What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-01 compared with 2022-03-01 · 322 added, 164 removed, 2031 unchanged (19% of the section changed)

9 unchanged sentences

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

49 TriCo Bancshares 2022 10-K

TRICO BANCSHARES

37 unchanged sentences

1,000,000 shares authorized;

zero issued and outstanding at December 31, 2021 and 2020

zero issued and outstanding at December 31, 2022 and 2021, respectively

Common stock, no par value:

4 unchanged sentences

Retained earnings 542,873 466,959

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

Accumulated other comprehensive income (loss), net of tax ( 193,905 ) 981

Total shareholders’ equity 1,046,416 1,000,184

1 unchanged sentence

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

50 TriCo Bancshares 2022 10-K

TRICO BANCSHARES

36 unchanged sentences

Diluted $ 3.83 $ 3.94 $ 2.16

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

6 unchanged sentences

Other comprehensive income (loss) ( 194,886 ) ( 11,299 ) 17,502

Comprehensive income $ 106,356 $ 82,316 $ 104,729

Comprehensive income (loss) $ ( 69,467 ) $ 106,356 $ 82,316

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

51 TriCo Bancshares 2022 10-K

TRICO BANCSHARES

17 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

14 unchanged sentences

Stock options exercised 63,325 1,190 1,190

Issuance of common stock 4,105,518 173,585 173,585

Repurchase of common stock ( 644,168 ) ( 13,440 ) ( 13,708 ) ( 27,148 )

3 unchanged sentences

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

52 TriCo Bancshares 2022 10-K

TRICO BANCSHARES

15 unchanged sentences

Change in market value of mortgage servicing rights ( 301 ) 872 2,634

Provision for (reversal of) losses on real estate owned — 128 ( 102 )

(Gain) loss on sale of real estate owned real estate owned ( 166 ) — 128

Deferred income tax expense ( 8,022 ) ( 936 ) ( 14,154 )

Gain on sale or transfer of loans, to real estate owned ( 233 ) ( 235 ) ( 608 )

Gain on transfer of loans to real estate owned ( 316 ) ( 233 ) ( 235 )

Operating lease payments ( 5,904 ) ( 4,964 ) ( 4,927 )

11 unchanged sentences

Investing activities:

Cash acquired in acquisition;

net of consideration paid 426,883 — —

Proceeds from maturities of securities available for sale 267,830 371,632 167,515

20 unchanged sentences

Cash and cash equivalents at end of year $ 107,230 $ 768,421 $ 669,551

Supplemental disclosure of cash flow activity:

Cash paid for interest expense $ 9,290 $ 5,942 $ 10,502

Cash paid for income taxes $ 41,000 $ 46,300 $ 29,500

Supplemental disclosure of noncash activities:

3 unchanged sentences

Obligations incurred in conjunction with leased assets $ 6,149 $ 2,883 $ 4,161

Supplemental disclosure of cash flow activity:

Cash paid for interest expense $ 5,942 $ 10,502 $ 14,965

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

Business combination (1)

(1) In the year ended 2022, the VRB acquisition included fair value tangible assets acquired of $ 1.37 billion, liabilities assumed of $ 1.28 billion, resulting in goodwill of $ 0.09 billion.

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

53 TriCo Bancshares 2022 10-K

TRICO BANCSHARES

38 unchanged sentences

(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.

During the twelve months ended December 31, 2022 and 2021, the Company recognized net unrealized gains of $ 35,000 and $ 718,000 , respectively, in the consolidated statements of net income related to changes in the fair value of non-marketable and other equity securities.

54 TriCo Bancshares 2022 10-K

Debt Securities

The Company classifies its debt securities into one of three categories:

trading, available for sale ("AFS") or held to maturity ("HTM").

trading, available for sale or held to maturity.

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.

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

Held 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.

38 unchanged sentences

Both cash and stock dividends are reported as income when received.

55 TriCo Bancshares 2022 10-K

Loans Held for Sale

12 unchanged sentences

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 Company measures credit losses under ASU 2016-03 Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which replaced 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.

18 unchanged sentences

When the value of a concession is measured using the discounted cash flow method, the ACL is determined by discounting the expected future cash flows at the original interest rate of the loan.

56 TriCo Bancshares 2022 10-K

PCD assets are assets acquired at a discount that is due, in part, to credit quality deterioration since origination which may be determined through observation of missed payments, downgrade in risk rating, deterioration of a borrower's financial trends or other observable factors including subjectivity utilized by management.

PCD assets are initially recorded at fair value, by taking the sum of the present value of expected future cash flows and an allowance for credit losses, at acquisition.

The allowance for credit losses for PCD assets is recorded through a gross-up of reserves on the consolidated balance sheets, while the allowance for acquired non-PCD assets, such as loans, is recorded through the provision for credit losses on the consolidated statements of income, consistent with originated loans.

Subsequent to acquisition, the allowance for credit losses for PCD loans will generally follow the same forward-looking estimation, provision, and charge-off process as non-PCD acquired and originated loans.

The Company has identified the following portfolio segments to evaluate and measure the allowance for credit loss:

11 unchanged sentences

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 .

24 unchanged sentences

Loss estimates are based on the general movement in credit score, economic outlook and its effects on employment and the Bank’s historical loss experience adjusted to reflect the economic outlook and the unemployment rate.

57 TriCo Bancshares 2022 10-K

Commercial and industrial:

15 unchanged sentences

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.

23 unchanged sentences

If the Bank retains such policies until the death of the insured, the Bank would receive nontaxable proceeds from the insurance company equal to the death benefit of the policies.

The Bank has entered into Joint Beneficiary Agreements (JBAs) with certain of the insured that provide some level of sharing of the death benefit, less the cash surrender value, among the Bank and the beneficiaries of the insured upon the receipt of death benefits.

58 TriCo Bancshares 2022 10-K

entered into Joint Beneficiary Agreements (JBAs) with certain of the insured that provide some level of sharing of the death benefit, less the cash surrender value, among the Bank and the beneficiaries of the insured upon the receipt of death benefits.

Goodwill, Other Intangible and Long-Lived Assets

41 unchanged sentences

Such financial instruments are recorded when they are funded.

59 TriCo Bancshares 2022 10-K

Low Income Housing Tax Credits

41 unchanged sentences

The performance obligation is completed as the transaction occurs and the fees are recognized at the time each specific service is provided to the customer.

60 TriCo Bancshares 2022 10-K

Debit and ATM interchange fees

23 unchanged sentences

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.

3 unchanged sentences

These reclassifications did not affect previously reported amounts of net income, total assets or total shareholders’ equity.

Note 2 - New Accounting Pronouncements

Accounting Standards Adopted in 2022

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 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):

1 unchanged sentence

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.

At the time that Update 2020-04 was issued, the UK Financial

Conduct Authority (FCA) had established its intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021.

As a result, the sunset provision was set for December 31, 2022—12 months after the expected cessation date of all currencies and tenors of LIBOR.

