Trico Bancshares · NASDAQ:TCBK
Trico Bancshares — D.A. Davidson Financial Institutions Conference 2018
53 slides from Trico Bancshares's conference presentation, May 10, 2018
Slide 1: D.A. Davidson Financial Institutions Conference
D.A. Davidson Financial Institutions Conference Richard P. Smith – President & CEO John S. Fleshood – Executive Vice President & COO Daniel K. Bailey – EVP Chief Retail Banking Officer May 8-10, 2018 Service With Solutions Trico Bancshares
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Certain comments included in this presentation may involve forward-looking statements, for which TriCo Bancshares (“TriCo” or the “Company”) claims the protection of the “safe harbor” provisions credited by Federal securities laws. Such forward-looking statements are subject to
Slide 3: Agenda
AGENDA •Company Overview •Recent Activities & Focus •Key Revenue Drivers •Challenges & Opportunities •Financials •Questions D.A. Davidson Financial Institutions Conference 3 | May 2018 Trico Bancshares
Slide 4: Company Overview
COMPANY OVERVIEW Asset Size: $4.8 Billion Location: Chico, CA Founded: 1975 Deposits: $4.1 Billion Loans (net): $3.0 Billion Customers: ~190,000 Bank Branches: 67* ATMs: 84 _____________________________________________________________________________ *includes our telephone banking center D.A. David
Slide 5: Company Overview
COMPANY OVERVIEW Nasdaq: TCBK *Stock Price: $37.37 Market Capitalization: $858 million *Price to Book stated: 1.7x *Price to TBVPS 2.0x **TCBK Asset Size Rank of CA Publicly Traded Banks: 16 Pro Forma TCBK+FNBG Rank: 13 D.A. Davidson Financial Institutions Conference 5 | May 2018 *Valuation Informat
Slide 6: Executive Team
Davidson Financial Institutions Conference 6 | May 2018 EXECUTIVE TEAM Rick Smith President & CEO TriCo since 1993 John Fleshood EVP Chief Operating Officer TriCo since 2016 Dan Bailey EVP Chief Retail Banking Officer TriCo since 2007 Craig Carney EVP Chief Credit Officer TriCo since 1996 Tom Reddis
Slide 7: 2017 Accomplishments
2017 ACCOMPLISHMENTS •New deposit product line-up implemented in Q1 •Strong fee revenue growth –Year-over-year deposit fee income growth of 12.6% •Several new technology projects for 2017: –Implementing new consumer and mortgage loan origination technologies –Loan and operational automation projects
Slide 8: Positioned for Today, Prepared for the Future
POSITIONED FOR TODAY, PREPARED FOR THE FUTURE D.A. Davidson Financial Institutions 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
Slide 9: Positioned for Today, Prepared for the Future continued
• Strong focus on risk management and new regulatory realities Enterprise Risk Strong Focus on CRA HMDA Reporting Fair Lending • Experienced project teams, well prepared for continued growth through acquisition D.A. Davidson Financial Institutions Conference 9 | May 2018 POSITIONED FOR TODAY, PREPAR
Slide 10: What Is Long Term Success?
D.A. Davidson Financial Institutions Conference 10 | May 2018 WHAT IS LONG TERM SUCCESS? •Rewarding our shareholders –A winning culture with a motivated and talented work force (good people) –Significant and growing market share –Low cost core deposit base –Strong credit culture –Diversified revenue
Slide 11: Key Drivers of Bank Revenues
KEY DRIVERS OF BANK REVENUES • Deposits & Margin –Average Cost of Deposits of 0.11% as of 03/31/2018 –Net Interest Margin in Q1 2018 was 4.14% • Commercial Loans –Commercial Real Estate • Diverse portfolio of property types and geographies –Commercial & Industry Lines and Loans & Leases –Agricultura
Slide 12: Key Drivers of Bank Revenues continued
KEY DRIVERS OF BANK REVENUES continued •Consumer Loans – Home Equity Lines/Loans •Rising rates a positive for growth – Small Business •Growth Opportunities – Wealth Management – Bank Managed Program •Raymond James as Broker-Dealer – Mortgage Banking – Merchant Fee Opportunities – Higher Stock Valuat
Slide 13: Deposit Structure
Non Interest Bearing 33% Interest Demand 25% Savings 34% Time Deposits 8% Wtd. Avg. Rate – 0.12% Wtd. Avg. Rate – 0.08% Wtd. Avg. Rate – 0.62% D.A. Davidson Financial Institutions Conference 13 | May 2018 DEPOSIT STRUCTURE Data as of 03.31.2018 Trico Bancshares
