sandler o’neill 2016 west coast financial services conference€¦ · 01/06/2016 · trico...

TriCo Bancshares Investor Presentation Sandler O’Neill 2016 West Coast Financial Services Conference

Richard P. Smith, President & CEO

March 8, 2016

SAFE HARBOR STATEMENTCertain 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, 2014 and TriCo’sQuarterly Reports on Form 10-Q as filed with the SEC in fiscal 2015.

2016 Community Bank Investor Conference

1 | February 2016

AGENDA• Company Overview• Recent Activities & Focus

– Merger Announcement

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


2 | February 2016

OVERVIEWAsset Size: $4.2 BillionLocation: Chico, CAFounded: 1975Deposits: $3.6 BillionLoans (net): $2.5 BillionCustomers: 190,000Bank Branches: 68ATMs: 80


3 | February 2016

OVERVIEWNasdaq: TCBKStock Price: $25.77Market Capitalization: $586 million*Price to TBVPS: 1.67x**Asset Size Rank ofCA Publicly Traded Banks: 13


4 | February 2016

*Valuation Information as of Market Close 02/01/2016**Ranking as of 06/30/2015 – Source: SNL Financial

Stock Price over the past 5 years

5 | February 2016


6 | February 2016

EXECUTIVE TEAM

Rick SmithPresident & CEOTriCo since 1993

Tom ReddishEVP Chief Financial Officer

TriCo since 1994

Dan Bailey EVP Retail BankingTriCo since 2007

Craig CarneyEVP Chief Credit Officer

TriCo since 1996

Carol WardEVP Chief Operating Officer

TriCo since 2012

Richard O’SullivanEVP Commercial Banking

TriCo since 1984

RECENT ACTIVITIES• Purchase of 3 branches from Bank of America

– Completion 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• Opening new branch in Roseville, Ca.• Several new technology projects for 2016:

– New Mobile Banking program– New Business On-Line Banking– Loan and Operational Imaging projects– Several vendor changes for electronic banking


7 | February 2016

POSITIONED FOR TODAY, PREPARED FOR THE FUTURE


• 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– Strong deposit growth

8 | February 2016

• Strong focus on risk management and new regulatory realities

• Experienced project teams, well prepared for continued growth through acquisition


9 | February 2016

POSITIONED FOR TODAY, PREPARED FOR THE FUTURE continued


10 | February 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

KEY DRIVERS OF BANK REVENUES• Deposits & Margin

– Average Cost of Deposits of .10% as of 12/31/2015– Net Interest Margin at 12/31/2015 is 4.39%

• Non-Interest Income– Mortgage Finance– Service Charge & Fee Income– Bank Wealth Management Program

• Consumer Loans– Home Equity Lines/Loans– Installment Lending– Small Business


11 | February 2016

KEY DRIVERS OF BANK REVENUES continued

• Commercial Loans– Commercial Real Estate– Commercial & Industry Lines and Loans & Leases– Agricultural Loans– Asset Based Loans

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


12 | February 2016

Non Interest Bearing

32%

Interest Demand24%

Savings35%

Time Deposits9%

Wtd. Avg. Rate – 0.13%

Wtd. Avg. Rate –0.06%

Wtd. Avg. Rate –0.39%


13 | February 2016

DEPOSIT STRUCTURE

Data as of 12.31.2015


14 | February 2016

TOTAL ENDING DEPOSITS

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

2011 2012 2013 2014 2015

$2,190,536$2,289,702

$2,410,483

$3,380,423

$3,631,266

Data as of 12.31.2015


15 | February 2016

MARKET SHARE OF ALL BRANCHESSORTED 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

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


16 | February 2016

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


17 | February 2016

CONSUMER LOANS• Increased demand for consumer loans

– Home equity values have increased– Economic uncertainty still negative factor– Reluctance to borrow (job security concerns)– Underperforming job market

• Low rate environment led to historically high refi activity– $36MM in Q4 2015 HELOC volume resulted in $7MM reduction in

outstandings

• Auto loans demand constant• Home equity lines/loans increasing in demand


18 | February 2016


19 | February 2016

HOME EQUITY LOANS OUTSTANDING

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

2011 2012 2013 2014 2015

$372,149 $355,582 $354,454 $383,898

$362,854

Data as of 12.31.2015


20 | February 2016

HOME EQUITY LINES OF CREDIT<80% LTV AT ORIGINATION

03/31/08 12/31/11 12/31/15 Q4 2015 Prod.

