TRICO BANCSHARES Investor Presentation
First Quarter 2024
Richard P. Smith, President & Chief Executive Officer Daniel K. Bailey, EVP & Chief Banking Officer
John S. Fleshood, EVP & Chief Operating Officer Peter G. Wiese, EVP & Chief Financial Officer
Investor Presentation | First Quarter 2024
Safe Harbor Statement
The 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. 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 conditions of the United States economy in general and the strength of the local economies in which we conduct operations; the impact of any future federal government shutdown and uncertainty regarding the federal government's debt limit or changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; the impacts of inflation, interest rate, market and monetary fluctuations on the Company's business condition and financial operating results; the impact of changes in financial services industry policies, laws and regulations; regulatory restrictions affecting our ability to successfully market and price our products to consumers; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learning; extreme weather, natural disasters and other catastrophic events that may or may not be caused by climate change and their effects on the Company's customers and the economic and business environments in which the Company operates; the impact of a slowing U.S. economy, decreases in housing and commercial real estate prices, and potentially increased unemployment on the performance of our loan portfolio, the market value of our investment securities and possible other-than-temporary impairment of securities held by us due to changes in credit quality or rates; the availability of, and cost of, sources of funding and the demand for our products; adverse developments with respect to U.S. or global economic conditions and other uncertainties, including the impact of supply chain disruptions, commodities prices, inflationary pressures and labor shortages on the economic recovery and our business; the impacts of international hostilities, wars, terrorism or geopolitical events; adverse developments in the financial services industry generally such as the recent bank failures and any related impact on depositor behavior or investor sentiment; risks related to the sufficiency of liquidity; the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; the costs or effects of mergers, acquisitions or dispositions we may make, as well as whether we are able to obtain any required governmental approvals in connection with any such activities, or identify and complete favorable transactions in the future, and/or realize the anticipated financial and business benefits; the regulatory and financial impacts associated with exceeding $10 billion in total assets; the negative impact on our reputation and profitability in the event customers experience economic harm or in the event that regulatory violations are identified; the ability to execute our business plan in new markets; the future operating or financial performance of the Company, including our outlook for future growth and changes in the level and direction of our nonperforming assets and charge-offs; the appropriateness of the allowance for credit losses, including the assumptions made under our current expected credit losses model; any deterioration in values of California real estate, both residential and commercial; the effectiveness of the Company's asset management activities managing the mix of earning assets and in improving, resolving or liquidating lower-quality assets; the effect of changes in the financial performance and/or condition of our borrowers; changes in accounting standards and practices; changes in consumer spending, borrowing and savings habits; our ability to attract and maintain deposits and other sources of liquidity; the effects of changes in the level or cost of checking or savings account deposits on our funding costs and net interest margin; increasing noninterest expense and its impact on our financial performance; competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional competitors including retail businesses and technology companies; the challenges of attracting, integrating and retaining key employees; the vulnerability of the Company's operational or security systems or infrastructure, the systems of third-party vendors or other service providers with whom the Company contracts, and the Company's customers to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and data/security breaches and the cost to defend against and respond to such incidents; the impact of the 2023 cyber security ransomware incident on our operations and reputation; increased data security risks due to work from home arrangements and email vulnerability; failure to safeguard personal information, and any resulting litigation; the effect of a fall in stock market prices on our brokerage and wealth management businesses; the transition from the LIBOR to new interest rate benchmarks; the emergence or continuation of widespread health emergencies or pandemics; 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. There can be no assurance that future developments affecting us will be the same as those anticipated by management. 