What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-03-01 · 117 added, 137 removed, 2078 unchanged (11% of the section changed)

8 unchanged sentences

Management’s Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm – Moss Adams LLP

Report of Independent Registered Public Accounting Firm ( Moss Adams LLP , Sacramento, California , PCAOB ID:

TRICO BANCSHARES

44 unchanged sentences

Retained earnings 466,959 381,999

Accumulated other comprehensive income (loss), net of tax 12,280 ( 5,222 )

Accumulated other comprehensive income, net of tax 981 12,280

Total shareholders’ equity 1,000,184 925,114

59 unchanged sentences

Net income 92,072 92,072

Adoption ASU 2016-01 ( 62 ) 62 —

Adoption ASU 2018-02 1,093 ( 1,093 ) —

Other comprehensive loss ( 11,620 ) ( 11,620 )

Stock option vesting 75 75

Other comprehensive income 12,657 12,657

Service condition RSU vesting 1,161 1,161

2 unchanged sentences

Service condition RSUs released 33,060 —

Tax benefit from release of service condition RSUs 25,512 —

Issuance of common stock 7,405,277 284,437 284,437

Market plus service condition RSUs released 22,237 —

Repurchase of common stock ( 131,196 ) ( 2,339 ) ( 2,769 ) ( 5,108 )

2 unchanged sentences

Balance at December 31, 2019 30,523,824 543,998 367,794 ( 5,222 ) 906,570

Cumulative change from adoption of ASU 2016-13 — — ( 12,983 ) — ( 12,983 )

Balance at January 1, 2020 (as adjusted for change in accounting principle) 30,523,824 543,998 354,811 ( 5,222 ) 893,587

Net income 64,814 64,814

9 unchanged sentences

Balance at December 31, 2020 29,727,214 530,835 381,999 12,280 925,114

Cumulative change from adoption of ASU 2016-13 — — ( 12,983 ) — ( 12,983 )

Balance at January 1, 2020 (as adjusted for change in accounting principle) 30,523,824 543,998 354,811 ( 5,222 ) 893,587

Net income 117,655 117,655

Other comprehensive income 17,502 17,502

Other comprehensive loss ( 11,299 ) ( 11,299 )

Service condition RSU vesting 1,728 1,728

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Operating lease payments ( 4,964 ) ( 4,927 ) ( 4,931 )

Loss on disposal of fixed assets 67 82 185

(Gain) loss on disposal of fixed assets ( 439 ) 67 82

Increase in cash value of life insurance ( 2,775 ) ( 2,949 ) ( 3,029 )

2 unchanged sentences

Equity compensation vesting expense 2,638 2,036 1,654

Change in value of other real estate 9 — —

Interest receivable 712 ( 1,107 ) 515

4 unchanged sentences

Investing activities:

Cash acquired in acquisition;

net of consideration paid — — 30,613

Proceeds from maturities of securities available for sale 371,632 167,515 97,993

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Proceeds from sale of real estate owned 1,526 570 1,336

Proceeds from sale of premises and equipment 2,743 — —

Purchases of premises and equipment ( 3,196 ) ( 2,812 ) ( 4,293 )

19 unchanged sentences

Cash paid for income taxes $ 46,300 $ 29,500 $ 35,050

Assets acquired in acquisition and goodwill, net $ — $ — $ 1,463,100

Liabilities assumed in acquisition $ — $ — $ 1,171,968

The accompanying notes are an integral part of these consolidated financial statements.

7 unchanged sentences

The Bank is a California-chartered bank that is engaged in the general commercial and retail banking business in 31 California counties.

The Company has five capital subsidiary business trusts (collectively, the “Capital Trusts”) that issued trust preferred securities, including two organized by the Company and three acquired with the acquisition of North Valley Bancorp.

The consolidated financial statements are prepared in accordance with accounting policies generally accepted in the United States of America and general practices in the banking industry.

9 unchanged sentences

Segment and Significant Group Concentration of Credit Risk

The Company grants agribusiness, commercial, consumer, and residential loans to customers located throughout Northern and Central California.

The Company grants agribusiness, commercial, consumer, and residential loans to customers located throughout California.

The Company has a diversified loan portfolio within the business segments located in this geographical area.

12 unchanged sentences

Net cash flows are reported for loan and deposit transactions and other borrowings.

Marketable Equity Securities

Effective January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10):

" Recognition and Measurement of Financial Assets and Financial Liabilities ." ASU 2016-01 required equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income.

The adoption of this guidance resulted in a $ 62,000 decrease to retaining earnings as of January 1, 2018 and a decrease to the deferred tax of $ 18,000 .

