Trico Bancshares · NASDAQ:TCBK
Trico Bancshares — FIG Partners Bank Forum 2018
53 slides from Trico Bancshares's conference presentation, Feb 1, 2018
Slide 1: FIG Partners Bank Forum – TriCo Bancshares
Richard P. Smith – President & CEO John S. Fleshood – Executive Vice President & COO FIG Partners Bank Forum January 31st – February 1st 2018 Trico Bancshares 40 years of service 1975-2015
Slide 2: Safe Harbor Statement
FIG Partners Bank Forum 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 unc
Slide 3: Agenda
FIG Partners Bank Forum AGENDA Company Overview Recent Activities & Focus Key Revenue Drivers Challenges & Opportunities Financials Questions 3 | January 2018
Slide 4: Company Overview
FIG Partners Bank Forum COMPANY OVERVIEW Asset Size: Location: Founded: Deposits: Loans (net): Customers: Bank Branches: ATMs: $4.8 Billion Chico, CA 1975 $4.0 Billion $3.0 Billion 190,000 68* 84 *includes our telephone banking center 4 | January 2018
Slide 5: Company Overview
FIG Partners Bank Forum COMPANY OVERVIEW Nasdaq: *Stock Price: Market Capitalization: *Price to Book stated: *Price to TBVPS **Asset Size Rank of CA Publicly Traded Banks: TCBK $37.71 $866 million 1.7x 1.98x 14 *Valuation Information as of Market Close 1/26/2018 **Ranking as of 01/25/2015 – Source:
Slide 6: Executive Team
FIG Partners Bank Forum EXECUTIVE TEAM Rick Smith President & CEO TriCo since 1993 John Fleshood EVP Chief Operating Officer TriCo since 2016 Tom Reddish EVP Chief Financial Officer TriCo since 1994 Craig Carney EVP Chief Credit Officer TriCo since 1996 Richard O’Sullivan EVP Commercial Banking TriC
Slide 7: 2017 Accomplishments
FIG Partners Bank Forum 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
Slide 8: Positioned for Today, Prepared for the Future
FIG Partners Bank Forum 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 Loan growth of 9.3%*
Slide 9: Positioned for Today, Prepared for the Future continued
FIG Partners Bank Forum 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 9 | January 2
Slide 10: What Is Long Term Success?
FIG Partners Bank Forum 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 sources Efficient operations Strong risk ma
Slide 11: Key Drivers of Bank Revenues
FIG Partners Bank Forum KEY DRIVERS OF BANK REVENUES Deposits & Margin – Average Cost of Deposits of 0.11% as of 12/31/2017 – Net Interest Margin in Q4 2017 was 4.26% Commercial Loans – Commercial Real Estate Diverse portfolio of property types and geographies – Commercial & Industry Lines and Loans
Slide 12: Key Drivers of Bank Revenues continued
FIG Partners Bank Forum 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 stoc
Slide 13: Deposit Structure
FIG Partners Bank Forum DEPOSIT STRUCTURE Time Deposits 8% Savings 34% Wtd. Avg. Non Interest Rate – 0.55% Wtd. Avg. Rate – 0.12% Bearing 34% Interest Demand 24% Wtd. Avg. Rate – 0.09% Data as of 12.31.2017 13 | January 2018
Slide 14: Total Ending Deposits
FIG Partners Bank Forum TOTAL ENDING DEPOSITS $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $2,410,483 3,380,423 3,631,266 3,895,560 4,009,131 2013 2014 2015 2016 2017 14 | January 2018
Slide 15: Market Share of All Branches Sorted by Zip Code
FIG Partners Bank Forum MARKET SHARE OF ALL BRANCHES SORTED BY ZIP CODE Rank Institution Name State Charter Deposits Market Share (Hdqtrd) ($000) 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 Bank of America, National Association NC
Slide 16: Non-Interest Income
FIG Partners Bank Forum 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 mark
Slide 17: Non-Interest Income continued
FIG Partners Bank Forum 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 17 | January 2018
Slide 18: Consumer Loans
FIG Partners Bank Forum 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 $38MM in Q4 2017 HELOC volume resulted in $3MM decrease in outstandings
Slide 19: Home Equity Loans Outstanding
FIG Partners Bank Forum HOME EQUITY LOANS OUTSTANDING $400,000 $390,000 $380,000 $370,000 $360,000 $350,000 $340,000 $330,000 $320,000 $310,000 $300,000 $354,454 $383,898 $362,854 $331,537 $331,719 2013 2014 2015 2016 2017 Data as of 12.31.2017 19 | January 2018