In March 2021, the FCA announced that the intended cessation date of the overnight 1-, 3-, 6-, and 12-month tenors of USD LIBOR would be June 30, 2023, which is beyond the current sunset date of Topic 848.

Because the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in this

Update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024.

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.

Accounting Standards Pending Adoption

In March 2022, the FASB issued ASU 2022-02, Financial Instruments — Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

The amendments in this Update eliminate the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.

The amendments enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

Furthermore, the amendments in this Update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20.

The Company adopted these amendments on January 1, 2023 and has thus far observed no material impact to

61 TriCo Bancshares 2022 10-K

deferred fees and costs and the related timing of net interest income recognition as a result of adoption.

Note 2 - Business Combinations

On March 25, 2022, the Company completed its acquisition of Valley Republic Bancorp (VRB), including the merger of Valley Republic Bank into Tri Counties Bank, with Tri Counties Bank as the surviving entity, in accordance with the terms of the merger agreement dated as of July 27, 2021.

The cash and stock transaction was valued at $ 174,016,000 in aggregate, based on TriCo's closing stock price of $ 42.48 on March 25, 2022.

Under the terms of the merger agreement, the Company issued 4,105,518 shares, in addition to approximately $ 431,000 in cash paid out for settlement of stock option awards at VRB.

The acquisition of VRB has been accounted for as a business combination.

The Company recorded the fair values based on the valuations available as of acquisition date, and subject to adjustment up to one year following the merger date of March 25, 2022.

During the fourth quarter of 2022, an adjustment to the initial allocation was based on more detailed information obtain about tax-related matters.

Management believes the purchase price allocation is now finalized as December 31, 2022.

The following table summarizes the consideration paid for VRB and the amounts of assets acquired and liabilities assumed that were recorded at the acquisition date (in thousands):

Estimated Fair Value

March 25, 2022 Adjustments Fair Value December 31, 2022

Fair value of consideration transferred:

Fair value of shares issued $ 173,585 $ — $ 173,585

Cash consideration 431 — 431

Total fair value of consideration transferred 174,016 — 174,016

Assets acquired:

Cash and cash equivalents 427,314 — 427,314

Securities available for sale 109,716 — 109,716

Loans and leases 771,353 — 771,353

Premises and equipment 4,658 — 4,658

Cash value of life insurance 13,609 — 13,609

Core deposit intangible 10,635 — 10,635

Other assets 26,244 3,500 29,744

Total assets acquired 1,363,529 3,500 1,367,029

Liabilities assumed:

Deposits ( 1,215,479 ) — ( 1,215,479 )

Subordinated debt ( 47,236 ) — ( 47,236 )

SERP liability ( 3,352 ) — ( 3,352 )

Other liabilities ( 10,516 ) — ( 10,516 )

Total liabilities assumed ( 1,276,583 ) — ( 1,276,583 )

Total net assets acquired 86,946 — 90,446

Goodwill recognized $ 87,070 $ ( 3,500 ) $ 83,570

62 TriCo Bancshares 2022 10-K

Note 3 – Investment Securities

9 unchanged sentences

Asset backed securities 454,943 17 ( 15,193 ) 439,767

Non-agency collateralized mortgage obligations 380,847 — ( 39,901 ) 340,946

Total debt securities available for sale $ 2,742,987 $ 421 $ ( 290,970 ) $ 2,452,438

14 unchanged sentences

Asset backed securities 408,329 2,354 ( 1,131 ) 409,552

Non-agency collateralized mortgage obligations 345,856 — ( 3,859 ) 341,997

Total debt securities available for sale $ 2,208,330 $ 16,413 $ ( 16,805 ) $ 2,207,938

4 unchanged sentences

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

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 .

There were no sales of debt securities during the years ended December 31, 2022 and 2021, respectively.

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

Investment securities with an aggregate carrying value of $ 595,779,000 and $ 423,892,000 at December 31, 2022 and 2021, respectively, were pledged as collateral for specific borrowings, lines of credit and local agency deposits.

8 unchanged sentences

Average remaining life is defined as the time span after which the principal balance has been reduced by half.

63 TriCo Bancshares 2022 10-K

Debt Securities Available for Sale Held to Maturity

18 unchanged sentences

Obligations of states and political subdivisions 43,282 ( 12,917 ) 219,532 ( 26,904 ) 262,814 ( 39,821 )

Corporate bonds — — 5,751 ( 413 ) 5,751 ( 413 )

Asset backed securities 205,329 ( 10,238 ) 231,703 ( 4,955 ) 437,032 ( 15,193 )

Non-agency collateralized mortgage obligations 203,620 ( 36,480 ) 123,075 ( 3,421 ) 326,695 ( 39,901 )

Total debt securities available for sale $ 1,218,843 $ ( 193,869 ) $ 1,185,676 $ ( 97,101 ) $ 2,404,519 $ ( 290,970 )

Debt Securities Held to Maturity

Obligations of U.S.

government agencies $ — $ — $ 143,577 $ ( 11,013 ) $ 143,577 $ ( 11,013 )

Obligations of states and political subdivisions — — 4,530 ( 47 ) 4,530 ( 47 )

Total debt securities held to maturity $ — $ — $ 148,107 $ ( 11,060 ) $ 148,107 $ ( 11,060 )

Less than 12 months 12 months or more Total

8 unchanged sentences

Asset backed securities 62,792 ( 259 ) 109,748 ( 872 ) 172,540 ( 1,131 )

Non-agency collateralized mortgage obligations 327,045 ( 3,859 ) — — 327,045 ( 3,859 )

Total securities available for sale $ 1,393,098 $ ( 14,640 ) $ 153,834 $ ( 2,165 ) $ 1,546,932 $ ( 16,805 )

Obligations of U.S.

government corporations and agencies:

government agencies:

Unrealized losses on investments in obligations of U.S.

11 unchanged sentences

At December 31, 2022, 202 debt security representing obligations of states and political subdivisions had unrealized losses with aggregate depreciation of 13.16 % from the Company’s amortized cost basis.

Corporate bonds:

The unrealized losses on investments in corporate bonds 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.

64 TriCo Bancshares 2022 10-K

Because management believes 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, there is no impairment on these securities and there has been no allowance for credit losses as of and for the year ended December 31, 2022.

At December 31, 2022, 6 asset backed securities had unrealized losses with aggregate depreciation of 6.70 % from the Company’s amortized cost basis.

Asset backed securities:

4 unchanged sentences

At December 31, 2022, 48 asset backed securities had unrealized losses with aggregate depreciation of 3.36 % from the Company’s amortized cost basis.

Non-agency collateralized mortgage obligations:

The unrealized losses on investments in asset backed securities 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.

At December 31, 2022, 22 asset backed securities had unrealized losses with aggregate depreciation of 10.88 % from the Company’s amortized cost basis.

Marketable equity securities:

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.

The Company monitors credit quality of debt securities held-to-maturity through the use of credit rating.

The Company monitors the credit rating on a monthly basis.

