2016 Community Bank Conference September 6, 2016 2016 Community - - PowerPoint PPT Presentation

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2016 Community Bank Conference September 6, 2016 2016 Community - - PowerPoint PPT Presentation

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Richard P. Smith, President & CEO Raymond James 2016 Community Bank Conference September 6, 2016 2016 Community Bank Conference SAFE HARBOR STATEMENT Certain comments included in this presentation may involve forward- looking statements,

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SLIDE 1

2016 Community Bank Conference

Richard P. Smith, President & CEO

Raymond James

September 6, 2016

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SLIDE 2

SAFE HARBOR STATEMENT

Certain comments included in this presentation may involve forward- looking statements, for which TriCo claims the protection of the “safe harbor” provisions credited by Federal securities laws. Such forward- looking statements are subject to risks and uncertainties which may cause TriCo’s actual results to differ materially from those contemplated by such statements. Additional information concerning certain of these risks and uncertainties are described in TriCo’s Annual Report of Form 10-K for the fiscal year ended December 31, 2015 and TriCo’s Quarterly Reports on Form 10-Q as filed with the SEC in fiscal 2016.

2016 Community Bank Conference

2 | September 2016

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SLIDE 3

AGENDA

  • Company Overview
  • Recent Activities & Focus

– Merger Announcement

  • Key Revenue Drivers
  • Challenges & Opportunities
  • Financials
  • Questions

2016 Community Bank Conference

3 | September 2016

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SLIDE 4

OVERVIEW

Asset Size: $4.4 Billion Location: Chico, CA Founded: 1975 Deposits: $3.7 Billion Loans (net): $2.6 Billion Customers: 190,000 Bank Branches: 68 ATMs: 80 2016 Community Bank Conference

4 | September 2016

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SLIDE 5

OVERVIEW

Nasdaq: TCBK Stock Price: $27.98 Market Capitalization: $638 million *Price to TBVPS: 1.59x **Asset Size Rank of CA Publicly Traded Banks: 13 2016 Community Bank Conference

5 | September 2016

*Valuation Information as of Market Close 07/27/2016 **Ranking as of 06/30/2015 – Source: SNL Financial

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SLIDE 6

2016 Community Bank Conference

6 | September 2016

EXECUTIVE TEAM

Rick Smith President & CEO TriCo since 1993 Tom Reddish EVP Chief Financial Officer TriCo since 1994 Dan Bailey EVP Retail Banking TriCo since 2007 Craig Carney EVP Chief Credit Officer TriCo since 1996 Carol Ward EVP Chief Operating Officer TriCo since 2012 Richard O’Sullivan EVP Commercial Banking TriCo since 1984

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SLIDE 7

RECENT ACTIVITIES

  • Purchase of 3 branches from Bank of America

– Completed in March, 2016

  • Completion of merger of North Valley 2015
  • Closed 13 branches in 2015 as result of merger and

customer migration to technology tools

  • Opened new branch in Roseville, CA in 2016
  • Several new technology projects for 2016:

– New Mobile Banking program – New Business On-Line Banking – Loan and Operational Imaging projects – Core Conversion

2016 Community Bank Conference

7 | September 2016

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SLIDE 8

POSITIONED FOR TODAY, PREPARED FOR THE FUTURE

2016 Community Bank Conference

  • Strong and growing bank capital
  • Competitive product set to compete with banks both

large and small

  • Superior reputation versus large bank competitors
  • Continue to see strong organic growth in current

environment

– Double digit loan growth – Double deposit growth

8 | September 2016

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SLIDE 9
  • Strong focus on risk management and new

regulatory realities

  • Experienced project teams, well prepared for

continued growth through acquisition

2016 Community Bank Conference

9 | September 2016

POSITIONED FOR TODAY, PREPARED FOR THE FUTURE continued

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SLIDE 10

2016 Community Bank Conference

10 | September 2016

WHAT IS LONG TERM SUCCESS?