During the twelve months ended December 31, 2020 and 2019, the Company recognized $ 64,000 and $ 86,000 of unrealized losses, respectively, in the consolidated statements of income related to changes in the fair value of marketable equity securities.

Non-Marketable and Other Equity Securities

Non-marketable and other equity securities include qualified public welfare investments and venture capital/private equity funds.

Our accounting for investments in non-marketable and other equity securities depends on several factors, including the level of ownership, power to control and the legal structure of the subsidiary making the investment.

We base our accounting for such securities on:

(i) fair value accounting, (ii) measurement alternative for other investments without a readily determinable fair value, and (iii) equity method accounting.

During the twelve months ended December 31, 2021 and 2020, the Company recognized net unrealized gains of $ 718,000 and losses of $ 64,000 , respectively, in the consolidated statements of net income related to changes in the fair value of non-marketable and other equity securities.

Debt Securities

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Trading securities are bought and held principally for the purpose of selling in the near term and changes in the value of these securities are recorded through earnings.

Held to maturity securities are those securities which the Company has the ability and intent to hold until maturity.

to maturity securities are those securities which the Company has the ability and intent to hold until maturity.

These securities are carried at cost adjusted for amortization of premium and accretion of discount, computed by the effective interest method over their contractual lives.

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The Company did not have any debt securities classified as trading during the three year period ended December 31, 2021.

The Company has made a policy election to exclude accrued interest from the amortized cost basis of debt securities and report accrued interest separately in other assets in the consolidated balance sheets.

The Company has made a policy election to exclude accrued interest from the amortized cost basis of debt securities and report accrued interest separately in the consolidated balance sheets.

A debt security is placed on nonaccrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain.

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For HTM debt securities, the Company measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type, then further disaggregated by sector and bond rating.

Accrued interest receivable on held-to-maturity (HTM) debt securities totaled $ 735,000 at December 31, 2020 and is excluded from the estimate of credit losses.

Accrued interest receivable on held-to-maturity (HTM) debt securities is excluded from the estimate of credit losses.

The estimate of expected credit losses considers historical credit loss information that is adjusted for current condition and reasonable and supportable forecasts based on current and expected changes in credit ratings and default rates.

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Allowance for Credit Losses - Loans

On January 1, 2020, the Company adopted ASU 2016-03 Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which replaces the incurred loss methodology and is referred to as the current expected credit loss (CECL) methodology.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized costs, including loan receivables and held-to-maturity debt securities.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures.

As a result, the Company recognized an increase in the ACL for loans totaling $ 18,913,000 , including a reclassification of $ 481,000 from discounts on acquired loans to the allowance for credit losses, as a cumulative effect adjustment from change in accounting policies, with a corresponding decrease in retained earnings, net of $ 5,449,000 in taxes of $ 12,983,000 .

The allowance for credit losses (ACL) is a valuation account that is deducted from the loan's amortized cost basis to present the net amount expected to be collected on the loans.

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When default is driven by issues related specifically to the business owner, collateral values tend to provide better repayment support and may result in little or no loss.

Alternatively, when default is driven more by general economic conditions, the underlying collateral may have devalued more and thus result in larger losses in the event of default.

Alternatively, when default is driven more by general economic conditions, the underlying collateral may have devalued more

and thus result in larger losses in the event of default.

The terms on these loans at origination typically have maturities from five to ten years with amortization periods from fifteen to thirty years .

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Leases typically represent an elevated level of credit risk as compared to loans secured by real estate as the collateral for leases is often subject to a more rapid rate of depreciation or depletion.

The ultimate severity of loss is impacted by the type of collateral securing the exposure, the size of the exposure, the borrower’s industry sector, any guarantors and the geographic market.

The ultimate severity of loss is impacted by the type of collateral securing the exposure, the size of the exposure, the

borrower’s industry sector, any guarantors and the geographic market.

Assumptions of expected loss are conditioned to the economic outlook and the other variables discussed above.

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When the Company finances the sale of other real estate owned to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable.

Once these criteria are met, the other real estate owned asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer.

Once these criteria are

met, the other real estate owned asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer.

In determining the gain or loss on sale, the Company adjusts the transaction price and related gain or loss on sale if a significant financing component is present.

5 unchanged sentences

Accounting Standards Adopted in 2021

On January 1, 2020, the Company adopted ASU 2016-03 Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which replaces the incurred loss methodology and is referred to as the current expected credit loss (CECL) methodology.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized costs, including loan receivables and held-to-maturity debt securities.