The following table summarizes the amortized cost of debt securities held-to-maturity at the dates indicated, aggregated by credit quality indicator:

December 31, 2022 December 31, 2021

AAA/AA/A BBB/BB/B AAA/AA/A BBB/BB/B

(In thousands) (In thousands)

Debt Securities Held to Maturity

Obligations of U.S.

government agencies $ 154,830 $ — $ 192,068 $ —

Obligations of states and political subdivisions 6,153 — 7,691 —

Total debt securities held to maturity $ 160,983 $ — $ 199,759 $ —

65 TriCo Bancshares 2022 10-K

Note 4 – Loans

25 unchanged sentences

As of December 31, 2022, there was approximately $ 15,000 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 .

During the year ended December 31, 2022, the Company recognized $ 2,149,000 in fees on PPP loans, as compared with $ 14,148,000 and $ 7,760,000 for the years ended December 31, 2021 and 2020, respectively.

The SBA ended PPP and did not accept new borrowing applications, effective May 31, 2021.

Note 5 – Allowance for Credit Losses

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.

In addition to the quantitative loan portfolio credit quality characteristics which are illustrated in the following tabular disclosures, the Company’s expected credit loss methodology incorporates the use of qualitative factors.

The two most critical qualitative factors utilized by the Company include the actual and forecasted changes in both California unemployment and U.S.

gross domestic product.

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 ACL was $ 105,680,000 as of December 31, 2022 as compared to $ 85,376,000 at December 31, 2021.

The provision for credit losses on loans of $ 17,945,000 during the year ended December 31, 2022 was comprised of $ 10,820,000 in day 1 required reserves from loans acquired in connection with the VRB merger in the first quarter of 2022.

Additionally, the Company designated certain loans and leases purchased from VRB as PCD, which required $ 2,037,000 in additional credit reserves as of the acquisition date.

For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using the same methodology as other loans and leases held-for-investment.

The remaining increase in the allowance for credit reserves was the result of 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.

The quantitative component of the ACL increased reserve requirements due to loan volume growth and increases in specific reserves.

In addition to the quantitative loan portfolio, credit quality characteristics which are illustrated in the following tabular disclosures, the Company’s expected credit loss methodology (CECL) incorporates the use of qualitative factors.

The qualitative components of the ACL resulted in a net increase in required reserves despite continued improvement in US employment rates, due to increased uncertainty in the global economic markets, US economic policy uncertainty, and the continued rise in corporate debt yields.

As compared to historical norms, inflation remains elevated from continued disruptions in the supply chain, wage pressures, and higher living costs such as housing and food prices.

Management notes the rapid intervals of rate increases by the Federal Reserve and inversion of the yield curve, have boosted expectations of the US entering a recession within 12 months.

As a result, management continues to believe that certain credit weakness are likely present in the overall economy and that it is appropriate to maintain an allowance for credit losses that incorporates such risk factors.

66 TriCo Bancshares 2022 10-K

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

5 unchanged sentences

Allowance for individually evaluated loans 2,414 982

Allowance for PCD loan losses — —

Total allowance for credit losses $ 105,680 $ 85,376

The following tables summarize the activity in the allowance for loan losses, and ending balance of loans, net of unearned fees for the periods indicated.

The following table provides a summary of loans and leases purchased as part of the VRB acquisition with credit deterioration (PCD) at acquisition:

As of March 25, 2022

(in thousands) Commercial Real Estate Consumer Commercial and Industrial Construction Agriculture Production Total

Par value $ 27,237 $ 3,877 $ 2,674 $ 25,645 $ 9,080 $ 68,513

ACL at acquisition ( 1,573 ) ( 144 ) ( 81 ) ( 201 ) ( 38 ) ( 2,037 )

Non-credit discount ( 2,305 ) ( 360 ) ( 47 ) ( 232 ) ( 12 ) ( 2,956 )

Purchase price $ 23,359 $ 3,373 $ 2,546 $ 25,212 $ 9,030 $ 63,520

The following tables summarize the activity in the allowance for credit losses, and ending balance of loans, net of unearned fees for the periods indicated.

Allowance for Credit Losses – December 31, 2022

(in thousands) Beginning

Balance Charge-offs Recoveries Provision for

Balance ACL on PCD Loans Charge-offs Recoveries Provision for

(Benefit from)

17 unchanged sentences

Total $ 89,166 $ 2,037 $ ( 1,585 ) $ 1,907 $ 18,470 $ 109,995

67 TriCo Bancshares 2022 10-K

Allowance for Credit Losses – December 31, 2021

(in thousands) Beginning

Balance Impact of CECL Adoption Charge-offs Recoveries Provision for

Balance Charge-offs Recoveries Provision for

(Benefit from)

14 unchanged sentences

Leases 5 — — 13 18

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

Allowance for credit losses on loans 91,847 ( 2,392 ) 3,086 ( 7,165 ) 85,376

Reserve for unfunded commitments 3,400 — — 390 3,790

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 for

Balance Impact of CECL Adoption Charge-offs Recoveries Provision for

(Benefit from)

14 unchanged sentences

Leases 21 ( 12 ) — — ( 4 ) 5

Allowance for loan losses $ 32,582 $ ( 3,639 ) $ 3,363 $ ( 1,690 ) $ 30,616

Reserve for Unfunded Commitments - December 31, 2019

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

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

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

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including, but not limited to, trends relating to (i) the level of criticized and classified loans, (ii) net charge-offs, (iii) non-performing loans, and (iv) delinquency within the portfolio.

4 unchanged sentences

Appropriate valuations are obtained at initiation of the credit and periodically (every 3 - 12 months depending on collateral type) once repayment is questionable and the loan has been classified.

68 TriCo Bancshares 2022 10-K

The Company utilizes a risk grading system to assign a risk grade to each of its loans.

35 unchanged sentences

Total CRE owner occupied risk ratings $ 213,445 $ 214,083 $ 126,412 $ 66,868 $ 50,858 $ 268,762 $ 44,379 $ — $ 984,807

69 TriCo Bancshares 2022 10-K

Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2022

35 unchanged sentences

Total other consumer loans $ 14,070 $ 13,008 $ 10,330 $ 10,877 $ 5,401 $ 2,073 $ 969 $ — $ 56,728

70 TriCo Bancshares 2022 10-K

Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2022

33 unchanged sentences

Total loans outstanding $ 1,246,402 $ 1,284,725 $ 607,121 $ 526,167 $ 378,767 $ 1,383,071 $ 1,010,395 $ 13,799 $ 6,450,447

The following information related to loan originations by vintage are presented for comparison purposes only.

