |
|
% |
||||||
Tier 1 common equity ratio |
12.9 |
|
% |
|
12.8 |
|
% |
|
12.8 |
|
% |
|
13.3 |
|
% |
|
13.4 |
|
% |
||||||
Tier 1 leverage ratio |
10.0 |
|
% |
|
10.3 |
|
% |
|
11.2 |
|
% |
|
11.6 |
|
% |
|
11.3 |
|
% |
||||||
Tangible capital ratio (1) |
9.2 |
|
% |
|
9.1 |
|
% |
|
10.0 |
|
% |
|
10.6 |
|
% |
|
10.6 |
|
% |
||||||
(1) |
Non-GAAP measure |
TRICO BANCSHARES—NON-GAAP FINANCIAL MEASURES
(Unaudited. Dollars in thousands)
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this press release because it believes that they provide useful and comparative information to assess trends in the Company's core operations reflected in the current quarter's results, and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below:
|
|
Three months ended |
|
Nine months ended |
|||||||||||||||||||
(dollars in thousands) |
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30, 2020 |
|
September 30,
|
|||||||||||||
Net interest margin |
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Acquired loans discount accretion, net: |
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Amount (included in interest income) |
|
$ |
1,876 |
|
|
|
$ |
2,587 |
|
|
|
$ |
2,360 |
|
|
$ |
6,211 |
|
|
|
$ |
5,919 |
|
Effect on average loan yield |
|
0.17 |
|
% |
|
0.24 |
|
% |
|
0.23 |
% |
|
0.19 |
|
% |
|
0.19 |
% |
|||||
Effect on net interest margin (FTE) |
|
0.11 |
|
% |
|
0.16 |
|
% |
|
0.16 |
% |
|
0.13 |
|
% |
|
0.14 |
% |
|||||
Net interest margin (FTE) |
|
3.72 |
|
% |
|
4.10 |
|
% |
|
4.44 |
% |
|
4.02 |
|
% |
|
4.48 |
% |
|||||
Net interest margin less effect of acquired loan discount accretion (Non-GAAP) |
|
3.61 |
|
% |
|
3.94 |
|
% |
|
4.28 |
% |
|
3.89 |
|
% |
|
4.34 |
% |
|||||
PPP loans yield, net: |
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Amount (included in interest income) |
|
$ |
2,603 |
|
|
|
$ |
2,356 |
|
|
|
|
none |
|
|
$ |
4,959 |
|
|
|
|
none |
|
Effect on net interest margin (FTE) |
|
(0.09 |
) |
% |
|
(0.04 |
) |
% |
|
— |
|
|
(0.05 |
) |
% |
|
— |
|
|||||
Net interest margin less effect of PPP loan yield (Non-GAAP) |
|
3.81 |
|
% |
|
4.14 |
|
% |
|
— |
|
|
4.08 |
|
% |
|
— |
|
|||||
Acquired loan discount accretion and PPP loan yield, net: |
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Amount (included in interest income) |
|
$ |
4,479 |
|
|
|
$ |
4,943 |
|
|
|
$ |
2,360 |
|
|
$ |
11,170 |
|
|
|
$ |
5,919 |
|
Effect on net interest margin (FTE) |
|
0.02 |
|
% |
|
0.12 |
|
% |
|
0.16 |
% |
|
0.08 |
|
% |
|
0.14 |
% |
|||||
Net interest margin less effect of acquired loan discount accretion and PPP yields, net (Non-GAAP) |
|
3.70 |
|
% |
|
3.98 |
|
% |
|
4.28 |
% |
|
3.94 |
|
% |
|
4.34 |
% |
|||||
|
Three months ended |
|
Nine months ended |
|||||||||||||||||||
(dollars in thousands) |
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|||||||||||||
Pre-tax pre-provision return on average assets or equity |
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income (GAAP) |
$ |
17,606 |
|
|
7,430 |
|
|
$ |
23,395 |
|
|
|
$ |
41,157 |
|
|
$ |
69,182 |
|
|
||
Exclude income tax expense |
6,622 |
|
|
1,092 |
|
|
9,386 |
|
|
|
13,786 |
|
|
25,924 |
|
|
||||||
Exclude provision (benefit) for credit losses |
7,649 |
|
|
22,244 |
|
|
(329 |
) |
|
|
37,963 |
|
|
(1,392 |
) |
|
||||||
Net income before income tax and provision expense (Non-GAAP) |
$ |
31,877 |
|
|
$ |
30,766 |
|
|
$ |
32,452 |
|
|
|
$ |
92,906 |
|
|
$ |
93,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Average assets (GAAP) |
$ |
7,380,961 |
|
|
$ |
7,027,735 |
|
|
$ |
6,452,470 |
|
|
|
$ |
6,971,575 |
|
|
$ |
6,421,699 |
|
|
|
Average equity (GAAP) |
898,986 |
|
|
880,405 |
|
|
890,667 |
|
|
|
896,753 |
|
|
866,812 |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Return on average assets (GAAP) (annualized) |
0.95 |
% |
|
0.43 |
% |
|
1.44 |
|
% |
|
0.79 |
% |
|
1.44 |
|
% |
||||||
Pre-tax pre-provision return on average assets (Non-GAAP) (annualized) |
1.72 |
% |
|
1.76 |
% |
|
2.02 |
|
% |
|
1.78 |
% |
|
1.95 |
|
% |
||||||