It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in certain leases.

In addition, ASC 326 made changes to the accounting for available for sale debt securities.

One such change is to require increases or decreases in credit losses be presented as an allowance rather than as a write-down on available for sale debt securities, based on management's intent to sell the security or likelihood the Company will be required to sell the security, before recovery of the amortized cost basis.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures.

Results for the reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration (PCD) that were previously classified as purchase credit impaired (PCI) and accounted for under ASC 310-30.

In accordance with ASC 326, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption.

The remaining noncredit discount (based on the adjusted amortized costs basis) will be accreted into interest income at the effective interest rate as of adoption.

The Company recognized an increase in the ACL for loans totaling $ 18,913,000 , including a reclassification of $ 481,000 from discounts on acquired loans to the allowance for credit losses, as a cumulative effect adjustment from change in accounting policies, with a corresponding decrease in retained earnings, net of $ 5,449,000 in taxes of $ 12,983,000 .

Management has separately evaluated its held-to-maturity investment securities from obligations of state and political subdivisions and determined that no loss reserves were required.

On January 1, 2020 the Company adopted ASU 2017-04, Intangibles—Goodwill and Other:

Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates step two of the goodwill impairment test (the hypothetical purchase price allocation used to determine the implied fair value of goodwill) when step one (determining if the carrying value of a reporting unit exceeds its fair value) is failed.

Instead, entities simply will compare the fair value of a reporting unit to its carrying amount and record goodwill impairment for the amount by which the reporting unit’s carrying amount exceeds its fair value.

There was no goodwill impairment recorded during the year ended December 31, 2020.

On January 1, 2020 the Company adopted ASU 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements.

Among the changes, entities are no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but are required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the Coronavirus Disease 2019 (COVID-19) pandemic.

The CARES Act provides optional temporary relief from troubled debt restructuring and impairment accounting requirements for loan modifications related to the COVID-19 pandemic made during the period from March 1, 2020 to the earlier of December 31, 2020 or 60 days after the national emergency concerning COVID-19 declared by the President terminates.

The termination of these provisions was extended, to the earlier of 60 days after the COVID-19 national emergency date or January 1, 2022, with the Consolidated Appropriations Act of 2021.

Banking regulators issued similar guidance, which also clarified that a COVID-19-related modification should not be considered a TDR if the borrower was current on payments at the time the underlying loan modification program was implemented and if the modification was considered to be short-term.

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 similarly 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 Interagency Statement requires the modification event to be short-term and COVID-19 related, requiring the borrower be not more than 30 days past due as of the date the modification program was implemented, and allowing Management to apply judgement as to when the modification program terminates.

The ability to suspend TDR accounting under either program does not apply to any adverse impact on the credit of a borrower that is not related to the COVID-19 pandemic.

Accounting Standards Pending Adoption

In October 2020, the FASB issued ASU No.

On January 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

This ASU simplified the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The guidance also promoted consistent application and simplification of GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

ASU 2019-12 did not have a significant impact on the Company’s consolidated financial statements.

On January 1, 2021, the Company adopted ASU No.

2020-10, "Codification Improvements" to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to GAAP.

ASU 2020-10 is effective for annual periods beginning after December 15, 2020 and is not expected to have a significant impact on the Company’s consolidated financial statements.

ASU 2020-10 did not have a significant impact on the Company’s consolidated financial statements.

In August 2021, FASB issued ASU 2021-06, Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services—Investment Companies (Topic 946):

Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.

33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, and No.

33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants.

This ASU updates certain GAAP annual and interim disclosure requirements to conform with SEC disclosure updates to Guide 3 "Statistical Disclosure by Bank Holding Companies.” Amendments in this ASU were effective for the Company's annual disclosures for fiscal year ending December 31, 2021.

The Company's existing annual disclosure report (10-K) largely complied with the impacted updates to Guide 3 requirements, with limited changes made to Management's Discussion and Analysis section of the 10-K.

Accounting Standards Pending Adoption

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform by providing optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected if certain criteria are met.

The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The election to apply the optional relief for existing fair value and cash flow hedge accounting relationships may be made on a hedge-by-hedge basis and across multiple reporting periods.

Amendments in this ASU are effective for the Company through December 31, 2022.

As the Company has an insignificant number of instruments that are applicable to this ASU, management has determined that no impact to the valuations of these instruments are applicable for financial reporting purposes.

Note 3 – Investment Securities

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Total debt securities held to maturity $ 199,759 $ 8,381 $ — $ 208,140

There was no allowance for credit losses recorded for the held to maturity debt portfolio as of or for the year ended December 31, 2020.