Slide 20: Loan Portfolio by Type
FIG Partners Bank Forum LOAN PORTFOLIO BY TYPE Consumer—Home Equity 1% Consumer—Other 1% Commercial 7% Construction—RE 2% Construction—Commercial 2% Secured by RE -Residential 1-4 13% Consumer -HELOCS 10% Secured By Commercial Real Estate 64% Data as of 12.31.2017 20 | January 2018
Slide 21: Commercial Banking
FIG Partners Bank Forum 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 21 | January 2018
Slide 22: Commercial Banking continued
FIG Partners Bank Forum 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 7A program now offered 22 |
Slide 23: Commercial Real Estate Portfolio as of 12.31.2017
FIG Partners Bank Forum COMMERCIAL REAL ESTATE PORTFOLIO AS OF 12.31.2017 Real Estate Loan Type # of Outstandings* % to Total Avg. Commitment Loans Loans Amount Office 601 $411,640,000 15% $698,000 Retail 422 $324,027,000 11% $808,000 Multi-Family 318 $319,957,000 11% $1,041,000 Special Purpose 234
Slide 24: Ag Portfolio as of 12.31.2017
FIG Partners Bank Forum AG PORTFOLIO AS OF 12.31.2017 Agricultural Loans (excluding RE secured) total $43 million in total commitments with $24 million outstanding The highest crop concentrations by commitments are: Multiple Crop $12.2 million 13 loans $ 939,000 Avg. Commitment Rice $7.9 million 41
Slide 25: Construction and A&D
FIG Partners Bank Forum CONSTRUCTION AND A&D Construction lending totals approx. $137,557,000 outstanding with $326,977,000 in commitments Residential construction approx. $67,930,000 Commercial construction approx. $69,627,000 Total construction, land development and land acquisition loans represen
Slide 26: Total Loans Net of Unamortized Deferred Loan Fees and Discounts
FIG Partners Bank Forum TOTAL LOANS NET OF UNAMORTIZED DEFERRED LOAN FEES AND DISCOUNTS ($000’S) $2,900,000 $2,700,000 $2,500,000 $2,300,000 $2,100,000 $1,900,000 $1,700,000 $1,500,000 $1,672,007 $2,282,524 $2,522,937 $2,759,593 $3,015,165 2013 2014 2015 2016 2017 Data as of 12.31.2017 26 | January
Slide 27: Growth Opportunities
FIG Partners Bank Forum 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 Ba
Slide 28: What Keeps Us Up at Night?
FIG Partners Bank Forum 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 28 | January 2018
Slide 29: Challenges Within Bank Strategies
FIG Partners Bank Forum 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 cost
Slide 30: Financials
FIG Partners Bank Forum FINANCIALS
Slide 31: Total Assets
FIG Partners Bank Forum TOTAL ASSETS ($000’S) $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $2,744,066 $3,912,358 $4,220,722 $4,517,968 $4,761,315 2013 2014 2015 2016 2017 Data as of 12.31.2017 31 | January 2018
Slide 32: Capital Ratios
FIG Partners Bank Forum CAPITAL RATIOS ($000’S) 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 15.6% 14.8% 15.1% 14.8% 14.4% 14.1% 13.5% 13.8% 13.7% 13.2% 12.2% 12.2% 11.7% 8.6% 9.1% 9.2% 9.1% 9.3% 2013 2014 2015 2016 2017 Common Equity Tier 1 Tier 1 Total Risk Based Tangible Common Data as of 12.
Slide 33: Net Income
FIG Partners Bank Forum NET INCOME ($000’S) $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- $11,422 $12,533 $2,989 $11,897 $12,694 $12,199 $5,236 $5,650 $7,361 $13,589 $8,234 $9,405 $11,366 $6,325 $4,859 $10,674 $12,079 $8,477 $7,365 $8,336 2013 2014 2015 2016 2017 Q1 Q2 Q3
Slide 34: Net Interest Margin
FIG Partners Bank Forum NET INTEREST MARGIN 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 4.18% 4.17% 4.39% 4.23% 4.26% 0.15% 0.12% 0.10% 0.09% 0.11% 2013 2014 2015 2016 Q4 2017 Wtd. Avg. Deposit Rate Net Interest Margin Data as of 12.31.2017 34 | January 2018
Slide 35: Non-Interest Income
FIG Partners Bank Forum NON-INTEREST INCOME ($000’S) $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- $12,478 $11,445 $12,462 $10,219 $12,930 $9,755 $11,642 $11,066 $10,131 $8,589 $12,910 $12,080 $11,245 $9,127 $7,877 $10,180 $9,790 $11,703 $7,352 $8,295 2013 2014 2015 2016 2017 Q1 Q2 Q3 Q4 Data a
Slide 36: Efficiency Ratio
FIG Partners Bank Forum EFFICIENCY RATIO (FULLY TAXABLE EQUIVALENT) 75.0% 70.0% 65.0% 60.0% 55.0% 50.0% 72.9% 67.3% 67.9% 64.7% 65.5% 2013 2014 2015 2016 2017 Data as of 12.31.2017 36 | January 2018
