TRICO BANCSHARES /TCBK
TRICO BANCSHARES / Income Taxes Disclosure
Income Taxes
The components of consolidated income tax expense are as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current tax expense | |||||||||||||||||
| Federal | $ | 23,353 | $ | 23,128 | $ | 26,133 | |||||||||||
| State | 18,703 | 17,754 | 19,781 | ||||||||||||||
| $ | 42,056 | 40,882 | 45,914 | ||||||||||||||
| Deferred tax expense | |||||||||||||||||
| Federal | 1,095 | 512 | (1,330) | ||||||||||||||
| State | 1,450 | (1,158) | (1,069) | ||||||||||||||
| 2,545 | (646) | (2,399) | |||||||||||||||
| Total tax expense | $ | 44,601 | $ | 40,236 | $ | 43,515 | |||||||||||
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.
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, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Tax credits and other tax benefits – decrease in tax expense | $ | (13,139) | $ | (11,650) | $ | (10,857) | |||||||||||
| Amortization – increase in tax expense | $ | 13,000 | $ | 10,762 | $ | 9,092 | |||||||||||
The carrying value of Low Income Housing Tax Credit Funds was $122.8 million and $109.1 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company has committed to make additional capital contributions to the Low Income Housing Tax Credit Funds in the amount of $59.0 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, 2025, 2024 and 2023 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) | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Federal statutory income tax rate | $ | 34,893 | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||||||
| California income taxes, net of federal tax benefit | 11,131 | 6.6 | 7.9 | 7.9 | |||||||||||||||||||
| Nontaxable and nondeductible items, net | |||||||||||||||||||||||
| Tax-exempt interest on municipal obligations | (978) | (0.6) | (0.5) | (0.7) | |||||||||||||||||||
| Tax-exempt life insurance related income | (969) | (0.6) | (0.4) | (0.4) | |||||||||||||||||||
| Equity compensation | 659 | 0.4 | 0.1 | 0.3 | |||||||||||||||||||
| Tax credits | |||||||||||||||||||||||
| Low income housing tax credits | (14,401) | (8.7) | (7.9) | (6.6) | |||||||||||||||||||
| Other reconciling items | |||||||||||||||||||||||
| Low income housing tax credit amortization | 13,001 | 7.8 | 6.9 | 5.6 | |||||||||||||||||||
| Other | 1,265 | 0.9 | (1.2) | (0.1) | |||||||||||||||||||
| Provision for income taxes | $ | 44,601 | 26.8 | % | 25.9 | % | 27.0 | % | |||||||||||||||
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, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Allowance for losses and reserve for unfunded commitments | $ | 39,470 | $ | 38,837 | |||||||
| Deferred compensation | 1,455 | 1,471 | |||||||||
| Other accrued expenses | 2,680 | 3,881 | |||||||||
| Additional unfunded status of the supplemental retirement plans | 14,941 | 15,062 | |||||||||
| Operating lease liability | 8,064 | 7,520 | |||||||||
| State taxes | 2,983 | 2,814 | |||||||||
| Share based compensation | 1,263 | 1,200 | |||||||||
| Nonaccrual interest | 2,108 | 1,477 | |||||||||
| Acquisition cost basis | 7,013 | 10,477 | |||||||||
| Unrealized loss on securities | 44,783 | 69,075 | |||||||||
| Tax credits | 776 | 852 | |||||||||
| Net operating loss carryforwards | 323 | 1,097 | |||||||||
| Other | 65 | 136 | |||||||||
| Total deferred tax assets | 125,924 | 153,899 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Securities income | (777) | (777) | |||||||||
| Depreciation | (7,883) | (7,696) | |||||||||
| Right of use asset | (7,540) | (6,956) | |||||||||
| Funded pension liability | (4,768) | (4,755) | |||||||||
| Securities accretion | (2,239) | (2,957) | |||||||||
| Mortgage servicing rights valuation | (1,958) | (1,953) | |||||||||
| Core deposit intangible | (1,111) | (1,647) | |||||||||
| Junior subordinated debt | — | (1,036) | |||||||||
| Prepaid expenses and other | (1,744) | (1,368) | |||||||||
| Total deferred tax liability | (28,020) | (29,145) | |||||||||
| Net deferred tax asset | $ | 97,904 | $ | 124,754 | |||||||
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 $4.2 million California net operating loss carryforwards subject to these limitations as of December 31, 2025. The amount of the Company’s tax credits that would be subject to these limitations as of December 31, 2025 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 2033.
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, 2025 and 2024 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, 2025 and 2024 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 2022 and 2021, respectively.
Cash paid for income taxes, net of refunds, were as follows:
| Year ended December 31, | ||||||||
(in thousands) | 2025 | |||||||
| US federal | $ | 15,600 | ||||||
| California state and local | 12,067 | |||||||
| Total cash paid for income taxes, net of refunds | $ | 27,667 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 15, 2017 | |
| 2015 | Mar 10, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.