Avg CB Score 757 754 774 774

Avg Loan Commitment to Value at Origination

62% 61% 57% 59%

Avg LTV to Current Value N/A 92% 55% N/A

Utilization Rate 49% 48% 45% 46%

Data as of 12.31.2015


21 | February 2016

LOAN PORTFOLIO BY TYPE

Secured by RE -Residential 1-4

12.46%

Secured by RE -Com'l

59.36%

Consumer -HELOCS12.78%

Consumer - Home Eq

1.40%

Consumer - Other1.29%

Commercial7.73%

Construction - RE1.83%

Construction -Commercial

2.96%

Data as of 06.30.2015


22 | February 2016

COMMERCIAL LOANS

Total Commercial72%

Total Consumer28%

Data as of 12.31.2015

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• $150 million in CRE & C&I production resulted in $38 million

in net growth – Q4


23 | February 2016

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


24 | February 2016


25 | February 2016

COMMERCIAL REAL ESTATE PORTFOLIO AS OF 09.30.2015

Real Estate Loan Type # of Loans

Outstandings* % to Total Loans

Avg. Commitment Amount

Office 575 313,293,000 12% 559,000

Retail 419 281,392,000 11% 705,000

Multi-Family 307 199,512,000 8% 695,000

Special PurposeGas Station, Mini Storage, Hotel/Motel, Restaurant

162 143,651,000 6% 887,000

OtherWarehouse, Manufacturing, Bare Land, Agricultural Land + Structures

1,193 521,040,000 21% 446,000

Totals 2,656 1,458,888,000 58% -

Averages - - - 577,000

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

AG PORTFOLIO AS OF 09.30.2015


26 | February 2016

• Agricultural Loans (excluding RE secured) total $69 million in total commitments with $39 million outstanding

• The highest crop concentrations by commitments are:

Rice $27.0 million 66 loans $410,000 Avg. Commitment

Multiple Crop $20.2 million 21 loans $962,000 Avg. Commitment

Almonds $5.1 million 10 loans $505,000 Avg. Commitment

Walnuts $3.1 million 3 loans $1,026,000 Avg. Commitment

Beef $1.9 million 11 loans $173,000 Avg. Commitment

Dairy $970 thousand 6 loans $162,000 Avg. Commitment

• Construction lending totals approx. $120,909,000 outstanding with $187,894,000 in commitments

• Residential construction approx. $46,135,000• Commercial construction approx. $74,774,000• Total construction, land development and land

acquisition loans represent 4.8% of total loans outstanding


27 | February 2016

CONSTRUCTION AND A&D

Data as of 12.31.2015


28 | February 2016

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

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

2011 2012 2013 2014 2015

$1,551,032 $1,564,823 $1,672,007

$2,282,524 $2,522,937

Data as of 12.31.2015

• Mergers and Acquisitions– 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


29 | February 2016

GROWTH OPPORTUNITIES

• 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


30 | February 2016

WHAT KEEPS US UP AT NIGHT?

• Big Banks– Aggressive banking in community bank space– Bad reputations– Large banks cost saving 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


31 | February 2016

CHALLENGES WITHIN BANK STRATEGIES


32 | February 2016

FINANCIALS


33 | February 2016

TOTAL ASSETS ($000’S)

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

2011 2012 2013 2014 2015

$2,555,597 $2,609,269 $2,744,066

$3,912,358

$4,220,722

Data as of 12.31.2015


34 | February 2016

CAPITAL RATIOS ($000’S)