  • Rewarding our shareholders

– A winning culture with a motivated and talented work force – Significant and growing market share – Low cost core deposit base – Strong credit culture – Diversified revenue sources – Efficient operations – Strong risk management practices

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SLIDE 11

KEY DRIVERS OF BANK REVENUES

  • Deposits & Margin

– Average Cost of Deposits of .09% as of 06/30/2016 – Net Interest Margin at 06/30/2016 is 4.13%

  • Commercial Loans

–Commercial Real Estate

– Commercial & Industry Lines and Loans & Leases – Agricultural Loans – Asset Based Loans

  • Non-Interest Income

– Mortgage Finance – Service Charge & Fee Income – Bank Wealth Management Program 2016 Community Bank Conference

11 | September 2016

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SLIDE 12

KEY DRIVERS OF BANK REVENUES continued

  • Consumer Loans –

– Home Equity Lines/Loans – Small Business

  • Growth Opportunities

–Wealth Management – Bank Managed Program – Raymond James as Broker-Dealer – Merchant Fee Opportunities – Growth Opportunity with North Valley Bank New markets for TriCo

2016 Community Bank Conference

12 | September 2016

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SLIDE 13

Non Interest Bearing 32% Interest Demand 23% Savings 36% Time Deposits 9%

  • Wtd. Avg. Rate – 0.12%
  • Wtd. Avg. Rate –

0.05% Wtd. Avg. Rate – 0.39%

2016 Community Bank Conference

13 | September 2016

DEPOSIT STRUCTURE

Data as of 06.30.2016

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2016 Community Bank Conference

14 | September 2016

TOTAL ENDING DEPOSITS

$2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000

2012 2013 2014 2015 Q2 2016 $2,289,702 $2,410,483 $3,380,423 $3,631,266 $3,741,396

Data as of 06.30.2016

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2016 Community Bank Conference

15 | September 2016

MARKET SHARE OF ALL BRANCHES

SORTED BY ZIP CODE

Rank Institution Name State (Hdqtrd) Charter Deposit ($000) Market Share 1 Wells Fargo Bank, National Association SD Federal 8,418,824 24.27% 2 Bank of America, National Association NC Federal 4,528,537 13.05% 3 Rabobank, National Association CA Federal 4,076,603 11.75% 4 Tri Counties Bank CA State 3,271,795 9.43% 5 JP Morgan Chase Bank, National Association OH Federal 2,280,105 6.86% 6 Umpqua Bank OR State 1,609,334 4.64% 7 U.S. Bank National Association OH Federal 1,570,801 4.53% 8 Bank of the West CA State 1,091,336 3.15%

Source: FDIC Summary of Deposits, June 2015 Total Deposits 06/30/2015: $3,895,680

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NON-INTEREST INCOME

  • Consistently Represents Approximately

25% of Total Bank Revenues

  • Residential Home Mortgage Lending

– Refinances remain consistent – Increasing numbers of purchase transactions and increasing overall activity for home loans

2016 Community Bank Conference

16 | September 2016

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NON-INTEREST INCOME continued

  • Wealth Management revenues
  • Lower revenues from service charges but

increased interchange income

  • Cash Management fees continue to increase

following merger integration

  • Merchant Card Services – $1.2 million in 2015

2016 Community Bank Conference

17 | September 2016

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CONSUMER LOANS

  • Increased demand for consumer loans

– Home equity values have increased – Borrowers still reluctant to leverage their homes

  • Low rate environment led to historically

high refi activity

– $40MM in Q2 2016 HELOC volume resulted in $5MM reduction in

  • utstandings

– Home equity lines/loans increasing in demand but cannot outpace 1st lien refi volume

  • Auto loans demand constant

2016 Community Bank Conference

18 | September 2016

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SLIDE 19

2016 Community Bank Conference

19 | September 2016

HOME EQUITY LOANS OUTSTANDING

$300,000 $310,000 $320,000 $330,000 $340,000 $350,000 $360,000 $370,000 $380,000 $390,000 $400,000 2012 2013 2014 2015 Q2 2016 $355,582 $354,454 $383,898 $362,854 $348,680

Data as of 06.30.2016

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2016 Community Bank Conference

20 | September 2016

LOAN PORTFOLIO BY TYPE

Secured by RE - Residential 1-4 12% Secured by RE - Com'l 60% Consumer - HELOCS 12%

Consumer - Home Eq 2%

Consumer - Other 1% Commercial 8% Construction - RE 2% Construction - Commercial 3%

Data as of 06.30.2016

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SLIDE 21

2016 Community Bank Conference

21 | September 2016

COMMERCIAL LOANS

Total Commercial 74% Total Consumer 26%

Data as of 06.30.2016

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COMMERCIAL BANKING

  • Target loans of $2,000,000 to $10,000,000
  • Personalized banking
  • Assigned Relationship Managers
  • Assigned Cash Management Officers
  • In-market lending
  • Competition is as fierce

and diverse as it has ever been

  • $191 million in CRE & C&I production in Q2 resulted in $58 million

in net growth, excluding loan purchases 2016 Community Bank Conference

22 | September 2016

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SLIDE 23

COMMERCIAL BANKING continued

  • Agricultural lending
  • Improving drought conditions
  • Ag prices declining may well be a positive
  • Loans <$1,000,000 served through alternate

channel

  • Business Relationship Managers
  • Credit scoring combined with traditional underwriting
  • SBA 7A program now offered