Return on average equity (GAAP) (annualized) |
7.79 |
% |
|
3.39 |
% |
|
10.42 |
|
% |
|
6.13 |
% |
|
10.67 |
|
% |
||||||
Pre-tax pre-provision return on average equity (Non-GAAP) (annualized) |
14.11 |
% |
|
4.67 |
% |
|
14.65 |
|
% |
|
13.84 |
% |
|
14.45 |
|
% |
||||||
|
Three months ended |
|
Nine months ended |
||||||||||||||||||||||
(dollars in thousands) |
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||||||||||
Return on tangible common equity |
|
|
|
|
|
|
|
|
|
||||||||||||||||
Average total shareholder's equity |
$ |
898,986 |
|
|
|
$ |
880,405 |
|
|
|
$ |
890,667 |
|
|
|
$ |
896,753 |
|
|
|
$ |
866,812 |
|
|
|
Exclude average goodwill |
(220,872 |
) |
|
|
(220,872 |
) |
|
|
(220,872 |
) |
|
|
(220,872 |
) |
|
|
(220,872 |
) |
|
||||||
Exclude average other intangibles |
(19,979 |
) |
|
|
(21,410 |
) |
|
|
(25,703 |
) |
|
|
(21,411 |
) |
|
|
(27,134 |
) |
|
||||||
Average tangible common equity (Non-GAAP) |
$ |
658,135 |
|
|
|
$ |
638,123 |
|
|
|
$ |
644,092 |
|
|
|
$ |
654,470 |
|
|
|
$ |
618,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (GAAP) |
$ |
17,606 |
|
|
|
$ |
7,430 |
|
|
|
$ |
23,395 |
|
|
|
$ |
41,157 |
|
|
|
$ |
69,182 |
|
|
|
Exclude amortization of intangible assets, net of tax effect |
1,008 |
|
|
|
1,008 |
|
|
|
1,008 |
|
|
|
3,024 |
|
|
|
3,024 |
|
|
||||||
Tangible net income available to common shareholders (Non-GAAP) |
$ |
18,614 |
|
|
|
8,438 |
|
|
|
$ |
24,403 |
|
|
|
$ |
44,181 |
|
|
|
$ |
72,206 |
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Return on average equity |
7.79 |
|
% |
|
3.39 |
|
% |
|
10.42 |
|
% |
|
6.13 |
|
% |
|
10.67 |
|
% |
||||||
Return on average tangible common equity (Non-GAAP) |
11.25 |
|
% |
|
5.32 |
|
% |
|
15.24 |
|
% |
|
9.02 |
|
% |
|
15.60 |
|
% |
||||||
|
Three months ended |
|||||||||||||||||||
(dollars in thousands) |
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|||||||||||
Tangible common shareholders’ equity to tangible assets |
|
|
|
|
|
|
|
|
|
|||||||||||
Shareholder's equity (GAAP) |
$ |
902,262 |
|
|
$ |
885,686 |
|
|
$ |
866,426 |
|
|
$ |
906,570 |
|
|
$ |
896,665 |
|
|
Exclude goodwill and other intangible assets, net |
240,136 |
|
|
241,566 |
|
|
242,998 |
|
|
244,429 |
|
|
245,860 |
|
||||||
Tangible s/h equity (Non-GAAP) |
$ |
662,126 |
|
|
$ |
644,120 |
|
|
$ |
623,428 |
|
|
$ |
662,141 |
|
|
$ |
650,805 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets (GAAP) |
$ |
7,449,799 |
|
|
$ |
7,360,071 |
|
|
$ |
6,474,309 |
|
|
$ |
6,471,181 |
|
|
$ |
6,384,883 |
|
|
Exclude goodwill and other intangible assets, net |
240,136 |
|
|
241,566 |
|
|
242,998 |
|
|
244,429 |
|
|
245,860 |
|
||||||
Total tangible assets (Non-GAAP) |
$ |
7,209,663 |
|
|
$ |
7,118,505 |
|
|
$ |
6,231,311 |
|
|
$ |
6,226,752 |
|
|
$ |
6,139,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common s/h equity to total assets (GAAP) |
12.11 |
% |
|
12.03 |
% |
|
13.38 |
% |
|
14.01 |
% |
|
14.04 |
% |
||||||
Tangible common s/h equity to tangible assets (Non-GAAP) |
9.18 |
% |
|
9.05 |
% |
|
10.00 |
% |
|
10.63 |
% |
|
10.60 |
% |
||||||
|
Three months ended |
|||||||||||||||||||
(dollars in thousands) |
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|||||||||||
Tangible common shareholders’ equity per share |
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible s/h equity (Non-GAAP) |
$ |
662,126 |
|
|
$ |
644,120 |
|
|
$ |
623,428 |
|
|
$ |
662,141 |
|
|
$ |
650,805 |
|
|
Tangible assets (Non-GAAP) |
7,209,663 |
|
|
7,118,505 |
|
|
6,231,311 |
|
|
6,226,752 |
|
|
6,139,023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common shares outstanding at end of period |
29,769,389 |
|
|
29,759,209 |
|
|
29,973,516 |
|
|
30,523,824 |
|
|
30,512,187 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common s/h equity (book value) per share (GAAP) |
$ |
30.31 |
|
|
$ |
29.76 |
|
|
$ |
28.91 |
|
|
$ |
29.70 |
|
|
$ |
29.39 |
|
|
Tangible common shareholder's equity (tangible book value) per share (Non-GAAP) |
$ |
22.24 |
|
|
$ |
21.64 |
|
|
$ |
20.80 |
|
|
$ |
21.69 |
|
|
$ |
21.33 |
|
|