Slide 14: Total Ending Deposits
D.A. Davidson Financial Institutions Conference 14 | May 2018 TOTAL ENDING DEPOSITS $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 2013 2014 2015 2016 2017 Q1 2018 $2,410,483 $3,380,423 $3,631,266 $3,895,560 $4,009,131 $4,084,404 Data as of 03.31.2018 Trico Bancshares
Slide 15: Market Share of All Branches Sorted by Zip Code
D.A. Davidson Financial Institutions Conference 15 | May 2018 MARKET SHARE OF ALL BRANCHES SORTED BY ZIP CODE 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 Ban
Slide 16: Non-Interest Income
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 –Higher rates will slow refinance market in 2018 D.A. D
Slide 17: Non-Interest Income continued
NON-INTEREST INCOME continued •Wealth Management revenues •Higher revenues from service charges and interchange income •Cash Management fees continue to increase •Merchant Card Services – $1.2 million in 2017 D.A. Davidson Financial Institutions Conference 17 | May 2018 Trico Bancshares
Slide 18: Consumer Loans
CONSUMER LOANS •Increased demand for consumer loans –Home equity values have increased –Borrowers using refinance of 1st mortgage to pay down debt •Low rate environment led to historically high refi activity –$37MM in Q1 2018 HELOC volume resulted in $6.5MM decrease in outstandings –This is compared
Slide 19: Home Equity Loans Outstanding
D.A. Davidson Financial Institutions Conference 19 | May 2018 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 2013 2014 2015 2016 2017 Q1 2018 $354,454 $383,898 $362,854 $331,537 $331,719 $325,183 Data as of 03.31.2018
Slide 20: Loan Portfolio by Type
D.A. Davidson Financial Institutions Conference 20 | May 2018 LOAN PORTFOLIO BY TYPE Secured by RE - Residential 1-4 13% Secured By Commercial Real Estate [PERCENTAGE] Consumer - HELOCS 9% [CATEGORY NAME]uity [PERCENTAGE] Consumer - Other 1% Commercial 7% Construction - RE 2% [CATEGORY NAME] [PERCEN
Slide 21: Commercial Banking
COMMERCIAL BANKING •Target loans of $2,000,000 to $15,000,000 •Personalized banking •Assigned Relationship Managers •Assigned Cash Management Officers •In-market lending •Competition is as fierce and diverse as it has ever been D.A. Davidson Financial Institutions Conference 21 | May 2018 Trico Banc
Slide 22: Commercial Banking continued
COMMERCIAL BANKING continued •Agricultural lending •Drought risk has subsided •Commodity prices have stabilized •Loans <$1,000,000 served through alternate channel •Business Relationship Managers •Credit scoring combined with traditional underwriting •SBA 7(a) program now offered D.A. Davidson Finan
Slide 23: Commercial Real Estate Portfolio as of 03.31.2018
D.A. Davidson Financial Institutions Conference 23 | May 2018 COMMERCIAL REAL ESTATE PORTFOLIO AS OF 03.31.2018 Real Estate Loan Type # of Loans Outstandings* % to Total Loans Avg. Commitment Amount Office 602 $426,934,000 14% $723,000 Multi-Family 333 $355,821,000 12% $1,130,000 Retail 418 $333,334
Slide 24: Ag Portfolio as of 03.31.2018
AG PORTFOLIO AS OF 03.31.2018 D.A. Davidson Financial Institutions Conference 24 | May 2018 •Agricultural Loans (excluding RE secured) total $48 million in total commitments with $20 million outstanding •The highest crop concentrations by commitments are: Multiple Crop $14.3 million 16 loans $895,00
Slide 25: Construction and A&D
•Construction lending totals approx. $145,550,000 outstanding with $377,787,000 in commitments •Residential construction approx. $71,598,000 •Commercial construction approx. $73,952,000 •Total construction, land development and land acquisition loans represent 4.7% of total loans outstanding D.A. Da
Slide 26: Total Loans Net of Unamortized Deferred Loan Fees
D.A. Davidson Financial Institutions Conference 26 | May 2018 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 $2,900,000 $3,100,000 2013 2014 2015 2016 2017 Q1 2018 $1,672,007 $2,282,524 $2,522,937
Slide 27: Growth Opportunities
•Mergers and Acquisitions –First National Bank of Northern California 2018 (Announced) –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 –Sutte
Slide 28: What Keeps Us Up at Night?
