TRICO BANCSHARES / 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO FINANCIAL STATEMENTS Page Consolidated Balance Sheets as of December 31, 2024 and 2023 55 Consolidated Statements of Income for the years ended December 31, 2024 , 2023 , and 2022 56 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2024, 2023 and 2022 56 Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2024 , 2023 , and 2022 57 Consolidated Statements of Cash Flows for the years ended December 31, 2024 , 2023 , and 2022 58 Notes to Consolidated Financial Statements 59 Management’s Report on Internal Control over Financial Reporting 107 Report of Independent Registered Public Accounting Firm ( Moss Adams LLP , San Francisco, California , PCAOB ID: 659 ) 108 54 TriCo Bancshares 2024 10-K T a ble of Contents TRICO BANCSHARES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) At December 31, 2024 At December 31, 2023 Assets: Cash and due from banks $ 85,409 $ 81,626 Cash at Federal Reserve and other banks 59,547 17,075 Cash and cash equivalents 144,956 98,701 Investment securities: Marketable equity securities 2,609 2,634 Available for sale debt securities, at fair value (amortized cost of $ 2,138,533 and $ 2,384,325 ) 1,904,885 2,152,504 Held to maturity debt securities, at amortized cost, net of allowance for credit losses of $ 0 111,866 133,494 Restricted equity securities 17,250 17,250 Loans held for sale 709 458 Loans 6,768,523 6,794,470 Allowance for credit losses ( 125,366 ) ( 121,522 ) Total loans, net 6,643,157 6,672,948 Premises and equipment, net 70,287 71,347 Cash value of life insurance 140,149 136,892 Accrued interest receivable 34,810 36,768 Goodwill 304,442 304,442 Other intangible assets, net 6,432 10,552 Operating leases, right-of-use 23,529 26,133 Other assets 268,647 245,966 Total assets $ 9,673,728 $ 9,910,089 Liabilities and Shareholders’ Equity: Liabilities: Deposits: Noninterest-bearing demand $ 2,548,613 $ 2,722,689 Interest-bearing 5,538,963 5,111,349 Total deposits 8,087,576 7,834,038 Accrued interest payable 11,501 8,445 Operating lease liability 25,437 28,261 Other liabilities 137,506 145,982 Other borrowings 89,610 632,582 Junior subordinated debt 101,191 101,099 Total liabilities 8,452,821 8,750,407 Commitments and contingencies (Note 15) Shareholders’ equity: Preferred stock, no par value: 1,000,000 shares authorized; zero issued and outstanding at December 31, 2024 and 2023, respectively — — Common stock, 0 par value: 50,000,000 shares authorized; issued and outstanding: 32,970,425 and 33,268,102 at December 31, 2024 and 2023, respectively 693,462 697,349 Retained earnings 679,907 615,502 Accumulated other comprehensive loss, net of tax ( 152,462 ) ( 153,169 ) Total shareholders’ equity 1,220,907 1,159,682 Total liabilities and shareholders’ equity $ 9,673,728 $ 9,910,089 The accompanying notes are an integral part of these consolidated financial statements. 55 TriCo Bancshares 2024 10-K T a ble of Contents TRICO BANCSHARES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Year ended December 31, 2024 2023 2022 Interest and dividend income: Loans, including fees $ 390,491 $ 356,710 $ 285,375 Investments: Taxable securities 66,912 73,924 59,395 Tax exempt securities 3,615 5,120 5,199 Dividends 1,522 1,294 1,137 Interest bearing cash at Federal Reserve and other banks 4,098 1,306 4,399 Total interest and dividend income 466,638 438,354 355,505 Interest expense: Deposits 113,126 55,087 4,689 Other borrowings 14,706 19,712 421 Junior subordinated debt 7,372 6,878 4,419 Total interest expense 135,204 81,677 9,529 Net interest income 331,434 356,677 345,976 Provision for credit losses 6,632 23,990 18,470 Net interest income after provision for credit losses 324,802 332,687 327,506 Noninterest income: Service charges and fees 51,330 50,088 49,765 Commissions on sale of non-deposit investment products 5,573 4,517 3,986 Increase in cash value of life insurance 3,257 3,150 2,858 Gain on sale of loans 1,532 1,166 2,342 Loss on sale of investment securities ( 43 ) ( 284 ) — Other 2,758 2,763 4,095 Total noninterest income 64,407 61,400 63,046 Noninterest expense: Salaries and related benefits 140,581 135,795 129,852 Other 93,524 97,387 86,793 Total noninterest expense 234,105 233,182 216,645 Income before provision for income taxes 155,104 160,905 173,907 Provision for income taxes 40,236 43,515 48,488 Net income $ 114,868 $ 117,390 $ 125,419 Earnings per common share: Basic $ 3.47 $ 3.53 $ 3.85 Diluted $ 3.46 $ 3.52 $ 3.83 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Year ended December 31, 2024 2023 2022 Net income $ 114,868 $ 117,390 $ 125,419 Other comprehensive income (loss), net of tax: Unrealized gains (losses) on available for sale securities arising during the period, after reclassifications ( 1,286 ) 41,365 ( 204,376 ) Change in minimum pension liability, after reclassifications 1,801 ( 263 ) 8,101 Change in joint beneficiary agreement liability 192 ( 366 ) 1,389 Other comprehensive income (loss) 707 40,736 ( 194,886 ) Comprehensive income (loss) $ 115,575 $ 158,126 $ ( 69,467 ) The accompanying notes are an integral part of these consolidated financial statements. 56 TriCo Bancshares 2024 10-K T a ble of Contents TRICO BANCSHARES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In thousands, except share and per share data) Shares of Common Stock Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Balance at January 1, 2022 29,730,424 $ 532,244 $ 466,959 $ 981 $ 1,000,184 Net income 125,419 125,419 Other comprehensive income (loss) ( 194,886 ) ( 194,886 ) Service condition RSU vesting 2,883 2,883 Market plus service condition RSU vesting 986 986 Service condition RSUs released 50,076 — Market plus service condition RSUs released 26,338 — 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 ) Dividends paid ($ 1.10 per share) ( 35,797 ) ( 35,797 ) Balance at December 31, 2022 33,331,513 697,448 542,873 ( 193,905 ) 1,046,416 Net income 117,390 117,390 Other comprehensive income (loss) 40,736 40,736 Service condition RSU vesting 2,806 2,806 Market plus service condition RSU vesting 1,319 1,319 Service condition RSUs released 81,902 — Market plus service condition RSUs released 55,928 — Stock options exercised 8,000 156 156 Repurchase of common stock ( 209,241 ) ( 4,380 ) ( 4,860 ) ( 9,240 ) Dividends paid ($ 1.20 per share) ( 39,901 ) ( 39,901 ) Balance at December 31, 2023 33,268,102 697,349 615,502 ( 153,169 ) 1,159,682 Net income 114,868 114,868 Other comprehensive income (loss) 707 707 Service condition RSU vesting 3,224 3,224 Market plus service condition RSU vesting 1,442 1,442 Service condition RSUs released 78,403 — Market plus service condition RSUs released 32,248 — Stock options exercised 7,500 174 174 Repurchase of common stock ( 415,828 ) ( 8,727 ) ( 6,817 ) ( 15,544 ) Dividends paid ($ 1.32 per share) ( 43,646 ) ( 43,646 ) Balance at December 31, 2024 32,970,425 $ 693,462 $ 679,907 $ ( 152,462 ) $ 1,220,907 The accompanying notes are an integral part of these consolidated financial statements. 57 TriCo Bancshares 2024 10-K T a ble of Contents TRICO BANCSHARES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year ended December 31, 2024 2023 2022 Operating activities: Net income $ 114,868 $ 117,390 $ 125,419 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment, and amortization 5,998 6,366 6,012 Amortization of intangible assets 4,120 6,118 6,334 Provision for credit losses 6,632 23,990 18,470 Amortization of investment securities premium, net 865 312 6,641 Loss on sale of investment securities 43 284 — Originations of loans for resale ( 59,620 ) ( 43,313 ) ( 71,600 ) Proceeds from sale of loans originated for resale 60,401 45,467 74,922 Gain on sale of loans ( 1,532 ) ( 1,166 ) ( 2,342 ) Change in fair market value of mortgage servicing rights 480 506 ( 301 ) Gain on sale of real estate owned, net 8 ( 18 ) ( 166 ) Deferred income tax expense ( 646 ) ( 2,399 ) ( 8,022 ) Gain on transfer of loans to real estate owned ( 81 ) ( 114 ) ( 316 ) Operating lease payments ( 6,170 ) ( 6,378 ) ( 5,904 ) Loss (gain) on disposal of fixed assets 19 23 ( 1,070 ) Increase in cash value of life insurance ( 3,257 ) ( 3,150 ) ( 2,858 ) Gain on life insurance death benefit — — ( 309 ) (Gain) loss on marketable equity securities ( 40 ) ( 36 ) 340 Equity compensation vesting expense 4,666 4,125 3,869 Change in value of other real estate 323 797 113 Amortization of operating lease right of use asset 5,950 6,364 6,033 Change in: Interest receivable 1,958 ( 4,912 ) ( 9,170 ) Interest payable 3,056 7,278 ( 287 ) Other assets and liabilities, net ( 28,334 ) ( 18,647 ) 17,087 Net cash from operating activities 109,707 138,887 162,895 Investing activities: Cash acquired in acquisition; net of consideration paid — — 426,883 Maturities and principal repayments of securities available for sale 401,384 321,738 267,830 Maturities and principal repayments of securities held to maturity 21,421 27,260 38,399 Proceeds from sale of available for sale securities 31,534 71,024 — Purchases of securities available for sale ( 187,763 ) ( 34,468 ) ( 699,035 ) Loan origination and principal collections, net 22,628 ( 345,902 ) ( 739,037 ) Loans purchased — ( 6,423 ) ( 22,845 ) Proceeds from sale of real estate owned 351 224 873 Proceeds from sale of premises and equipment — — 6,690 Purchases of premises and equipment ( 4,557 ) ( 4,886 ) ( 3,623 ) Life insurance proceeds — — 641 Net cash used in investing activities 284,998 28,567 ( 723,224 ) Financing activities: Net change in deposits 253,538 ( 494,975 ) ( 253,625 ) Net change in other borrowings ( 542,972 ) 367,977 214,518 Repurchase of common stock, net ( 15,544 ) ( 9,240 ) ( 27,148 ) Dividends paid ( 43,646 ) ( 39,901 ) ( 35,797 ) Exercise of stock options 174 156 1,190 Net cash used in financing activities ( 348,450 ) ( 175,983 ) ( 100,862 ) Net change in cash and cash equivalents 46,255 ( 8,529 ) ( 661,191 ) Cash and cash equivalents at beginning of year 98,701 107,230 768,421 Cash and cash equivalents at end of year $ 144,956 $ 98,701 $ 107,230 Year ended December 31, 2024 2023 2022 Supplemental disclosure of cash flow activity: Cash paid for interest expense $ 132,148 $ 74,399 $ 9,290 Cash paid for income taxes $ 33,700 $ 45,300 $ 41,000 Supplemental disclosure of noncash activities: Unrealized gain (loss) on securities available for sale $ ( 1,827 ) $ 58,727 $ ( 290,157 ) Loans transferred to foreclosed assets $ 682 $ 155 $ 1,349 Market value of shares tendered in-lieu of cash to pay for exercise of options and/or related taxes $ 1,363 $ 2,266 $ 2,522 Obligations incurred in conjunction with leased assets $ 2,226 $ 4,300 $ 6,149 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. 58 TriCo Bancshares 2024 10-K T a ble of Contents TRICO BANCSHARES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Note 1 – Summary of Significant Accounting Policies Description of Business and Basis of Presentation TriCo Bancshares (the “Company” or “we”) is a California corporation organized to act as a bank holding company for Tri Counties Bank (the “Bank”). The Company and the Bank are headquartered in Chico, California. 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 obtained through acquisition. 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. All adjustments necessary for a fair presentation of these consolidated financial statements have been included and are of a normal and recurring nature. The financial statements include the accounts of the Company and its wholly-owned subsidiary. All inter-company accounts and transactions have been eliminated in consolidation. For financial reporting purposes, the Company’s investments in the Capital Trusts of $ 1.8 million are accounted for under the equity method and, accordingly, are included in other assets on the consolidated balance sheets. The subordinated debentures issued and guaranteed by the Company and held by the Capital Trusts are reflected as debt on the Company’s consolidated balance sheets. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Segment and Significant Group Concentration of Credit Risk 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. While the chief operating decision-maker (CODM) may monitor the revenue streams of the various products and services, operations are managed, financial performance is evaluated, and decisions are generally made on a Company-wide basis. Discrete financial information is not available other than on a Company-wide basis. Accordingly, operations are considered by management to be aggregated in one reportable operating segment. Geographical Descriptions For the purpose of describing the geographical location of the Company’s operations, the Company has defined northern California as that area of California north of, and including, Stockton to the east and San Jose to the west; central California as that area of the state south of Stockton and San Jose, to and including, Bakersfield to the east and San Luis Obispo to the west; and southern California as that area of the state south of Bakersfield and San Luis Obispo. Business Combinations The Company accounts for acquisitions of businesses using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques including discounted cash flow analyses to determine these fair values. Any excess of the purchase price over amounts allocated to the acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and federal funds sold. Net cash flows are reported for loan and deposit transactions and other borrowings. 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, 2024, 2023 and 2022, the Company recognized an insignificant amount of earnings and losses in the consolidated statements of net income related to changes in the fair value of non-marketable and other equity securities. 59 TriCo Bancshares 2024 10-K T a ble of Contents Debt Securities The Company classifies its debt securities into one of three categories: 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. 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. All other securities not included in trading or held to maturity are classified as available for sale. AFS securities are recorded at fair value. Unrealized gains and losses, net of the related tax effect, on available for sale securities are reported as a separate component of other accumulated comprehensive income in shareholders’ equity until realized. Discounts are amortized or accreted over the expected life of the related investment security as an adjustment to yield using the effective interest method. Premiums on callable debt securities are generally amortized to the earliest call date of the security with the exception of mortgage backed securities, where estimated prepayments, if any, are considered. Dividend and interest income are recognized when earned. Realized gains and losses are derived from the amortized cost of the security sold. The Company did not have a significant level debt securities classified as trading during the three-year period ended December 31, 2024. 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. Accrued interest for a security placed on nonaccrual is reversed against interest income. There was no accrued interest related to debt securities reversed against interest income for the years ended December 31, 2024, 2023 or 2022. The Company evaluates available for sale debt securities in an unrealized loss position to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized as an allowance for credit losses on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Both the allowance for credit losses and the adjustment to net income may be reversed if conditions change. However, if the Company intends to sell an impaired available for sale debt security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount is recognized in earnings with a corresponding adjustment to the security's amortized cost basis. In evaluating available for sale debt securities in unrealized loss positions for impairment and the criteria regarding its intent or requirement to sell such securities, the Company considers the extent to which fair value is less than amortized cost, whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuers' financial condition, among other factors. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the ACL when management believes the uncollectability of an available for sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met. No security credit losses were recognized during the years ended December 31, 2024, 2023 or 2022. 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 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. Based on the implied guarantees of the U. S. Government or its agencies related to certain of these HTM investment securities, and the absence of any historical or expected losses, substantially all qualify for a zero loss assumption. Management has separately evaluated its HTM investment securities from obligations of state and political subdivisions utilizing the historical loss data represented by similar securities over a period of time spanning nearly 50 years. As a result of this evaluation, management determined that the expected credit losses associated with these securities is not significant for financial reporting purposes and therefore, no allowance for credit losses has been recognized during the years ended December 31, 2024, 2023 or 2022. Restricted Equity Securities Restricted equity securities represent the Company’s investment in the stock of the Federal Home Loan Bank of San Francisco (“FHLB”) and are carried at par value, which reasonably approximates its fair value. While technically these are considered equity securities, there is no market for FHLB stock. Therefore, the shares are considered as restricted investment securities. Management periodically evaluates FHLB stock for other-than-temporary impairment. Management’s determination of whether these investments are impaired is based on its assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as (1) the significance of any decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, (3) the impact of legislative and regulatory changes on institutions and, accordingly, the customer base of the FHLB, and (4) the liquidity position of the FHLB. As a member of the FHLB system, the Bank is required to maintain a minimum level of investment in FHLB stock based on specific percentages of its outstanding mortgages, total assets, or FHLB advances. The Bank may request redemption at par value of any stock in excess of the minimum required investment. Stock redemptions are at the discretion of the FHLB. Both cash and stock dividends are reported as income when received. 