There was no allowance for credit losses recorded for the held to maturity debt portfolio as of or for the years ended December 31, 2021 and 2020.

December 31, 2020

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Total debt securities held to maturity $ 284,563 $ 14,163 $ — $ 298,726

During 2020, proceeds from sales of debt securities were $ 229,000 , resulting in gross gains of $ 7,000 .

During 2019, proceeds from sales of debt securities were $ 127,066,000 , resulting in a gross gains of $ 338,000 and gross losses of $ 228,000 .

During 2018, proceeds from sales of debt securities totaled $ 293,279,000 , resulting in gross gains of $ 207,000 .

There were no sales of debt securities during the year ended December 31, 2021.

During 2020, proceeds from sales of debt securities were $ 229,000 , resulting in a gross gains of $ 7,000 .

Investment securities with an aggregate carrying value of $ 423,892,000 and $ 429,049,000 at December 31, 2021 and 2020, respectively, were pledged as collateral for specific borrowings, lines of credit and local agency deposits.

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government agencies $ 947,108 $ ( 9,737 ) $ 44,086 $ ( 1,293 ) $ 991,194 $ ( 11,030 )

Obligations of states and political subdivisions 56,153 ( 785 ) — — 56,153 ( 785 )

Asset backed securities 389,837 ( 4,118 ) 109,748 ( 872 ) 499,585 ( 4,990 )

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Total securities available for sale $ 212,087 $ ( 1,332 ) $ 297,020 $ ( 4,710 ) $ 509,107 $ ( 6,042 )

Debt Securities Held to Maturity

Obligations of U.S.

government agencies $ 18,813 $ ( 142 ) $ 62,952 $ ( 338 ) $ 81,765 $ ( 480 )

Obligations of U.S.

government corporations and agencies:

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government corporations and agencies had unrealized losses with aggregate depreciation of 1.10 % from the Company’s amortized cost basis.

Obligations of states and political subdivisions:

The unrealized losses on investments in obligations of states and political subdivisions were caused by increases in required yields by investors in these types of securities.

It is expected that the securities would not be settled at a price less than the amortized cost of the investment.

Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell and more likely than not will not be required to sell, these investments are not considered other-than-temporarily impaired.

At December 31, 2021, 33 debt security representing obligations of states and political subdivisions had unrealized losses with aggregate depreciation of 1.38 % from the Company’s amortized cost basis.

Asset backed securities:

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Marketable equity securities:

All unrealized gains recognized during the reporting period were for equity securities still held at December 31, 2020.

As there were no sales of marketable equity securities, all unrealized gains or losses recognized during the reporting period were for equity securities still held as of the end of the reporting period.

Note 4 – Loans

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In March 2020, the Small Business Administration ("SBA") Paycheck Protection Program ("PPP") was created to help small businesses keep workers employed during the COVID-19 crisis.

As of December 31, 2020, the total gross outstanding balance of Paycheck Protection Program (PPP) loans was $ 333,982,000 , which net of approximately $ 7,212,000 in net deferred fee income, were included in the commercial and industrial loan category, as compared to total PPP originations of $ 438,510,000 .

During the twelve months ended December 31, 2020, the Company recognized $ 7,760,000 in fees on PPP loans.

As of December 31, 2021 and 2020, the total gross balance outstanding of PPP loans, which are included in commercial and industrial loans above, was $ 63,311,000 and $ 333,982,000 , respectively, as compared to total PPP originations of $ 640,410,000 .

As of December 31, 2021, there was approximately $ 2,164,000 in net deferred fee income remaining to be recognized.

During the twelve months ended December 31, 2021, the Company recognized $ 14,148,000 in fees on PPP loans, as compared with $ 7,760,000 for the same period ended December 31, 2020 .

Note 5 – Allowance for Credit Losses

The allowance for credit losses (ACL) was $ 91,847,000 as of December 31, 2020 as compared to $ 49,529,000 as of the adoption date of the current expected credit loss accounting standard and related methodology on January 1, 2020.

The allowance for credit losses (ACL) was $ 85,376,000 as of December 31, 2021 as compared to $ 91,847,000 at December 31, 2020.

Changes in loan volume and changes in credit quality associated with levels of classified, past due and non-performing loans in addition to changes in qualitative factors, result in the need for changes in the balance of the allowance for credit losses.

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gross domestic product.

During the year ended December 31, 2020, these qualitative factors experienced significant volatility and deterioration which resulted in a significant increase in the related component of the allowance for credit losses.

