D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in...
Transcript of D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in...
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2016 Financial Institutions ConferenceDenver, CO
Richard P. Smith, President & CEO
D. A. Davidson
May 10-11, 2016
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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, 2015 and TriCo’sQuarterly Reports on Form 10-Q as filed with the SEC in fiscal 2016.
2016 Financial Institutions Conference
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AGENDA• Company Overview• Recent Activities & Focus
– Merger Announcement
• Key Revenue Drivers• Challenges & Opportunities• Financials• Questions
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OVERVIEWAsset Size: $4.4 BillionLocation: Chico, CAFounded: 1975Deposits: $3.8 BillionLoans (net): $2.5 BillionCustomers: 190,000Bank Branches: 70ATMs: 88
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OVERVIEWNasdaq: TCBKStock Price: $26.36Market Capitalization: $601 million*Price to TBVPS: 1.53x**Asset Size Rank ofCA Publicly Traded Banks: 13
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*Valuation Information as of Market Close 05/05/2016**Ranking as of 06/30/2015 – Source: SNL Financial
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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 Chief Commercial
Lending OfficerTriCo since 1984
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RECENT ACTIVITIES• Purchase of 3 branches from Bank of America
– Completion in March 2016• Completion of merger of North Valley Bank 2015• Closed 13 branches in 2015 as result of merger and
customer migration to technology tools• Opening new branch in Roseville, Ca.• Technology projects for 2016:
– New mobile banking program– New business online banking program– Loan and operational Imaging projects– Several vendor changes for electronic banking
2016 Financial Institutions Conference
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POSITIONED FOR TODAY, PREPARED FOR THE FUTURE
2016 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
environment– Double digit loan growth– Strong deposit growth
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• Strong focus on risk management and new regulatory realities
• Experienced project teams, well prepared for continued growth through acquisition
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POSITIONED FOR TODAY, PREPARED FOR THE FUTURE continued
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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
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KEY DRIVERS OF BANK REVENUES• Deposits & Margin
– Average Cost of Deposits of .09% as of 03/31/2016– Net Interest Margin at 03/31/2016 is 4.33%
• Non-Interest Income– Mortgage Finance– Service Charge & Fee Income– Bank Wealth Management Program
• Consumer Loans– Home Equity Lines/Loans– Installment Lending– Small Business
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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
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Non Interest Bearing
31%
Interest Demand24%
Savings36%
Time Deposits9%
Wtd. Avg. Rate – 0.12%
Wtd. Avg. Rate – 0.05%
Wtd. Avg. Rate – 0.40%
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DEPOSIT STRUCTURE
Data as of 03.31.2016
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TOTAL ENDING DEPOSITS
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
2012 2013 2014 2015 Q1 2016
$2,289,702$2,410,483
$3,380,423
$3,631,266$3,785,040
Data as of 03.31.2016
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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
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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
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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
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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– $30MM in Q1 2016 HELOC volume resulted in $9MM reduction in
outstandings
• Auto loans demand constant• Home equity lines/loans increasing in demand
2016 Financial Institutions Conference
18 | May 2016
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2016 Financial Institutions Conference
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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
2012 2013 2014 2015 Q1 2016
$355,582 $354,454
$383,898
$362,854 $354,056
Data as of 03.31.2016
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HOME EQUITY LINES OF CREDIT<80% LTV AT ORIGINATION
03/31/08 12/31/11 12/31/15 Q1 2016 Prod.