60 TriCo Bancshares 2024 10-K T a ble of Contents Loans Held for Sale Loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by aggregate outstanding commitments from investors of current investor yield requirements. Net unrealized losses are recognized through a valuation allowance by charges to non-interest income. Mortgage loans held for sale are generally sold with the mortgage servicing rights retained by the Company. Gains or losses on the sale of loans that are held for sale are recognized at the time of the sale and determined by the difference between net sale proceeds and the net book value of the loans less the estimated fair value of any retained mortgage servicing rights. Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal amount outstanding, net of deferred loan fees and costs. Loan origination and commitment fees and certain direct loan origination costs are deferred, and the net amount is amortized as an adjustment to the related loan’s yield over the actual life of the loan. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Loans are placed in nonaccrual status when reasonable doubt exists as to the full, timely collection of interest or principal, or a loan becomes contractually past due by 90 days or more with respect to interest or principal and is not well secured and in the process of collection. When a loan is placed on nonaccrual status, all interest previously accrued but not collected is reversed. Income on such loans is then recognized only to the extent that cash is received and where the future collection of principal is considered probable. Interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of Management, the loan is estimated to be fully collectible as to both principal and interest. Accrued interest receivable is not included in the calculation of the allowance for credit losses. Allowance for Credit Losses - Loans 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 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. Loans are charged off against the allowance when management believes the recorded loan balance is confirmed as uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Regardless of the determination that a charge-off is appropriate for financial accounting purposes, the Company manages its loan portfolio by continually monitoring, where possible, a borrower's ability to pay through the collection of financial information, delinquency status, borrower discussion and the encouragement to repay in accordance with the original contract or modified terms, if appropriate. Management estimates the allowance balance using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Historical credit loss experience provides the basis for the estimation of expected credit losses, which captures loan balances as of a point in time to form a cohort, then tracks the respective losses generated by that cohort of loans over the remaining life. The Company identified and accumulated loan cohort historical loss data beginning with the fourth quarter of 2008 and through the current period. In situations where the Company's actual loss history was not statistically relevant, the loss history of peers, defined as financial institutions with assets greater than three billion and less than ten billion, were utilized to create a minimum loss rate. Adjustments to historical loss information are made for differences in relevant current loan-specific risk characteristics, such as historical timing of losses relative to the loan origination. In its loss forecasting framework, the Company incorporates forward-looking information through the use of macroeconomic scenarios applied over the forecasted life of the assets. These macroeconomic scenarios incorporate variables that have historically been key drivers of increases and decreases in credit losses. These variables include, but are not limited to changes in environmental conditions, such as California unemployment rates, household debt levels, and the pace of change in corporate bond yields. The Company also considers macroeconomic forecasts to estimate the ACL. A loan is considered to be collateral dependent when repayment is expected to be provided substantially through the operation or sale of the collateral. The ACL on collateral dependent loans is measured using the fair value of the underlying collateral, adjusted for costs to sell when applicable, less the amortized cost basis of the financial asset. If the value of underlying collateral is determined to be less than the recorded amount of the loan, a charge-off will be taken. 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. 61 TriCo Bancshares 2024 10-K T a ble of Contents The Company has identified the following portfolio segments to evaluate and measure the allowance for credit loss: Commercial real estate : • Commercial real estate - Non-owner occupied: These commercial properties typically consist of buildings which are leased to others for their use and rely on rents as the primary source of repayment. Property types are predominantly office, retail, or light industrial but the portfolio also has some special use properties. As such, the risk of loss associated with these properties is primarily driven by general economic changes or changes in regional economies and the impact of such on a tenant’s ability to pay. Ultimately this can affect occupancy, rental rates, or both. Additional risk of loss can come from new construction resulting in oversupply, the costs to hold or operate the property, or changes in interest rates. The terms on these loans at origination typically have maturities from five to ten years with amortization periods from fifteen to thirty years . • Commercial real estate - Owner occupied: These credits are primarily susceptible to changes in the financial condition of the business operated by the property owner. This may be driven by changes in, among other things, industry challenges, factors unique to the operating geography of the borrower, change in the individual fortunes of the business owner, general economic conditions and changes in business cycles. 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. The terms on these loans at origination typically have maturities from five to ten years with amortization periods from fifteen to thirty years . • Multifamily: These commercial properties are generally comprised of more than four rentable units, such as apartment buildings, with each unit intended to be occupied as the primary residence for one or more persons. Multifamily properties are also subject to changes in general or regional economic conditions, such as unemployment, ultimately resulting in increased vacancy rates or reduced rents or both. In addition, new construction can create an oversupply condition and market competition resulting in increased vacancy, reduced market rents, or both. Due to the nature of their use and the greater likelihood of tenant turnover, the management of these properties is more intensive and therefore is more critical to the preclusion of loss. • Farmland: While the Company has few loans that were originated for the purpose of the acquisition of these commercial properties, loans secured by farmland represent unique risks that are associated with the operation of an agricultural businesses. The valuation of farmland can vary greatly over time based on the property's access to resources including but not limited to water, crop prices, foreign exchange rates, government regulation or restrictions, and the nature of ongoing capital investment needed to maintain the quality of the property. Loans secured by farmland typically represent less risk to the Company than other agriculture loans as the real estate typically provides greater support in the event of default or need for longer term repayment. Consumer loans : • SFR 1-4 1st DT Liens: The most significant drivers of potential loss within the Company's residential real estate portfolio relate general, regional, or individual changes in economic conditions and their effect on employment and borrowers cash flow. Risk in this portfolio is best measured by changes in borrower credit score and loan-to-value. Loss estimates are based on the general movement in credit score, economic outlook and its effects on employment and the value of homes and the Bank’s historical loss experience adjusted to reflect the economic outlook and the unemployment rate. • SFR HELOCs and Junior Liens: Similar to residential real estate term loans, HELOCs and junior liens performance is also primarily driven by borrower cash flows based on employment status. However, HELOCs carry additional risks associated with the fact that most of these loans are secured by a deed of trust in a position that is junior to the primary lien holder. Furthermore, the risk that as the borrower's financial strength deteriorates, the outstanding balance on these credit lines may increase as they may only be canceled by the Company if certain limited criteria are met. In addition to the allowance for credit losses maintained as a percent of the outstanding loan balance, the Company maintains additional reserves for the unfunded portion of the HELOC. • Other: The majority of these consumer loans are secured by automobiles, with the remainder primarily unsecured revolving debt (credit cards). These loans are susceptible to three primary risks; non-payment due to income loss, over-extension of credit and, when the borrower is unable to pay, shortfall in collateral value, if any. Typically, non-payment is due to loss of job and will follow general economic trends in the marketplace driven primarily by rises in the unemployment rate. Loss of collateral value can be due to market demand shifts, damage to collateral itself or a combination of those factors. Credit card loans are unsecured and while collection efforts are pursued in the event of default, there is typically limited opportunity for recovery. 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. Commercial and industrial: • Repayment of these loans is primarily based on the cash flow of the borrower, and secondarily on the underlying collateral provided by the borrower. A borrower's cash flow may be unpredictable, and collateral securing these loans may fluctuate in value. Most often, collateral includes accounts receivable, inventory, or equipment. Collateral securing these loans may depreciate over time, may be difficult to appraise, may be illiquid and may fluctuate in value based on the success of the business. Actual and forecast changes in gross domestic product are believed to be corollary to losses associated with these credits. Construction : • While secured by real estate, construction loans represent a greater level of risk than term real estate loans due to the nature of the additional risks associated with the not only the completion of construction within an estimated time period and budget, but also the 62 TriCo Bancshares 2024 10-K T a ble of Contents need to either sell the building or reach a level of stabilized occupancy sufficient to generate the cash flows necessary to support debt service and operating costs. The Company seeks to mitigate the additional risks associated with construction lending by requiring borrowers to comply with lower loan to value ratios and additional covenants as well as strong tertiary support of guarantors. The loss forecasting model applies the historical rate of loss for similar loans over the expected life of the asset as adjusted for macroeconomic factors. Agriculture production: • Repayment of agricultural loans is dependent upon successful operation of the agricultural business, which is greatly impacted by factors outside the control of the borrower. These factors include adverse weather conditions, including access to water, that may impact crop yields, loss of livestock due to disease or other factors, declines in market prices for agriculture products, changes in foreign exchange, and the impact of government regulations. In addition, many farms are dependent on a limited number of key individuals whose injury or death may significantly affect the successful operation of the business. Consequently, agricultural production loans may involve a greater degree of risk than other types of loans. Leases: • The loss forecasting model applies the historical rate of loss for similar loans over the expected life of the asset. 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. Assumptions of expected loss are conditioned to the economic outlook and the other variables discussed above. Unfunded commitments : • The estimated credit losses associated with these unfunded lending commitments is calculated using the same models and methodologies noted above and incorporate utilization assumptions at time of default. The reserve for unfunded commitments is maintained on the consolidated balance sheet in other liabilities. Real Estate Owned Real estate owned (REO) includes assets acquired through, or in lieu of, loan foreclosure. REO is held for sale and are initially recorded at fair value less estimated costs to sell at the date of acquisition, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Any write-downs based on the asset’s fair value less costs to sell at the date of acquisition are charged to the allowance for loan and lease losses. Any recoveries based on the asset’s fair value less estimated costs to sell in excess of the recorded value of the loan at the date of acquisition are recorded to the allowance for loan and lease losses. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. Revenue and expenses from operations and changes in the valuation allowance are included in other non-interest expense, along with the gain or loss on sale of REO. Premises and Equipment Land is carried at cost. Land improvements, buildings and equipment, including those acquired under capital lease, are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expenses are computed using the straight-line method over the shorter of the estimated useful lives of the related assets or lease terms. Asset lives range from 3 - 10 years for furniture and equipment and 15 - 40 years for land improvements and buildings. Company Owned Life Insurance The Company has purchased life insurance policies on certain key executives. Company owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. As a result of current tax law and the nature of these policies, the Bank records any increase in cash value of these policies as nontaxable non-interest income. If the Bank decided to surrender any of the policies prior to the death of the insured, such surrender may result in a tax expense related to the life-to-date cumulative increase in cash value of the policy. 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. Goodwill, Other Intangible and Long-Lived Assets Goodwill represents the excess of costs over fair value of net assets of businesses acquired from a business combination. The Company has an identifiable intangible asset consisting of core deposit intangibles (“CDI”). CDI are amortized over their respective estimated useful lives and reviewed periodically for impairment. Goodwill and other intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually. Other intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed periodically for impairment. 63 TriCo Bancshares 2024 10-K T a ble of Contents As of September 30 of each year, goodwill is tested for impairment, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. Long-lived assets, such as premises and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet. Mortgage Servicing Rights Mortgage servicing rights (“MSR”) represent the Company’s right to a future stream of cash flows based upon the contractual servicing fee associated with servicing mortgage loans. Our MSR arise from residential and commercial mortgage loans that we originate and sell, but retain the right to service the loans. The net gain from the retention of the servicing right is included in gain on sale of loans in non-interest income when the loan is sold. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. Servicing fees, when earned, and changes in fair value of the MSR, are recorded in non-interest income. The Company accounts for MSR at fair value. The determination of fair value of our MSR requires management judgment because they are not actively traded. The determination of fair value for MSR requires valuation processes which combine the use of discounted cash flow models and extensive analysis of current market data to arrive at an estimate of fair value. The cash flow and prepayment assumptions used in our discounted cash flow model are based on empirical data drawn from the historical performance of our MSR, which we believe are consistent with assumptions used by market participants valuing similar MSR, and from data obtained on the performance of similar MSR. The key assumptions used in the valuation of MSR include mortgage prepayment speeds and the discount rate. These variables can, and generally will, change from quarter to quarter as market conditions and projected interest rates change. The key risks inherent with MSR are prepayment speed and changes in interest rates. Leases The Company records a right-of-use asset (“ROUA”) on the consolidated balance sheets for those leases that convey rights to control use of identified assets for a period of time in exchange for consideration. The Company is also required to record a lease liability on the consolidated balance sheets for the present value of future payment commitments. Substantially all of the Company’s leases are comprised of operating leases in which the Company is lessee of real estate property for branches, ATM locations, and general administration and operations. The Company has elected not to include short-term leases (i.e. leases with initial terms of twelve months or less) within the ROUA and lease liability. Known or determinable adjustments to the required minimum future lease payments are included in the calculation of the Company’s ROUA and lease liability. Adjustments to the required minimum future lease payments that are variable and will not be determinable until a future period, such as changes in the consumer price index, are included as variable lease costs. Additionally, expected variable payments for common area maintenance, taxes and insurance are not unknown and not determinable at lease commencement and therefore, are not included in the determination of the Company’s ROUA or lease liability. The value of the ROUA and lease liability is impacted by the amount of the periodic payment required, length of the lease term, and the discount rate used to calculate the present value of the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. The Company uses the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. Off-Balance Sheet Credit Related Financial Instruments In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit card arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded. Low Income Housing Tax Credits The Company accounts for low income housing tax credits and the related qualified affordable housing projects using the proportional amortization method. Under the proportional amortization method, the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). Upon entering into a qualified affordable housing project, the Company records, in other liabilities, the entire amount that it has agreed to invest in the project, and an equal amount, in other assets, representing its investment in the project. As the Company disburses cash to satisfy its investment obligation, other liabilities are reduced. Over time, as the tax credits and other tax benefits of the project are realized by the Company, the investment recorded in other assets is reduced using the proportional amortization method. Income Taxes 64 TriCo Bancshares 2024 10-K T a ble of Contents The Company’s accounting for income taxes is based on an asset and liability approach. The Company recognizes the amount of taxes payable or refundable for the current year, and deferred tax assets and liabilities for the future tax consequences that have been recognized in its financial statements or tax returns. The measurement of tax assets and liabilities is based on the provisions of enacted tax laws. A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Interest and/or penalties related to income taxes are reported as a component of non-interest income. Share-Based Compensation Compensation cost is recognized for stock options and restricted stock awards issued to employees and directors, based on the fair value of the awards at the date of grant. The estimate of the fair value of stock options and performance based restricted awards are based on a Black-Scholes or Monte Carlo model, respectively, while the market price of the common stock at the date of grant is used for time based restricted awards. Compensation cost is recognized over the required service period, generally defined as the vesting or measurement period. The Company’s accounting policy is to recognize forfeitures as they occur. Earnings per Share Basic earnings per share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. There are no unvested share-based payment awards that contain rights to nonforfeitable dividends (participating securities). Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustments to income that would result from assumed issuance. Potential common shares that may be issued by the Company relate solely from outstanding stock options and restricted stock units, and are determined using the treasury stock method. Revenue Recognition The Company records revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. Most of our revenue-generating transactions are not subject to Topic 606, including revenue generated from financial instruments, such as our loans and investment securities. In addition, certain non-interest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not in scope of the new guidance. The Company’s non-interest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of December 31, 2024 and 2023, the Company did not have any significant contract balances. The Company has evaluated the nature of its revenue streams and determined that further disaggregation of revenue into more granular categories beyond what is presented in Note 18 was not necessary. The following are descriptions of revenues within the scope of ASC 606. Deposit service charges The Company earns fees from its deposit customers for account maintenance, transaction-based and overdraft services. Account maintenance fees consist primarily of account fees and analyzed account fees charged on deposit accounts on a monthly basis. The performance obligation is satisfied and the fees are recognized on a monthly basis as the service period is completed. Transaction-based fees on deposit accounts are charged to deposit customers for specific services provided to the customer, such as non-sufficient funds fees, overdraft fees, and wire fees. 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. Debit and ATM interchange fees Debit and ATM interchange income represent fees earned when a debit card issued by the Company is used. The Company earns interchange fees from debit cardholder transactions through the Visa payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. The performance obligation is satisfied and the fees are earned when the cost of the transaction is charged to the cardholders’ debit card. Certain expenses directly associated with the credit and debit card are recorded on a net basis with the interchange income. Commission on sale of non-deposit investment products Commissions on sale of non-deposit investment products consist of fees earned from advisory asset management, trade execution and administrative fees from investments. Advisory asset management fees are variable, since they are based on the underlying portfolio value, 65 TriCo Bancshares 2024 10-K T a ble of Contents which is subject to market conditions and asset flows. Advisory asset management fees are recognized quarterly and are based on the portfolio values at the end of each quarter. Brokerage accounts are charged commissions at the time of a transaction and the commission schedule is based upon the type of security and quantity. In addition, revenues are earned from selling insurance and annuity policies. The amount of revenue earned is determined by the value and type of each instrument sold and is recognized at the time the policy or contract is written. Merchant fee income Merchant fee income represents fees earned by the Company for card payment services provided to its merchant customers. The Company outsources these services to a third party to provide card payment services to these merchants. The third party provider passes the payments made by the merchants through to the Company. The Company, in turn, pays the third party provider for the services it provides to the merchants. These payments to the third party provider are recorded as expenses as a net reduction against fee income. In addition, a portion of the payment received represents interchange fees which are passed through to the card issuing bank. Income is primarily earned based on the dollar volume and number of transactions processed. The performance obligation is satisfied and the related fee is earned when each payment is accepted by the processing network. Gain/loss on other real estate owned, net The Company records a gain or loss from the sale of other real estate owned when control of the property transfers to the buyer, which generally occurs at the time of an executed deed of trust. 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 de-recognized 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. Gains or losses from transactions associated with other real estate owned are recorded as a component of non-interest expense. Reclassifications Certain amounts reported in previous consolidated financial statements have been reclassified and recalculated to conform to the presentation in this report. These reclassifications did not affect previously reported amounts of net income, total assets or total shareholders’ equity. Note 2 – Accounting Standards Update Accounting standards adopted in the current period Standard Summary of Guidance Effects on financial statements ASU 2023-07 - Segment Reporting (Topic 280): Improvement to Reportable Segments • Requires disclosure of the position and title of the CODM and significant segment expenses that the CODM is regularly provided. • Requires the disclosure of other segment items representing the difference between segment revenue and expense and the profit and loss measure of the segment. • Allows for the CODM to use more than one measure of segment profit and loss, as long as one measure is consistent with GAAP. • The Company adopted these disclosure requirements effective December 31, 2024. ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures • Requires a tabular rate reconciliation using both percentages and reporting currency amounts between the reported amount of income tax expense (or benefit) to the amount of statutory federal income tax at current rates for specified categories using specified disaggregation criteria. • The amount of net income taxes paid for federal, state, and foreign taxes, as well as the amount paid to any jurisdiction that net taxes exceed a 5% quantitative threshold. • The amendments will require the disclosure of pre-tax income disaggregated between domestic and foreign, as well as income tax expense disaggregated by federal, state, and foreign. • The amendment also eliminates certain disclosures related to unrecognized tax benefits and certain temporary differences. • The Company plans to adopt the ASU for the annual reporting period beginning on January 1, 2025, and is currently evaluating the impact of the ASU on disclosures. Accounting standards yet to be adopted Standard Summary of Guidance Effects on financial statements None 66 TriCo Bancshares 2024 10-K T a ble of Contents Note 3 – Investment Securities The amortized cost and estimated fair values of investment securities classified as available for sale and held to maturity are summarized in the following tables: December 31, 2024 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Debt Securities Available for Sale Obligations of U.S. government agencies $ 1,268,654 $ 16 $ ( 174,485 ) $ 1,094,185 Obligations of states and political subdivisions 249,627 66 ( 28,949 ) 220,744 Corporate bonds 6,182 — ( 345 ) 5,837 Asset backed securities 314,814 687 ( 1,238 ) 314,263 Non-agency collateralized mortgage obligations 299,256 238 ( 29,638 ) 269,856 Total debt securities available for sale $ 2,138,533 $ 1,007 $ ( 234,655 ) $ 1,904,885 Debt Securities Held to Maturity Obligations of U.S. government agencies $ 109,155 $ 3 $ ( 7,443 ) $ 101,715 Obligations of states and political subdivisions 2,711 2 ( 79 ) 2,634 Total debt securities held to maturity $ 111,866 $ 5 $ ( 7,522 ) $ 104,349 There was no allowance for credit losses recorded for the held to maturity debt portfolio as of or for the years ended December 31, 2024 and 2023. December 31, 2023 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Debt Securities Available for Sale Obligations of U.S. government agencies $ 1,386,772 $ 2 $ ( 165,037 ) $ 1,221,737 Obligations of states and political subdivisions 262,879 268 ( 26,772 ) 236,375 Corporate bonds 6,173 — ( 571 ) 5,602 Asset backed securities 359,214 255 ( 4,188 ) 355,281 Non-agency collateralized mortgage obligations 369,287 — ( 35,778 ) 333,509 Total debt securities available for sale $ 2,384,325 $ 525 $ ( 232,346 ) $ 2,152,504 Debt Securities Held to Maturity Obligations of U.S. government agencies $ 130,823 $ — $ ( 8,331 ) $ 122,492 Obligations of states and political subdivisions 2,671 6 ( 43 ) 2,634 Total debt securities held to maturity $ 133,494 $ 6 $ ( 8,374 ) $ 125,126 During the year ended December 31, 2024, proceeds from sales of debt securities totaled $ 31.5 million, resulting in gross losses of $ 2.9 million. In addition, during the three months ended June 30, 2024, the Company participated in and completed an exchange offering with Visa, which resulted in a gain of $ 2.9 million. There were no sales of debt securities during the years ended 2023 and 2022, respectively. Investment securities with an aggregate carrying value of $ 716.0 million and $ 702.2 million at December 31, 2024 and 2023, respectively, were pledged as collateral for specific borrowings, lines of credit and local agency deposits. The amortized cost and estimated fair value of debt securities at December 31, 2024 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. At December 31, 2024, obligations of U.S. government and agencies with an amortized cost basis totaling $ 1.3 billion consist almost entirely of residential real estate mortgage-backed securities whose contractual maturity, or principal repayment, will follow the repayment of the underlying mortgages. For purposes of the following table, the entire outstanding balance of these mortgage-backed securities issued by U.S. government corporations and agencies is categorized based on final maturity date. At December 31, 2024, the Company estimates the average remaining life of these mortgage-backed securities issued by U.S. government corporations and agencies to be approximately 6.43 years. Average remaining life is defined as the time span after which the principal balance has been reduced by half. 67 TriCo Bancshares 2024 10-K T a ble of Contents December 31, 2024 Available for Sale Held to Maturity (In thousands) Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Due in one year $ 6,847 $ 6,690 $ 1,147 $ 1,149 Due after one year through five years 68,151 64,940 3,054 2,965 Due after five years through ten years 194,985 182,944 89,254 83,477 Due after ten years 1,868,550 1,650,311 18,411 16,758 Totals $ 2,138,533 $ 1,904,885 $ 111,866 $ 104,349 Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows: December 31, 2024 Less than 12 months 12 months or more Total (in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Debt Securities Available for Sale Obligations of U.S. government agencies $ 63,714 $ ( 842 ) $ 1,021,654 $ ( 173,643 ) $ 1,085,368 $ ( 174,485 ) Obligations of states and political subdivisions 7,457 ( 140 ) 208,063 ( 28,809 ) 215,520 ( 28,949 ) Corporate bonds 1,229 ( 17 ) 4,608 ( 328 ) 5,837 ( 345 ) Asset backed securities 44,707 ( 30 ) 75,734 ( 1,208 ) 120,441 ( 1,238 ) Non-agency collateralized mortgage obligations — — 236,671 ( 29,638 ) 236,671 ( 29,638 ) Total debt securities available for sale $ 117,107 $ ( 1,029 ) $ 1,546,730 $ ( 233,626 ) $ 1,663,837 $ ( 234,655 ) Debt Securities Held to Maturity Obligations of U.S. government agencies $ — $ — $ 101,553 $ ( 7,443 ) $ 101,553 $ ( 7,443 ) Obligations of states and political subdivisions — — 1,485 ( 79 ) 1,485 ( 79 ) Total debt securities held to maturity $ — $ — $ 103,038 $ ( 7,522 ) $ 103,038 $ ( 7,522 ) December 31, 2023 Less than 12 months 12 months or more Total (in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Debt Securities Available for Sale Obligations of U.S. government agencies $ 224 $ — $ 1,221,320 $ ( 165,037 ) $ 1,221,544 $ ( 165,037 ) Obligations of states and political subdivisions 6,229 ( 75 ) 216,497 ( 26,697 ) 222,726 ( 26,772 ) Corporate bonds — — 5,602 ( 571 ) 5,602 ( 571 ) Asset backed securities 15,928 ( 93 ) 264,731 ( 4,095 ) 280,659 ( 4,188 ) Non-agency collateralized mortgage obligations 44,276 ( 583 ) 289,233 ( 35,195 ) 333,509 ( 35,778 ) Total securities available for sale $ 66,657 $ ( 751 ) $ 1,997,383 $ ( 231,595 ) $ 2,064,040 $ ( 232,346 ) Debt Securities Held to Maturity Obligations of U.S. government agencies $ — $ — $ 122,259 $ ( 8,331 ) $ 122,259 $ ( 8,331 ) Obligations of states and political subdivisions — — 1,012 ( 43 ) 1,012 ( 43 ) Total debt securities held to maturity $ — $ — $ 123,271 $ ( 8,374 ) $ 123,271 $ ( 8,374 ) Obligations of U.S. government agencies: Unrealized losses on investments in obligations of U.S. government corporations and agencies are caused by interest rate increases. The contractual cash flows of these securities are guaranteed by U.S. Government Sponsored Entities (principally Fannie Mae and Freddie Mac). 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, 2024, 156 debt securities representing obligations of U.S. government corporations and agencies had unrealized losses with aggregate depreciation of 13.85 % from the Company’s amortized cost basis. 68 TriCo Bancshares 2024 10-K T a ble of Contents 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, 2024, 153 debt security representing obligations of states and political subdivisions had unrealized losses with aggregate depreciation of 11.84 % 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. 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, 2024. At December 31, 2024, 6 asset backed securities had unrealized losses with aggregate depreciation of 5.58 % from the Company’s amortized cost basis. Asset backed securities: The unrealized losses on investments in asset backed securities were caused by increases in required yields by investors in these types of securities. At the time of purchase, each of these securities were rated AA or AAA and through December 31, 2024 have not experienced any deterioration in credit rating. The Company continues to monitor these securities for changes in credit rating or other indications of credit deterioration. 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, these investments are not considered other-than-temporarily impaired. At December 31, 2024, 17 asset backed securities had unrealized losses with aggregate depreciation of 1.02 % 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. 