TriCo Bancshares Q3 2026 Earnings: Wider Margin and Credit Benefit Lift Net Income

TriCo Bancshares (NASDAQ: TCBK) reported Q3 2026 net interest income of $96.5 million, up 7.8% year over year, while diluted EPS increased to $1.18 from $1.04. Net income rose 11.6% to $38.0 million, supported by a wider net interest margin and a $1.9 million credit-loss benefit. Those gains outweighed higher operating costs, including $3.8 million of merger-related expense.

Core Financial Results

Both major income lines increased during the quarter. Higher loan income and lower funding costs helped net interest income, while noninterest income advanced 12.0% year over year.

The credit-loss line also contributed to earnings: TriCo recorded a $1.9 million benefit, compared with a $0.7 million provision in Q3 2025. That swing helped absorb a 10.0% increase in noninterest expense.

Net interest margin is presented on a fully taxable-equivalent basis. The reported results are preliminary and unaudited.

Lending and Funding Trends

Loans ended the quarter at $7.41 billion, increasing $403.4 million, or 5.8%, from a year earlier. Compared with Q2 2026, loans grew $99.1 million, equivalent to a 5.4% annualized rate. Quarterly loan originations and draws totaled approximately $496.0 million, while payoffs and repayments were $410.8 million. Management said activity normalized after unusually high originations in the preceding quarter.

Deposits reached $8.44 billion, up $109.0 million, or 1.3%, year over year. The sequential increase was $74.6 million, although it included $68.8 million of one-way deposit-sale activity that returned to the balance sheet during the quarter.

Average noninterest-bearing deposits increased 3.2% year over year and represented 31.0% of average deposits. The loan-to-deposit ratio rose to 87.8% from 84.1% a year earlier, reflecting loan growth that continued to outpace deposit growth. TriCo reported no brokered deposits during 2025 or 2026.

Profitability, Credit, and Capital

Net Interest Margin

The fully taxable-equivalent net interest margin expanded five basis points sequentially and 24 basis points year over year to 4.16%. The yield on average earning assets reached 5.35%, compared with 5.31% in Q2 2026, while the average cost of total deposits declined one basis point sequentially and 13 basis points year over year to 1.26%.

Average loan yields increased to 5.87% from 5.75% in Q3 2025. By contrast, the investment portfolio yield declined to 3.30% from 3.49%, and average investment balances also fell. The improvement in loan economics and deposit costs was therefore the more important driver of margin expansion.

Credit Quality

The $1.9 million credit-loss benefit supported quarterly profit, but other credit indicators were mixed. Nonperforming assets increased to 0.79% of total assets from 0.76% in Q2 2026 and 0.72% a year earlier. The allowance for credit losses declined to 1.73% of total loans from 1.78% in both comparison periods.

Loan charge-offs were $831,000, while recoveries totaled $530,000. The quarter therefore combined a favorable credit-loss provision with a modest increase in the nonperforming-asset ratio.

Capital and Dividend

Shareholders’ equity decreased $15.1 million during the quarter. Net income of $38.0 million was more than offset by a $42.6 million increase in accumulated other comprehensive losses and $11.5 million of common dividends paid.

Book value per share declined to $41.56 from $42.03 at the end of Q2. Tangible book value per share, a non-GAAP measure, fell to $31.93 from $32.40. TriCo also declared an unchanged quarterly cash dividend of $0.36 per share, payable November 27, 2026, to shareholders of record on November 16.

Merger Costs Limited Efficiency Gains Despite Higher Income

Noninterest expense increased $6.1 million year over year to $66.5 million, including $3.8 million of merger-related costs. Merger expense was also higher than the $0.9 million recorded in Q2 2026. Consequently, the efficiency ratio rose to 56.96% from 56.18% a year earlier and 56.25% in the preceding quarter.

Higher net interest income, noninterest income, and the favorable change in credit-loss provisioning still allowed net income to grow by $3.9 million year over year. Management said the company remains focused on operating performance while preparing for its merger with First Hawaiian Bank, but it did not provide quantitative forward guidance.

Risks Investors Should Monitor

• Loan growth is exceeding deposit growth: Loans increased 5.8% year over year, compared with 1.3% deposit growth, pushing the loan-to-deposit ratio to 87.8%. Continued divergence could reduce funding flexibility.
• Credit indicators are not uniformly favorable: The credit-loss benefit lifted earnings, but nonperforming assets increased and the allowance-to-loans ratio declined.
• Merger expenses are pressuring efficiency: Merger-related costs reached $3.8 million and contributed to a higher efficiency ratio despite income growth.
• Market-value changes are affecting capital: The increase in accumulated other comprehensive losses reduced shareholders’ equity and book value even though the company remained profitable.

Summary

TriCo Bancshares’ Q3 2026 earnings benefited from loan growth, a wider net interest margin, lower deposit costs, and a credit-loss benefit. These factors produced double-digit growth in net income and EPS despite higher expenses related partly to the planned First Hawaiian Bank merger. The main issues to monitor are the gap between loan and deposit growth, the direction of nonperforming assets, merger-related spending, and continued pressure on book value from accumulated other comprehensive losses.