Avg CB Score 757 754 758 779
Avg Loan Commitment to Value at Origination
62% 61% 58% 61%
Avg LTV to Current Value N/A 92% 55% N/A
Utilization Rate 49% 48% 49% 35%
Data as of 03.31.2016
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LOAN PORTFOLIO BY TYPE
Secured by RE -Residential 1-4
12.40%
Secured by RE -Com'l
59.56%
Consumer -HELOCS12.30%
Consumer - Home Eq
1.40%
Consumer - Other1.30%
Commercial7.73%
Construction - RE2.08%
Construction -Commercial
2.99%
Data as of 03.31.2016
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COMMERCIAL LOANS
Total Commercial72%
Total Consumer28%
Data as of 03.31.2016
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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
2016 Financial Institutions Conference
23 | May 2016
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COMMERCIAL BANKING continued
• Agricultural lending• Improving drought conditions• Declining Ag prices 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
2016 Financial Institutions Conference
24 | May 2016
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2016 Financial Institutions Conference
25 | May 2016
COMMERCIAL REAL ESTATE PORTFOLIO AS OF 03.31.2016
Real Estate Loan Type # of Loans
Outstandings* % to Total Loans
Avg. Commitment Amount
Office 589 336,438,000 13% 584,000
Retail 407 284,529,000 11% 730,000
Multi-Family 327 211,814,000 8% 665,000
Special PurposeGas Station, Mini Storage, Hotel/Motel, Restaurant
179 166,275,000 7% 965,000
OtherWarehouse, Manufacturing, Bare Land, Agricultural Land + Structures
1,197 518,671,000 20% 466,000
Totals 2,699 1,517,727,000 60% -
Averages - - - 589,000
* RE Loan Type segment totals do not include all purchase discount adjustments
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AG PORTFOLIO AS OF 03.31.2016
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• Agricultural Loans (excluding RE secured) total $76 million in total commitments with $32 million outstanding
• The highest crop concentrations by commitments are:Rice $25.2 million 66 loans $382,000 Avg. Commitment
Multiple Crop $21.4 million 23 loans $931,000 Avg. Commitment
Almonds $5.0 million 8 loans $631,000 Avg. Commitment
Walnuts $4.7 million 5 loans $931,000 Avg. Commitment
Beef $2.8 million 11 loans $253,000 Avg. Commitment
Pistachios $942 thousand 2 loans $471,000 Avg. Commitment
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• Construction lending totals approx. $129,001,000 outstanding with $181,105,000 in commitments
• Residential construction approx. $52,983,000• Commercial construction approx. $76,018,000• Total construction, land development and land
acquisition loans represent 5.1% of total loans outstanding
2016 Financial Institutions Conference
27 | May 2016
CONSTRUCTION AND A&D
Data as of 03.31.2016
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2016 Financial Institutions Conference
28 | May 2016
TOTAL LOANSNET 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
2012 2013 2014 2015 Q1 2016
$1,564,823 $1,672,007
$2,282,524
$2,522,937 $2,541,547
Data as of 03.31.2016
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• Mergers and Acquisitions– 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– Sutter Butte Savings 1996– Country National Bank 1993– Branch purchase from Wells Fargo 1987– Shasta County Bank 1981
2016 Financial Institutions Conference
29 | May 2016
GROWTH OPPORTUNITIES
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• 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
2016 Financial Institutions Conference
30 | May 2016
WHAT KEEPS US UP AT NIGHT?
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• 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– So many threats, so little time
2016 Financial Institutions Conference
31 | May 2016
CHALLENGES WITHIN BANK STRATEGIES
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2016 Financial Institutions Conference
32 | May 2016
FINANCIALS
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TOTAL ASSETS ($000’S)
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
2012 2013 2014 2015 Q1 2016
$2,609,269 $2,744,066
$3,912,358
$4,220,722 $4,394,956
Data as of 03.31.2016
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34 | May 2016
CAPITAL RATIOS ($000’S)
Data as of 03.31.2016
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
2012 2013 2014 2015 Q1 2016
12.2% 12.4%13.3% 13.5%
14.4% 13.8% 14.0%14.5% 14.8%15.6% 15.1% 15.2%
8.2% 8.6%9.1% 9.2% 9.1%
Common Equity Tier 1 Tier 1 Total Risk Based Tangible Common
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NET INCOME ($000’S)
Data as of 03.31.2016
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
2012 2013 2014 2015 2016
$3,931 $8,477 $7,365 $8,336 $10,674
$5,321
$6,325 $4,859
$11,366 $5,020
$7,361 $8,234
$12,694
$4,722
$5,236 $5,650
$11,422
Q1 Q2 Q3 Q4
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2016 Financial Institutions Conference
36 | May 2016