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, 2024. At December 31, 2024, 18 asset backed securities had unrealized losses with aggregate depreciation of 11.13 % 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, 2024 December 31, 2023 (in thousands) AAA/AA/A BBB/BB/B AAA/AA/A BBB/BB/B Debt Securities Held to Maturity Obligations of U.S. government agencies $ 109,155 $ — $ 130,823 $ — Obligations of states and political subdivisions 2,711 — 2,671 — Total debt securities held to maturity $ 111,866 $ — $ 133,494 $ — 69 TriCo Bancshares 2024 10-K T a ble of Contents Note 4 – Loans A summary of loan balances follows: (in thousands) December 31, 2024 December 31, 2023 Commercial real estate: CRE non-owner occupied $ 2,323,036 $ 2,217,806 CRE owner occupied 961,415 956,440 Multifamily 1,028,035 949,502 Farmland 265,146 271,054 Total commercial real estate loans 4,577,632 4,394,802 Consumer: SFR 1-4 1st DT liens 859,660 883,438 SFR HELOCs and junior liens 363,420 356,813 Other 57,979 73,017 Total consumer loans 1,281,059 1,313,268 Commercial and industrial 471,271 586,455 Construction 279,933 347,198 Agriculture production 151,822 144,497 Leases 6,806 8,250 Total loans, net of deferred loan fees and discounts $ 6,768,523 $ 6,794,470 Total principal balance of loans owed, net of charge-offs $ 6,804,113 $ 6,834,935 Unamortized net deferred loan fees ( 15,283 ) ( 15,826 ) Discounts to principal balance of loans owed, net of charge-offs ( 20,307 ) ( 24,639 ) Total loans, net of unamortized deferred loan fees and discounts $ 6,768,523 $ 6,794,470 Allowance for credit losses $ ( 125,366 ) $ ( 121,522 ) Note 5 – Allowance for Credit Losses The ACL was $ 125.4 million as of December 31, 2024 as compared to $ 121.5 million at December 31, 2023. The provision for credit losses on loans of $ 6.5 million during the year ended December 31, 2024 was comprised of $ 2.5 million in qualitative reserves, $ 1.4 million in quantitative reserves and $ 2.6 million in net charge-offs. The qualitative components of the ACL increased reserve requirements due largely to the continued rise in CA unemployment and US policy uncertainty. This forecast data continues to evolve and includes improving shifts in the magnitude of changes for both the unemployment and GDP factors leading up to the balance sheet date. Core inflation is slowing but prices remain elevated relative to wage increases, as reflected by higher living costs such as housing, energy and general services. Actions by the Federal Reserve to cut rates during 2024 and beyond may help improve this outlook overall, but the uncertainty associated with the extent and timing of these potential reductions has inhibited a material change to forecasted reserve levels. Furthermore, geopolitical risks remain elevated, which may lead to further negative effects on domestic economic outcomes. As a result, management continues to believe that certain credit weaknesses are present in the overall economy and that it is appropriate to maintain a reserve level that incorporates such risk factors. The remaining increase in the allowance for credit reserves related to quantitative metrics was largely driven by increases in classified loan balances and individual reserves on specific loans. (dollars in thousands) December 31, 2024 December 31, 2023 Allowance for credit losses: Qualitative and forecast factor allowance $ 86,833 $ 84,291 Quantitative (Cohort) model allowance 33,908 34,139 Total allowance for credit losses 120,741 118,430 Allowance for individually evaluated loans 4,625 3,092 Total allowance for credit losses $ 125,366 $ 121,522 70 TriCo Bancshares 2024 10-K T a ble of Contents 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, 2024 (in thousands) Beginning Balance Charge-offs Recoveries Provision for (Benefit From) Credit Losses Ending Balance Commercial real estate: CRE non-owner occupied $ 35,077 $ — $ 187 $ 1,965 $ 37,229 CRE owner occupied 15,081 — 2 664 15,747 Multifamily 14,418 — — 1,495 15,913 Farmland 4,288 — — ( 328 ) 3,960 Total commercial real estate loans 68,864 — 189 3,796 72,849 Consumer: SFR 1-4 1st DT liens 14,009 ( 27 ) — 245 14,227 SFR HELOCs and junior liens 10,273 ( 41 ) 395 ( 216 ) 10,411 Other 3,171 ( 746 ) 217 183 2,825 Total consumer loans 27,453 ( 814 ) 612 212 27,463 Commercial and industrial 12,750 ( 1,787 ) 547 2,887 14,397 Construction 8,856 — — ( 1,632 ) 7,224 Agriculture production 3,589 ( 1,450 ) 65 1,199 3,403 Leases 10 — — 20 30 Allowance for credit losses on loans 121,522 ( 4,051 ) 1,413 6,482 125,366 Reserve for unfunded commitments 5,850 — — 150 6,000 Total $ 127,372 $ ( 4,051 ) $ 1,413 $ 6,632 $ 131,366 Allowance for Credit Losses – December 31, 2023 (in thousands) Beginning Balance Charge-offs Recoveries Provision for (Benefit from) Credit Losses Ending Balance Commercial real estate: CRE non-owner occupied $ 30,962 $ — $ — $ 4,115 $ 35,077 CRE owner occupied 14,014 ( 3,637 ) 2 4,702 15,081 Multifamily 13,132 — — 1,286 14,418 Farmland 3,273 — — 1,015 4,288 Total commercial real estate loans 61,381 ( 3,637 ) 2 11,118 68,864 Consumer: SFR 1-4 1st DT liens 11,268 — 262 2,479 14,009 SFR HELOCs and junior liens 11,413 ( 66 ) 723 ( 1,797 ) 10,273 Other 1,958 ( 558 ) 190 1,581 3,171 Total consumer loans 24,639 ( 624 ) 1,175 2,263 27,453 Commercial and industrial 13,597 ( 3,879 ) 316 2,716 12,750 Construction 5,142 — — 3,714 8,856 Agriculture production 906 — 34 2,649 3,589 Leases 15 — — ( 5 ) 10 Allowance for credit losses on loans 105,680 ( 8,140 ) 1,527 22,455 121,522 Reserve for unfunded commitments 4,315 — — 1,535 5,850 Total $ 109,995 $ ( 8,140 ) $ 1,527 $ 23,990 $ 127,372 71 TriCo Bancshares 2024 10-K T a ble of Contents Allowance for Credit Losses – December 31, 2022 (in thousands) Beginning Balance ACL on PCD Loans Charge-offs Recoveries Provision for (Benefit from) Credit Losses Ending Balance Commercial real estate: CRE non-owner occupied $ 25,739 $ 746 $ — $ 1 $ 4,476 $ 30,962 CRE owner occupied 10,691 63 — 2 3,258 14,014 Multifamily 12,395 — — — 737 13,132 Farmland 2,315 764 ( 294 ) — 488 3,273 Total commercial real estate loans 51,140 1,573 ( 294 ) 3 8,959 61,381 Consumer: SFR 1-4 1st DT liens 10,723 144 — 79 322 11,268 SFR HELOCs and junior liens 10,510 — ( 22 ) 429 496 11,413 Other 2,241 — ( 572 ) 235 54 1,958 Total consumer loans 23,474 144 ( 594 ) 743 872 24,639 Commercial and industrial 3,862 81 ( 697 ) 1,157 9,194 13,597 Construction 5,667 201 — — ( 726 ) 5,142 Agriculture production 1,215 38 — 4 ( 351 ) 906 Leases 18 — — — ( 3 ) 15 Allowance for credit losses on loans 85,376 2,037 ( 1,585 ) 1,907 17,945 105,680 Reserve for unfunded commitments 3,790 — — — 525 4,315 Total $ 89,166 $ 2,037 $ ( 1,585 ) $ 1,907 $ 18,470 $ 109,995 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. The Company analyzes loans individually to classify the loans as to credit risk and grading. This analysis is performed annually for all outstanding balances greater than $ 1.0 million and non-homogeneous loans, such as commercial real estate loans, unless other indicators, such as delinquency, trigger more frequent evaluation. Loans below the $ 1.0 million threshold and homogenous in nature are evaluated as needed for proper grading based on delinquency and borrower credit scores. Collateral values may be determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value information (blue book values for autos), sales invoices, or other appropriate means. 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. The Company utilizes a risk grading system to assign a risk grade to each of its loans. Loans are graded on a scale ranging from Pass to Loss. A description of the general characteristics of the risk grades is as follows: • Pass – This grade represents loans ranging from acceptable to very little or no credit risk. These loans typically meet most if not all policy standards in regard to: loan amount as a percentage of collateral value, debt service coverage, profitability, leverage, and working capital. • Special Mention – This grade represents “Other Assets Especially Mentioned” in accordance with regulatory guidelines and includes loans that display some potential weaknesses which, if left unaddressed, may result in deterioration of the repayment prospects for the asset or may inadequately protect the Company’s position in the future. These loans warrant more than normal supervision and attention. • Substandard – This grade represents “Substandard” loans in accordance with regulatory guidelines. Loans within this rating typically exhibit weaknesses that are well defined to the point that repayment is jeopardized. Loss potential is, however, not necessarily evident. The underlying collateral supporting the credit appears to have sufficient value to protect the Company from loss of principal and accrued interest, or the loan has been written down to the point where this is true. There is a definite need for a well-defined workout/rehabilitation program. • Doubtful – This grade represents “Doubtful” loans in accordance with regulatory guidelines. An asset classified as Doubtful has all the weaknesses inherent in a loan classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and financing plans. • Loss – This grade represents “Loss” loans in accordance with regulatory guidelines. A loan classified as Loss is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan, even though some recovery may be affected in the future. The portion of the loan that is graded loss should be charged off no later than the end of the quarter in which the loss is identified. 72 TriCo Bancshares 2024 10-K T a ble of Contents The following tables present ending loan balances by loan category and risk grade for the periods indicated: Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2024 (in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Commercial real estate: CRE non-owner occupied risk ratings Pass $ 184,623 $ 177,650 $ 408,129 $ 282,953 $ 152,278 $ 909,735 $ 163,628 $ — $ 2,278,996 Special Mention — 836 1,688 — — 24,840 506 — 27,870 Substandard — — — — — 16,170 — — 16,170 Doubtful/Loss — — — — — — — — — Total CRE non-owner occupied risk ratings $ 184,623 $ 178,486 $ 409,817 $ 282,953 $ 152,278 $ 950,745 $ 164,134 $ — $ 2,323,036 Current year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate: CRE owner occupied risk ratings Pass $ 83,320 $ 75,804 $ 191,619 $ 177,134 $ 104,490 $ 254,282 $ 35,961 $ — $ 922,610 Special Mention 1,618 — 2,699 1,731 206 11,950 — — 18,204 Substandard — 242 7,798 5,380 3,490 3,644 47 — 20,601 Doubtful/Loss — — — — — — — — — Total CRE owner occupied risk ratings $ 84,938 $ 76,046 $ 202,116 $ 184,245 $ 108,186 $ 269,876 $ 36,008 $ — $ 961,415 Current year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate: Multifamily risk ratings Pass $ 65,376 $ 27,904 $ 171,470 $ 294,317 $ 117,889 $ 289,229 $ 44,816 $ — $ 1,011,001 Special Mention — — — 11,926 — 207 3,393 — 15,526 Substandard — — 480 — 554 474 — — 1,508 Doubtful/Loss — — — — — — — — — Total multifamily loans $ 65,376 $ 27,904 $ 171,950 $ 306,243 $ 118,443 $ 289,910 $ 48,209 $ — $ 1,028,035 Current year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate: Farmland risk ratings Pass $ 23,780 $ 18,205 $ 45,582 $ 20,832 $ 15,066 $ 36,909 $ 44,083 $ — $ 204,457 Special Mention — — 2,057 7,944 47 3,764 1,356 — 15,168 Substandard — 2,770 — 20,414 — 10,416 11,921 — 45,521 Doubtful/Loss — — — — — — — — — Total farmland loans $ 23,780 $ 20,975 $ 47,639 $ 49,190 $ 15,113 $ 51,089 $ 57,360 $ — $ 265,146 Current year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 73 TriCo Bancshares 2024 10-K T a ble of Contents Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2024 (in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Consumer loans: SFR 1-4 1st DT liens risk ratings Pass $ 60,203 $ 113,467 $ 173,217 $ 241,388 $ 115,915 $ 137,361 $ — $ 3,952 $ 845,503 Special Mention — — 60 — — 892 — 239 1,191 Substandard — 244 137 3,467 2,092 6,393 — 633 12,966 Doubtful/Loss — — — — — — — — — Total SFR 1st DT liens $ 60,203 $ 113,711 $ 173,414 $ 244,855 $ 118,007 $ 144,646 $ — $ 4,824 $ 859,660 Current year gross charge-offs $ — $ 27 $ — $ — $ — $ — $ — $ — $ 27 Consumer loans: SFR HELOCs and Junior Liens risk ratings Pass $ 236 $ — $ — $ — $ — $ 68 $ 345,902 $ 5,799 $ 352,005 Special Mention — — — — — 4 6,082 327 6,413 Substandard — — — — — — 4,579 423 5,002 Doubtful/Loss — — — — — — — — — Total SFR HELOCs and Junior Liens $ 236 $ — $ — $ — $ — $ 72 $ 356,563 $ 6,549 $ 363,420 Current year gross charge-offs $ — $ — $ — $ — $ — $ — $ 41 $ — $ 41 Consumer loans: Other risk ratings Pass $ 10,371 $ 21,746 $ 5,891 $ 6,059 $ 4,917 $ 6,991 $ 610 $ — $ 56,585 Special Mention — 63 34 227 107 41 21 — 493 Substandard 37 152 304 111 2 294 1 — 901 Doubtful/Loss — — — — — — — — — Total other consumer loans $ 10,408 $ 21,961 $ 6,229 $ 6,397 $ 5,026 $ 7,326 $ 632 $ — $ 57,979 Current year gross charge-offs $ 385 $ 88 $ 40 $ 74 $ 37 $ 108 $ 14 $ — $ 746 Commercial and industrial loans: Commercial and industrial risk ratings Pass $ 73,321 $ 49,921 $ 61,634 $ 48,255 $ 3,721 $ 8,463 $ 203,978 $ 150 $ 449,443 Special Mention 137 775 1,970 63 275 851 3,197 — 7,268 Substandard 272 35 682 728 — 596 12,200 47 14,560 Doubtful/Loss — — — — — — — — — Total commercial and industrial loans $ 73,730 $ 50,731 $ 64,286 $ 49,046 $ 3,996 $ 9,910 $ 219,375 $ 197 $ 471,271 Current year gross charge-offs $ 389 $ — $ 178 $ 95 $ 24 $ — $ 1,101 $ — $ 1,787 74 TriCo Bancshares 2024 10-K T a ble of Contents Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2024 (in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Construction loans: Construction risk ratings Pass $ 36,031 $ 124,759 $ 80,269 $ 11,354 $ 6,714 $ 7,359 $ — $ — $ 266,486 Special Mention — — 13,390 — — — — — 13,390 Substandard — — — — — 57 — — 57 Doubtful/Loss — — — — — — — — — Total construction loans $ 36,031 $ 124,759 $ 93,659 $ 11,354 $ 6,714 $ 7,416 $ — $ — $ 279,933 Current year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Agriculture production loans: Agriculture production risk ratings Pass $ 265 $ 1,434 $ 2,297 $ 905 $ 175 $ 7,477 $ 133,115 $ — $ 145,668 Special Mention — — — — 2 218 5,192 — 5,412 Substandard — — 138 485 107 12 — — 742 Doubtful/Loss — — — — — — — — — Total agriculture production loans $ 265 $ 1,434 $ 2,435 $ 1,390 $ 284 $ 7,707 $ 138,307 $ — $ 151,822 Current year gross charge-offs $ — $ — $ 173 $ — $ — $ — $ 1,277 $ — $ 1,450 Leases: Lease risk ratings Pass $ 6,806 $ — $ — $ — $ — $ — $ — $ — $ 6,806 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful/Loss — — — — — — — — — Total leases $ 6,806 $ — $ — $ — $ — $ — $ — $ — $ 6,806 Current year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Total loans outstanding: Risk ratings Pass $ 544,332 $ 610,890 $ 1,140,108 $ 1,083,197 $ 521,165 $ 1,657,874 $ 972,093 $ 9,901 $ 6,539,560 Special Mention 1,755 1,674 21,898 21,891 637 42,767 19,747 566 110,935 Substandard 309 3,443 9,539 30,585 6,245 38,056 28,748 1,103 118,028 Doubtful/Loss — — — — — — — — — Total loans outstanding $ 546,396 $ 616,007 $ 1,171,545 $ 1,135,673 $ 528,047 $ 1,738,697 $ 1,020,588 $ 11,570 $ 6,768,523 Current year gross charge-offs $ 774 $ 115 $ 391 $ 169 $ 61 $ 108 $ 2,433 $ — $ 4,051 75 TriCo Bancshares 2024 10-K T a ble of Contents Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2023 (in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Commercial real estate: CRE non-owner occupied risk ratings Pass $ 180,326 $ 413,863 $ 290,210 $ 137,656 $ 206,408 $ 792,875 $ 141,686 $ — $ 2,163,024 Special Mention — 1,329 — 5,281 17,093 14,174 1,247 — 39,124 Substandard — — 767 — 2,139 12,540 212 — 15,658 Doubtful/Loss — — — — — — — — — Total CRE non-owner occupied risk ratings $ 180,326 $ 415,192 $ 290,977 $ 142,937 $ 225,640 $ 819,589 $ 143,145 $ — $ 2,217,806 Prior year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate: CRE owner occupied risk ratings Pass $ 71,288 $ 196,915 $ 190,384 $ 118,457 $ 59,220 $ 268,990 $ 23,740 $ — $ 928,994 Special Mention — 5,773 1,513 2,754 703 2,678 — — 13,421 Substandard — 2,972 7,835 — 111 3,107 — — 14,025 Doubtful/Loss — — — — — — — — — Total CRE owner occupied risk ratings $ 71,288 $ 205,660 $ 199,732 $ 121,211 $ 60,034 $ 274,775 $ 23,740 $ — $ 956,440 Prior year gross charge-offs $ — $ — $ — $ 1,380 $ — $ 2,228 $ 29 $ — $ 3,637 Commercial real estate: Multifamily risk ratings Pass $ 28,445 $ 177,032 $ 279,660 $ 89,106 $ 104,108 $ 225,446 $ 33,470 $ — $ 937,267 Special Mention — — 11,914 — — 321 — — 12,235 Substandard — — — — — — — — — Doubtful/Loss — — — — — — — — — Total multifamily loans $ 28,445 $ 177,032 $ 291,574 $ 89,106 $ 104,108 $ 225,767 $ 33,470 $ — $ 949,502 Prior year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate: Farmland risk ratings Pass $ 21,729 $ 46,398 $ 37,134 $ 16,006 $ 16,780 $ 41,663 $ 50,857 $ — $ 230,567 Special Mention — 2,170 5,802 51 261 734 — — 9,018 Substandard 101 813 9,053 377 — 13,266 7,859 — 31,469 Doubtful/Loss — — — — — — — — — Total farmland loans $ 21,830 $ 49,381 $ 51,989 $ 16,434 $ 17,041 $ 55,663 $ 58,716 $ — $ 271,054 Prior year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Consumer loans: SFR 1-4 1st DT liens risk ratings Pass $ 135,741 $ 189,920 $ 260,870 $ 125,081 $ 29,568 $ 126,975 $ — $ 4,079 $ 872,234 Special Mention 71 — — — — 1,948 — 27 2,046 Substandard — 140 1,296 1,490 531 5,265 — 436 9,158 Doubtful/Loss — — — — — — — — — Total SFR 1st DT liens $ 135,812 $ 190,060 $ 262,166 $ 126,571 $ 30,099 $ 134,188 $ — $ 4,542 $ 883,438 Prior year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 76 TriCo Bancshares 2024 10-K T a ble of Contents Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2023 (in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Consumer loans: SFR HELOCs and Junior Liens risk ratings Pass $ 297 $ — $ — $ — $ — $ 96 $ 343,698 $ 6,444 $ 350,535 Special Mention — — — — — — 2,274 138 2,412 Substandard — — — — — — 3,212 654 3,866 Doubtful/Loss — — — — — — — — — Total SFR HELOCs and Junior Liens $ 297 $ — $ — $ — $ — $ 96 $ 349,184 $ 7,236 $ 356,813 Prior year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ 66 $ 66 Consumer loans: Other risk ratings Pass $ 34,441 $ 9,061 $ 8,908 $ 7,419 $ 6,825 $ 4,619 $ 659 $ — $ 71,932 Special Mention 21 54 203 63 54 37 18 — 450 Substandard 87 183 164 30 116 52 3 — 635 Doubtful/Loss — — — — — — — — — Total other consumer loans $ 34,549 $ 9,298 $ 9,275 $ 7,512 $ 6,995 $ 4,708 $ 680 $ — $ 73,017 Prior year gross charge-offs $ 376 $ 82 $ — $ 36 $ 39 $ 9 $ 16 $ — $ 558 Commercial and industrial loans: Commercial and industrial risk ratings Pass $ 70,930 $ 83,184 $ 51,455 $ 9,504 $ 10,193 $ 7,636 $ 340,858 $ 318 $ 574,078 Special Mention 33 663 237 83 — 178 1,126 — 2,320 Substandard — 2,014 782 103 4 762 6,318 74 10,057 Doubtful/Loss — — — — — — — — — Total commercial and industrial loans $ 70,963 $ 85,861 $ 52,474 $ 9,690 $ 10,197 $ 8,576 $ 348,302 $ 392 $ 586,455 Prior year gross charge-offs $ 153 $ 287 $ 240 $ 2,285 $ — $ — $ 896 $ 18 $ 3,879 Construction loans: Construction risk ratings Pass $ 56,378 $ 136,294 $ 85,144 $ 47,632 $ 4,583 $ 6,518 $ — $ — $ 336,549 Special Mention — 10,582 — — — — — — 10,582 Substandard — — — — 67 — — — 67 Doubtful/Loss — — — — — — — — — Total construction loans $ 56,378 $ 146,876 $ 85,144 $ 47,632 $ 4,650 $ 6,518 $ — $ — $ 347,198 Prior year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 77 TriCo Bancshares 2024 10-K T a ble of Contents Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2023 (in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Agriculture production loans: Agriculture production risk ratings Pass $ 945 $ 2,749 $ 1,595 $ 396 $ 620 $ 8,491 $ 114,935 $ — $ 129,731 Special Mention — 183 543 176 — — 11,302 — 12,204 Substandard — — — — — — 2,562 — 2,562 Doubtful/Loss — — — — — — — — — Total agriculture production loans $ 945 $ 2,932 $ 2,138 $ 572 $ 620 $ 8,491 $ 128,799 $ — $ 144,497 Prior year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Leases: Lease risk ratings Pass $ 8,250 $ — $ — $ — $ — $ — $ — $ — $ 8,250 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful/Loss — — — — — — — — — Total leases $ 8,250 $ — $ — $ — $ — $ — $ — $ — $ 8,250 Prior year gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Total loans outstanding: Risk ratings Pass $ 608,770 $ 1,255,416 $ 1,205,360 $ 551,257 $ 438,305 $ 1,483,309 $ 1,049,903 $ 10,841 $ 6,603,161 Special Mention 125 20,754 20,212 8,408 18,111 20,070 15,967 165 103,812 Substandard 188 6,122 19,897 2,000 2,968 34,992 20,166 1,164 87,497 Doubtful/Loss — — — — — — — — — Total loans outstanding $ 609,083 $ 1,282,292 $ 1,245,469 $ 561,665 $ 459,384 $ 1,538,371 $ 1,086,036 $ 12,170 $ 6,794,470 Prior year gross charge-offs $ 529 $ 369 $ 240 $ 3,701 $ 39 $ 2,237 $ 941 $ 84 $ 8,140 Once a loan becomes delinquent and repayment becomes questionable, a Bank collection officer will address collateral shortfalls with the borrower and attempt to obtain additional collateral. If this is not forthcoming and payment in full is unlikely, the Bank will estimate its probable loss, using a recent valuation as appropriate to the underlying collateral less estimated costs of sale, and charge the loan down to the estimated net realizable amount. Depending on the length of time until ultimate collection, the Bank may revalue the underlying collateral and take additional charge-offs as warranted. Revaluations may occur as often as every 3-12 months depending on the underlying collateral and volatility of values. Final charge-offs or recoveries are taken when collateral is liquidated and actual loss is known. Unpaid balances on loans after or during collection and liquidation may also be pursued through lawsuit and attachment of wages or judgment liens on borrower’s other assets. 