71 TriCo Bancshares 2022 10-K

Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2021

35 unchanged sentences

Total SFR 1st DT liens $ 269,846 $ 159,860 $ 40,947 $ 35,251 $ 36,869 $ 119,753 $ — $ 4,434 $ 666,960

72 TriCo Bancshares 2022 10-K

Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2021

35 unchanged sentences

Total agriculture production loans $ 2,068 $ 878 $ 1,393 $ 951 $ 940 $ 895 $ 43,686 $ — $ 50,811

73 TriCo Bancshares 2022 10-K

Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2021

37 unchanged sentences

Total $ 2,681 $ 488 $ 1,778 $ 4,947 $ 6,445,500 $ 6,450,447

74 TriCo Bancshares 2022 10-K

The following table shows the ending balance of current and past due originated loans by loan category as of the date indicated:

40 unchanged sentences

Interest income actually recognized on these loans during the years ended December 31, 2022, 2021, and 2020 was $ 579,000 , $ 471,000 , and $ 701,000 , respectively.

75 TriCo Bancshares 2022 10-K

The following tables present the amortized cost basis of collateral dependent loans by class of loans as of the following periods:

33 unchanged sentences

Total $ 2,591 $ 1,253 $ 1,545 $ 7,315 $ 4,458 $ 1,027 $ 5,253 $ 1,636 $ 5 $ 2,162 $ 117 $ 27,362

76 TriCo Bancshares 2022 10-K

The following tables show certain information regarding Troubled Debt Restructurings that occurred during the periods indicated:

57 unchanged sentences

Total 16 $ 9,083 $ 9,116 $ 2,521 5 $ 1,107 $ ( 5 )

77 TriCo Bancshares 2022 10-K

TDR information for the year ended December 31, 2020

47 unchanged sentences

Gain on sale of real estate owned $ 166 $ 233

At December 31, 2021, the balance of real estate owned includes 4 foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At December 31, 2021, there were no residential real estate properties with formal foreclosure proceedings underway .

At December 31, 2022, the balance of real estate owned includes 8 foreclosed real estate properties and one land property recorded as a result of obtaining physical possession of the property.

At December 31, 2022, there were no real estate properties with formal foreclosure proceedings underway .

78 TriCo Bancshares 2022 10-K

Note 7 – Premises and Equipment

34 unchanged sentences

For each of the years in the three year period ended December 31, 2022, there were no impairment charges recognized.

79 TriCo Bancshares 2022 10-K

The following table summarizes the Company’s core deposit intangibles (“CDI”) as of the dates indicated:

(in thousands) December 31,

2021 Additions Reductions/

Amortization December 31,

Core deposit intangibles $ 37,163 $ — $ — $ 37,163

Accumulated amortization ( 24,794 ) — ( 5,464 ) ( 19,330 )

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.

2022 December 31,

Core deposit intangibles, gross $ 36,265 $ 37,725

Fully amortized portion ( 8,074 ) ( 1,460 )

Acquisition of VRB 10,635 —

Core deposit intangibles, gross ending balance 38,826 36,265

Accumulated amortization, gross ( 23,896 ) ( 19,891 )

Fully amortized portion 8,074 1,460

Amortization expense ( 6,334 ) ( 5,465 )

Accumulated amortization, gross ending balance ( 22,156 ) ( 23,896 )

Core deposit intangible, net $ 16,670 $ 12,369

The Company's remaining CDI balance of $ 16,670,000 as of December 31, 2022 reflects balances recorded from the VRB acquisition on March 25, 2022 totaling $ 10,635,000 , the FNBB acquisition on July 6, 2018 totaling $ 2,046,000 , and the acquisition of three branch offices from Bank of America on March 18, 2016 totaling $ 6,614,000 .

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

Years Ended Estimated CDI Amortization

Thereafter 1,936

Note 10 – Mortgage Servicing Rights

13 unchanged sentences

Weighted-average discount rate 12.0 % 12.0 % 12.0 %

The changes in fair value of MSRs during 2021 were primarily due to changes in principal balances and mortgage prepayment speeds of the MSRs.

The changes in fair value of MSRs during 2020 were primarily due to changes in investor required rate of return, or discount rate, of the MSRs.

The changes in fair value of MSRs during 2019 were primarily due to changes in principal balances, changes in mortgage prepayment speeds, and changes in investor required rate of return, or discount rate, of the MSRs.

The changes in fair value of MSRs during 2022 were primarily due to changes in mortgage prepayment speeds and expected life estimates of the MSRs.

The changes in fair value of MSRs during 2021 were primarily due to changes in principal balance and mortgage prepayment speeds of the MSRs.

The changes in fair value of MSRs during 2020 were primarily due to changes in investor require rate of return, or discount rate, of the MSRs.

80 TriCo Bancshares 2022 10-K

Note 11 - Leases

31 unchanged sentences

Total deposits $ 8,329,013 $ 7,367,159

Certificate of deposit balances of $ 1,000,000 and $ 10,000,000 from the State of California were included in time certificates over $250,000 at December 31, 2021 and 2020, respectively.

The Bank participates in a deposit program offered by the State of California whereby the State may make deposits at the Bank’s request subject to collateral and credit worthiness constraints.

The negotiated rates on these State deposits are generally more favorable than other wholesale funding sources available to the Bank.

Overdrawn deposit balances of $ 1,766,000 and $ 2,324,000 were classified as consumer loans at December 31, 2022 and 2021, respectively.

81 TriCo Bancshares 2022 10-K

At December 31, 2022, the scheduled maturities of time deposits were as follows (in thousands):

4 unchanged sentences

(in thousands)

Overnight borrowing at FHLB, fixed rate, as of December 31, 2022 of 4.65 %, payable on January 3, 2023

$ 216,700 $ —

Other collateralized borrowings, fixed rate, as of December 31, 2022 and 2020 of 0.05 %, payable on January 3, 2023 and January 3, 2022, respectively

4 unchanged sentences

The Company maintains a collateralized line of credit with the FHLB.

Based on the FHLB stock requirements at December 31, 2021, this line provided for maximum borrowings of $ 2,251,285,000 of which none was outstanding.

As of December 31, 2021, the Company had designated investment securities with a fair value of $ 72,108,000 and loans totaling $ 3,486,380,000 as potential collateral under this collateralized line of credit with the FHLB.

Based on the FHLB stock requirements at December 31, 2022, this line provided for maximum borrowings of $ 2,485,905,000 of which $ 216,700,000 was outstanding.

As of December 31, 2022, the Company had designated investment securities with a fair value of $ 80,187,000 and loans with unpaid principal balances totaling $ 4,389,161,000 as potential collateral under this collateralized line of credit with the FHLB.

The Company maintains a collateralized line of credit with the Federal Reserve Bank of San Francisco (“FRB”).

As of December 31, 2022, this line provided for maximum borrowings of $ 299,689,000 of which none was outstanding.

As of December 31, 2021, the Company has designated investment securities with fair value of $ 7,000 and loans totaling $ 308,299,000 as potential collateral under this collateralized line of credit with the FRB.

As of December 31, 2022, the Company has designated investment securities with fair value of $ 5,000 and loans with unpaid principal balances totaling $ 424,946,000 as potential collateral under this collateralized line of credit with the FRB.

The Company has available unused correspondent banking lines of credit from commercial banks totaling $ 30,000,000 for federal funds transactions at December 31, 2022.