During the year ended December 31, 2021, both the quantitative and qualitative factors improved which resulted in a decrease in the related components of the allowance for credit losses, despite the increases in non-PPP loan balances outstanding.

The table below sets forth the components of the Company’s allowance for credit losses as of the dates indicated.

(dollars in thousands) December 31, 2020 January 1, 2020 December 31, 2019

(dollars in thousands) December 31, 2021 December 31, 2020

Allowance for credit losses:

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Allowance for individually evaluated loans 982 1,450

Allowance for PCD loan losses — — n/a

Allowance for PCI loan losses n/a n/a 6

Allowance for PCD loan losses — —

Total allowance for credit losses $ 85,376 $ 91,847

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(in thousands) Beginning

Balance Impact of CECL Adoption Charge-offs Recoveries Provision Ending

Balance Charge-offs Recoveries Provision for

(Benefit from)

Credit Losses Ending

Commercial real estate:

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Total $ 95,247 $ ( 2,392 ) $ 3,086 $ ( 6,775 ) $ 89,166

Allowance for Loan Losses – December 31, 2019

Allowance for Credit Losses – December 31, 2020

(in thousands) Beginning

Balance Charge-offs Recoveries Provision Ending

Balance Impact of CECL Adoption Charge-offs Recoveries Provision for

(Benefit from)

Credit Losses Ending

Commercial real estate:

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Allowance for loan losses 30,616 18,913 ( 1,755 ) 1,885 42,188 91,847

Reserve for Unfunded Commitments - December 31, 2019

Reserve for unfunded commitments 2,775 — — — 625 3,400

Total $ 33,391 $ 18,913 $ ( 1,755 ) $ 1,885 $ 42,813 $ 95,247

Allowance for Loan Losses – December 31, 2019

(in thousands) Beginning

Balance Charge-offs Recoveries Provision Ending

Balance Charge-offs Recoveries Provision for

(Benefit from)

Credit Losses Ending

Commercial real estate:

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Agriculture production — — — 5 18 —

Leases — — — — —

Sub-total 26,417 30,350 — 22,390 26,864 —

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Core deposit intangibles, net $ 12,369 — $ ( 5,464 ) $ 17,833

The Company recorded additions to its CDI of $ 27,605,000 in conjunction with the FNBB acquisition on July 6, 2018, $ 2,046,000 in conjunction with the acquisition of three branch offices from Bank of America on March 18, 2016, $ 6,614,000 in conjunction with the North Valley Bancorp acquisition on

October 3, 2014, and $ 898,000 in conjunction with the Citizens acquisition on September 23, 2011.

The following table summarizes the Company’s estimated core deposit intangible amortization (dollars in thousands):

Years Ended Estimated CDI Amortization

Thereafter 309

Note 10 – Mortgage Servicing Rights

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Weighted-average prepayment speed (CPR) 208.0 % 294.0 % 182.0 %

Weighted-average expected life (years) 5.7 4.5 6.2

Weighted-average discount rate 12.0 % 12.0 % 12.0 %

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Total lease cost $ 5,429 $ 5,273

Prior to the adoption of ASU 2016-02, rent expense under operating leases was $ 6,348,000 for year ended 2018.

Rent expense was offset by rent income of $ 42,000 during the same period.

The following table presents supplemental cash flow information related to leases as of the periods ended:

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Note 15 – Commitments and Contingencies

Restricted Cash Balances — Reserves (in the form of deposits with the San Francisco Federal Reserve Bank) were not required to be maintained as of December 31, 2020.

Reserves totaling $ 136,370,000 were maintained to satisfy Federal regulatory requirements at December 31, 2019.

These reserves are included in cash and due from banks in the accompanying consolidated balance sheets.

Restricted Cash Balances — Reserves (in the form of deposits with the San Francisco Federal Reserve Bank) were not required to be maintained as of December 31, 2021 and 2020.

Financial Instruments with Off-Balance-Sheet Risk — The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.

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Visa Member Banks are required to fund an escrow account to cover settlements, resolution of pending litigation and related claims.

If the funds in the escrow account are insufficient to settle all the

covered litigation, Visa may sell additional Class A shares, use the proceeds to settle litigation, and further reduce the conversion ratio.

If the funds in the escrow account are insufficient to settle all the covered litigation, Visa may sell additional Class A shares, use the proceeds to settle litigation, and further reduce the conversion ratio.

If funds remain in the escrow account after all litigation is settled, the Class B conversion ratio will be increased to reflect that surplus.