78 TriCo Bancshares 2024 10-K T a ble of Contents The following table shows the ending balance of current and past due originated loans by loan category as of the date indicated: Analysis of Past Due Loans - As of December 31, 2024 (in thousands) 30-59 days 60-89 days > 90 days Total Past Due Loans Current Total Commercial real estate: CRE non-owner occupied $ 221 $ — $ 2,452 $ 2,673 $ 2,320,363 $ 2,323,036 CRE owner occupied 1,625 85 3,619 5,329 956,086 961,415 Multifamily 1,120 — — 1,120 1,026,915 1,028,035 Farmland 2,686 113 6,145 8,944 256,202 265,146 Total commercial real estate loans 5,652 198 12,216 18,066 4,559,566 4,577,632 Consumer: SFR 1-4 1st DT liens — 6 1,556 1,562 858,098 859,660 SFR HELOCs and junior liens 201 852 1,078 2,131 361,289 363,420 Other 50 — 132 182 57,797 57,979 Total consumer loans 251 858 2,766 3,875 1,277,184 1,281,059 Commercial and industrial 537 308 9,257 10,102 461,169 471,271 Construction — — — — 279,933 279,933 Agriculture production 37 317 314 668 151,154 151,822 Leases — — — — 6,806 6,806 Total $ 6,477 $ 1,681 $ 24,553 $ 32,711 $ 6,735,812 $ 6,768,523 The following table shows the ending balance of current and past due originated loans by loan category as of the date indicated: Analysis of Past Due Loans - As of December 31, 2023 (in thousands) 30-59 days 60-89 days > 90 days Total Past Due Loans Current Total Commercial real estate: CRE non-owner occupied $ 3,876 $ — $ 1,382 $ 5,258 $ 2,212,548 $ 2,217,806 CRE owner occupied 34 — 247 281 956,159 956,440 Multifamily — — — — 949,502 949,502 Farmland 635 3,798 2,052 6,485 264,569 271,054 Total commercial real estate loans 4,545 3,798 3,681 12,024 4,382,778 4,394,802 Consumer: SFR 1-4 1st DT liens 141 1,449 490 2,080 881,358 883,438 SFR HELOCs and junior liens 16 — 623 639 356,174 356,813 Other 148 40 30 218 72,799 73,017 Total consumer loans 305 1,489 1,143 2,937 1,310,331 1,313,268 Commercial and industrial 244 605 1,654 2,503 583,952 586,455 Construction — — — — 347,198 347,198 Agriculture production 593 878 33 1,504 142,993 144,497 Leases 447 — — 447 7,803 8,250 Total $ 6,134 $ 6,770 $ 6,511 $ 19,415 $ 6,775,055 $ 6,794,470 79 TriCo Bancshares 2024 10-K T a ble of Contents The following table shows the ending balance of non accrual loans by loan category as of the date indicated: Non Accrual Loans As of December 31, 2024 As of December 31, 2023 (in thousands) Non accrual with no allowance for credit losses Total non accrual Past due 90 days or more and still accruing Non accrual with no allowance for credit losses Total non accrual Past due 90 days or more and still accruing Commercial real estate: CRE non-owner occupied $ 3,017 $ 3,017 $ — $ 2,024 $ 2,024 $ — CRE owner occupied 3,632 3,874 — 3,994 3,994 — Multifamily 480 480 — — — — Farmland 12,483 16,195 — 5,996 14,484 — Total commercial real estate loans 19,612 23,566 — 12,014 20,502 — Consumer: SFR 1-4 1st DT liens 5,979 5,979 — 2,808 2,811 — SFR HELOCs and junior liens 3,370 3,868 — 3,281 3,571 — Other 41 204 — 39 105 — Total consumer loans 9,390 10,051 — 6,128 6,487 — Commercial and industrial 830 9,707 59 1,379 2,503 10 Construction 57 57 — 67 67 — Agriculture production — 656 — — 2,322 — Leases — — — — — — Sub-total 29,889 44,037 59 19,588 31,881 10 Less: Guaranteed loans ( 828 ) ( 816 ) — ( 766 ) ( 878 ) — Total, net $ 29,061 $ 43,221 $ 59 $ 18,822 $ 31,003 $ 10 Interest income on non accrual loans that would have been recognized during the years ended December 31, 2024, 2023, and 2022, if all such loans had been current in accordance with their original terms, totaled $ 4.2 million, $ 2.5 million, and $ 1.4 million, respectively. Interest income actually recognized on these loans during the years ended December 31, 2024, 2023, and 2022 was $ 0.8 million, $ 1.0 million, and $ 0.6 million, respectively. 80 TriCo Bancshares 2024 10-K T a ble of Contents The following tables present the amortized cost basis of collateral dependent loans by class of loans as of the following periods: As of December 31, 2024 (in thousands) Retail Office Warehouse Other Multifamily Farmland SFR -1st Deed SFR -2nd Deed Automobile/Truck A/R and Inventory Equipment Total Commercial real estate: CRE non-owner occupied $ 2,452 $ 356 $ — $ 210 $ — $ — $ — $ — $ — $ — $ — $ 3,018 CRE owner occupied — 260 142 3,472 — — — — — — — 3,874 Multifamily — — — — 480 — — — — — — 480 Farmland — — — — — 16,448 — — — — — 16,448 Total commercial real estate loans 2,452 616 142 3,682 480 16,448 — — — — — 23,820 Consumer: SFR 1-4 1st DT liens — — — — — — 5,979 — — — — 5,979 SFR HELOCs and junior liens — — — — — — 1,291 2,079 — — — 3,370 Other — — — — — — — — 132 — — 132 Total consumer loans — — — — — — 7,270 2,079 132 — — 9,481 Commercial and industrial — — — 8,334 — — — 54 — 530 788 9,706 Construction — — — — — — 57 — — — — 57 Agriculture production — — — — — — — — — — 12 12 Leases — — — — — — — — — — — — Total $ 2,452 $ 616 $ 142 $ 12,016 $ 480 $ 16,448 $ 7,327 $ 2,133 $ 132 $ 530 $ 800 $ 43,076 As of December 31, 2023 (in thousands) Retail Office Warehouse Other Multifamily Farmland SFR -1st Deed SFR -2nd Deed Automobile/Truck A/R and Inventory Equipment Total Commercial real estate: CRE non-owner occupied $ 124 $ 615 $ 519 $ 766 $ — $ — $ — $ — $ — $ — $ — $ 2,024 CRE owner occupied 614 — 297 3,083 — — — — — — — 3,994 Multifamily — — — — — — — — — — — — Farmland — — — 635 — 13,849 — — — — — 14,484 Total commercial real estate loans 738 615 816 4,484 — 13,849 — — — — — 20,502 Consumer: SFR 1-4 1st DT liens — — — — — — 2,808 — — — — 2,808 SFR HELOCs and junior liens — — — — — — 1,816 1,467 — — — 3,283 Other — — — — — — — — 95 — — 95 Total consumer loans — — — — — — 4,624 1,467 95 — — 6,186 Commercial and industrial — — — — — — — — — 1,712 791 2,503 Construction — — — — — — 67 — — — — 67 Agriculture production — — — 2,288 — — — — — — 33 2,321 Leases — — — — — — — — — — — — Total $ 738 $ 615 $ 816 $ 6,772 $ — $ 13,849 $ 4,691 $ 1,467 $ 95 $ 1,712 $ 824 $ 31,579 81 TriCo Bancshares 2024 10-K T a ble of Contents Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. The following tables show the amortized cost basis of loans that were both experiencing financial difficulty and modified during the periods presented. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivables is also presented below. For the twelve months ended December 31, 2024 (in thousands) Combination - Term Extension / Rate Change Payment Delay / Extension Total % of Loans Outstanding Commercial real estate: CRE non-owner occupied $ 211 $ — 0.01 % CRE owner occupied 219 — 0.02 % Multifamily — 295 0.03 % Total commercial real estate loans 430 295 0.02 % Consumer: SFR HELOCs and junior liens — 41 0.01 % Total consumer loans — 41 nm Commercial and industrial — 1,008 0.21 % Total $ 430 $ 1,344 0.03 % The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the twelve months ended December 31, 2024: Twelve Months Ended Modification Type Loan Type Financial Effect Combination - term extension / rate change CRE non-owner occupied Added 120 months to the life of the loan; converted from variable to fixed interest rate Combination - term extension / rate change CRE owner occupied Added 24 months to the life of the loan; converted from variable to fixed Payment delay / term extension Multifamily Added 12 months to the life of the loan Payment delay / term extension SFR HELOCs and junior liens Added 60 months to the life of the loan Payment delay / term extension Commercial and industrial Added a weighted average 53 months to the life of the loans For the twelve months ended December 31, 2023 (in thousands) Payment Delay /Extension Combination - Term Change / Available Credit Reduction Combination - Payment Delay / Term Reduction For the Total % of Loans Outstanding Commercial real estate: Farmland $ — $ — $ 1,430 0.53 % Commercial and industrial 152 60 — 0.08 % Total $ 152 $ 60 $ 1,430 0.02 % The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023 : Twelve Months Ended Modification Type Loan Type Financial Effect Combination - payment delay / term reduction Farmland Changed loan terms from fully amortizing to interest-only with balloon, and reduced the loan maturity by 12 months, which reduced the loan payment owed by the borrowers Payment delay / extension Commercial and industrial Added 12 months to the life of the loan, which reduced the payment owed by the borrowers Payment delay / extension Commercial and industrial Changed loan terms from fully amortizing to interest-only with balloon, which reduced the payment owed by the borrowers Combination - term change / available credit reduction Commercial and industrial Added 60 months to the life of the loan to avoid balloon repayment and reduced available credit 82 TriCo Bancshares 2024 10-K T a ble of Contents There were no loans with payment defaults by borrowers experiencing financial difficulty during the year ended December 31, 2024 which had material modifications in rate, term or principal forgiveness during the twelve months prior to default. Note 6 – Real Estate Owned A summary of the activity in the balance of real estate owned follows: Year ended December 31, (in thousands) 2024 2023 Beginning balance, net $ 2,705 $ 3,439 Additions/transfers from loans 682 155 Dispositions/sales ( 359 ) ( 206 ) Valuation adjustments ( 242 ) ( 683 ) Ending balance, net $ 2,786 $ 2,705 Ending valuation allowance $ ( 717 ) $ ( 739 ) Ending number of foreclosed assets 10 9 Proceeds from sale of real estate owned $ 351 $ 224 Gain (loss) on sale of real estate owned $ ( 8 ) $ 18 At December 31, 2024, the balance of real estate owned includes 8 foreclosed real estate properties and two land properties recorded as a result of obtaining physical possession of the property. At December 31, 2024, there were no real estate properties with formal foreclosure proceedings underway. Note 7 – Premises and Equipment As of December 31, (in thousands) 2024 2023 Land and land improvements $ 26,365 $ 26,032 Buildings 66,520 65,467 Furniture and equipment 45,205 43,984 138,090 135,483 Less: Accumulated depreciation ( 69,057 ) ( 65,154 ) 69,033 70,329 Construction in progress 1,254 1,018 Total premises and equipment $ 70,287 $ 71,347 Depreciation expense for premises and equipment amounted to $ 5.6 million, $ 5.8 million, and $ 5.7 million during the years ended 2024, 2023, and 2022, respectively. Note 8 – Cash Value of Life Insurance A summary of the activity in the balance of cash value of life insurance follows: Year ended December 31, (in thousands) 2024 2023 Beginning balance $ 136,892 $ 133,742 Increase in cash value of life insurance 3,257 3,150 Ending balance $ 140,149 $ 136,892 End of period death benefit $ 224,723 $ 224,021 Number of policies owned 216 216 Insurance companies used 14 14 Current and former employees and directors covered 79 79 83 TriCo Bancshares 2024 10-K T a ble of Contents Note 9 – Goodwill and Other Intangible Assets The following table summarizes the Company’s goodwill intangible as of the dates indicated: (in thousands) December 31, 2024 Additions Reductions December 31, 2023 Goodwill $ 304,442 $ — $ — $ 304,442 Impairment exists when a Company’s carrying value exceeds its fair value. Goodwill is evaluated for impairment annually. At September 30, 2024, the Company had positive equity and the Company elected to perform a qualitative assessment to determine if it was more likely than not that the fair value of the Company exceeded its carrying value, including goodwill. The qualitative assessment indicated that it was more likely than not that the fair value of the reporting unit exceeds its carrying value, resulting in no impairment. For each of the years in the three year period ended December 31, 2024, there were no impairment charges recognized. The following table summarizes the Company’s core deposit intangibles (“CDI”) as of the dates indicated: (in thousands) December 31, 2024 December 31, 2023 Core deposit intangibles, gross $ 38,240 $ 40,286 Fully amortized portion — ( 2,046 ) Core deposit intangibles, gross ending balance 38,240 38,240 Accumulated amortization, gross ( 27,688 ) ( 23,616 ) Fully amortized portion — 2,046 Amortization expense ( 4,120 ) ( 6,118 ) Accumulated amortization, gross ending balance ( 31,808 ) ( 27,688 ) Core deposit intangible, net $ 6,432 $ 10,552 The Company's remaining net CDI balance of $ 6.4 million as of December 31, 2024 reflects gross balances recorded from the VRB acquisition on March 25, 2022 totaling $ 10.6 million and the FNBB acquisition on July 6, 2018 totaling $ 27.6 million. The following table summarizes the Company’s estimated core deposit intangible amortization (dollars in thousands): Years Ended Estimated CDI Amortization 2025 $ 1,961 2026 1,527 2027 1,008 2028 797 2029 587 Thereafter 552 $ 6,432 84 TriCo Bancshares 2024 10-K T a ble of Contents Note 10 – Mortgage Servicing Rights The following tables summarize the activity in, and the main assumptions used to determine the fair value of mortgage servicing rights for the periods indicated: (in thousands) Year ended December 31, 2024 2023 2022 Balance at beginning of period $ 6,606 $ 6,712 $ 5,874 Additions 500 400 537 Change in fair value ( 480 ) ( 506 ) 301 Balance at end of period $ 6,626 $ 6,606 $ 6,712 Contractually specified servicing fees, late fees and ancillary fees earned $ 1,739 $ 1,808 $ 1,887 Balance of loans serviced at: Beginning of period $ 714,801 $ 739,919 $ 770,299 End of period $ 702,596 $ 714,801 $ 739,919 Period end: Weighted-average prepayment speed (CPR) 109.0 % 116.0 % 127.0 % Weighted-average expected life (years) 8.0 7.8 7.6 Weighted-average discount rate 12.0 % 12.0 % 12.0 % The changes in fair value of MSRs during 2024 were primarily due to changes in mortgage prepayment speeds and changes in principal balances of the underlying mortgages. The changes in fair value of MSRs during 2023 were primarily due to changes in principal balance and mortgage prepayment speeds of the MSRs. The changes in fair value of MSRs during 2022 were primarily due to changes in investor require rate of return, or discount rate, of the MSRs. Note 11 - Leases The following table presents the components of lease expense for the periods indicated: Year ended December 31, (in thousands) 2024 2023 Operating lease cost $ 5,730 $ 5,997 Short-term lease cost 216 329 Variable lease cost 4 38 Total lease cost $ 5,950 $ 6,364 The following table presents supplemental cash flow information related to leases as of the periods ended: Year ended December 31, (in thousands) 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 6,170 $ 6,378 ROUA obtained in exchange for operating lease liabilities $ 2,226 $ 4,300 The following table presents the weighted average operating lease term and discount rate as of the periods ended: Year ended December 31, 2024 2023 Weighted-average remaining lease term 7.6 years 7.9 years Weighted-average discount rate 3.5 % 3.3 % 85 TriCo Bancshares 2024 10-K T a ble of Contents At December 31, 2024, future expected operating lease payments are as follows (in thousands): Periods ending December 31, 2025 $ 5,512 2026 4,950 2027 4,284 2028 3,276 2029 2,327 Thereafter 8,779 29,128 Discount for present value of expected cash flows ( 3,691 ) Lease liability at December 31, 2024 $ 25,437 Note 12 – Deposits A summary of the balances of deposits follows: (in thousands) December 31, 2024 2023 Noninterest-bearing demand $ 2,548,613 $ 2,722,689 Interest-bearing demand 1,758,629 1,731,814 Savings 2,657,849 2,682,068 Time certificates, $250,000 and over 485,180 250,180 Other time certificates 637,305 447,287 Total deposits $ 8,087,576 $ 7,834,038 Overdrawn deposit balances of $ 2.5 million and $ 1.8 million were classified as consumer loans at December 31, 2024 and 2023, respectively. At December 31, 2024, the scheduled maturities of time deposits were as follows (in thousands): Scheduled Maturities 2025 $ 1,081,409 2026 33,157 2027 6,006 2028 1,046 2029 867 Thereafter — Total $ 1,122,485 Note 13 – Other Borrowings A summary of the balances of other borrowings follows: December 31, (in thousands) 2024 2023 Term borrowing at FHLB, fixed rate of 5.23 %, payable on April 8, 2025 75,000 — Term borrowing at FHLB, fixed rate of 4.75 %, payable on April 8, 2024 — 200,000 Overnight borrowing at FHLB, fixed rate of 5.70 %, payable on January 2, 2024 — 400,000 Other collateralized borrowings, fixed rate, as of December 31, 2024 and 2023 of 0.05 %, payable on January 2, 2025 and January 2, 2024, respectively 14,610 32,582 Total other borrowings $ 89,610 $ 632,582 Other collateralized borrowings are generally overnight maturity borrowings from non-financial institutions that are collateralized by securities owned by the Company. As of December 31, 2024, the Company has pledged as collateral and sold under agreements to repurchase investment securities with fair value of $ 14.6 million under these other collateralized borrowings. 86 TriCo Bancshares 2024 10-K T a ble of Contents The Company maintains a collateralized line of credit with the FHLB. Based on the FHLB stock requirements at December 31, 2024, this line provided for maximum borrowings of $ 2.4 billion of which $ 75.0 million was outstanding. As of December 31, 2024, the Company had designated investment securities with a fair value of $ 58.1 million and loans with unpaid principal balances totaling $ 4.3 billion 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, 2024, this line provided for maximum borrowings of $ 362.3 million of which none was outstanding. As of December 31, 2024, the Company has loans with unpaid principal balances totaling $ 468.3 million 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 $ 85.0 million for federal funds transactions at December 31, 2024. Note 14 – Junior Subordinated Debt At December 31, 2024, the Company had five wholly-owned subsidiary business trusts that had issued $ 62.9 million of trust preferred securities (the “Capital Trusts”). Trust preferred securities accrue and pay distributions periodically at specified annual rates as provided in the indentures. The trusts used the net proceeds from the offering to purchase a like amount of subordinated debentures (the “Debentures”) of the Company. The Debentures are the sole assets of the trusts. The Company’s obligations under the subordinated debentures and related documents, taken together, constitute a full and unconditional guarantee by the Company of the obligations of the trusts. The trust preferred securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption as provided in the indentures. The Company has the right to redeem the Debentures in whole (but not in part) on or after specific dates, at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date. The Company also has a right to defer consecutive payments of interest on the debentures for up to five years . The Company organized two of the Capital Trusts. The Company acquired its three other Capital Trusts and assumed their related Debentures as a result of its acquisition of North Valley Bancorp in 2014. The acquired Debentures were recorded on the Company’s books at their fair values on the acquisition date. The related fair value discounts to face value of these Debentures will be amortized over the remaining period in which their values are fully allowed to be included in the Company's capital ratio calculations using the effective interest method. 