Trico NIM Expands as Deposit Costs Ease
The California-based regional lender saw net interest margin rise 6 basis points to 3.25% in the second quarter.
Trico Bancshares’ net interest margin widened for the first time in six quarters, a signal that deposit-cost pressures may be easing for the $14.6 billion-asset regional lender. Net interest margin expanded 6 basis points from the prior quarter to 3.25% in the three months ended June 30. The improvement was driven by a 2-basis-point decline in the cost of deposits to 1.20%, extending a year-long descent from 1.43% in the first quarter of 2024.
Net interest income rose to $73.4 million, lifting earnings to $0.60 a share from $0.55 in the first quarter. Loan growth, however, continued to slow: gross loans increased $200 million, or 1.4% annualized, compared with 5.1% in the fourth quarter of 2023 and 8.1% in the second quarter of 2024. Deposit trends were not disclosed for the latest quarter, but prior periods showed volatility—an 8.3% annualized gain in the second quarter of 2024 followed by a 2.0% decline in the third quarter.
Credit quality remained stable. The provision for credit losses shifted to a net release or minimal build, contrasting with a $4.7 million provision in the year-ago quarter. Non-performing assets edged up to 0.72% of total assets from 0.68% in the first quarter of 2024 but remained below the 0.72% level reported in the third quarter of 2024. Net charge-offs were not detailed in the release.
Capital metrics were not updated for the second quarter, though tangible book value per share rose 3% sequentially to $15.04. Earlier quarters showed the CET1 ratio climbing steadily, and management has signaled that the pending merger with First Hawaiian Bank will lift pro forma CET1 to 12.4% at close. The combined entity, announced in the second quarter, is expected to hold $34 billion in assets and deliver a return on average assets of at least 1.35%.
Fee income trends were not broken out in the latest release, but prior quarters showed strength in interchange and asset-management revenue. The efficiency ratio improved to 56.18% in the third quarter of 2024 from 59.00% in the prior quarter, reflecting operating leverage.
Management did not provide explicit guidance for the second half, but the margin expansion and deposit-cost trajectory suggest the bank may have passed the peak of funding pressures. Loan pipelines were not disclosed, leaving the near-term growth outlook uncertain as the merger integration approaches.