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Stock Repurchase Plan

On November 12, 2019 the Board of Directors approved the authorization to repurchase up to 1,525,000 shares of the Company's common stock (the 2019 Repurchase Plan), which approximated 5.0 % of the shares outstanding as of the approval date.

On February 25, 2021 the Board of Directors approved the authorization to repurchase up to 2,000,000 shares of the Company's common stock (the 2021 Repurchase Plan), which approximated 6.7 % of the shares outstanding as of the approval date.

The actual timing of any share repurchases will be determined by the Company's management and therefore the total value of the shares to be purchased under the program is subject to change.

The 2019 Repurchase Plan has no expiration date and as of and for year ended December 31, 2020, the Company repurchased 858,717 shares.

There were no shares repurchased during 2019 under the 2019 Repurchase Plan.

In connection with approval of the 2019 Repurchase Plan, the Company’s previous repurchase program adopted on August 21, 2007 (the 2007 Repurchase Plan) was terminated.

Under the 2007 Repurchase Plan, during the year ended December 31, 2019 the Company had repurchased zero total shares.

There were 26,966 shares of common stock with a fair value of $ 968,000 repurchased under the 2007 Repurchase Plan during the year ended December 31, 2018.

The 2021 Repurchase Plan has no expiration date (in accordance with applicable laws and regulations) and as of and for year ended December 31, 2021, the Company repurchased 63,317 shares.

There were 223 shares repurchased during 2021 under the 2019 Repurchase Plan.

In connection with approval of the 2021 Repurchase Plan, the Company’s previous repurchase program adopted on November 12, 2019 (the 2019 Repurchase Plan) was terminated.

Under the 2019 Repurchase Plan, during the year ended December 31, 2020 the Company had repurchased 858,717 total shares.

There were no shares of common stock repurchased under any plans during the year ended December 31, 2019.

Stock Repurchased Under Equity Compensation Plans

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Shares tendered to TriCo or withheld from delivery to a participant as payment of the exercise price or in connection with the “net exercise” of a stock option or to satisfy TriCo’s tax withholding obligations will not again become available for future Awards under the 2019 Plan.

As of December 31, 2020, there were no outstanding options for the purchase of common shares and 83,545 RSUs were outstanding, and 1,222,011 shares remain available for issuance.

As of December 31, 2021, there were no outstanding options for the purchase of common shares and 97,202 RSUs were outstanding.

The number of shares that remain available for issuance is not more than 1,004,737 , which could decrease based on the level of the Company's future performance and outcome of certain vesting requirements.

The 2019 Plan replaced the TriCo Bancshares 2009 Equity Incentive Plan (2009 Plan), which expired on March 26, 2019.

As a result of its expiration, no further awards may be issued under the 2009 Plan, though all awards under the 2009 Plan that were outstanding as of its expiration continue to be

governed by the terms, conditions and procedures set forth in the 2009 Plan and any applicable award agreement.

As a result of its expiration, no further awards may be issued under the 2009 Plan, though all awards under the 2009 Plan that were outstanding as of its expiration continue to be governed by the terms, conditions and procedures set forth in the 2009 Plan and any applicable award agreement.

There were no new grants issued under the 2009 Plan during 2019 prior to expiration, and as of December 31, 2021, 78,825 options for the purchase of common shares and 6,315 RSUs remain outstanding.

17 unchanged sentences

Intrinsic value (in thousands) $ 1,867 $ — $ 1,867

Weighted average remaining contractual term (yrs.) 1.98 — 1.98

Weighted average remaining contractual term (yrs.) 1.40 n/a 1.40

All options outstanding as of December 31, 2021 are fully vested.

47 unchanged sentences

2021 2020 2019

Debit and ATM and interchange fees $ 21,660 $ 20,639 $ 18,249

ATM and interchange fees $ 25,356 $ 21,660 $ 20,639

Service charges on deposit accounts 14,013 13,944 16,657

3 unchanged sentences

Total service charges and fees 43,948 37,981 40,417

Commissions on sale of non-deposit investment products 2,989 2,877 3,151

Asset management and commission income 3,668 2,989 2,877

Increase in cash value of life insurance 2,775 2,949 3,029

30 unchanged sentences

Gain on sale or acquisition of foreclosed assets ( 233 ) ( 235 ) ( 246 )

Loss on disposal of fixed assets 67 82 185

(Gain) loss on disposal of fixed assets ( 439 ) 67 82

Other miscellaneous expense 11,038 12,018 15,637

60 unchanged sentences

Right of use asset ( 7,588 ) ( 8,232 )

Merger related fixed asset valuations ( 30 ) ( 30 )

Funded pension liability ( 709 ) —

Securities accretion ( 846 ) ( 702 )

14 unchanged sentences

These tax loss and tax credit carryforwards expire at various dates beginning in 2019.