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 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. The premiums or discount to face value of acquired debt will be amortized or accreted over the remaining maturity period using the effective interest method. The following table summarizes the terms and recorded balance of each subordinated debenture as of the date indicated (dollars in thousands): Coupon Rate (Variable) 3 mo. SOFR + As of December 31, 2024 December 31, 2023 Subordinated Debt Series Maturity Date Face Value Current Coupon Rate Recorded Book Value Recorded Book Value TriCo Cap Trust I 10/7/2033 $ 20,619 3.05 % 7.97 % $ 20,619 $ 20,619 TriCo Cap Trust II 7/23/2034 20,619 2.55 % 7.44 % 20,619 20,619 North Valley Trust II 4/24/2033 6,186 3.25 % 8.08 % 5,713 5,602 North Valley Trust III 7/23/2034 5,155 2.80 % 7.69 % 4,571 4,472 North Valley Trust IV 3/15/2036 10,310 1.33 % 5.95 % 7,863 7,615 VRB Subordinated - 6 % 3/29/2029 16,000 3.52 % 9.11 % 16,799 17,000 VRB Subordinated - 5 % 8/27/2035 20,000 Fixed 5.00 % 25,007 25,172 $ 98,889 $ 101,191 $ 101,099 VRB Subordinated - 5 % matures in 2035 and provides 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. 87 TriCo Bancshares 2024 10-K T a ble of Contents 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, 2024 and 2023. 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. These financial instruments include commitments to extend credit, standby letters of credit, and deposit account overdraft privilege. Those instruments involve, to varying degrees, elements of risk in excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The Company’s exposure to loss in the event of nonperformance by the other party to the financial instrument for deposit account overdraft privilege is represented by the overdraft privilege amount disclosed to the deposit account holder. The following table presents a summary of the Bank’s commitments and contingent liabilities: December 31, (in thousands) 2024 2023 Financial instruments whose amounts represent risk: Commitments to extend credit: Commercial loans $ 788,491 $ 788,742 Consumer loans 627,681 652,110 Real estate mortgage loans 419,172 453,647 Real estate construction loans 272,308 331,178 Standby letters of credit 39,804 38,449 Deposit account overdraft privilege 121,006 121,539 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. Commitments generally have fixed expiration dates of one year or less or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on Management’s credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, residential properties, and income-producing commercial properties. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing arrangements. Most standby letters of credit are issued for one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Collateral requirements vary, but in general follow the requirements for other loan facilities. Deposit account overdraft privilege amount represents the unused overdraft privilege balance available to the Company’s deposit account holders who have deposit accounts covered by an overdraft privilege. The Company has established an overdraft privilege for certain of its deposit account products whereby all holders of such accounts who bring their accounts to a positive balance at least once every thirty days receive the overdraft privilege. The overdraft privilege allows depositors to overdraft their deposit account up to a predetermined level. The predetermined overdraft limit is set by the Company based on account type. Legal Proceedings — The Company is party to various legal and administrative proceedings and claims. While any litigation contains an element of uncertainty, management believes that neither the Company nor its subsidiaries are a party to any pending legal proceedings that are material, nor is their property the subject of any other material pending legal proceeding at this time. All other legal proceedings are routine and arise out of the ordinary course of the Bank’s business. None of those proceedings are currently expected to have a material adverse impact upon the Company’s and the Bank’s business, their consolidated financial position nor their operations in any material amount not already accrued, after taking into consideration any applicable insurance and any contingency reserves. Other Commitments and Contingencies —The Company has entered into employment agreements or change of control agreements with certain officers of the Company providing severance payments and accelerated vesting of benefits under supplemental retirement agreements to the officers in the event of a change in control of the Company and termination for other than cause or after a substantial and material change in the officer’s title, compensation or responsibilities. 88 TriCo Bancshares 2024 10-K T a ble of Contents In April 2024, Visa Inc. announced the commencement of an exchange offer for Visa Class B-1 common stock and the Company subsequently tendered all of its Visa Class B-1 common stock in exchange for a combination of Visa Class B-2 common stock and Visa Class C common stock. Completion of the exchange resulted in a gain of $ 2.9 million relating to the Visa Class C common stock, which was subsequently disposed. Visa Class B-2 common stock continues to be carried at zero. The Bank owns 6,698 shares of Class B-2 common stock of Visa Inc. which may be convertible into Class A common stock at a conversion ratio of 1.5430 per Class B-2 share. As of December 31, 2024, the value of the Class A shares was $ 316.04 per share. Utilizing the conversion ratio, the value of unredeemed Class A equivalent shares owned by the Bank was $ 3.3 million as of December 31, 2024, and has not been reflected in the accompanying consolidated financial statements. The shares of Visa Class B-2 common stock are restricted and may not be transferred. 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 funds remain in the escrow account after all litigation is settled, the Class B-2 conversion ratio may be increased to reflect that surplus. Until all U.S. covered litigation obligations have been satisfied or the Applicable Conversion Rate for the Class B-2 common stock reaches zero, there is no dollar cap on the amount of payments that a participating holder and its guarantors may be obligated to make under its Makewhole Agreement. Mortgage loans sold to investors may be sold with servicing rights retained, with only the standard legal representations and warranties regarding recourse to the Bank. Management believes that any liabilities that may result from such recourse provisions are not significant. Note 16 – Shareholders’ Equity Dividends Paid The Bank paid to the Company cash dividends in the aggregate amounts of $ 71.2 million, $ 52.8 million, and $ 64.2 million in 2024, 2023, and 2022, respectively. The Bank is regulated by the Federal Deposit Insurance Corporation (“FDIC”) and the State of California Department of Financial Protection & Innovation (the “DFPI”). 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, 2024, the Bank could have paid dividends of $ 184.8 million to the Company without the approval of the Commissioner of the DFPI. Stock Repurchase Plan 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" or the "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 Plan has no expiration date (in accordance with applicable laws and regulations) and for years ended December 31, 2024, 2023 and 2022, the Company repurchased 379,279 , 150,000 , and 576,881 shares under this Plan. As of December 31, 2024, 830,523 shares remained available for repurchases under the Plan. Stock Repurchased Under Equity Compensation Plans The Company's shareholder-approved equity compensation plans permit employees to tender recently vested shares in lieu of cash for the payment of withholding taxes on such shares. During the years ended December 31, 2024, 2023, and 2022, employees tendered zero , 2,506 , and 39,447 shares, respectively, of the Company's common stock in connection with option exercises. Employees also tendered 36,549 , 52,437 and 27,840 shares in connection with other share based awards during December 31, 2024, 2023 and 2022, respectively. In total, shares of the Company's common stock tendered had market values of $ 1.4 million, $ 2.1 million, and $ 1.3 million for the years ended December 31, 2024, 2023 and 2022, respectively. The tendered shares were retired. The market value of tendered shares is the last market trade price at closing on the day an option is exercised or the other share based award vests. Stock repurchased under equity incentive plans are not included in the total of stock repurchased under the 2021 or 2019 Repurchase Plans. Note 17 – Stock Options and Other Equity-Based Incentive Instruments On April 16, 2024, the Board of Directors adopted the 2024 Equity Incentive Plan (2024 Plan) which was approved by shareholders on May 23, 2024. The 2024 Plan allows for up to 1,200,000 shares to be issued in connection with equity-based incentives. In conjunction with shareholder approval of the 2024 Plan, the 2019 Equity Incentive Plan (2019 Plan), which allowed for up to 1,500,000 shares to be issued in connection with equity-based incentives, is no longer available for grant issuances. The Company's 2009 Equity Incentive Plan expired on March 26, 2019. While no new awards can be granted under the 2019 Plan or 2009 Plan, existing grants continue to be governed by the terms, conditions and procedures set forth in any applicable award agreement. 89 TriCo Bancshares 2024 10-K T a ble of Contents Stock option activity is summarized in the following table for the dates indicated: Number of Shares Option Price per Share Weighted Average Exercise Price Outstanding at January 1, 2023 15,500 $ 19.46 to $ 23.21 $ 21.27 Options granted — — — Options exercised ( 8,000 ) $ 19.46 $ 19.46 Options forfeited — — — Outstanding at December 31, 2023 7,500 $ 23.21 $ 23.21 Options granted — — — Options exercised ( 7,500 ) 23.21 $ 23.21 Options forfeited — — — Outstanding at December 31, 2024 — $— $ — The Company did not modify any options grants during the three-year period ended December 31, 2024. The following table shows the total intrinsic value of options exercised, the total fair value of options vested, total compensation costs for options recognized in income, total tax benefit and excess tax benefits recognized in income related to compensation costs for options during the periods indicated: Year Ended December 31, (in thousands) 2024 2023 2022 Intrinsic value of options exercised $ 153 $ 134 $ 1,190 Fair value of options that vested — — — Total compensation costs for options recognized in expense — — — Total tax benefit recognized in income related to compensation costs for options 42 40 — Excess tax benefit recognized in income — — — There were no stock options granted during 2024, 2023 and 2022, respectively. Restricted stock unit activity is summarized in the following table for the dates indicated: Service Condition Vesting RSUs Market Plus Service Condition Vesting RSUs Number of RSUs Weighted Average Fair Value on Date of Grant Number of RSUs Weighted Average Fair Value on Date of Grant Outstanding at January 1, 2024 144,487 123,102 RSUs granted 86,036 $ 38.23 56,516 $ 20.86 Additional market plus service condition RSUs vested — 1,536 RSUs added through dividend credits 5,817 — RSUs released through vesting ( 78,403 ) ( 32,248 ) RSUs forfeited/expired ( 5,365 ) ( 4,191 ) Outstanding at December 31, 2024 152,572 144,715 The Company uses a Monte Carlo simulation model to determine the grant-date fair value of awards with market plus service conditions (PSU). The weighted average fair value and assumptions used to value the PSU awards granted with market-based performance conditions are as follows: 90 TriCo Bancshares 2024 10-K T a ble of Contents December 31, 2024 2023 Performance share fair value $ 20.86 $ 27.73 Risk-free interest rate 4.32 % 4.16 % Expected volatility 32.06 % 33.86 % Expected life (years) 3 3 Expected dividend yield 3.99 % 3.22 % The 152,572 of service condition vesting RSUs outstanding as of December 31, 2024 include a feature whereby each RSU outstanding is credited with a dividend amount equal to any common stock cash dividend declared and paid, and the credited amount is divided by the closing price of the Company’s stock on the dividend payable date to arrive at an additional amount of RSUs outstanding under the original grant. Additional RSUs credited through dividends are subject to the same vesting requirements as the original grant. The Company expects to recognize $ 3.5 million of pre-tax compensation costs related to these service condition vesting RSUs between December 31, 2024 and their vesting dates. The Company did not modify any service condition vesting RSUs during 2024 or 2023. The Company expects to recognize $ 1.9 million of pre-tax compensation costs related to the market plus service condition RSUs between December 31, 2024 and their vesting dates. As of December 31, 2024, 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 217,073 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 2024 or 2023. The following table shows the compensation costs and excess tax benefits for RSUs recognized in income for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 2022 Total compensation costs recognized in income Service condition vesting RSUs $ 3,224 $ 2,807 $ 2,883 Market plus service condition vesting RSUs 1,442 1,319 986 Excess tax benefit recognized in income Service condition vesting RSUs $ 964 $ 924 $ 1,079 Market plus service condition vesting RSUs 427 594 355 Note 18 – Non-interest Income and Expense The components of other non-interest income were as follows: Year Ended December 31, (in thousands) 2024 2023 2022 ATM and interchange fees $ 25,319 $ 26,459 $ 26,767 Service charges on deposit accounts 19,451 17,595 16,536 Other service fees 5,301 4,732 4,274 Mortgage banking service fees 1,739 1,808 1,887 Change in value of mortgage loan servicing rights ( 480 ) ( 506 ) 301 Total service charges and fees 51,330 50,088 49,765 Asset management and commission income 5,573 4,517 3,986 Increase in cash value of life insurance 3,257 3,150 2,858 Gain on sale of loans 1,532 1,166 2,342 Lease brokerage income 455 441 820 Sale of customer checks 1,216 1,383 1,167 (Loss) gain on sale of investment securities ( 43 ) ( 284 ) — (Loss) gain on marketable equity securities 126 36 ( 340 ) Other 961 903 2,448 Total other noninterest income 13,077 11,312 13,281 Total noninterest income $ 64,407 $ 61,400 $ 63,046 91 TriCo Bancshares 2024 10-K T a ble of Contents Mortgage banking servicing fee income (expense), net of change in value of mortgage loan servicing rights, totaling $ 1.3 million, $ 1.3 million, and $ 2.2 million were recorded within service charges and fees for the years ended December 31, 2024, 2023, and 2022, respectively. The components of noninterest expense were as follows: Year Ended December 31, (in thousands) 2024 2023 2022 Base salaries, net of deferred loan origination costs $ 96,862 $ 94,564 $ 84,861 Incentive compensation 16,897 15,557 17,908 Benefits and other compensation costs 26,822 25,674 27,083 Total salaries and benefits expense 140,581 135,795 129,852 Occupancy 16,411 16,135 15,493 Data processing and software 20,952 18,933 14,660 Equipment 5,424 5,644 5,733 Intangible amortization 4,120 6,118 6,334 Advertising 3,851 3,531 3,694 ATM and POS network charges 7,151 7,080 6,984 Professional fees 6,794 7,358 4,392 Telecommunications 2,053 2,547 2,298 Regulatory assessments and insurance 4,951 5,276 3,142 Merger and acquisition expense — — 6,253 Postage 1,329 1,236 1,147 Operational losses 1,681 2,444 1,000 Courier service 2,119 1,851 2,013 (Gain) loss on sale or acquisition of foreclosed assets ( 73 ) ( 133 ) ( 481 ) (Gain) loss on disposal of fixed assets 19 23 ( 1,070 ) Other miscellaneous expense 16,742 19,344 15,201 Total other noninterest expense 93,524 97,387 86,793 Total noninterest expense $ 234,105 $ 233,182 $ 216,645 Note 19 – Income Taxes The components of consolidated income tax expense are as follows (in thousands): Year Ended December 31, 2024 2023 2022 Current tax expense Federal $ 23,128 $ 26,133 $ 34,155 State 17,754 19,781 22,355 $ 40,882 45,914 56,510 Deferred tax expense Federal 512 ( 1,330 ) ( 5,224 ) State ( 1,158 ) ( 1,069 ) ( 2,798 ) ( 646 ) ( 2,399 ) ( 8,022 ) Total tax expense $ 40,236 $ 43,515 $ 48,488 A deferred tax asset or liability is recognized for the tax consequences of temporary differences in the recognition of revenue and expense for financial and tax reporting purposes. The net change during the year in the deferred tax asset or liability results in a deferred tax expense or benefit. 