kbw winter financial services symposium...loan portfolio mix: february 2019; kbw winter financial...

KBW Winter FinancialServices Symposium

Richard P. Smith – President & Chief Executive OfficerJohn S. Fleshood – EVP & Chief Operating Officer

February 2019

SAFE HARBOR STATEMENTThe statements contained herein that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond our control. There can be no assurance that future developments affecting us will be the same as those anticipated by management. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the impact of changes in financial services policies, laws and regulations; technological changes; mergers and acquisitions; changes in the level of our nonperforming assets and charge-offs; any deterioration in values of California real estate, both residential and commercial; the effect of changes in accounting standards and practices; possible other-than-temporary impairment of securities held by us; changes in consumer spending, borrowing and savings habits; our ability to attract deposits and other sources of liquidity; changes in the financial performance and/or condition of our borrowers; the impact of competition from other financial service providers; the possibility that any of the anticipated benefits of our recent merger with FNBB will not be realized or will not be realized within the expected time period, or that integration of FNBB’s operations will be more costly or difficult than expected; the challenges of integrating and retaining key employees; unanticipated regulatory or judicial proceedings; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; and our ability to manage the risks involved in the foregoing. Additional factors that could cause results to differ materially from those described above can be found in our Annual Report on Form 10-K for the year ended December 31, 2017, which is on file with the Securities and Exchange Commission (the “SEC”) and available in the “Investor Relations” section of our website, https://www.tcbk.com/investor-relations and in other documents we file with the SEC. Annualized, pro forma, projections and estimates are not forecasts and may not reflect actual results.

KBW Winter Financial Services Symposium

February 20192

AGENDA• Most Recent Quarter Recap

• Company Overview

• Lending Overview

• Deposit Overview

• Financials

KBW Winter Financial Services Symposium

February 20193

MOST RECENT QUARTER HIGHLIGHTS

KBW Winter Financial Services Symposium

February 20194

Robust Earnings•Q4 2018 return on average assets of 1.47% versus 1.05% linked quarter.• Loans to deposits ratio of 75% in Q4 2018, down slightly from 79% in Q3

2018.

Industry Leading Net Interest Margin

•Net Interest Margin increased 14 bps versus Q3 2018 and 20 bps versus Q4 2017.

•Net Interest Income grew 23.2% on an annualized linked quarter basis versus prior quarter.

•Yield on loans increased by 26 basis points linked quarter and 35 basis points versus prior year.

Low Efficiency Ratio•Revenue growth and operating expense management resulted in

improvement in the efficiency ratio to 59.1% for Q4 compared to 65.2% in the prior quarter and 66.1% for the prior year.

Profitable Deposit Base•Average cost of total deposits rose 4 bps versus the prior quarter to

0.20%.•Total deposits grew 21.5% on an annualized linked quarter basis, with

non-interest bearing demand deposits comprising 33% of total deposits.

Strong Capital Levels•Tangible capital consistent at 9.5%.•Common dividend increased to $0.19 during Q4 2018, and 11.8%

increase over Q4 2017.

COMPANY OVERVIEW

February 2019

KBW Winter Financial Services Symposium

5

COMPANY OVERVIEWAsset Size: $6.4 Billion

Founded: 1975

Deposits: $5.4 Billion

Loans (net): $4.0 Billion

Bank Branches: 79

ATMs: 99Market Area: TriCo currently serves 29 counties

throughout Northern and Central California. These counties represent over 30% of California’s population.

KBW Winter Financial Services Symposium

February 20196

COMPANY OVERVIEWNasdaq: TCBK

Stock Price*: $37.76

Market Capitalization: $1.15 billion

Price to Book stated: 1.4xPrice to TBVPS 2.00x

Rank (Total Assets) amongCA Publicly Traded Banks: 12(Source: SNL Financial)

KBW Winter Financial Services Symposium

February 20197

_________________________________________________________________________

*as of 02/08/2019 COB

EXECUTIVE TEAM

Rick SmithPresident & CEOTriCo since 1993

John FleshoodEVP Chief Operating Officer

TriCo since 2016

Dan Bailey EVP Chief Retail Banking Officer

TriCo since 2007

Craig CarneyEVP Chief Credit Officer

TriCo since 1996

Peter WieseEVP Chief Financial Officer

TriCo since 2018

Richard O’SullivanEVP Chief Commercial

Lending OfficerTriCo since 1984

KBW Winter Financial Services Symposium

February 20198

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018Earnings $12.2 $12.5 $12.1 $13.6 $11.9 $3.0 $13.9 $15.0 $16.2 $23.2E.P.S. (Diluted) $0.53 $0.54 $0.52 $0.58 $0.51 $0.13 $0.60 $0.65 $0.53 $0.76

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

$22

$24

E.P.