The Company believes that a valuation allowance is not needed to reduce the deferred tax assets as it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets, including the tax attribute carryforwards acquired as part of the FNB Bancorp and North Valley Bancorp merger.

Disclosure of unrecognized tax benefits at December 31, 2021 and 2020 were not considered significant for disclosure purposes.

23 unchanged sentences

Realized gains on debt securities — ( 7 ) ( 110 )

Adoption ASU 2016-01 — — 62

Adoption ASU 2018-02 — — ( 425 )

Total amounts reclassified out of accumulated other

7 unchanged sentences

Amortization of actuarial losses 254 9,309 408

Adoption ASU 2018-02 — — ( 668 )

Total amounts reclassified out of accumulated other

12 unchanged sentences

Tax effect 116 ( 5,671 )

Unrealized holding loss on available for sale securities, net of tax 13,512 2,386

Unrealized holding (gain) loss on available for sale securities, net of tax ( 276 ) 13,512

Unfunded status of the supplemental retirement plans 2,399 ( 1,294 )

2 unchanged sentences

Joint beneficiary agreement liability, net of tax ( 433 ) ( 320 )

Accumulated other comprehensive loss $ 12,280 $ ( 5,222 )

Accumulated other comprehensive income $ 981 $ 12,280

Note 22 – Retirement Plans

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The cash values of the insurance policies purchased to fund the deferred compensation obligations and the supplemental retirement obligations were $ 117,857,000 and $ 118,870,000 at December 31, 2021 and 2020, respectively.

The Company recorded in other liabilities the additional unfunded status of the supplemental retirement plans of $ 1,294,000 and $ 11,193,000 related to the supplemental retirement plans as of December 31, 2020 and 2019, respectively.

The Company recorded in other liabilities the additional (funded) unfunded status of the supplemental retirement plans of $( 2,399,000 ) and $ 1,294,000 related to the supplemental retirement plans as of December 31, 2021 and 2020, respectively.

These amounts represent the amount by which the projected benefit obligations for these retirement plans exceeded the fair value of plan assets plus amounts previously accrued related to the plans.

25 unchanged sentences

Unrecognized net obligation existing at January 1, 1986 —

Unrecognized net actuarial loss 1,380 11,333

Unrecognized net actuarial (loss)/gain ( 2,453 ) 1,380

Unrecognized prior service cost ( 28 ) ( 86 )

Accumulated other comprehensive income ( 1,294 ) ( 11,193 )

Accumulated other comprehensive income (loss) 2,481 ( 1,294 )

Accrued benefit cost $ ( 35,259 ) $ ( 38,000 )

139 unchanged sentences

Impaired loans $ 3,683 $ 3,683 $ ( 1,105 )

Real estate owned 979 — — 979 155

Total assets measured at fair value $ 2,403 — — $ 2,403 $ ( 1,334 )

Year ended December 31, 2020 Total Level 1 Level 2 Level 3 Total Gains

28 unchanged sentences

Capitalization rate Not meaningful;

Real estate owned (Land) $ 155 Sales comparison

approach Adjustment for differences between

comparable sales Not meaningful;

Real estate owned (Residential) $ 824 Sales comparison

approach Adjustment for differences between

comparable sales Not meaningful;

December 31, 2020 Fair Value

78 unchanged sentences

(In thousands)

Interest expense $ ( 2,555 ) $ ( 3,272 ) $ ( 3,131 )

Net interest expense $ ( 2,128 ) $ ( 2,555 ) $ ( 3,272 )

Administration expense ( 985 ) ( 932 ) ( 877 )

93 unchanged sentences

Net interest income 69,783 68,233 67,083 66,440

Provision for credit losses 4,850 7,649 22,244 8,070

Provision for (benefit from reversal of) credit losses 980 ( 1,435 ) ( 260 ) ( 6,060 )

Net interest income after provision for credit losses 68,803 69,668 67,343 72,500

17 unchanged sentences

Net interest income 66,422 63,454 64,659 63,192

Provision for (benefit from reversal of provision for) loan losses ( 298 ) ( 329 ) 537 ( 1,600 )

Provision for credit losses 4,850 7,649 22,244 8,070

Net interest income after provision for loan losses 61,572 55,805 42,415 55,122

39 unchanged sentences

The Company adopted the new credit loss standard using the modified retrospective approach such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

The adoption of the new credit loss standard and its subsequent application is also communicated as a critical audit matter below.