13 unchanged sentences

The recorded book values of the Debentures issued by the Capital Trusts are reflected as junior subordinated debt in the Company’s consolidated balance sheets.

The common stock issued by the Capital Trusts and owned by the Company is recorded in other assets in the Company’s consolidated balance sheets.

The common stock issued by the Capital Trusts and owned by the Company is recorded in other assets in the

82 TriCo Bancshares 2022 10-K

Company’s consolidated balance sheets.

The recorded book value of the debentures issued by the Capital Trusts, less the recorded book value of the common stock of the Capital Trusts owned by the Company will continue to qualify as Tier 1 or Tier 2 capital under interim guidance issued by the Board of Governors of the Federal Reserve System until only five years remain until their scheduled maturity.

In connection with the acquisition of Valley Republic Bancorp the Company assumed $ 36.0 million in subordinated capital notes, comprised of $ 16.0 million that matures in 2029 and $ 20.0 million that matures in 2035.

The notes that mature in 2029 provide for quarterly interest payments at a fixed rate of 6.00 % until March 29, 2024 and then will have a floating rate of three month LIBOR plus 3.52 % until maturity.

The notes that mature in 2035 provide for quarterly interest payments at a fixed rate of 5.00 % until August 27, 2025 and then will have a floating rate of 90-day average SOFR plus 4.90 % until maturity.

The acquired subordinated capital notes were recorded on the Company’s books at their fair values on the acquisition date.

The related fair value premiums to face value will be amortized over the remaining maturity period using the effective interest method.

The Company expects a comparable SOFR rate term to replace LIBOR as the benchmark rate index for applicable debentures in 2024.

The following table summarizes the terms and recorded balance of each subordinated debenture as of the date indicated (dollars in thousands):

10 unchanged sentences

North Valley Trust IV 3/15/2036 10,310 1.33 % 6.10 % 7,393 7,147

VRB Subordinated - 6 %

3/29/2029 16,000 Fixed 6.00 % 17,187 —

VRB Subordinated - 5 %

8/27/2035 20,000 Fixed 5.00 % 25,336 —

$ 98,889 $ 101,040 $ 58,079

18 unchanged sentences

Deposit account overdraft privilege 126,634 125,670

83 TriCo Bancshares 2022 10-K

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.

32 unchanged sentences

Absent approval from the Commissioner of the DPFI, California banking laws generally limit the Bank’s ability to pay dividends to the lesser of (1) retained earnings or (2) net income for the last three fiscal years, less cash distributions paid during such period.

Under this law, at December 31, 2021, the Bank could have paid dividends of $ 154,466,000 to the Company without the approval of the Commissioner of the DPFI.

Under this law, at December 31, 2022, the Bank could have paid dividends of $ 157,036,000 to the Company without the approval of the Commissioner of the DFPI.

Stock Repurchase Plan

2 unchanged sentences

The 2021 Repurchase Plan has no expiration date (in accordance with applicable laws and regulations) and as of and for year ended December 31, 2022, the Company repurchased 576,881 shares.

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

The Company repurchased 63,317 shares during the year ended December 31, 2021.

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.

Under the 2019 Repurchase Plan, during the years ended December 31, 2021 and 2020 the Company had repurchased 223 and 858,717 shares, respectively.

84 TriCo Bancshares 2022 10-K

Stock Repurchased Under Equity Compensation Plans

29 unchanged sentences

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.

As of December 31, 2022, 15,500 options for the purchase of common shares remain outstanding under the 2009 Plan.

Stock option activity is summarized in the following table for the dates indicated:

1 unchanged sentence

per Share Weighted

Outstanding at January 1, 2020 160,500 $ 12.63 to $ 23.21

Outstanding at January 1, 2021

128,500 $ 14.54 to $ 23.21

Options granted — — —

1 unchanged sentence

Options forfeited — — —

Outstanding at December 31, 2020 128,500 $ 14.54 to $ 23.21

Outstanding at December 31, 2021

78,825 $ 15.34 to $ 23.21

Options granted — — —

2 unchanged sentences

Outstanding at December 31, 2022 15,500 $ 19.46 to $ 23.21

85 TriCo Bancshares 2022 10-K

The following table shows the number, weighted-average exercise price, intrinsic value, and weighted average remaining contractual life of options exercisable, options not yet exercisable and total options outstanding as of December 31, 2022:

4 unchanged sentences

Intrinsic value (in thousands) $ 461 $ — $ 461

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

Weighted average remaining contractual term (yrs.) 1 year n/a 1 year

All options outstanding as of December 31, 2022 are fully vested.

18 unchanged sentences

Outstanding at January 1, 2022

103,517 99,763

RSUs granted 84,278 $ 44.00 37,877 $ 40.74

6 unchanged sentences

Additional RSUs credited through dividends are subject to the same vesting requirements as the original grant.

The 103,517 of service condition vesting RSUs outstanding as of December 31, 2021 are expected to vest, and be released, on a weighted-average basis, over the next 1.3 years.

The Company expects to recognize $ 3,822,000 of pre-tax compensation costs related to these service condition vesting RSUs between December 31, 2022 and their vesting dates.

The Company did not modify any service condition vesting RSUs during 2022 or 2021.

The 99,763 of market plus service condition vesting RSUs outstanding as of December 31, 2021 are expected to vest, and be released, on a weighted-average basis, over the next 1.5 years.

The Company expects to recognize $ 1,599,463 of pre-tax compensation costs related to these RSUs between December 31, 2021 and their vesting dates.

The Company expects to recognize $ 2,110,000 of pre-tax compensation costs related to the market plus service condition RSUs between December 31, 2022 and their vesting dates.

As of December 31, 2022, the number of market plus service condition vesting RSUs outstanding that will actually vest, and be released, may be reduced to zero or increased to 171,721 depending on the total return of the Company’s common stock versus the total return of an index of bank stocks from the grant date to the vesting date.

The Company did not modify any market plus service condition vesting RSUs during 2022 or 2021.

86 TriCo Bancshares 2022 10-K

The following table shows the compensation costs and excess tax benefits for RSUs recognized in income for the periods indicated:

29 unchanged sentences

Mortgage banking servicing fee income (expense), net of change in value of mortgage loan servicing rights, totaling $ 2,188,000 , $ 1,009,000 , and $ 779,000 were recorded within service charges and fees for the years ended December 31, 2022, 2021, and 2020, respectively.

87 TriCo Bancshares 2022 10-K

The components of noninterest expense were as follows:

47 unchanged sentences

As of December 31, 2022, the Company has committed to make additional capital contributions to the Low Income Housing Tax Credit Funds in the amount of $ 65,285,000 , and these contributions are expected to be made over the next several years.

88 TriCo Bancshares 2022 10-K

The provisions for income taxes applicable to income before taxes for the years ended December 31, 2022, 2021 and 2020 differ from amounts computed by applying the statutory Federal income tax rates to income before taxes.