Slide 37: Diluted Earnings Per Share
FIG Partners Bank Forum DILUTED EARNINGS PER SHARE $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 $- $0.50 $0.54 $0.13 $0.32 $0.25 $0.51 $0.45 $0.55 $0.53 $0.50 $0.58 $0.39 $0.41 $0.30 $0.49 $0.53 $0.45 $0.46 $0.52 $0.36 2013 2014 2015 2016 2017 Q1 Q2 Q3 Q4 Data as of 12.31.2017 37 | January 2018
Slide 38: Dividends Paid
FIG Partners Bank Forum DIVIDENDS PAID $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 0.17 0.15 0.15 0.17 0.11 0.15 0.11 0.13 0.11 0.11 0.15 0.17 0.11 0.13 0.11 0.15 0.15 0.09 0.11 0.11 2013 2014 2015 2016 2017 Q1 Q2 Q3 Q4 Data as of 12.31.2017 38 | January 2018
Slide 39: Non-Performing Assets to Total Assets
FIG Partners Bank Forum NON-PERFORMING ASSETS TO TOTAL ASSETS 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2.17% 1.34% 1.01% 0.53% 0.58% 2013 2014 2015 2016 2017 Data as of 12.31.2017 39 | January 2018
Slide 40: Allowance for Loan Losses to Total Loans
FIG Partners Bank Forum ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2.29% 1.60% 1.43% 1.18% 1.01% 2013 2014 2015 2016 2017 Data as of 12.31.2017 40 | January 2018
Slide 41: Originated ALLL to Total Originated Loans
FIG Partners Bank Forum ORIGINATED ALLL TO TOTAL ORIGINATED LOANS 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2.11% 1.85% 1.57% 1.19% 1.08% 2013 2014 2015 2016 2017 Data as of 12.31.2017 41 | January 2018
Slide 42: Annualized Net Charge-Offs to Average Loans
FIG Partners Bank Forum ANNUALIZED NET CHARGE-OFFS TO AVERAGE LOANS 0.25% 0.20% 0.15% 0.10% 0.05% 0.00% 0.05% 0.10% 0.15% 0.23% 0.11%* -0.13% -0.07% -0.10% 2013 2014 2015 2016 2017 Data as of 12.31.2017 *0.08% related to ASC 310-30 PCI loan adjustment 42 | January 2018
Slide 43: Return on Average Assets
FIG Partners Bank Forum RETURN ON AVERAGE ASSETS 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 1.11% 1.04% 1.03% 0.87% 0.89% 2013 2014 2015 2016 2017 Data as of 12.31.2017 43 | January 2018
Slide 44: Return on Average Shareholder's Equity
FIG Partners Bank Forum RETURN ON AVERAGE SHAREHOLDER’S EQUITY 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 11.34% 10.04% 8.67% 9.47% 8.10% 2013 2014 2015 2016 2017 Data as of 12.31.2017 44 | January 2018
Slide 45: Acquisition of FNB Bancorp
Acquisition of FNB Bancorp
Slide 46: Premier NorCal Community Bank
FIG Partners Bank Forum PREMIER NORCAL COMMUNITY BANK 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+ ye
Slide 47: Market Position in NorCal
FIG Partners Bank Forum MARKET POSITION IN NORCAL FNBG and TriCo will create the largest Northern California-based community bank at over $6bn in assets TriCo currently has a dominant market share in several Northern California markets – #1 ranked deposit market share in Chico and Redding MSAs (~25%
Slide 48: Bay Area Opportunity
FIG Partners Bank Forum BAY AREA OPPORTUNITY Economy 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
Slide 49: Overview of FNB Bancorp
FIG Partners Bank Forum OVERVIEW OF FNB BANCORP Company Background 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
Slide 50: Pro Forma Loan & Deposit Mix
FIG Partners Bank Forum PRO FORMA LOAN & DEPOSIT MIX Loan Portfolio Highly Similar Lending Focus, Shared Credit Culture TCBK FNBG Pro Forma(1) 1.0% 7.8% 3.7% 1.3% 6.2% 1.1% 7.4% 9.9% 17.0% 8.5% 14.9% 15.3% 5.9% 5.2% 5.0% 61.5% 65.9% 62.5% CRE Construction & L Home Equity $2.9B Loans $0.8B Loans $3.8
Slide 51: Transaction Assumptions
FIG Partners Bank Forum TRANSACTION ASSUMPTIONS 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 Cost Savings from elimination of FNBG’s in-house data processing function Retain branches and
Slide 52: Financial Impact & Pricing
FIG Partners Bank Forum FINANCIAL IMPACT & PRICING EPS Accretion(1) TBV Impact Other Metrics Pricing Multiples As announced—35% Fed tax rate 2018e: 2.1% accretive excluding transaction costs (2) 2019e: 7.9% EPS accretion (2) TBV dilution of 6.6% at close TBV earnback of 4.7 years via crossover metho
Slide 53: TriCo Bancshares Is Committed To
TRICO BANCSHARES IS COMMITTED TO: Improving the financial success and w being of our shareholders, customers, communities and employees. Tri counties bank CHICO, CALIFORNIA 1975 EST.