Basis for Opinions

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses - CECL Adoption, Loan Risk Ratings, Reasonable and Supportable Forecasts and Qualitative Factors

As discussed in Note 1 to the consolidated financial statements, the Company adopted Accounting Standards Update No.

2016-13, Accounting Standards Codification Topic 326, Financial Instruments - Credit Losses (Topic 326), as of January 1, 2020, using the modified retrospective method of adoption.

Topic 326 requires the measurement of the current expected credit losses (“CECL”) for financial assets, including the Company’s loan portfolio, held at the reporting date.

Accordingly, the Company recorded a decrease to retained earnings of $12,983,000, net of taxes of $5,449,000, as of January 1, 2020 for the cumulative effect of adopting Topic 326.

As further discussed in Note 1 and Note 5, the Company’s allowance for credit losses for loans was $91,847,000 as of December 31, 2020, and consists of both historical credit loss experience and management’s estimates of current conditions and reasonable and supportable forecasts.

The Company’s allowance for credit losses for loans is a valuation account that is deducted from the amortized cost basis of loans to present the net carrying value at the amount expected to be collected on such loans and is a material and complex estimate requiring significant management judgment in the estimation of expected lifetime losses within the loan portfolio at both the date of adoption and the balance sheet date.

We identified management’s adoption of Topic 326, risk ratings of loans, and the reasonable and supportable forecasts, including the estimate of a qualitative and environmental factor related to California’s unemployment, and the selection of the methodology and economic variables utilized, as a critical audit matter.

Allowance for Credit Losses - Loan Risk Ratings, Reasonable and Supportable Forecasts and Qualitative Factors

As discussed in Note 1 and Note 5 to the consolidated financial statements, the Company’s allowance for credit losses for loans was $85,376,000 as of December 31, 2021, and consists of both historical credit loss experience and management’s estimates of current conditions and reasonable and supportable forecasts.

We identified management’s risk rating of loans and the qualitative and environmental factors related to California’s unemployment and unemployment outlook, which are components of the reasonable and supportable forecasts, as a critical audit matter.

In estimating the allowance for credit losses on loans, the Company utilizes relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

4 unchanged sentences

The primary procedures we performed to address this critical audit matter included:

• Testing the design, implementation and operating effectiveness of controls relating to management’s adoption of Topic 326 and the calculation of the allowance for credit losses on loans, including controls over the review of loans and assignment of risk ratings, evaluation of the environmental and forecast factors, model development and validation, selection and application of new accounting policies, and disclosures.

• Evaluating the appropriateness of the Company’s assumptions and elections involved in the adoption of the CECL methodology, including the cohort methodology selected by the Company compared to other available methodologies as well as the economic variables selected based on the correlation to historical charge offs.

• Evaluating the appropriateness of the Company’s loan risk rating policy and testing a risk-based targeted selection of loans to gain substantive evidence that the Company is appropriately rating these loans in accordance with its policies, and that the risk ratings for the loans are reasonable.

• Evaluating the reasonableness and appropriateness of the estimated California unemployment factor utilized by management in forming the forecast factors and any qualitative adjustments by comparing forecasts and any qualitative adjustments to relevant external data, including historical trends.

• Testing the mathematical accuracy and computation of the allowance for credit losses for loans by re-performing or independently calculating significant elements of the allowance, including quantitative historical loss factors applied to the loan segments based on risk ratings and utilizing relevant source documents, including the completeness and accuracy of the data used in the calculation.

• Evaluating the accuracy and completeness of the Company’s disclosures in accordance with Topic 326.

• Testing the design, implementation and operating effectiveness of controls relating to management’s calculation of the allowance for credit losses on loans, including controls over the review of loans and assignment of risk ratings, and evaluation of the environmental and forecast factors.

• Evaluating the appropriateness of the Company’s loan risk ratings and testing a risk-based targeted selection of loans to obtain substantive evidence that the Company is appropriately rating these loans in accordance with its policies, and that the risk ratings for the loans are reasonable.

• Evaluating the reasonableness and appropriateness of the estimated California unemployment factor and the estimated unemployment outlook forecast factor utilized by management in forming the environmental factor by comparing forecasts to relevant external data, including historical trends.

• Testing the mathematical accuracy and computation of the allowance for credit losses for loans by re-performing or independently calculating significant elements of the allowance and utilizing relevant source documents, including the completeness and accuracy of the data used in the calculation.

/s/ Moss Adams LLP

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data