Data as of 12.31.2015

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

2011 2012 2013 2014 2015

12.20%12.70%

13.30% 13.50%14.40%

13.80%13.90%14.50% 14.80%

15.60%15.10%

7.90% 8.20% 8.60% 9.10% 9.20%

Common Equity Tier 1 Tier 1 Total Risk Based Tangible Common


35 | February 2016

NET INCOME ($000’S)

Data as of 12.31.2015

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2011 2012 2013 2014 2015

$2,800 $3,931 $8,477 $7,365 $8,336 $2,771

$5,321

$6,325 $4,859

$11,366

$6,470 $5,020

$7,361 $8,234

$12,694

$6,549 $4,722

$5,236 $5,650

$11,422

Q1 Q2 Q3 Q4


36 | February 2016

NET INTEREST MARGIN

Data as of 12.31.2015

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2011 2012 2013 2014 2015

0.34% 0.20% 0.15% 0.12% 0.10%

4.43%4.32% 4.18% 4.17% 4.39%

Wtd. Avg. Deposit Rate Net Interest Margin


37 | February 2016

NON INTEREST INCOME ($000’S)

Data as of 12.31.2015

$-

$10,000

$20,000

$30,000

$40,000

$50,000

2011 2012 2013 2014 2015

$9,350 $8,265 $7,352 $8,295 $10,180

$8,251 $10,577 $9,127 $7,877

$12,080

$7,198 $9,127

$10,131 $8,589

$11,642 $10,489

$10,011 $10,219

$9,755

$11,445

Q1 Q2 Q3 Q4

*2011 has been adjusted to remove Bargain Purchase Gains


38 | February 2016

EFFICIENCY RATIO (FULLY TAXABLE EQUIVALENT)

Data as of 12.31.2015

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

2011 2012 2013 2014 2015

60.9%

70.2%

67.3%

72.9%

64.7%


39 | February 2016

DILUTED EARNINGS PER SHARE

Data as of 12.31.2015

$-

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

$1.75

$2.00

2011 2012 2013 2014 2015

$0.17 $0.25 $0.53 $0.45 $0.36

$0.17

$0.33

$0.39 $0.30 $0.49

$0.40

$0.31

$0.45 $0.50

$0.55

$0.41 $0.29

$0.32

$0.25

$0.50

Q1 Q2 Q3 Q4


40 | February 2016

DIVIDENDS PER SHARE

Data as of 12.31.2015

0

0.1

0.2

0.3

0.4

0.5

0.6

2011 2012 2013 2014 2015

0.09 0.09 0.09 0.11 0.11

0.09 0.09 0.110.11 0.13

0.09 0.090.11

0.110.130.09 0.09

0.110.11

0.15

Q1 Q2 Q3 Q4


41 | February 2016

NON-PERFORMING ASSETS TO TOTAL ASSETS

Data as of 12.31.2015

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

2011 2012 2013 2014 2015

3.99%

3.07%

2.17%

1.34%1.01%


42 | February 2016

ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS

Data as of 12.31.2015

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

2011 2012 2013 2014 2015

2.96%2.73%

2.29%

1.60%1.43%


43 | February 2016

ORIGINATED ALLL TO TOTAL ORIGINATED LOANS

Data as of 12.31.2015

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2011 2012 2013 2014 2015

3.10%

2.54%

2.11%1.85%

1.57%


44 | February 2016

ANNUALIZED NET CHARGE-OFFS TO AVERAGE LOANS

Data as of 12.31.2015

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

2011 2012 2013 2014 2015

1.35%

0.82%

0.23%

-0.13% -0.14%


45 | February 2016

Data as of 12.31.2015

RETURN ON AVERAGE ASSETS

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

2011 2012 2013 2014 2015

0.82%0.75%

1.04%

0.87%

1.11%


46 | February 2016

Data as of 06.30.2015

RETURN ON AVERAGE SHAREHOLDER’S EQUITY

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2010 2011 2012 2013 2014 Q2 2015

2.94%

8.93% 8.44%

11.34%

8.67%

10.56%

TRICO BANCSHARES IS COMMITTED TO:

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

communities and employees.

sandler o’neill 2016 west coast financial services conference€¦ · 01/06/2016 · trico...

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