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, 2023, which has been filed with the Securities and Exchange Commission (the "SEC") and all subsequent filings with the SEC under Sections 13(a), 13(c), 14, and 15(d) of the Securities Act of 1934, as amended. Such filings are also available in the "Investor Relations" section of our website, https://www.tcbk.com/investor-relationsand in other documents we file with the SEC. Annualized, pro forma, projections and estimates are not forecasts and may not reflect actual results. We undertake no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Investor Presentation | First Quarter 2024 | 2 |
Tri Counties Bank Awards
Sacramento Rainbow Chamber
of Commerce
Corporate Advocate of the Year 2024
Gustine Press-Standard
Best Bank
2023
Cen Cal Business Finance Group SBA-504Lender of the Year 2023
Sacramento Business Journal
C-Suite Awards:
Daniel Bailey, EVP & CBO 2023
Most Admired CEOs:
Rick Smith, President & CEO 2023
Corporate Citizenship: Corporate Champion for Basic Needs
2022
S&P Global Market Intelligence
Top Community Bank with
$3 billion to $10 billion in assets 2022, 2023
Forbes Magazine
Best-In-State Bank 2021
Style Magazine
Reader's Choice -
Roseville, Granite Bay & Rocklin Won every year from 2011 to 2023
California Black Chamber of Commerce
Top Partner Award 2023
Raymond James
Community Bankers Cup Award Top 10% of Community Banks 2019, 2021, 2022
Habitat for Humanity of Greater Sacramento Hammy Award: Finance Partner 2022
Auburn Journal
Best Bank
Won every year from 2019 to 2021
Grass Valley Union Best of Nevada County
Won every year from 2011 to 2023
Record Searchlight
Best Bank in the North State 2015, 2016, 2018, 2022, 2023
Chico Enterprise Record Readers' Choice Best Bank Won every year from 2019 to 2023
Chico News & Review
Best Bank
Won every year from 2008 to 2019, then 2022 and 2023
Marysville Appeal-Democrat
Favorite Bank: 2019, 2021, 2023
Favorite Banker:
Heather Peña, 2023
Amy Briscoe, 2020
Formstack:
Practically Genius Award Creative Digital Innovation of the Year
2021
Colusa County Pioneer Review
Best Bank
Won every year from 2019 to 2021
Times Standard Best of North Coast 2020
Mt. Shasta Herald
Best Banker - Barry Stacy 2019, 2020
Investor Presentation | First Quarter 2024 | 3 |
Executive Team
Rick Smith | Dan Bailey |
President & | EVP |
Chief Executive Officer | Chief Banking Officer |
Greg Gehlmann | Judi Giem |
SVP | SVP |
General Counsel | Chief Human Resources |
Officer |
Craig Carney
EVP
Chief Credit Officer
Jason Levingston
SVP
Chief Information Officer
John Fleshood
EVP
Chief Operating Officer
Scott Robertson
SVP
Chief Community
Banking Officer
Peter Wiese
EVP
Chief Financial Officer
Angela Rudd
SVP
Chief Risk Officer
Investor Presentation | First Quarter 2024 | 4 |
Agenda
- Most Recent Quarter Recap
- Company Overview
- Lending Overview
- Deposit Overview
- Financials
Investor Presentation | First Quarter 2024 | 5 |
Most Recent Quarter Highlights
Operating Leverage | | Pre-taxpre-provision ROAA and ROAE were 1.71% and 14.38%, respectively, for the quarter ended March 31, |
2024, and 2.18% and 19.83%, respectively, for the same quarter in the prior year | ||
and Profitability | | Our efficiency ratio was 57.4% for the quarter ended March 31, 2024, compared to 58.7% and 50.3% for the |
quarters ended December 31, 2023 and March 31, 2023, respectively |
- Net interest margin (FTE) of 3.68%, compared to 3.81% in the trailing quarter, and 4.20% in the quarter ended
Net Interest Income March 31, 2023, was influenced by the rising rate environment and a liability sensitive balance sheet
and Margin | | Average yield on earning assets (FTE) of 5.13% was 4 basis points higher than the 5.09% in the trailing quarter, |
while the cost of interest-bearing liabilities increased 23 basis points to 2.24% from 2.01% | ||
| Total deposits grew by an annualized 7.8% while loan balances increased by an annualized 0.4% | |
Balance Sheet | Loan to deposit ratio has grown to 85.1% at March 31, 2024 compared to 80.0% a year ago | |
| Cash flows generated from the principal repayment of investment securities were elevated during the current | |
Management | | quarter due to the maturity of certain agency securities |
Other borrowings decreased by $240.2 million to $392.4 million as compared to the trailing quarter providing | ||
momentum into Q2; however average borrowings during the quarter increased by $68.7 million to $584.7 million | ||
Liquidity | Readily available and unused funding sources, which total approximately $4.0 billion and represent 50% of total | |
| deposits and 163% of total estimated uninsured deposits. | |
No reliance on brokered deposits or FRB borrowing facilities during the 2024 or 2023 | ||
The allowance for credit losses to total loans was 1.83% as of March 31, 2024, compared to 1.79% as of | ||
Credit Quality | December 31, 2023, and 1.69% as of March 31, 2023 | |
| With non-performing assets to total assets remaining well below 0.50% and the allowance for credit losses | |