S (D

ilute

d)

Earn

ings

(in

Mill

ions

)

CONSISTENT EARNINGS TRACK RECORD

February 2019

KBW Winter Financial Services Symposium

9

DILUTED EARNINGS PER SHARE

February 2019

KBW Winter Financial Services Symposium

10

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

2013 2014 2015 2016 2017 2018

$0.53 $0.45 $0.36 $0.46 $0.52 $0.60

$0.39 $0.30 $0.49 $0.41

$0.58 $0.65

$0.45 $0.50

$0.55 $0.53 $0.51

$0.53 $0.32 $0.25

$0.50 $0.54 $0.13

$0.76

Q1 Q2 Q3 Q4

KBW Winter Financial Services Symposium

February 201911 *Total Assets for years ending 2000-2018.

CAGR5 yrs. 18.3%10 yrs.12.0%

CONSISTENT ORGANIC GROWTH AND DISCIPLINED ACQUIRER

• Deposit Betas• Ability to Increase Loan Yields• Interest Rate Risk• Aggressive Competitors• The Cost of Compliance with New Regulations• Dysfunction in Washington

WHAT KEEPS US UP AT NIGHT?

KBW Winter Financial Services Symposium

February 201912

LOANS

KBW Winter Financial Services Symposium

February 201913

CONSISTENT LOAN GROWTH

KBW Winter Financial Services Symposium

February 201914*Note: Q3 2018 includes acquisition of FNB Bancorp (Loan Yield was 5.04%)

6.06%

5.62%5.52%

5.37%5.16%

5.03% 5.06%5.27%

5.53%

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

2013 2014 2015 2016 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

Loan

Yie

ld (%

)

Tota

l Loa

ns (0

00's)

Total Loans Loan Yield

CAGR5 yrs. 19.7%10 yrs. 9.9%

LOAN PORTFOLIO MIX:

February 2019

KBW Winter Financial Services Symposium

15

Consumer Loans$47,925

1%

Agri. Production$25,838

1%

Farmland$128,995

3%

Total Construction$184,333

5%Commercial &

Industrial$263,094

7%

CRE - Multifamily$485,024

12%

Revolving LOC$330,132

8%

1st Lien Closed-End Loans$528,474

13%

CRE - Owner Occupied$537,062

13%

CRE - Non-Owner Occupied$1,459,050

36%

Junior Lien Closed-End Loans$40,713

1%

DIVERSIFIED CRE & CONSTRUCTION PORTFOLIO

February 2019

KBW Winter Financial Services Symposium

16

Office Building, $555,150,000

Multifamily Residence,

$538,303,000

Retail Building, $427,452,000

Warehouse, $286,140,000

Hospitality,$247,796,000

Mini Storage, $92,576,000

Gas Station /Convenience,

$79,623,000

Restaurant, $48,347,000

SFR (1-4/Condo),

$19,529,000

All Other, $371,615,000

Property Type Loan SizeAvg. Loan Amount

Office Building $769,000

Multifamily Residence $1,092,000

Retail Building $786,000

Warehouse $705,000

Hospitality $2,503,000

Mini Storage $1,624,000

Gas Station /Convenience $959,000

Restaurant $488,000

SFR (1-4/Condo) $814,000

All Other $527,000

CONSERVATIVE CONSTRUCTION AND CRE UNDERWRITING CULTURE – LTV DISTRIBUTION

February 2019

KBW Winter Financial Services Symposium

17

30%

23%

16%15%

10%

3%2%

1%0%

5%

10%

15%

20%

25%

30%

35%

% o

f Por

tfolio

LTV Range

Loan to Value Avg. Loan Amount

<50% $637,000

51%-60% $959,000

61%-65% $1,176,000

66%-70% $898,000

71%-75% $845,000

76%-80% $706,000

81%-90% $906,000

>90% $780,000

DIVERSIFIED GEOGRAPHY – CRE & CONSTRUCTION

February 201918

KBW Winter Financial Services Symposium

County Principal City Outstanding Balance% of CRE-Related

Average Loan Amount

Bay Area San Francisco $628,664,000 24% $906,000

Sacramento Sacramento/Elk Grove $253,822,000 10% $1,203,000

Kern Bakersfield $191,885,000 7% $1,487,000

Butte Chico $157,586,000 6% $461,000

Placer Roseville/Auburn $114,251,000 5% $1,053,000

Shasta Redding $140,287,000 5% $533,000

Stanislaus Modesto $129,068,000 5% $963,000

Fresno Fresno $84,872,000 3% $690,000

Sonoma Sonoma/Santa Rosa $78,781,000 3% $856,000

Nevada Truckee $78,158,000 3% $511,000

17 Other Counties N.A. $779,170,000 29% $817,000

TOTAL $2,666,533,000 AVG. $825,000

NON-PERFORMING ASSETS & NET CHARGE OFFS

KBW Winter Financial Services Symposium

February 201919

2.17%

1.34%

1.01%

0.53% 0.58% 0.55%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

2013 2014 2015 2016 2017 2018

Non

-Per

form

ing

Asse

ts a

s % o

f Tot

al A

sset

s

-0.20%

-0.10%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

2013 2014 2015 2016 2017 2018

0.23%

-0.13%

-0.07%-0.10%

0.08%

0.04%Net

Cha

rge

Offs

HOME EQUITY LOANS OUTSTANDING

KBW Winter Financial Services Symposium

February 201920

$300,000

$310,000

$320,000

$330,000

$340,000

$350,000

$360,000

$370,000

$380,000

$390,000

$400,000

2013 2014 2015 2016 2017 2018

$354,454

$383,898

$362,854

$331,537 $331,719

$363,260

Loan

s (00

0’s)

