Investor Presentation

Third Quarter 2023

Richard P. Smith, President & Chief Executive Officer Dan K. Bailey, EVP & Chief Banking Officer

John S. Fleshood, EVP & Chief Operating Officer Peter G. Wiese, EVP & Chief Financial Officer

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 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; 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; technological changes; 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 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, 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 recent 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 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, 2022, 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 | Third Quarter 2023

Tri Counties Bank

  • Investor Presentation | Third Quarter 2023

Agenda

  • Most Recent Quarter Recap
  • Company Overview
  • Lending Overview
  • Deposit Overview
  • Financials

Executive Team (left to right)

  • Judi Giem, SVP & Chief Human Resources Officer
  • Peter Wiese, EVP & Chief Financial Officer
  • Dan Bailey, EVP & Chief Banking Officer
  • Rick Smith, President & Chief Executive Officer
  • John Fleshood, EVP & Chief Operating Officer
  • Craig Carney, EVP & Chief Credit Officer
  • Greg Gehlmann, SVP & General Counsel

4

Investor Presentation | Third Quarter 2023

4

Most Recent Quarter Highlights

Operating Leverage

• Pre-taxpre-provision ROAA and ROAE were 1.86% and 16.49%, respectively, for the quarter ended

and Profitability

September 30, 2023, and 2.16% and 20.41%, respectively, for the same quarter in the prior year

• Our efficiency ratio was 55.6% for the quarter ended September 30, 2023, compared to 58.7% and 49.63%

for the quarters ended June 30, 2023 and September 30, 2022, respectively

Balance Sheet

• Total loans grew by an annualized 11.5% while deposits declined by an annualized 4.2%

Management

• Loan to deposit ratio has grown to 83.8% at September 30, 2023 compared to 72.9% a year ago

• Cash flows generated from investment securities continue to reduce short-term borrowing needs

• The continued and intentional mix shift of earning assets will benefit both interest income and interest

expense in periods of future rate changes as management has not utilized any synthetic rate tools

Liquidity

• Readily available and unused funding sources, which total approximately $4.2 billion and represent 52% of

total deposits and 175% of total estimated uninsured deposits.

• No reliance on brokered deposits or FRB borrowing facilities during the 2023 or 2022

Net Interest Income and

• Net interest margin (FTE) of 3.88%, compared to 3.96% in the trailing quarter, and 4.02% in the quarter

Margin

ended September 30, 2022, was influenced by the rising rate environment and balance sheet augmentation

• The loan portfolio yields increased 14 basis points to 5.52% during the quarter

• Yield on earning assets (FTE) of 4.94% in the quarter, an increase of 16 basis points from 4.78% in the

trailing quarter, while the cost of interest-bearing liabilities increased 34 basis points from 1.37% to 1.71%

Credit Quality

• The allowance for credit losses to total loans was 1.73% as of September 30, 2023, compared to 1.80% as

of June 30, 2023, and 1.61% as of September 30, 2022

• Management continues to actively monitor the entire portfolio and decreases in both nonaccrual and

criticized loans were realized during the quarter

• Overall portfolio credit trends remain below historic averages with loans past due 30+ days to total loans

remaining less than 0.15% at quarter end

Diverse Deposit Base

• Non-interest-bearing deposits comprised 35.7% of total deposits

• Deposit betas remain low with a cycle-to-date deposit beta of 15.6%

Capital Strategies

• Quarterly dividend of $0.30 or $1.20 annually

• Approximately 1.2 million shares remain as being authorized for repurchase

• Tangible capital ratio of 7.9% at September 30, 2023, an increase from 6.9% in the same quarter, prior year

• Strength in core earnings is key to self-financed and self-funded growth

• All regulatory capital ratios have grown year-over-year

  • Investor Presentation | Third Quarter 2023

Company Overview

Nasdaq:

TCBK

Headquarters:

Chico, California

Stock Price*:

$32.03

Market Cap.:

$1.07 Billion

Asset Size:

$9.90 Billion

Loans:

$6.71 Billion

Deposits:

$8.01 Billion

Bank Branches:

69

ATMs:

87 Bank ATMs, with

access to ~ 40,000

in network

Market Area:

TriCo currently serves

31 counties throughout

California

  • As of close of business September 30, 2023
  • Investor Presentation | Third Quarter 2023

"Recurring Critical and Strategic Themes Noted in Recent Executive Discussions"

  • Continued Identification and Acquisition of New Customer Relationships While Expanding Services to Existing Customers - A Holistic Understanding of Their Balance Sheet and Ours
  • Capital - Balance of Regulatory and Shareholder Expectations
  • Scaling and Leverage - Meticulously Patient in Finding the Right Partner at the Right Time to Cross $10 Billion in Total Assets
  • Rationalization of Operating Costs Through the Relentless Pursuit of Redundant Expenses / Overlapping Vendor Services and Partially Implemented Technologies
  • Regulatory Focus Areas - Compliance (Including CRA & ESG) Data Governance and the Hurdles Associated with Merger Approvals
  • Active Monitoring of Loans for Early Warning Signs of Credit Deterioration and the Impact of Actual or Potential Global Events on Local Markets
  • Investor Presentation | Third Quarter 2023

Positive Earnings Track Record

Earnings (in Millions)

$40

$36 $32 $28

$24

$20

July 2018

2020

March 2022

Acquired FNB Bancorp

Elevated ACL Provisioning

Acquired Valley Republic Bancorp

($1.2B assets)

Associated with COVID

($1.4B assets)

Related Risks

$1.20

$0.80

EPS (diluted)

$16

$12

$8

$4

$0

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

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

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

Qtrly

$0.40

$0.00

  • Investor Presentation | Third Quarter 2023

Shareholder Returns

Dividends per Share: 11.4% CAGR*

$1.25

Q1

Q2

Q3 Q4

$1.10

$1.20

$1.00

$0.88

$1.00

$0.82

$0.30

$0.70

$0.25

$0.66

$0.22

$0.75

$0.22

$0.30

$0.17

$0.19

$0.22

$0.25

$0.30

$0.50

$0.22

$0.30

$0.17

$0.17

$0.25

$0.25

$0.22

$0.19

$0.17

$0.17

$0.25

$0.25

$0.25

$0.30

$0.15

$0.17

$0.19

$0.22

$0.00

2017

2018

2019

2020

2021

2022

2023

Dividends as % of Earnings

41%

37%

33%

27%

27%

29%

25%

2017

2018

2019

2020

2021

2022

2023

  • Compound Annual Growth Rate, 5 years 2023 ROE results YTD annualized

Return on Avg. Shareholder Equity

10.75%

12.10%

11.67%

11.06%

10.49%

8.10%

7.18%

2017

2018

2019

2020

2021

2022

2023

Diluted EPS

$5.00

$4.50

Q1

Q2

Q3

Q4

$3.94

$4.00

$3.83

$3.50

$3.00

$0.94

$2.54

$1.09

$3.00

$2.50

$0.75

$2.16

$0.92

$0.92

$1.74

$0.76

$1.12

$2.00

$0.76

$0.79

$0.53

$0.95

$0.75

$1.50

$0.51

$0.75

$0.59

$0.93

$1.00

$0.58

$0.65

$0.25

$1.13

$1.07

$0.50

$0.52

$0.60

$0.74

$0.67

$0.53

$0.00

2017

2018

2019

2020

2021

2022

2023

  • Investor Presentation | Third Quarter 2023

Consistent Growth

Organic Growth and Disciplined Acquisitions

CAGR, Assets

5 yrs.

10 yrs.

9.4% 14.2%

Asset Dollars in Billions.

Trailing 10 years

Trailing 5 quarters

10 Investor Presentation | Third Quarter 2023

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

TriCo Bancshares published this content on 25 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 October 2023 20:40:50 UTC.