representing 339% of non-performing assets, we believe the overall credit risk profile remains historically low | ||
Diverse Deposit Base | | Non-interest-bearing deposits comprised 33.8% of total deposits |
| Deposit betas remain low with a cycle-to-date deposit beta of 22.3% | |
Increased the quarterly dividend by 10% to $0.33 or $1.32 annually as compared to the $1.20 paid in 2023 | ||
Approximately 1.1 million shares remain as being authorized for repurchase | ||
Capital Strategies | | Tangible capital ratio of 8.9% at March 31, 2024, an increase from 8.1% at March, 2023, due primarily to the |
retention of earnings. | ||
Strength in core earnings is key to self-financed and self-funded growth | ||
| All regulatory capital ratios have grown year-over-year |
Investor Presentation | First Quarter 2024 | 6 |
Company Overview
Nasdaq: | TCBK |
Headquarters: | Chico, California |
Stock Price*: | $36.78 |
Market Cap.: | $1.22 Billion |
Asset Size: | $9.81 Billion |
Loans: | $6.80 Billion |
Deposits: | $7.99 Billion |
Bank Branches: | 69 |
ATMs: | 86 Bank ATMs, with |
access to ~ 40,000 | |
in network | |
Market Area: | TriCo currently serves |
31 counties throughout | |
California |
* As of close of business March 31, 2024
Investor Presentation | First Quarter 2024 | 7 |
"Recurring Critical and Strategic Themes
Noted in Recent Executive Discussions"
- Scaling and Leverage:
Finding the right partner(s) at the right time to cross $10 Billion in total assets - New customer relationships:
Continued identification of new relationships and acquisition while expanding services to existing
customers - a holistic understanding of their balance sheet and ours - Capital:
Balance of regulatory and shareholder expectations while maintaining and utilizing all available tools
- Regulatory Focus Areas:
Enterprise Risk Management, Compliance (including CRA & ESG), CFPB preparedness, and the hurdles associated with merger approvals - Operating Costs:
Rationalization of costs through the relentless pursuit of redundant expenses / overlapping vendor services and partially-implemented technologies - Active Credit Management:
Continual and proactive monitoring for early warning signs of credit deterioration and the impact of actual or potential global events on local markets
Investor Presentation | First Quarter 2024 | 8 |
Positive Earnings Track Record
Earnings (in Millions)
$40
$36
$32
$28
$24
$20
$16
July 2018
Acquired FNB Bancorp ($1.2B assets)
2020
Elevated ACL Provisioning Associated with COVID Related Risks
March 2022
Acquired Valley Republic Bancorp ($1.4B assets)
$1.20
$0.80
Qtrly EPS (diluted)
$12 | $0.40 | |||||||||||||||||||||||||||
$8 | ||||||||||||||||||||||||||||
$4 | ||||||||||||||||||||||||||||
$0 | $0.00 | |||||||||||||||||||||||||||
Q1'18 | Q2'18 | Q3'18 | Q4'18 | Q1'19 | Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q3'20 | Q4'20 | Q1'21 | Q2'21 | Q3'21 | Q4'21 | Q1'22 | Q2'22 | Q3'22 | Q4'22 | Q1'23 | Q2'23 | Q3'23 | Q4'23 | Q1'24 | ||||
Net Income ($MM) | $13.9 | $15.0 | $16.2 | $23.2 | $22.7 | $23.1 | $23.4 | $22.9 | $16.1 | $7.4 | $17.6 | $23.6 | $33.6 | $28.4 | $27.4 | $28.2 | $20.4 | $31.4 | $37.3 | $36.3 | $35.8 | $24.9 | $30.6 | $26.1 | $27.7 | |||
Qtrly Diluted EPS | $0.60 | $0.65 | $0.53 | $0.76 | $0.74 | $0.75 | $0.76 | $0.75 | $0.53 | $0.25 | $0.59 | $0.79 | $1.13 | $0.95 | $0.92 | $0.94 | $0.67 | $0.93 | $1.12 | $1.09 | $1.07 | $0.75 | $0.92 | $0.78 | $0.83 | |||
Investor Presentation | First Quarter 2024 | 9 |
Shareholder Returns
Dividends per Share: 10% CAGR*
$1.25 | Q1 | Q2 Q3 | Q4 | $1.10 | $1.20 | ||
$0.88 | $1.00 | $0.30 | |||||
$1.00 | $0.82 | $0.25 | $0.30 | ||||
$0.70 | |||||||
$0.22 | $0.30 | ||||||
$0.75 | $0.22 | ||||||
$0.19 | $0.22 | $0.22 | $0.25 | $0.30 | $0.30 | ||
$0.50 | $0.17 | ||||||
$0.22 | $0.25 | $0.25 | |||||
$0.17 | $0.19 | ||||||
$0.25 | |||||||
$0.22 | $0.25 | $0.25 | $0.30 | $0.33 | |||
$0.00 | $0.17 | $0.19 | |||||
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
Dividends as % of Earnings
41% | 40% | |||||||
34% | ||||||||
27% | 27% | 25% | 29% | |||||
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
*Compound Annual Growth Rate, 5 years
Return on Avg. Shareholder Equity
10.75% | 10.49% | 12.10% | 11.67% | 10.65% | ||
9.50% | ||||||
7.18% | ||||||
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
Diluted EPS
$5.00 | ||||||||
$4.50 | Q1 | Q2 | Q3 | Q4 | $3.94 | |||
$4.00 | $3.83 | $3.52 | ||||||
$3.00 | $0.94 | |||||||
$3.50 | $1.09 | |||||||
$3.00 | $2.54 | $0.78 | ||||||
$0.75 | $2.16 | $0.92 | ||||||
$2.50 | $1.12 | $0.92 | ||||||
$2.00 | $0.76 | |||||||
$0.79 | ||||||||
$1.50 | $0.53 | $0.95 | $0.75 | |||||
$0.75 | $0.59 | $0.93 | ||||||
$1.00 | $0.65 | |||||||
$0.25 | $1.13 | $1.07 | ||||||
$0.50 | $0.60 | $0.74 | $0.67 | $0.83 | ||||
$0.00 | $0.53 | |||||||
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
Investor Presentation | First Quarter 2024 | 10 |
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TriCo Bancshares published this content on 25 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2024 14:52:03 UTC.