•Deposit Betas •Ability to Increase Loan Yields •Interest Rate Risk •Aggressive Competitors •Compliance Regulations •The Cost of Compliance with New Regulations •Dysfunction in Washington D.A. Davidson Financial Institutions Conference 28 | May 2018 WHAT KEEPS US UP AT NIGHT? Trico Bancshares
Slide 29: Challenges Within Bank Strategies
•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 multipl
Slide 30: Financials
D.A. Davidson Financial Institutions Conference FINANCIALS Trico Bancshares
Slide 31: Total Assets
D.A. Davidson Financial Institutions Conference 31 | May 2018 TOTAL ASSETS ($000’S) $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 2013 2014 2015 2016 2017 Q1 2018 $2,744,066 $3,912,358 $4,220,722 $4,517,968 $4,761,315 $4,779,957 Data as of 03.31.2018 Trico Bancshares
Slide 32: Capital Ratios
0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 2013 2014 2015 2016 2017 Q1 2018 12.2% 12.2% 11.7% 11.6% 13.5% 14.4% 13.8% 13.7% 13.2% 13.0% 14.8% 15.6% 15.1% 14.8% 14.1% 13.9% 8.6% 9.1% 9.2% 9.1% 9.2% 9.1% Common Equity Tier 1 Tier 1 Total Risk Based Tangible Common D.A. Davidson Financial Institutions Co
Slide 33: Net Income
D.A. Davidson Financial Institutions Conference 33 | May 2018 NET INCOME ($000’S) Data as of 03.31.2018 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 2013 2014 2015 2016 2017 2018 $8,477 $7,365 $8,336 $10,674 $12,079 $13,910 $6,325 $4,859 $11,366 $9,405 $13,589 $7,361 $8,
Slide 34: Net Interest Margin
D.A. Davidson Financial Institutions Conference 34 | May 2018 NET INTEREST MARGIN Data as of 03.31.2018 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2013 2014 2015 2016 2017 Q1 20180.15% 0.12% 0.10% 0.09% 0.10% 0.11% 4.18% 4.17% 4.39% 4.23% 4.22% 4.14% Wtd. Avg. Deposit Rate Net Interest Margin
Slide 35: Non-Interest Income
Trico Bancshares D.A. Davidson Financial Institutions Conference 35 | May 2018 NON-INTEREST INCOME ($000’S) Data as of 03.31.2018 $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 2013 2014 2015 2016 2017 2018 $7,352 $8,295 $10,180 $9,790 $11,703 $12,290 $9,127 $7,877 $12,080 $11,245 $12,910 $10,13
Slide 36: Efficiency Ratio (Fully Taxable Equivalent)
D.A. Davidson Financial Institutions Conference 36 | May 2018 EFFICIENCY RATIO (FULLY TAXABLE EQUIVALENT) Data as of 03.31.2018 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 2013 2014 2015 2016 2017 Q1 2018 67.3% 72.9% 64.7% 67.9% 65.5% 66.3% Trico Bancshares
Slide 37: Diluted Earnings Per Share
D.A. Davidson Financial Institutions Conference 37 | May 2018 DILUTED EARNINGS PER SHARE Data as of 03.31.2018 $- $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75 $2.00 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 $0.45 $0.50 $0.55 $0.53 $0.51 $0.32 $0.25
Slide 38: Dividends Paid
D.A. Davidson Financial Institutions Conference 38 | May 2018 Data as of 03.31.2018 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 2013 2014 2015 2016 2017 20180.09 0.11 0.11 0.15 0.15 0.17 0.11 0.11 0.13 0.15 0.17 0.11 0.11 0.13 0.15 0.17 0.11 0.11 0.15 0.15 0.17 Q1 Q2 Q3 Q4 DIVIDENDS PAID Trico B
Slide 39: Non-Performing Assets to Total Assets
D.A. Davidson Financial Institutions Conference 39 | May 2018 NON-PERFORMING ASSETS TO TOTAL ASSETS Data as of 03.31.2018 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 2013 2014 2015 2016 2017 Q1 2018 2.17% 1.34% 1.01% 0.53% 0.58% 0.54% Trico Bancshares
Slide 40: Allowance for Loan Losses to Total Loans
D.A. Davidson Financial Institutions Conference 40 | May 2018 ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS Data as of 03.31.2018 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 2013 2014 2015 2016 2017 Q1 2018 2.29% 1.60% 1.43% 1.18% 1.01% 0.98% Trico Bancshares
Slide 41: Originated ALLL to Total Originated Loans
D.A. Davidson Financial Institutions Conference 41 | May 2018 ORIGINATED ALLL TO TOTAL ORIGINATED LOANS Data as of 03.31.2018 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 2013 2014 2015 2016 2017 Q1 2018 2.11% 1.85% 1.57% 1.19% 1.08% 1.05% Trico Bancshares