NET INTEREST MARGIN
Data as of 03.31.2016
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
2012 2013 2014 2015 Q1 20160.20% 0.15% 0.12% 0.10% 0.09%
4.32% 4.18% 4.17% 4.39% 4.33%
Wtd. Avg. Deposit Rate Net Interest Margin
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NON-INTEREST INCOME ($000’S)
Data as of 03.31.2016
$-
$10,000
$20,000
$30,000
$40,000
$50,000
2012 2013 2014 2015 2016
$8,265 $7,352 $8,295 $10,180 $9,790
$10,577 $9,127 $7,877
$12,080
$9,127 $10,131 $8,589
$11,642
$10,011 $10,219
$9,755
$11,445
Q1 Q2 Q3 Q4
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38 | May 2016
EFFICIENCY RATIO (FULLY TAXABLE EQUIVALENT)
Data as of 03.31.2016
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
2012 2013 2014 2015 Q1 2016
70.2%
67.3%
72.9%
64.7% 65.2%
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39 | May 2016
DILUTED EARNINGS PER SHARE
Data as of 03.31.2016
$-
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
2012 2013 2014 2015 2016
$0.25 $0.53 $0.45 $0.36 $0.46
$0.33
$0.39 $0.30 $0.49
$0.31
$0.45 $0.50
$0.55 $0.29
$0.32
$0.25
$0.50
Q1 Q2 Q3 Q4
![Page 40: D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in March 2016 • Completion of merger of North Valley Bank 2015 • Closed 13 branches](https://reader034.fdocuments.in/reader034/viewer/2022050509/5f99db4ead2b5d398427ff9a/html5/thumbnails/40.jpg)
2016 Financial Institutions Conference
40 | May 2016
DIVIDENDS PER SHARE
Data as of 03.31.2016
0
0.1
0.2
0.3
0.4
0.5
0.6
2012 2013 2014 2015 2016
0.09 0.09 0.11 0.110.15
0.09 0.110.11 0.13
0.090.11
0.110.130.09
0.110.11
0.15
Q1 Q2 Q3 Q4
![Page 41: D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in March 2016 • Completion of merger of North Valley Bank 2015 • Closed 13 branches](https://reader034.fdocuments.in/reader034/viewer/2022050509/5f99db4ead2b5d398427ff9a/html5/thumbnails/41.jpg)
2016 Financial Institutions Conference
41 | May 2016
NON-PERFORMING ASSETS TO TOTAL ASSETS
Data as of 03.31.2016
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2012 2013 2014 2015 Q1 2016
3.07%
2.17%
1.34%1.01%
0.65%
![Page 42: D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in March 2016 • Completion of merger of North Valley Bank 2015 • Closed 13 branches](https://reader034.fdocuments.in/reader034/viewer/2022050509/5f99db4ead2b5d398427ff9a/html5/thumbnails/42.jpg)
2016 Financial Institutions Conference
42 | May 2016
ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS
Data as of 03.31.2016
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
2012 2013 2014 2015 Q1 2016
2.73%
2.29%
1.60%1.43% 1.43%
![Page 43: D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in March 2016 • Completion of merger of North Valley Bank 2015 • Closed 13 branches](https://reader034.fdocuments.in/reader034/viewer/2022050509/5f99db4ead2b5d398427ff9a/html5/thumbnails/43.jpg)
2016 Financial Institutions Conference
43 | May 2016
ORIGINATED ALLL TO TOTAL ORIGINATED LOANS
Data as of 03.31.2016
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
2012 2013 2014 2015 Q1 2016
2.54%
2.11%1.85%
1.57% 1.52%
![Page 44: D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in March 2016 • Completion of merger of North Valley Bank 2015 • Closed 13 branches](https://reader034.fdocuments.in/reader034/viewer/2022050509/5f99db4ead2b5d398427ff9a/html5/thumbnails/44.jpg)
2016 Financial Institutions Conference
44 | May 2016
ANNUALIZED NET CHARGE-OFFS TO AVERAGE LOANS
Data as of 03.31.2016
-0.20%-0.10%0.00%0.10%0.20%0.30%0.40%0.50%0.60%0.70%0.80%0.90%
2012 2013 2014 2015 2016
0.82%
0.23%
-0.13% -0.14% -0.01%
![Page 45: D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in March 2016 • Completion of merger of North Valley Bank 2015 • Closed 13 branches](https://reader034.fdocuments.in/reader034/viewer/2022050509/5f99db4ead2b5d398427ff9a/html5/thumbnails/45.jpg)
2016 Financial Institutions Conference
45 | May 2016
Data as of 03.31.2016
RETURN ON AVERAGE ASSETS
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
2012 2013 2014 2015 Q1 2016
0.75%
1.04%
0.87%
1.11%1.01%
![Page 46: D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in March 2016 • Completion of merger of North Valley Bank 2015 • Closed 13 branches](https://reader034.fdocuments.in/reader034/viewer/2022050509/5f99db4ead2b5d398427ff9a/html5/thumbnails/46.jpg)
2016 Financial Institutions Conference
46 | May 2016
Data as of 03.31.2016
RETURN ON AVERAGE SHAREHOLDER’S EQUITY
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2012 2013 2014 2015 Q1 2016
8.44%
11.34%
8.67%10.04%
9.25%
![Page 47: D. A. DavidsonJun 01, 2016 · • Purchase of 3 branches from Bank of America – Completion in March 2016 • Completion of merger of North Valley Bank 2015 • Closed 13 branches](https://reader034.fdocuments.in/reader034/viewer/2022050509/5f99db4ead2b5d398427ff9a/html5/thumbnails/47.jpg)
TRICO BANCSHARES IS COMMITTED TO:
Improving the financial success and well-being of our shareholders, customers,
communities and employees.