92 TriCo Bancshares 2024 10-K T a ble of Contents The Company recognized, as components of tax expense, tax credits and other tax benefits, and amortization expense relating to our investments in Qualified Affordable Housing Projects as follows for the periods indicated (in thousands): Year Ended December 31, 2024 2023 2022 Tax credits and other tax benefits – decrease in tax expense $ ( 11,650 ) $ ( 10,857 ) $ ( 6,370 ) Amortization – increase in tax expense $ 10,762 $ 9,092 $ 6,178 The carrying value of Low Income Housing Tax Credit Funds was $ 109.1 million and $ 96.9 million as of December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company has committed to make additional capital contributions to the Low Income Housing Tax Credit Funds in the amount of $ 57.0 million, and these contributions are expected to be made over the next several years. The provisions for income taxes applicable to income before taxes for the years ended December 31, 2024, 2023 and 2022 differ from amounts computed by applying the statutory Federal income tax rates to income before taxes. The effective tax rate and the statutory federal income tax rate are reconciled as follows: Year Ended December 31, (in thousands) 2024 2023 2022 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 7.9 7.9 7.9 Tax-exempt interest on municipal obligations ( 0.5 ) ( 0.7 ) ( 0.7 ) Tax-exempt life insurance related income ( 0.4 ) ( 0.4 ) ( 0.4 ) Low income housing tax credits ( 7.9 ) ( 6.6 ) ( 3.7 ) Low income housing tax credit amortization 6.9 5.6 3.6 Equity compensation 0.1 0.3 ( 0.2 ) Non-deductible merger expenses — — 0.1 Other ( 1.2 ) ( 0.1 ) 0.3 Effective Tax Rate 25.9 % 27.0 % 27.9 % 93 TriCo Bancshares 2024 10-K T a ble of Contents The temporary differences, tax effected, which give rise to the Company’s net deferred tax asset recorded in other assets are as follows for the years indicated (in thousands): December 31, 2024 2023 Deferred tax assets: Allowance for losses and reserve for unfunded commitments $ 38,837 $ 37,656 Deferred compensation 1,471 1,534 Other accrued expenses 3,881 3,899 Additional unfunded status of the supplemental retirement plans 15,062 15,434 Operating lease liability 7,520 8,355 State taxes 2,814 3,346 Share based compensation 1,200 1,050 Nonaccrual interest 1,477 706 Acquisition cost basis 10,477 12,046 Unrealized loss on securities 69,075 68,535 Tax credits 852 852 Net operating loss carryforwards 1,097 953 Other 136 190 Total deferred tax assets 153,899 154,556 Deferred tax liabilities: Securities income ( 777 ) ( 777 ) Depreciation ( 7,696 ) ( 8,364 ) Right of use asset ( 6,956 ) ( 7,726 ) Funded pension liability ( 4,755 ) ( 3,999 ) Securities accretion ( 2,957 ) ( 2,265 ) Mortgage servicing rights valuation ( 1,953 ) ( 1,946 ) Core deposit intangible ( 1,647 ) ( 2,814 ) Junior subordinated debt ( 1,036 ) ( 1,171 ) Prepaid expenses and other ( 1,368 ) ( 1,170 ) Total deferred tax liability ( 29,145 ) ( 30,232 ) Net deferred tax asset $ 124,754 $ 124,324 As part of the merger with FNB Bancorp in 2018 and North Valley Bancorp in 2014, TriCo acquired federal and state net operating loss carryforwards, capital loss carryforwards, and tax credit carryforwards. 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. There were no federal and $ 13.0 million California net operating loss carryforwards subject to these limitations as of December 31, 2024. The amount of the Company’s tax credits that would be subject to these limitations as of December 31, 2024 are $ 0.3 million and $ 0.6 million for federal and California, respectively. Due to the limitation, a significant portion of the state tax credits will expire regardless of whether the Company generates future taxable income. 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 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. Disclosure of unrecognized tax benefits at December 31, 2024 and 2023 were not considered significant for disclosure purposes. Management does not expect the unrecognized tax benefit will materially change in the next 12 months. During the years ended December 31, 2024 and 2023 the Company did not recognize any significant amounts related to interest and penalties associated with taxes. The Company files income tax returns in the U.S. federal jurisdiction, and California. With few exceptions, the Company is no longer subject to U.S. federal and state/local income tax examinations by tax authorities for years before 2021 and 2020, respectively. 94 TriCo Bancshares 2024 10-K T a ble of Contents Note 20 – Earnings per Share Earnings per share have been computed based on the following: Year Ended December 31, (in thousands) 2024 2023 2022 Net income $ 114,868 $ 117,390 $ 125,419 Average number of common shares outstanding 33,088 33,261 32,584 Effect of dilutive stock options and restricted stock 142 94 137 Average number of common shares outstanding used to calculate diluted earnings per share 33,230 33,355 32,721 Equity awards excluded from diluted earnings per share because their effect was antidilutive — — — Note 21 – Comprehensive Income (Loss) Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. The components of other comprehensive income and related tax effects are as follows: Year Ended December 31, (in thousands) 2024 2023 2022 Unrealized holding gains (losses) on available for sale securities before reclassifications $ ( 4,772 ) $ 58,444 $ ( 290,157 ) Amounts reclassified out of accumulated other comprehensive loss: Realized loss on debt securities 2,945 284 — Total amounts reclassified out of accumulated other comprehensive loss 2,945 284 — Unrealized holding gains (losses) on available for sale securities after reclassifications ( 1,827 ) 58,728 ( 290,157 ) Tax effect 541 ( 17,363 ) 85,781 Unrealized holding gains (losses) on available for sale securities, net of tax ( 1,286 ) 41,365 ( 204,376 ) Change in unfunded status of the supplemental retirement plans before reclassifications 3,017 81 11,522 Amounts reclassified out of accumulated other comprehensive loss: Amortization of prior service cost — — ( 28 ) Amortization of actuarial losses ( 459 ) ( 455 ) 8 Total amounts reclassified out of accumulated other comprehensive loss ( 459 ) ( 455 ) ( 20 ) Change in unfunded status of the supplemental retirement plans after reclassifications 2,558 ( 374 ) 11,502 Tax effect ( 757 ) 111 ( 3,401 ) Change in unfunded status of the supplemental retirement plans, net of tax 1,801 ( 263 ) 8,101 Change in joint beneficiary agreement liability before reclassifications 192 ( 366 ) 1,389 Tax effect — — — Change in unfunded status of the supplemental retirement plans, net of tax 192 ( 366 ) 1,389 Total other comprehensive income (loss) $ 707 $ 40,736 $ ( 194,886 ) The components of accumulated other comprehensive loss, included in shareholders’ equity, are as follows: Year Ended December 31, (in thousands) 2024 2023 Net unrealized loss on available for sale securities $ ( 233,648 ) $ ( 231,821 ) Tax effect 69,075 68,534 Unrealized holding loss on available for sale securities, net of tax ( 164,573 ) ( 163,287 ) Unfunded status of the supplemental retirement plans 16,085 13,527 Tax effect ( 4,756 ) ( 3,999 ) Unfunded status of the supplemental retirement plans, net of tax 11,329 9,528 Joint beneficiary agreement liability, net of tax 782 590 Accumulated other comprehensive loss $ ( 152,462 ) $ ( 153,169 ) 95 TriCo Bancshares 2024 10-K T a ble of Contents Note 22 – Retirement Plans 401(k) Plan The Company sponsors a 401(k) Plan whereby substantially all employees aged 21 and over with 90 days of service may participate. Participants may contribute a portion of their compensation subject to certain limits based on federal tax laws. 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 for the years ended: Year Ended December 31, (in thousands) 2024 2023 2022 401(k) Plan benefits expense $ 1,705 $ 1,767 $ 1,541 401(k) Plan contributions made by the Company $ 1,752 $ 1,524 $ 1,214 Employee Stock Ownership Plan Substantially all employees with at least one year of service are covered by a discretionary employee stock ownership plan (ESOP). Company shares owned by the ESOP are paid dividends and included in the calculation of earnings per share as common shares outstanding. Contributions are made to the plan at the discretion of the Board of Directors. Expenses related to the Company’s ESOP, included in benefits and other compensation costs under salaries and benefits expense, and contributions to the plan for the years ended were: Year Ended December 31, (in thousands) 2024 2023 2022 ESOP benefits expense $ 3,514 $ 3,075 $ 2,824 ESOP contributions made by the Company $ 3,640 $ 2,977 $ 3,535 Deferred Compensation Plans The Company has deferred compensation plans for certain directors and key executives, which allow certain directors and key executives designated by the Board of Directors of the Company to defer a portion of their compensation. The Company has purchased insurance on the lives of certain of the participants and intends to hold these policies until death as a cost recovery of the Company’s deferred compensation obligations of $ 5.0 million and $ 5.2 million at December 31, 2024 and 2023, respectively. Earnings credits on deferred balances included in non-interest expense are included in the following table: Year Ended December 31, (in thousands) 2024 2023 2022 Deferred compensation earnings credits included in non-interest expense $ 212 $ 210 $ 187 Supplemental Retirement Plans The Company has supplemental retirement plans for certain directors and key executives. These plans are non-qualified defined benefit plans and are unsecured and unfunded. The Company has purchased insurance on the lives of the participants and intends to hold these policies until death as a cost recovery of the Company’s retirement obligations. The cash values of the insurance policies purchased to fund the deferred compensation obligations and the supplemental retirement obligations were $ 140.1 million and $ 136.9 million at December 31, 2024 and 2023, respectively. The Company recorded in other liabilities the additional funded status of the supplemental retirement plans of $ 16.1 million and $ 13.5 million related to the supplemental retirement plans as of December 31, 2024 and 2023, 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, 2024 and 2023, the additional funded status of the supplemental retirement plans of $ 16.1 million and $ 13.5 million were offset by a reduction of shareholders’ equity accumulated other comprehensive gain of $ 11.3 million and $ 9.5 million, respectively, representing the after-tax impact of the additional funded status of the supplemental retirement plans, and the related deferred tax liability of $ 4.8 million and $ 4.0 million, 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. The Company expects to recognize approximately $ 0.5 million of the net actuarial loss reported in the following table as of December 31, 2024 as a component of net periodic benefit cost during 2022. 96 TriCo Bancshares 2024 10-K T a ble of Contents December 31, (in thousands) 2024 2023 Transition obligation $ — $ — Prior service cost — — Net actuarial (gain) / loss ( 16,085 ) ( 13,527 ) Amount included in accumulated other comprehensive income (loss) ( 16,085 ) ( 13,527 ) Deferred tax liability / (benefit) 4,756 3,999 Amount included in accumulated other comprehensive income (loss), net of tax $ ( 11,329 ) $ ( 9,528 ) Information pertaining to the activity in the supplemental retirement plans, using a measurement date of December 31, is as follows: December 31, (in thousands) 2024 2023 Change in benefit obligation: Benefit obligation at beginning of year $ ( 38,645 ) $ ( 40,341 ) Acquisition of obligations — — Service cost ( 114 ) ( 138 ) Interest cost ( 1,830 ) ( 2,016 ) Actuarial (loss)/gain 3,017 81 Plan amendments — — Benefits paid 2,709 3,769 Benefit obligation at end of year $ ( 34,863 ) $ ( 38,645 ) Change in plan assets: Fair value of plan assets at beginning of year $ — $ — Fair value of plan assets at end of year $ — $ — Funded status $ ( 34,863 ) $ ( 38,645 ) Unrecognized net obligation existing at January 1, 1986 — — Unrecognized net actuarial (loss)/gain ( 16,085 ) ( 13,527 ) Unrecognized prior service cost — — Accumulated other comprehensive loss 16,085 13,527 Accrued benefit cost $ ( 34,863 ) $ ( 38,645 ) Accumulated benefit obligation $ ( 34,863 ) $ ( 38,645 ) The following table sets forth the net periodic benefit cost recognized for the supplemental retirement plans: Year Ended December 31, (in thousands) 2024 2023 2022 Net pension cost included the following components: Service cost-benefits earned during the period $ 114 $ 138 $ 1,624 Interest cost on projected benefit obligation 1,830 2,016 1,731 Amortization of net obligation at transition — — — Amortization of prior service cost — — ( 28 ) Recognized net actuarial loss 16 10 ( 86 ) Amortization of loss/(gain) ( 475 ) ( 466 ) ( 114 ) Recognition of pension service cost to due amendment — — 2,141 Net periodic pension cost $ 1,485 $ 1,698 $ 5,268 97 TriCo Bancshares 2024 10-K T a ble of Contents The following table sets forth assumptions used in accounting for the plans: Year Ended December 31, 2024 2023 2022 Discount rate used to calculate benefit obligation 5.59 % 5.01 % 5.23 % Discount rate used to calculate net periodic pension cost 5.01 % 5.23 % 2.74 % Average annual increase in executive compensation — % — % — % Average annual increase in director compensation — % — % — % 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: (in thousands) Expected Benefit Payments to Participants Estimated Company Contributions 2025 $ 1,798 $ 1,798 2026 2,823 2,823 2027 2,866 2,866 2028 2,836 2,836 2029 2,802 2,802 2028-2032 14,401 14,401 Note 23 – Related Party Transactions In the ordinary course of business, the Bank has made loans to certain of its directors and executive officers (and their associated and affiliated companies). All such loans have been made in accordance with regulatory requirements. The following table summarizes the activity in these loans for the periods indicated: (in thousands) Balance January 1, 2023 $ 11,384 Advances/new loans — Removed/payments ( 9,851 ) Balance December 31, 2023 1,533 Advances/new loans 1,257 Removed/payments ( 335 ) Balance December 31, 2024 $ 2,455 Deposits of directors, officers and other related parties to the Bank totaled $ 33.1 million and $ 29.7 million at December 31, 2024 and 2023, respectively. Note 24 – Fair Value Measurement The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, income approach, and/or the cost approach. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset and the risk of nonperformance. Securities available-for-sale and mortgage servicing rights are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as loans held for sale, loans held for investment and certain other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or impairment write-downs of individual assets. The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the observable nature of the assumptions used to determine fair value. These levels are: Level 1 — Valuation is based upon quoted prices for identical instruments traded in active markets. 98 TriCo Bancshares 2024 10-K T a ble of Contents Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 3 — Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. Securities available for sale — Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. 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. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. The Company had no securities classified as Level 3 during any of the periods covered in these financial statements. Loans held for sale — Loans held for sale are carried at the lower of cost or fair value. The fair value of loans held for sale is based on what secondary markets are currently offering for loans with similar characteristics. As such, we classify those loans subjected to nonrecurring fair value adjustments as Level 2. 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. Foreclosed assets are held for sale and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. 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 asset 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 foreclosed asset as nonrecurring Level 3. Revenue and expenses from operations and changes in the valuation allowance are included in other non-interest expense. Mortgage servicing rights — Mortgage servicing rights are carried at fair value. A valuation model, which utilizes a discounted cash flow analysis using a discount rate and prepayment speed assumptions is used in the computation of the fair value measurement. While the prepayment speed assumption is currently quoted for comparable instruments, the discount rate assumption currently requires a significant degree of management judgment and is therefore considered an unobservable input. As such, the Company classifies mortgage servicing rights subjected to recurring fair value adjustments as Level 3. Additional information regarding mortgage servicing rights can be found in Note 10 in the consolidated financial statements at Item 1 of this report. 99 TriCo Bancshares 2024 10-K T a ble of Contents 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, 2024 Total Level 1 Level 2 Level 3 Marketable equity securities $ 2,609 $ 2,609 $ — $ — Debt securities available for sale: Obligations of U.S. government agencies 1,094,185 — 1,094,185 — Obligations of states and political subdivisions 220,744 — 220,744 — Corporate bonds 5,837 — 5,837 — Asset backed securities 314,263 — 314,263 — Non-agency collateralized mortgage obligations 269,856 — 269,856 — Loans held for sale 709 — 709 — Mortgage servicing rights 6,626 — — 6,626 Total assets measured at fair value $ 1,914,829 $ 2,609 $ 1,905,594 $ 6,626 Fair value at December 31, 2023 Total Level 1 Level 2 Level 3 Marketable equity securities $ 2,634 $ 2,634 $ — $ — Debt securities available for sale: Obligations of U.S. government agencies 1,221,737 — 1,221,737 — Obligations of states and political subdivisions 236,375 — 236,375 — Corporate bonds 5,602 — 5,602 — Asset backed securities 355,281 — 355,281 — Non-agency collateralized mortgage obligation 333,509 — 333,509 — Loans held for sale 458 — 458 — Mortgage servicing rights 6,606 — — 6,606 Total assets measured at fair value $ 2,162,202 $ 2,634 $ 2,152,962 $ 6,606 Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally corresponds with the Company’s quarterly valuation process. There were no transfers between any levels during 2024 or 2023. The following table provides a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the years ended December 31, 2024, 2023, and 2022. Had there been any transfer into or out of Level 3 during 2024, 2023, or 2022, the amount included in the “Transfers into (out of) Level 3” column would represent the beginning balance of an item in the period (interim quarter) during which it was transferred (in thousands): Year ended December 31, Beginning Balance Transfers into (out of) Level 3 Change Included in Earnings Issuances Ending Balance 2024: Mortgage servicing rights $ 6,606 — $ ( 480 ) $ 500 $ 6,626 2023: Mortgage servicing rights $ 6,712 — $ ( 506 ) $ 400 $ 6,606 2022: Mortgage servicing rights $ 5,874 — $ 301 $ 537 $ 6,712 The Company’s method for determining the fair value of mortgage servicing rights is described in Note 1. The key unobservable inputs used in determining the fair value of mortgage servicing rights are mortgage prepayment speeds and the discount rate used to discount cash projected cash flows. Generally, any significant increases in the mortgage prepayment speed and discount rate utilized in the fair value measurement of the mortgage servicing rights will result in a negative fair value adjustments (and decrease in the fair value measurement). Conversely, a decrease in the mortgage prepayment speed and discount rate will result in a positive fair value adjustment (and increase in the fair value measurement). Note 10 contains additional information regarding mortgage servicing rights. 