DEPOSITS

KBW Winter Financial Services Symposium

February 201921

Non Interest Bearing

33%

Interest Demand23%

Savings36%

Time Deposits9%

Wtd. Avg. Rate – 0.24%

Wtd. Avg. Rate – 0.09%

Wtd. Avg. Rate – 1.03%

*Weighted average costs of deposits for the quarter ended 12/31/2018

CONSISTENT AND BALANCED CORE DEPOSIT FUNDING*

KBW Winter Financial Services Symposium

February 201922

Wtd. Avg. Rate – 0.18%

Wtd. Avg. Rate – 0.09%

Wtd. Avg. Rate – 0.92%

MARKET SHARE OF ALL BRANCHESSORTED BY ZIP CODE

KBW Winter Financial Services Symposium

February 201923

Source: FDIC Summary of Deposits, June 2018*Includes acquisition of FNB Bancorp – July 2018

Rank Institution Name State (Hdqtrd) Charter Deposits

($000) Market Share

1 U.S. Bank National Association OH Federal 9,893,012 21.2%

2 Wells Fargo & Company SD Federal 8,782,186 18.8%

3 Bank of America, National Association NC Federal 6,017,267 12.9%

4 Tri Counties Bank CA State 3,881,355 8.3%

5 JP Morgan Chase Bank, National Association OH Federal 2,994,175 6.4%

6 MUFG Union Bank, National Association CA Federal 2,177,323 4.7%

7 Bank of the West CA State 1,832,370 3.9%

8 Umpqua Bank CA State 1,636,359 3.5%

CONSISTENT DEPOSIT GROWTH – ATTRACTIVE COST

KBW Winter Financial Services Symposium

February 201924 *Note: Q3 2018 includes acquisition of FNB Bancorp (Deposit cost of 0.28%)

0.15%

0.12%0.10% 0.09%

0.10%

0.11%

0.12%

0.16%0.20%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2013 2014 2015 2016 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

Tota

l Cos

t of D

epos

its

Tota

l Dep

osits

(000

’s)

Total Deposits Cost of Deposits

CAGR5 yrs. 17.4%10 yrs. 12.4%

*

FINANCIALS

KBW Winter Financial Services Symposium

February 201925

NET INTEREST MARGIN –CONTRIBUTION FROM DISCOUNT ACCRETION

KBW Winter Financial Services Symposium

February 201926

1.00%

2.00%

3.00%

4.00%

5.00%

2015 2016 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

4.39% 4.23% 4.22% 4.14% 4.14% 4.32% 4.46%

0.10%0.09% 0.10% 0.11% 0.12%

0.15%0.16%

Effect of Loan Discount Accretion Net Interest Margin

RETURN ON AVERAGE ASSETS

KBW Winter Financial Services Symposium

February 201927

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

2013 2014 2015 2016 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

1.04%

0.87%

1.11%1.03%

0.89%

1.17%1.25%

1.05%

1.47%

RETURN ON AVERAGE SHAREHOLDER’S EQUITY

KBW Winter Financial Services Symposium

February 201928

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2013 2014 2015 2016 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

11.34%

8.67%

10.04%9.47%

8.10%

11.00%11.78%

9.11%

11.40%

EFFICIENCY RATIO (FULLY TAXABLE EQUIVALENT)

KBW Winter Financial Services Symposium

February 201929

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

2013 2014 2015 2016 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

67.3%

72.9%

64.7%

67.9%

65.5% 66.3%65.2% 65.2%

59.1%

DIVIDENDS PAID

KBW Winter Financial Services Symposium

February 201930

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

2013 2014 2015 2016 2017 2018

$0.09 $0.11 $0.11 $0.15 $0.15 $0.17$0.11 $0.11 $0.13

$0.15 $0.17 $0.17$0.11 $0.11$0.13

$0.15$0.17 $0.17

$0.11 $0.11

$0.15

$0.15$0.17

$0.19

Annual Dividends $0.70$0.60$0.42 $0.44 $0.52 $0.66

CAPITAL RATIOS ($000’S)

KBW Winter Financial Services Symposium

February 201931

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2013 2014 2015 2016 2017 Q4 2018

12.2% 12.2% 11.7%12.5%

13.5%14.4%

13.8% 13.7%13.2%

13.7%14.8%

15.7%15.1% 14.8%

14.1% 14.4%

8.6% 9.1% 9.2% 9.1% 9.3% 9.5%

Common Equity Tier 1 Tier 1 Total Risk Based Tangible Common

KBW Winter Financial Services Symposium

February 201932

TRICO BANCSHARES IS COMMITTED TO:

Improving the financial success and well-being of our shareholders, customers,

communities and employees.