17 unchanged sentences

Deferred compensation 1,696 1,758

Accrued pension liability — 383

Other accrued expenses 2,720 1,994

17 unchanged sentences

Mortgage servicing rights valuation ( 1,976 ) ( 1,726 )

Unrealized gain on securities — ( 5,671 )

Core deposit intangible ( 4,778 ) ( 3,248 )

5 unchanged sentences

In addition, the 2020 Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provided the Company with an opportunity to file amended federal tax returns and generate proposed refunds of approximately $ 805,000 .

These tax attribute carryforwards will be subject to provisions of the tax law that limit the use of such losses and credits generated by a company prior to the date certain ownership changes occur.

The amount of the Company’s net operating loss carryforwards that would be subject to these limitations as of December 31, 2021 were none for federal and $ 13,367,000 for California.

These tax attribute carryforwards will be subject to provisions of the tax law that limit the use of such losses and

89 TriCo Bancshares 2022 10-K

credits generated by a company prior to the date certain ownership changes occur.

The amount of the Company’s net operating loss carryforwards that are subject to these limitations as of December 31, 2022 were approximately $ 5,518,000 for federal and $ 11,187,000 for California.

The amount of the Company’s tax credits that would be subject to these limitations as of December 31, 2022 are $ 395,000 and $ 648,000 for federal and California, respectively.

1 unchanged sentence

As such, the Company has recorded the future benefit of these tax credits on the books at the value which is more likely than not to be realized.

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

These tax loss and tax credit carryforwards expire at various dates through 2032.

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 past mergers.

15 unchanged sentences

Options excluded from diluted earnings per share because the effect of these options was antidilutive — — —

Note 21 – Comprehensive Income

90 TriCo Bancshares 2022 10-K

Note 21 – Comprehensive Income (Loss)

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.

6 unchanged sentences

Realized gains on debt securities — — ( 7 )

Total amounts reclassified out of accumulated other

comprehensive income — ( 7 ) ( 110 )

Total amounts reclassified out of accumulated other comprehensive income — — ( 7 )

Unrealized holding gains (losses) on available for sale securities after reclassifications ( 290,157 ) ( 19,575 ) 15,796

5 unchanged sentences

Amortization of actuarial losses 8 254 9,309

Total amounts reclassified out of accumulated other

comprehensive income 196 9,254 354

Total amounts reclassified out of accumulated other comprehensive income ( 20 ) 196 9,254

Change in unfunded status of the supplemental retirement plans after reclassifications 11,502 3,693 9,899

5 unchanged sentences

Total other comprehensive income (loss) $ ( 194,886 ) $ ( 11,299 ) $ 17,502

The components of accumulated other comprehensive income, included in shareholders’ equity, are as follows:

The components of accumulated other comprehensive income (loss), included in shareholders’ equity, are as follows:

Year Ended December 31,

(in thousands) 2022 2021

Net unrealized gain (loss) on available for sale securities $ ( 392 ) $ 19,183

Net unrealized loss on available for sale securities $ ( 290,549 ) $ ( 392 )

Tax effect 85,897 116

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

Unrealized holding loss on available for sale securities, net of tax ( 204,652 ) ( 276 )

Unfunded status of the supplemental retirement plans 13,901 2,399

2 unchanged sentences

Joint beneficiary agreement liability, net of tax 956 ( 433 )

Accumulated other comprehensive income $ 981 $ 12,280

Accumulated other comprehensive income (loss) $ ( 193,905 ) $ 981

Note 22 – Retirement Plans

1 unchanged sentence

Participants may contribute a portion of their compensation subject to certain limits based on federal tax laws.

Prior to July 1, 2015, the Company did not contribute to the 401(k) Plan.

Effective July 1, 2015, the Company initiated a discretionary matching contribution equal to 50 % of participant’s elective deferrals each quarter, up to 4 % of eligible compensation.

The Company provides a discretionary matching contribution equal to 50 % of participant’s elective deferrals, up to 4 % of eligible compensation.

The Company recorded salaries & benefits expense attributable to the 401(k) Plan matching contributions and 401(k) Plan matching contributions for the years ended:

3 unchanged sentences

401(k) Plan contributions made by the Company $ 1,214 $ 1,121 $ 202

91 TriCo Bancshares 2022 10-K

Employee Stock Ownership Plan

19 unchanged sentences

The cash values of the insurance policies purchased to fund the deferred compensation obligations and the supplemental retirement obligations were $ 133,742,000 and $ 117,857,000 at December 31, 2022 and 2021, 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.

The Company recorded in other liabilities the additional funded status of the supplemental retirement plans of $ 13,901,000 and $ 2,399,000 related to the supplemental retirement plans as of December 31, 2022 and 2021, 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.

The projected benefit obligation is recorded in other liabilities.

At December 31, 2021 and 2020, the additional unfunded status of the supplemental retirement plans of $( 2,399,000 ) and $ 1,294,000 were offset by a reduction of shareholders’ equity accumulated other comprehensive loss of $( 1,690,000 ) and $ 912,000 , respectively, representing the after-tax impact of the additional unfunded status of the supplemental retirement plans, and the related deferred tax asset of $( 709,000 ) and $ 382,000 , respectively.

At December 31, 2022 and 2021, the additional funded status of the supplemental retirement plans of $ 13,901,000 and $ 2,399,000 were offset by a reduction of shareholders’ equity accumulated other comprehensive gain of $ 9,792,000 and $ 1,690,000 , respectively, representing the after-tax impact of the additional funded status of the supplemental retirement plans, and the related deferred tax liability of $ 4,109,000 and $ 709,000 , respectively.

Amounts recognized as a component of accumulated other comprehensive income (loss) as of year-end that have not been recognized as a component of the combined net period benefit cost of the Company’s defined benefit pension plans are presented in the following table.

3 unchanged sentences

Prior service cost — ( 28 )

Net actuarial loss ( 2,371 ) 1,380

Net actuarial (gain) / loss ( 13,901 ) ( 2,371 )

Amount included in accumulated other comprehensive income (loss) ( 13,901 ) ( 2,399 )

Deferred tax benefit 709 ( 382 )

Deferred tax liability / (benefit) 4,109 709

Amount included in accumulated other comprehensive income (loss), net of tax $ ( 9,792 ) $ ( 1,690 )

92 TriCo Bancshares 2022 10-K

Information pertaining to the activity in the supplemental retirement plans, using a measurement date of December 31, is as follows:

2 unchanged sentences

Benefit obligation at beginning of year $ ( 43,834 ) $ ( 46,197 )

Acquisition of obligations ( 3,310 ) —

Service cost ( 1,624 ) ( 1,103 )

11 unchanged sentences

Unrecognized prior service cost — ( 28 )

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

Accumulated other comprehensive loss 13,901 2,481

Accrued benefit cost $ ( 40,341 ) $ ( 43,834 )

9 unchanged sentences

Recognized net actuarial loss ( 86 ) 254 9,309

Amortization of loss/(gain) ( 114 ) — —

Recognition of pension service cost to due amendment 2,141 — —

Net periodic pension cost $ 5,268 $ 2,817 $ 13,309

6 unchanged sentences

Average annual increase in director compensation — % — % — %

93 TriCo Bancshares 2022 10-K

The following table sets forth the expected benefit payments to participants and estimated contributions to be made by the Company under the supplemental retirement plans for the years indicated:

37 unchanged sentences

If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.

Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S.

Level 1 securities include those traded on an active exchange, such as the

94 TriCo Bancshares 2022 10-K

New York Stock Exchange, U.S.

Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds.

4 unchanged sentences

As such, we classify those loans subjected to nonrecurring fair value adjustments as Level 2.

Impaired loans —Loans are not recorded at fair value on a recurring basis.

However, from time to time, loans maybe considered impaired and an allowance for credit losses is established.

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired.

The fair value of an impaired loan is estimated using one of several methods, including collateral value, fair value of similar debt, enterprise value, liquidation value and discounted cash flows.

Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.

Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy.

When the fair value of the collateral is based on an observable market price or a current appraised value which uses substantially observable data, the Company records the impaired loan as nonrecurring Level 2.

When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value, or the appraised value contains a significant unobservable assumption, such as deviations from comparable sales, and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3.

Individually evaluated loans —Loans are not recorded at fair value on a recurring basis.

However, from time to time, loans may require individual analysis and an allowance for credit losses is established.

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are an example.

The fair value of individually evaluated loans is estimated using one of several methods, including collateral value, fair value of similar debt, enterprise value, liquidation value and discounted cash flows.

Those individually evaluated loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.

Individually evaluated loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy.

When the fair value of the collateral is based on an observable market price or a current appraised value which uses substantially observable data, the Company records the loan as nonrecurring Level 2.

When an appraised value is not available or management determines the fair value of the collateral is below the appraised value, or the appraised value contains a significant unobservable assumption, such as deviations from comparable sales, and there is no observable market price, the Company records the loan as nonrecurring Level 3.

Foreclosed assets —Foreclosed assets include assets acquired through, or in lieu of, loan foreclosure.

1 unchanged sentence

Subsequent to foreclosure, management periodically performs valuations and the assets are carried at the lower of carrying amount or fair value less cost to sell.

When the fair value of foreclosed assets is based on an observable market price or a current appraised value which uses substantially observable data, the Company records the impaired originated loan as nonrecurring Level 2.

When the fair value of foreclosed assets is based on an observable market price or a current appraised value which uses substantially observable data, the Company records the asset as nonrecurring Level 2.

5 unchanged sentences

Additional information regarding mortgage servicing rights can be found in Note 10 in the consolidated financial statements at Item 1 of this report.

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis (in thousands):

The tables below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis (in thousands):

Fair value at December 31, 2022 Total Level 1 Level 2 Level 3

6 unchanged sentences

Asset backed securities 439,767 — 439,767 —

Non-agency collateralized mortgage obligations 340,946 — 340,946 —

Loans held for sale 1,846 — 1,846 —

1 unchanged sentence

Total assets measured at fair value $ 2,463,594 $ 2,598 $ 2,454,284 $ 6,712

95 TriCo Bancshares 2022 10-K

Fair value at December 31, 2021 Total Level 1 Level 2 Level 3

6 unchanged sentences

Asset backed securities 409,552 — 409,552 —

Non-agency collateralized mortgage obligation 341,997 — 341,997 —

Loans held for sale 3,466 — 3,466 —

18 unchanged sentences

Note 10 contains additional information regarding mortgage servicing rights.

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2021 and 2020:

The following table present quantitative information about recurring Level 3 fair value measurements at December 31, 2022 and 2021:

December 31, 2022 Fair Value

11 unchanged sentences

Discount rate 10 %- 14 %, 12 %

The tables below present the recorded amount of assets and liabilities measured at fair value on a nonrecurring basis, as of the dates indicated, that had a write-down or an additional allowance provided during the periods indicated (in thousands):

Year ended December 31, 2021 Total Level 1 Level 2 Level 3 Total Gains

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

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

Impaired loans $ 1,424 — — $ 1,424 $ ( 1,489 )

96 TriCo Bancshares 2022 10-K

The gains (losses) represent the amounts recorded during the period regardless of whether the asset is still held at fair value at period end (in thousands):

December 31, 2022 Total Level 1 Level 2 Level 3 Total Gains

Individually evaluated loans $ 5,719 — — $ 5,719 $ ( 2,283 )

Real estate owned 311 — — 311 481

Total assets measured at fair value $ 6,030 — — $ 6,030 $ ( 1,802 )

The impaired loan amount above represents impaired, collateral dependent loans that have been adjusted to fair value.

When we identify a collateral dependent loan as impaired, we measure the impairment using the current fair value of the collateral, less selling costs.

December 31, 2021 Total Level 1 Level 2 Level 3 Total Gains

Individually evaluated loans $ 3,683 — — $ 3,683 $ ( 1,105 )

The individually evaluated loan amount above represents collateral dependent loans with unique risk characteristics that have been adjusted to fair value.

When we identify a collateral dependent loan as requiring individual evaluation, we measure the need for credit reserves using the current fair value of the collateral, less selling costs.

Depending on the characteristics of a loan, the fair value of collateral is generally estimated by obtaining external appraisals.

If we determine that the value of the impaired loan is less than the recorded investment in the loan, we recognize this impairment and adjust the carrying value of the loan to fair value through the allowance for loan and lease losses.

If we determine that the value of the loan is less than the recorded investment in the loan, we recognize this impairment and adjust the carrying value of the loan to fair value through the allowance for loan and lease losses.

The loss represents charge-offs or impairments on collateral dependent loans for fair value adjustments based on the fair value of collateral.

12 unchanged sentences

Under certain circumstances, management discounts are applied based on specific characteristics of an individual property.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at December 31, 2021 and 2020:

The following tables present quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at December 31, 2022 and 2021:

December 31, 2022 Fair Value

1 unchanged sentence

Weighted Average

Impaired loans $ 3,683 Sales comparison

Individually evaluated loans $ 5,719 Sales comparison

Income approach Adjustment for differences between

1 unchanged sentence

Capitalization rate Not meaningful;

Real estate owned (Residential) $ 311 Sales comparison

approach Adjustment for differences between

comparable sales Not meaningful;

December 31, 2021 Fair Value

1 unchanged sentence

Weighted Average

Impaired loans $ 1,424 Sales comparison

Individually evaluated loans $ 3,683 Sales comparison

approach Income

1 unchanged sentence

comparable sales Capitalization rate Not meaningful;

Real estate owned (Residential) $ 824 Sales comparison

approach Adjustment for differences between

comparable sales Not meaningful;

97 TriCo Bancshares 2022 10-K

The estimated fair values of financial instruments that are reported at amortized cost in the Corporation’s consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value, were as follows (in thousands):

20 unchanged sentences

Commitments (1) $ 2,188,560 $ 21,886 $ 1,586,068 $ 15,861

$ 1,586,068 $ 15,861 $ 1,426,827 $ 14,268

Standby letters of credit (1) 26,599 266 21,871 219

21,871 219 15,056 151

Overdraft privilege commitments (1) 126,634 1,266 125,670 1,257

125,670 1,257 110,813 1,108

The methods and assumptions used to estimate the fair value of each class of financial instruments not measured at fair value are as follows:

14 unchanged sentences

These instruments generate fees, which approximate those currently charged to originate similar commitments, which are recognized over the term of the commitment period.