2016 Community Bank Conference

23 | September 2016

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2016 Community Bank Conference

24 | September 2016

COMMERCIAL REAL ESTATE PORTFOLIO

AS OF 06.30.2016

Real Estate Loan Type # of Loans Outstandings* % to Total Loans

  • Avg. Commitment

Amount Office 584 340,862,000 13% 596,000 Retail 410 287,945,000 11% 731,000 Multi-Family 344 237,042,000 9% 719,000 Special Purpose

Gas Station, Mini Storage, Hotel/Motel, Restaurant

186 178,938,000 7% 997,000 Other

Warehouse, Manufacturing, Bare Land, Agricultural Land + Structures

1,206 553,747,000 21% 498,000 Totals 2,730 1,598,533,000 60%

  • Averages
  • 615,000

* RE Loan Type segment totals do not include all purchase discount adjustments

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AG PORTFOLIO AS OF 06.30.2016

2016 Community Bank Conference

25 | September 2016

  • Agricultural Loans (excluding RE secured) total $74

million in total commitments with $39 million outstanding

  • The highest crop concentrations by commitments are:

Rice $30.3 million 69 loans $439,000 Avg. Commitment Multiple Crop $19.7million 19 loans $1,039,000 Avg. Commitment Almonds $4.0 million 8 loans $502,000 Avg. Commitment Beef $2.4 million 10 loans $243,000 Avg. Commitment Walnuts $1.5 million 6 loans $248,000 Avg. Commitment Dairy $719 thousand 4 loans $180,000 Avg. Commitment

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SLIDE 26
  • Construction lending totals approx. $149,786,000
  • utstanding with $226,699,000 in commitments
  • Residential construction approx. $62,019,000
  • Commercial construction approx. $87,767,000
  • Total construction, land development and land

acquisition loans represent 5.6% of total loans

  • utstanding

2016 Community Bank Conference

26 | September 2016

CONSTRUCTION AND A&D

Data as of 06.30.2016

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2016 Community Bank Conference

27 | September 2016

TOTAL LOANS

NET OF UNAMORTIZED DEFERRED LOAN FEES AND DISCOUNTS ($000’S)

$1,500,000 $1,700,000 $1,900,000 $2,100,000 $2,300,000 $2,500,000 $2,700,000

2012 2013 2014 2015 Q2 2016 $1,564,823 $1,672,007 $2,282,524 $2,522,937 $2,653,630

Data as of 06.30.2016

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SLIDE 28
  • Mergers and Acquisitions

– 3 Branch purchase Bank of America 2016 – North Valley Bancorp 2014 – Citizens Bank of Northern California 2011 – Granite Community Bank 2010 – North State National Bank 2003 – 9 Branch purchase Wells Fargo 1997 – Sutter Butte Savings 1996 – Country National Bank 1993 – Branch purchase from Wells Fargo 1987 – Shasta County Bank 1981

2016 Community Bank Conference

28 | September 2016

GROWTH OPPORTUNITIES

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SLIDE 29
  • Near Zero Interest Rate Environment
  • Aggressive Competitors
  • Bank Regulation
  • The Cost of Compliance with New Regulations
  • Interest Rate Risk
  • Economic Malaise
  • Slow Industry Consolidation
  • Dysfunction in Washington

2016 Community Bank Conference

29 | September 2016

WHAT KEEPS US UP AT NIGHT?

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SLIDE 30
  • Big Banks

– Aggressive banking in community bank space – Bad reputations – Large banks cost saving plans a new opportunity in rural markets

  • Technology and Banking

– New technology is expensive – New technology will streamline banking ultimately lowering costs

  • Bank Operations and Efficiency

– Managing multiple delivery channels

  • Enterprise Risk Management

– Many threats, so little time 2016 Community Bank Conference

30 | September 2016

CHALLENGES WITHIN BANK STRATEGIES

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2016 Community Bank Conference

31 | September 2016

FINANCIALS

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2016 Community Bank Conference

32 | September 2016

TOTAL ASSETS ($000’S)

$2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000

2012 2013 2014 2015 Q2 2016 $2,609,269 $2,744,066 $3,912,358 $4,220,722 $4,352,492

Data as of 06.30.2016

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2016 Community Bank Conference

33 | September 2016

CAPITAL RATIOS ($000’S)