Slide 42: Annualized Net Charge-Offs to Average Loans
D.A. Davidson Financial Institutions Conference 42 | May 2018 ANNUALIZED NET CHARGE-OFFS TO AVERAGE LOANS Data as of 03.31.2018 -0.15% -0.10% -0.05% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 2013 2014 2015 2016 2017 2018 0.23% -0.13% -0.07% -0.10% [VALUE]* 0.02% *0.08% related to ASC 310-30 PCI loan adjus
Slide 43: Return on Average Assets
D.A. Davidson Financial Institutions Conference 43 | May 2018 Data as of 03.31.2018 RETURN ON AVERAGE ASSETS 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 2013 2014 2015 2016 2017 Q1 2018 1.04% 0.87% 1.11% 1.03% 0.89% 1.17% Trico Bancshares
Slide 44: Return on Average Shareholder's Equity
D.A. Davidson Financial Institutions Conference 44 | May 2018 Data as of 03.31.2018 RETURN ON AVERAGE SHAREHOLDER’S EQUITY 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2013 2014 2015 2016 2017 Q1 2018 11.34% 8.67% 10.04% 9.47% 8.10% 11.00% trico bancshares
Slide 45: Acquisition of FNB Bancorp
Acquisition of FNB Bancorp Announced December 11, 2017 trico bancshares
Slide 46: Premier NorCal Community Bank
PREMIER NORCAL COMMUNITY BANK 46 December 2017 •TCBK has an extensive presence throughout Northern California and the Central Valley with 66 branches •FNBG’s twelve branches across the SF Peninsula provide scale in a key Northern California market •FNBG adds an established presence with a 50+ year h
Slide 47: Market Position in NorCal
Other CA 31% Chico, CA 19% Redding, CA 17% Sacramento, CA 7% Truckee-Grass Valley, CA 5% San Francisco, CA 21% MARKET POSITION IN NORCAL 47 December 11, 2017 FNBG (SF Peninsula) •FNBG and TriCo will create the largest Northern California-based community bank at over $6bn in assets •TriCo currently h
Slide 48: Bay Area Economy and Demographics
•The Bay Area’s $780 billion economy would rank 5th among all US states and 18th globally among all countries •The Bay Area economy grew 5.2% in 2016, ~3x faster than the US rate •At 3.3% unemployment the area is significantly below national averages •The Bay Area is the #1 region in the U.S. for ve
Slide 49: Overview of FNB Bancorp
OVERVIEW OF FNB BANCORP 49 December 11, 2017 •FNB Bancorp (NASDAQ: FNBG) is the bank holding company for First National Bank of Northern California •Bank was founded in 1963 and is headquartered in South San Francisco, CA •Largest community bank headquartered on the San Francisco Peninsula •Twelve b
Slide 50: Pro Forma Loan & Deposit Mix
50 December 11, 2017 Source: SNL Financial. TCBK and FNBG information for the quarter ended 9/30/2017. (1) Pro forma does not include purchase accounting or merger related adjustments. PRO FORMA LOAN & DEPOSIT MIX Loan Portfolio Highly Similar Lending Focus, Shared Credit Culture Deposit Base Mainta
Slide 51: Transaction Assumptions
TRANSACTION ASSUMPTIONS 51 May 2018 Cost Savings •Estimated at $8.7mm or 28% of FNBG’s 2017e expense base •Primarily driven by executive management and back office operations as well as significant IT savings from elimination of FNBG’s in-house data processing function •Retain branches and substanti
Slide 52: Financial Impact & Pricing
FINANCIAL IMPACT & PRICING 52 May 2018 EPS Accretion(1) •2018e: 2.1% accretive excluding transaction costs (2) •2019e: 7.9% EPS accretion (2) TBV Impact •TBV dilution of 6.6% at close •TBV earnback of 4.7 years via crossover method Other Metrics •Internal rate of return of >15% •Improves estimated 2
Slide 53: TriCo Bancshares Is Committed To
TRICO BANCSHARES IS COMMITTED TO: Improving the financial success and well-being of our shareholders, customers, communities and employees. rti counties bank chico. California 1975 est. trico bancshares
TriCo Bancshares — D.A. Davidson Financial Institutions Conference 2018 on 6ix