98 TriCo Bancshares 2022 10-K

Note 25 – TriCo Bancshares Condensed Financial Statements (Parent Only)

33 unchanged sentences

Net income $ 125,419 $ 117,655 $ 64,814

Condensed Statements of Comprehensive Income

99 TriCo Bancshares 2022 10-K

Condensed Statements of Comprehensive Income (Loss)

Year Ended December 31,

5 unchanged sentences

Change in minimum pension liability 8,101 2,602 6,972

Change in joint beneficiary agreement liablity ( 113 ) ( 596 ) —

Change in joint beneficiary agreement liability 1,389 ( 113 ) ( 596 )

Other comprehensive income (loss) ( 194,886 ) ( 11,299 ) 17,502

Comprehensive income $ 106,356 $ 82,316 $ 104,729

Comprehensive income (loss) $ ( 69,467 ) $ 106,356 $ 82,316

Condensed Statements of Cash Flows

10 unchanged sentences

Investing activities:

Sales or maturities of investments 4,234 — —

Financing activities:

6 unchanged sentences

Cash and cash equivalents at end of year $ 7,987 $ 4,950 $ 13,297

100 TriCo Bancshares 2022 10-K

Note 26 – Regulatory Matters

42 unchanged sentences

Tri Counties Bank $ 811,713 9.77 % $ 332,196 4.00 % $ 415,245 5.00 %

101 TriCo Bancshares 2022 10-K

Note 27 – Summary of Quarterly Results of Operations (unaudited)

The following table sets forth the results of operations for the four quarters of 2021 and 2020, and is unaudited;

The following tables set forth the results of operations for the four quarters of 2022 and 2021, and is unaudited;

however, in the opinion of Management, it reflects all adjustments (which include only normal recurring adjustments) necessary to present fairly the summarized results for such periods.

9 unchanged sentences

Net interest income 98,900 94,106 85,046 67,924

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

Provision for credit losses 4,245 3,795 2,100 8,330

Net interest income after provision for credit losses 94,655 90,311 82,946 59,594

17 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

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

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

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

Noninterest income 16,502 15,095 15,957 16,110

6 unchanged sentences

Dividends $ 0.25 $ 0.25 $ 0.25 $ 0.25

102 TriCo Bancshares 2022 10-K

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

18 unchanged sentences

March 1, 2023

103 TriCo Bancshares 2022 10-K

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of TriCo Bancshares (and subsidiaries) (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in shareholders equity, and cash flow for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”.

We have audited the accompanying consolidated balance sheets of TriCo Bancshares (and subsidiaries) (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

1 unchanged sentence

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for credit losses effective January 1, 2020, due to the adoption of Accounting Standards Codification Topic 326:

Financial Instruments - Credit Losses (“Topic 326”).

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.

Basis for Opinions

18 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

104 TriCo Bancshares 2022 10-K

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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 matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates.

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

1 unchanged sentence

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 the balance sheet date.

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.

We identified management’s risk rating of loans and the qualitative and environmental factors related to California’s unemployment and unemployment outlook, Global Economic Uncertainty, and US Policy Uncertainty, which are components of the reasonable and supportable forecasts, as critical audit matters.

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.

1 unchanged sentence

This process requires significant management judgment in the review of the loan portfolio and assignment of risk ratings based upon the characteristics of loans.

In addition, estimation of the lifetime expected credit losses for loans require significant management judgment, particularly as it relates to forward-looking information through the use of environment factors applied over the forecasted life of the loans.

In addition, estimation of the lifetime expected credit losses for loans requires significant management judgment, particularly as it relates to forecast components of California’s unemployment and unemployment outlook, Global Economic Uncertainty and US Policy Uncertainty applied over the life of the loans.

Auditing these complex judgments and assumptions involves especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.

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 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.

• 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 related to California’s unemployment and unemployment outlook, Global Economic Uncertainty, and US Policy Uncertainty.

• Performing a sensitivity analysis to identify loan segments that would materially impact the allowance for credit losses due to risk rating changes as well as 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, the Global Economic Uncertainty outlook factor, and the US Policy Uncertainty outlook 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 testing the completeness and accuracy of the data used in the calculation.

Business Combination – Valley Republic Bancorp acquired loans valuation

As discussed in Note 1 and Note 2 to the consolidated financial statements, on March 25, 2022, the Company completed the acquisition of Valley Republic Bancorp (VRB).

Total merger consideration, including cash and stock transactions, was approximately $174 million.

The fair value of total assets acquired as a result of the merger totaled $1.4 billion (net of cash consideration), with loans totaling $771 million, and resulting in $83.6 million of acquired goodwill.

The merger was accounted for using the acquisition method of accounting in which assets, liabilities, and consideration exchanged were recorded at their respective fair values at the merger date.

To estimate the fair value of the acquired loans, the Company utilized a discounted cash flow methodology that involved assumptions and judgments as to principal default and loss rates, prepayment rates, and market discount rates.

The acquired loans were recorded at fair value at the acquisition date without carryover of VRB’s previously established allowance for loan losses.

We identified the valuation of acquired loans as a critical audit matter because of the judgments necessary by management to identify purchased loans with deteriorated credit quality since acquisition and to determine the fair value of the loan portfolio acquired, and the related high degree of auditor judgment and the extensive audit effort involved in testing management’s significant estimates and assumptions, including using individuals with specialized skill and knowledge.

105 TriCo Bancshares 2022 10-K

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

• Testing the design, implementation and operating effectiveness of controls relating to the completeness and accuracy of acquired loan level data, and the fair value estimate of acquired loans, including significant assumptions and methods utilized in the calculation.

• Testing the completeness and accuracy of acquired loan level data used in the fair value estimate calculation.

• Testing the completeness and accuracy of loans identified as purchase credit deteriorated since origination and evaluating identification criteria utilized by management.

• Utilizing our internal valuation specialists to:

◦ Test management’s approach to the fair value estimate for reasonableness.

◦ Validate the reasonableness of assumptions utilized in the determination of the fair value of acquired loans, including the principal default and loss rates, prepayment rates and market discount rates assumptions.

◦ Independently estimate the fair value of the acquired loans and compare it to the fair value recorded by management.

/s/ Moss Adams LLP

2 unchanged sentences

We have served as the Company’s auditor since 2018.

106 TriCo Bancshares 2022 10-K

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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