Data as of 06.30.2016

0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 2012 2013 2014 2015 Q2 2016 12.2% 12.0% 13.3% 13.5% 14.4% 13.8% 13.6% 14.5% 14.8% 15.6% 15.1% 14.7% 8.2% 8.6% 9.1% 9.2% 9.4% Common Equity Tier 1 Tier 1 Total Risk Based Tangible Common

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2016 Community Bank Conference

34 | September 2016

NET INCOME ($000’S)

Data as of 06.30.2016

$- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000

2012 2013 2014 2015 2016

$3,931 $8,477 $7,365 $8,336 $10,674 $5,321 $6,325 $4,859 $11,366 $9,405 $5,020 $7,361 $8,234 $12,694 $4,722 $5,236 $5,650 $11,422

Q1 Q2 Q3 Q4

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2016 Community Bank Conference

35 | September 2016

NET INTEREST MARGIN

Data as of 06.30.2016

0.00% 1.00% 2.00% 3.00% 4.00% 5.00%

2012 2013 2014 2015 Q2 2016

0.20% 0.15% 0.12% 0.10% 0.09% 4.32% 4.18% 4.17% 4.39% 4.13%

  • Wtd. Avg. Deposit Rate

Net Interest Margin

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2016 Community Bank Conference

36 | September 2016

NON INTEREST INCOME ($000’S)

Data as of 06.30.2016

$- $10,000 $20,000 $30,000 $40,000 $50,000

2012 2013 2014 2015 2016 $8,265 $7,352 $8,295 $10,180 $9,790 $10,577 $9,127 $7,877 $12,080 $11,245 $9,127 $10,131 $8,589 $11,642 $10,011 $10,219 $9,755 $11,445

Q1 Q2 Q3 Q4

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2016 Community Bank Conference

37 | September 2016

EFFICIENCY RATIO (FULLY TAXABLE EQUIVALENT)

Data as of 06.30.2016

50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 2012 2013 2014 2015 Q2 2016

70.2% 67.3% 72.9% 64.7% 72.2%

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2016 Community Bank Conference

38 | September 2016

DILUTED EARNINGS PER SHARE

Data as of 06.30.2016

$- $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75 $2.00

2012 2013 2014 2015 2016

$0.25 $0.53 $0.45 $0.36 $0.46 $0.33 $0.39 $0.30 $0.49 $0.41 $0.31 $0.45 $0.50 $0.55 $0.29 $0.32 $0.25 $0.50

Q1 Q2 Q3 Q4

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SLIDE 39

2016 Community Bank Conference

39 | September 2016

DIVIDENDS PER SHARE

Data as of 06.30.2016

0.1 0.2 0.3 0.4 0.5 0.6

2012 2013 2014 2015 2016

0.09 0.09 0.11 0.11 0.15 0.09 0.11 0.11 0.13 0.15 0.09 0.11 0.11 0.13 0.09 0.11 0.11 0.15

Q1 Q2 Q3 Q4

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2016 Community Bank Conference

40 | September 2016

NON-PERFORMING ASSETS TO TOTAL ASSETS

Data as of 06.30.2016

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50%

2012 2013 2014 2015 Q2 2016

3.07% 2.17% 1.34% 1.01% 0.55%

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2016 Community Bank Conference

41 | September 2016

ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS

Data as of 06.30.2016

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2012 2013 2014 2015 Q2 2016 2.73% 2.29% 1.60% 1.43% 1.34%

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2016 Community Bank Conference

42 | September 2016

ORIGINATED ALLL TO TOTAL ORIGINATED LOANS

Data as of 06.30.2016

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2012 2013 2014 2015 Q2 2016 2.54% 2.11% 1.85% 1.57% 1.40%

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SLIDE 43

2016 Community Bank Conference

43 | September 2016

ANNUALIZED NET CHARGE-OFFS TO AVERAGE LOANS

Data as of 06.30.2016

  • 0.20%
  • 0.10%

0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 2012 2013 2014 2015 2016

0.82% 0.23%

  • 0.13%
  • 0.14%

0.00%

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2016 Community Bank Conference

44 | September 2016

Data as of 06.30.2016

RETURN ON AVERAGE ASSETS

0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 2012 2013 2014 2015 Q2 2016

0.75% 1.04% 0.87% 1.11% 0.86%

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2016 Community Bank Conference

45 | September 2016

Data as of 06.30.2016

RETURN ON AVERAGE SHAREHOLDER’S EQUITY

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2012 2013 2014 2015 Q2 2016

8.44% 11.34% 8.67% 10.04% 7.98%

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TRICO BANCSHARES IS COMMITTED TO: Improving the financial success and well-being of our shareholders, customers, communities and employees.