100 TriCo Bancshares 2024 10-K T a ble of Contents The following table present quantitative information about recurring Level 3 fair value measurements at December 31, 2024 and 2023: December 31, 2024 Fair Value (in thousands) Valuation Technique Unobservable Inputs Range, Weighted Average Mortgage Servicing Rights $ 6,626 Discounted cash flow Constant prepayment rate 6 %- 11 %, 7 % Discount rate 10 %- 14 %, 12 % December 31, 2023 Mortgage Servicing Rights $ 6,606 Discounted cash flow Constant prepayment rate 6 %- 13 %, 7 % 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. December 31, 2024 Total Level 1 Level 2 Level 3 Fair value: Individually evaluated loans $ 8,770 — — $ 8,770 Real estate owned 709 — — 709 Total assets measured at fair value $ 9,479 — — $ 9,479 December 31, 2023 Total Level 1 Level 2 Level 3 Fair value: Individually evaluated loans $ 4,175 — — $ 4,175 Real estate owned 50 — — 50 Total assets measured at fair value $ 4,225 — — $ 4,225 The tables below present the gains (losses) resulting from non-recurring fair value adjustments of assets and liabilities for the periods indicated, regardless of whether the asset is still being held at fair value at period end (in thousands): December 31, 2024 2023 Individually evaluated loans $ ( 4,575 ) $ ( 4,498 ) Real estate owned ( 19 ) ( 312 ) Total losses from non-recurring measurements $ ( 4,594 ) $ ( 4,810 ) 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 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. The carrying value of loans fully charged-off is zero . The real estate owned amounts above represents impaired real estate that has been adjusted to fair value. Foreclosed assets represent real estate which the Bank has taken control of in partial or full satisfaction of loans. At the time of foreclosure, other real estate owned is recorded at fair value less costs to sell, which becomes the property’s new basis. Any write-downs based on the asset’s fair value at the date of acquisition are charged to the allowance for loan and lease losses. After foreclosure, management periodically performs valuations such that the real estate is carried at the lower of its new cost basis or fair value, net of estimated costs to sell. Fair value adjustments on other real estate owned are recognized within net loss on real estate owned. The loss represents impairments on non-covered other real estate owned for fair value adjustments based on the fair value of the real estate. The Company’s property appraisals are primarily based on the sales comparison approach and income approach methodologies, which consider recent sales of comparable properties, including their income generating characteristics, and then make adjustments to reflect the general assumptions that a market participant would make when analyzing the property for purchase. These adjustments may increase or 101 TriCo Bancshares 2024 10-K T a ble of Contents decrease an appraised value and can vary significantly depending on the location, physical characteristics and income producing potential of each property. Additionally, the quality and volume of market information available at the time of the appraisal can vary from period to period and cause significant changes to the nature and magnitude of comparable sale adjustments. Given these variations, comparable sale adjustments are generally not a reliable indicator for how fair value will increase or decrease from period to period. Under certain circumstances, management discounts are applied based on specific characteristics of an individual property. 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, 2024 and 2023: December 31, 2024 Fair Value (in thousands) Valuation Technique Unobservable Inputs Range, Weighted Average Individually evaluated loans $ 8,770 Sales comparison approach; Income approach Adjustment for differences between comparable sales; Capitalization rate Not meaningful; N/A Real estate owned (Residential) $ 709 Sales comparison approach; Income approach Adjustment for differences between comparable sales; Capitalization rate Not meaningful; N/A December 31, 2023 Fair Value (in thousands) Valuation Technique Unobservable Inputs Range, Weighted Average Individually evaluated loans $ 4,175 Sales comparison approach; Income approach Adjustment for differences between comparable sales; Capitalization rate Not meaningful; N/A Real estate owned (Residential) $ 50 Sales comparison approach Adjustment for differences between comparable sales Not meaningful; N/A 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): December 31, 2024 December 31, 2023 Carrying Amount Fair Value Carrying Amount Fair Value Financial assets: Level 1 inputs: Cash and due from banks $ 85,409 $ 85,409 $ 81,626 $ 81,626 Cash at Federal Reserve and other banks 59,547 59,547 17,075 17,075 Level 2 inputs: Securities held to maturity 111,866 104,349 133,494 125,126 Level 3 inputs: Loans, net 6,643,157 6,293,727 6,672,948 6,278,577 Financial liabilities: Level 2 inputs: Deposits 8,087,576 8,085,150 7,834,038 7,828,554 Other borrowings 89,610 89,780 632,582 632,582 Level 3 inputs: Junior subordinated debt 101,191 103,630 101,099 95,407 The methods and assumptions used to estimate the fair value of each class of financial instruments not measured at fair value are as follows: Securities held to maturity - This includes mortgage-backed securities issued by government sponsored entities and municipal bonds. Fair value measurement is based upon quoted prices, if available. 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. Loans - Loans are generally valued by discounting expected cash flows using market inputs with adjustments based on cohort level assumptions for certain loan types as well as internally developed estimates at a business segment level. Due to the significance of the unobservable market inputs and assumptions, as well as the absence of a liquid secondary market for most loans, these loans are classified 102 TriCo Bancshares 2024 10-K T a ble of Contents as Level 3. Certain loans are measured based on observable market prices sourced from external data providers and classified as Level 2. Nonaccrual loans are written down and reported at their estimated recovery value which approximates their fair value and classified as Level 3. Deposits - The estimated fair value of deposits with no stated maturity, such as demand deposit accounts, money market accounts, and savings accounts was the amount payable on demand at the reporting date. The fair value of time deposits was estimated based on a discounted cash flow technique using Level 3 inputs appropriate to the contractual maturity. Other borrowings - The cash flows were calculated using the contractual features of the advance and then discounted using observable market. These are short-term in nature. Junior subordinated debt - The fair value of structured financings was estimated based on a discounted cash flow technique using observable market interest rates adjusted for estimated spreads. Note 25 – TriCo Bancshares Condensed Financial Statements (Parent Only) Condensed Balance Sheets December 31, 2024 December 31, 2023 (In thousands) Assets Cash and cash equivalents $ 12,518 $ 6,356 Investment in Tri Counties Bank 1,308,545 1,253,492 Other assets 1,888 1,872 Total assets $ 1,322,951 $ 1,261,720 Liabilities and shareholders’ equity Other liabilities $ 853 $ 939 Junior subordinated debt 101,191 101,099 Total liabilities 102,044 102,038 Shareholders’ equity: Preferred stock, no par value: 1,000,000 shares authorized; zero issued and outstanding at December 31, 2024 and 2023, respectively — — Common stock, no par value: 50,000,000 shares authorized; issued and outstanding: 32,970,425 and 33,268,102 at December 31, 2024 and 2023, respectively 693,462 697,349 Retained earnings 679,907 615,502 Accumulated other comprehensive loss, net ( 152,462 ) ( 153,169 ) Total shareholders’ equity 1,220,907 1,159,682 Total liabilities and shareholders’ equity $ 1,322,951 $ 1,261,720 Condensed Statements of Income Year Ended December 31, 2024 2023 2022 (In thousands) Net interest expense $ ( 7,372 ) $ ( 6,878 ) $ ( 4,385 ) Administration expense ( 1,096 ) ( 1,096 ) ( 816 ) Loss before equity in net income of Tri Counties Bank ( 8,468 ) ( 7,974 ) ( 5,201 ) Equity in net income of Tri Counties Bank: Distributed 71,152 52,805 64,188 Undistributed 49,681 70,202 64,896 Income tax benefit 2,503 2,357 1,536 Net income $ 114,868 $ 117,390 $ 125,419 103 TriCo Bancshares 2024 10-K T a ble of Contents Condensed Statements of Comprehensive Income (Loss) Year Ended December 31, 2024 2023 2022 (In thousands) Net income $ 114,868 $ 117,390 $ 125,419 Other comprehensive income (loss), net of tax: Increase (decrease) in unrealized gains on available for sale securities arising during the period ( 1,286 ) 41,365 ( 204,376 ) Change in minimum pension liability 1,801 ( 263 ) 8,101 Change in joint beneficiary agreement liability 192 ( 366 ) 1,389 Other comprehensive income (loss) 707 40,736 ( 194,886 ) Comprehensive income (loss) $ 115,575 $ 158,126 $ ( 69,467 ) Condensed Statements of Cash Flows Year Ended December 31, 2024 2023 2022 (In thousands) Operating activities: Net income $ 114,868 $ 117,390 $ 125,419 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed equity in earnings of Tri Counties Bank ( 49,681 ) ( 70,202 ) ( 64,896 ) Equity compensation vesting expense 4,666 4,125 3,869 Net change in other assets and liabilities ( 4,675 ) ( 3,959 ) ( 3,834 ) Net cash provided by operating activities 65,178 47,354 60,558 Investing activities: Sales or maturities of investments — — 4,234 Financing activities: Exercise of stock options 174 156 1,190 Repurchase of common stock ( 15,544 ) ( 9,240 ) ( 27,148 ) Dividends paid ( 43,646 ) ( 39,901 ) ( 35,797 ) Net cash used for financing activities ( 59,016 ) ( 48,985 ) ( 61,755 ) Net change in cash and cash equivalents 6,162 ( 1,631 ) 3,037 Cash and cash equivalents at beginning of year 6,356 7,987 4,950 Cash and cash equivalents at end of year $ 12,518 $ 6,356 $ 7,987 104 TriCo Bancshares 2024 10-K T a ble of Contents Note 26 – Regulatory Matters The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. These capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require that minimum amounts and ratios of total, Tier 1, and common equity Tier 1capital to risk-weighted assets, and of Tier 1 capital to average assets be maintained. Under applicable capital requirements both the Company and the Bank are required to have a common equity Tier 1 capital ratio of 4.5%, a Tier 1 leverage ratio of 4.0%, a Tier 1 risk-based ratio of 6.0% and a total risk-based ratio of 8.0%. In addition, the Company and the Bank are also required to maintain a capital conservation buffer consisting of common equity Tier 1 capital above 2.5% of minimum risk based capital ratios to avoid restrictions on certain activities including payment of dividends, stock repurchases and discretionary bonuses to executive officers. The additional 2.5% buffer, where applicable, is included in the minimum ratios set forth in the table below. Management believes as of December 31, 2024 and 2023, the Company and Bank meet all capital adequacy requirements to which they are subject. Actual Required for Capital Adequacy Purposes Required to be Considered Well Capitalized Under Prompt Corrective Action Regulations (in thousands) Amount Ratio Amount Ratio Amount Ratio As of December 31, 2024: Total Capital (to Risk Weighted Assets): Consolidated $ 1,258,218 15.71 % $ 840,943 10.50 % N/A N/A Tri Counties Bank $ 1,248,802 15.60 % $ 840,740 10.50 % $ 800,704 10.00 % Tier 1 Capital (to Risk Weighted Assets): Consolidated $ 1,118,292 13.96 % $ 680,763 8.50 % N/A N/A Tri Counties Bank $ 1,148,328 14.34 % $ 680,599 8.50 % $ 640,563 8.00 % Common equity Tier 1 Capital (to Risk Weighted Assets): Consolidated $ 1,060,690 13.24 % $ 560,628 7.00 % N/A N/A Tri Counties Bank $ 1,148,328 14.34 % $ 560,493 7.00 % $ 520,458 6.50 % Tier 1 Capital (to Average Assets): Consolidated $ 1,118,292 11.70 % $ 382,214 4.00 % N/A N/A Tri Counties Bank $ 1,148,328 12.02 % $ 382,096 4.00 % $ 477,620 5.00 % Actual Required for Capital Adequacy Purposes Required to be Considered Well Capitalized Under Prompt Corrective Action Regulations (in thousands) Amount Ratio Amount Ratio Amount Ratio As of December 31, 2023: Total Capital (to Risk Weighted Assets): Consolidated $ 1,196,106 14.73 % $ 852,850 10.50 % N/A N/A Tri Counties Bank $ 1,190,542 14.66 % $ 852,648 10.50 % $ 812,046 10.00 % Tier 1 Capital (to Risk Weighted Assets): Consolidated $ 1,052,063 12.95 % $ 690,402 8.50 % N/A N/A Tri Counties Bank $ 1,088,717 13.41 % $ 690,239 8.50 % $ 649,637 8.00 % Common equity Tier 1 Capital (to Risk Weighted Assets): Consolidated $ 994,907 12.25 % $ 568,566 7.00 % N/A N/A Tri Counties Bank $ 1,088,717 13.41 % $ 568,432 7.00 % $ 527,830 6.50 % Tier 1 Capital (to Average Assets): Consolidated $ 1,052,063 10.75 % $ 391,620 4.00 % N/A N/A Tri Counties Bank $ 1,088,717 11.12 % $ 391,574 4.00 % $ 489,468 5.00 % 105 TriCo Bancshares 2024 10-K T a ble of Contents Note 27 – Segment Information The Company's reportable segment is determined by the Chief Executive Officer, who is designated the chief operating decision maker, based upon information provided about the Company's products and services offered, primary banking operations. The segment is also distinguished by the level of information provided to the chief operation decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. The chief operating decision maker will evaluate the financial performance of the Company's business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Company's segment and in the determination of allocating resources. The chief operating decision maker uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The chief operating decision maker uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessing performance and in establishing compensation. Loans and investments are the primary sources of revenue in the banking operation. Interest expense on deposits and borrowings, provisions for credit losses, and payroll comprise the significant expenses in the banking operation. All operations are domestic. Accounting policies for segments are the same as those described in Note 1. Segment performance is evaluated using consolidated net income. Information reported internally for performance assessment by the chief operating decision maker follows, inclusive of reconciliations of the banking segment totals to the financial statements: Year Ended December 31, (in thousands) 2024 2023 2022 Interest income $ 466,638 $ 438,354 $ 355,505 Reconciliation of revenue: Other revenues 64,407 61,400 63,046 Total consolidated revenues 531,045 499,754 418,551 Less: Interest expense 135,204 81,677 9,529 Segment net interest income and noninterest income 395,841 418,077 409,022 Less: Provision for credit losses 6,632 23,990 18,470 Salaries and benefits expense 140,581 135,795 129,852 Other banking segment items 93,524 97,387 86,793 Provision for income taxes 40,236 43,515 48,488 Segment net income/consolidated net income $ 114,868 $ 117,390 $ 125,419 Reconciliation of assets: Total assets for reportable segment $ 9,673,728 $ 9,910,089 $ 9,930,986 Other assets — — — Total consolidated assets $ 9,673,728 $ 9,910,089 $ 9,930,986 106 TriCo Bancshares 2024 10-K T a ble of Contents MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of TriCo Bancshares is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Under the supervision and with the participation of management, including the principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation under the framework in the 2013 Internal Control – Integrated Framework, management of the Company has concluded the Company maintained effective internal control over financial reporting, as such term is defined in Securities Exchange Act of 1934 Rules 13a-15(f), as of December 31, 2024. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is also responsible for the preparation and fair presentation of the consolidated financial statements and other financial information contained in this report. The accompanying consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles and include, as necessary, best estimates and judgments by management. In addition to management’s assessment, Moss Adams LLP, an independent registered public accounting firm, has audited the Company’s consolidated financial statements as of and for the year ended December 31, 2024, and the Company’s effectiveness of internal control over financial reporting as of December 31, 2024, dated March 3, 2025, as stated in its report, which is included herein. /s/ Richard P. Smith Richard P. Smith President and Chief Executive Officer /s/ Peter G. Wiese Peter G. Wiese Executive Vice President and Chief Financial Officer March 3, 2025 107 TriCo Bancshares 2024 10-K T a ble of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of TriCo Bancshares 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, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, 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, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. 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. 108 TriCo Bancshares 2024 10-K T a ble of Contents Allowance for Credit Losses on Loans - Reasonable and Supportable Qualitative Forecast Factors As discussed in Note 1 and Note 5 to the consolidated financial statements, the Company’s allowance for credit losses on loans was $125.4 million as of December 31, 2024, 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 on 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 the 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 the auditing of certain qualitative forecast factors used by management as a critical audit matter, given their importance in forming a reasonable and supportable forecast. In estimating the allowance for credit losses on loans, the Company incorporates relevant information, from both internal and external sources, considering past events, current conditions, and reasonable and supportable forecasts. The estimation of the lifetime expected credit losses on loans requires significant management judgment, especially concerning certain qualitative forecast factors over the forecast period. Auditing these significant management judgments involves especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures related to the critical audit matter included the following, among others: • 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 evaluation of the qualitative forecast factors. • Evaluating the reasonableness and appropriateness of certain qualitative forecast factors utilized by management in forming the reasonable and supportable forecast factors by comparing data used in management’s forecasts to relevant external data, including historical trends. • Testing completeness and accuracy of the data used in the determination of forecast factors within the qualitative allowance for credit losses on loans and testing the mathematical accuracy of the calculation of the qualitative allowance for credit losses on loans. /s/ Moss Adams LLP San Francisco, California March 3, 2025 We have served as the Company’s auditor since 2018. 109 TriCo Bancshares 2024 10-K T a ble of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.