richard p. smith, president & ceo thomas j. reddish ......sep 15, 2015 · raymond james 2015...
TRANSCRIPT
Raymond James 2015 U.S. Bank Conference
Richard P. Smith, President & CEO Thomas J. Reddish, Executive Vice President & CFO
September 9, 2015
TRICO BANCSHARES
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 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, 2014 and TriCo’s Quarterly Reports on Form 10-Q as filed with the SEC in fiscal 2015.
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AGENDA • Company Overview • Recent Activities & Focus • Key Revenue Drivers • Challenges & Opportunities • Financials • Questions
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OVERVIEW Asset Size: $3.9 Billion Location: Chico, CA Founded: 1975 Deposits: $3.3 Billion Loans (net): $2.4 Billion Customers: 190,000 Bank Branches: 68 ATMs: 79
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OVERVIEW Nasdaq: TCBK Stock Price: $24.05 Market Capitalization: $550,000,000 *Price to TBVPS: 1.51x **Asset Size Rank of CA Publicly Traded Banks: 15
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*Valuation Information as of Market Close 06/30/2015 **Ranking as of 06/30/2015 – Source: SNL Financial
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EXECUTIVE TEAM
Rick Smith President & CEO TriCo since 1993
Tom Reddish EVP Chief Financial Officer
TriCo since 1994
Dan Bailey EVP Retail Banking TriCo since 2007
Craig Carney EVP Chief Credit Officer
TriCo since 1996
Carol Ward EVP- Chief
Operating Officer TriCo since 2012
Michael Cushman EVP Strategic Initiatives
TriCo since 2014
Richard O’Sullivan EVP Commercial
Banking TriCo since 1984
Glenn Hunter Sr. VP Chief Human Resources Officer TriCo since 2013
RECENT ACTIVITIES • Completed merger & systems integration with North Valley
Bancorp - October 2014 • Acquired 2 banks through FDIC bidding process – Granite Community Bank, Granite Bay, CA in 2011 – Citizens Bank of N. California, Nevada City, CA in 2012 • Closed 16 branches since 2011 • Opening of new branch in Colusa, CA • Significant investments in technology – Mobile and On-line Banking – Cash Management Software – Data Security and Disaster Recovery
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TRANSACTION HIGHLIGHTS • Creates the Premier Community Bank in
Northern California (1)
– $3.9 billion in total assets – Approximately 80 branches from Bakersfield to the Oregon Border;
expands the Tri Counties brand into Humboldt, Trinity, and Sonoma counties
– Top 3 deposit market share rank in 15 of TriCo’s 26 pro forma counties of operation (2)
• Similar community banks with strong core deposit bases
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(1) Based on 6/30/2013 deposit market share data per FDIC. (2) Among community banks.
• 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 organic growth in current environment • 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
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WHAT IS LONG TERM SUCCESS?
• A winning culture with a motivated and talented work force
• Significant and growing market share • Low cost core deposit base • Diversified revenue sources • Efficient operations • Strong risk management practices • Rewarding our shareholders
KEY DRIVERS OF BANK REVENUES • Deposits & Margin – Average Cost of Deposits of .15% as of 06/30/2015 – Net Interest Margin at 06/30/2015 is 4.35% • 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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DEPOSIT STRUCTURE
Non Interest Bearing
32%
Interest Demand 23%
Savings 35%
Time Deposits 10%
Wtd. Avg. Rate – 0.12%
Wtd. Avg. Rate – 0.06%
Wtd. Avg. Rate – 0.45%
Data as of 06.30.2015
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TOTAL ENDING DEPOSITS
$1,200,000
$1,700,000
$2,200,000
$2,700,000
$3,200,000
$3,700,000
2010 2011 2012 2013 2014 Q2 2015
$1,852,173
$2,190,536 $2,289,702
$2,410,483
$3,380,423 $3,341,682
Data as of 06.30.2015
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MARKET SHARE OF ALL BRANCHES SORTED BY ZIP CODE
Rank Institution Name State (Hdqtrd)
Charter Deposit ($000)
Market Share
1 Wells Fargo Bank, National Association
SD Federal 6,367,673 21.93%
2 Bank of America, National Association
NC Federal 3,823,853 13.17%
3 Rabobank, National Association CA Federal 2,921,974 10.06%
4 Tri Counties Bank CA State 2,377,310 8.19%
12 North Valley Bank CA State 431,253 1.49%
4 Tri Counties Bank - Consolidated CA State 2,808,563 9.68%
5 JP Morgan Chase Bank, National Association
OH Federal 2,237,731 7.71%
6 Umpqua Bank OR State 1,234,794 4.25%
7 U.S. Bank National Association OH Federal 1,232,016 4.24%
Source: FDIC Summary of Deposits, June 2014 Total Deposits 06/30/2015: $3,895,680
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 – New opportunities with North Valley Bank
• Lower revenues from service charges but increased interchange income
• Cash Management fees continue to increase following merger integration
• Merchant Card Services – $326,000 Q2 2015
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CONSUMER LOANS • Increased Demand for Consumer Loans
– Home equity values have increased – Economic uncertainty improving – Reluctance to borrow (job security concerns) – Underperforming job market
• Low rate environment led to historically high refi activity – $38MM in Q1 2015 HELOC volume resulted in $6MM reduction in
outstandings
• Auto loans demand constant • North Valley Bank customer base represents
tremendous opportunity for consumer cross-sale
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HOME EQUITY LOANS OUTSTANDING
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
2010 2011 2012 2013 2014 Q2 2015
$376,485 $372,149 $355,582 $354,454
$383,898 $378,687
Data as of 06.30.2015
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HOME EQUITY LINES OF CREDIT <80% LTV AT ORIGINATION
03/31/08 12/31/11 12/31/14 Q1 2015 Prod.
Avg CB Score 757 754 755 770
Avg Loan Commitment to Value at Origination
62% 61% 58% 59%
Avg LTV to current value N/A 92% 58% N/A
Utilization Rate 49% 48% 50% 42%
Data as of 03.31.2015
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LOAN PORTFOLIO BY TYPE
Secured by RE - Residential 1-4
12.18%
Secured by RE - Com'l
58.28%
Consumer - HELOCS 14.38%
Consumer - Home Eq
1.40%
Consumer - Other 1.38%
Commercial 8.18%
Construction - RE 1.75%
Construction - Commercial
2.41%
Data as of 06.30.2015
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COMMERCIAL LOANS
Total Commercial 70.62%
Total Consumer 29.38%
Data as of 06.30.2015
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 • $121 million in CRE & C&I production resulted in $31 million in net
growth - Q1
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COMMERCIAL BANKING continued
• Agricultural lending • Loans <$1,000,000 served through alternate
channel • Business Relationship Managers • Credit scoring combined with traditional underwriting
• SBA 7A program now offered
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COMMERCIAL REAL ESTATE PORTFOLIO AS OF 03.31.2015
Real Estate Loan Type # of Loans
Outstandings* % to Total Loans
Avg. Commitment Amount
Office 559 278,521,000 12% 513,000
Retail 403 272,933,000 12% 705,000
Multi-Family 291 182,446,000 8% 668,000
Special Purpose Gas Station, Mini Storage, Hotel/Motel, Restaurant
149 130,035,000 6% 906,000
Other Warehouse, Manufacturing, Bare Land, Agricultural Land + Structures
1,178 630,580,000 27% 452,000
Totals 2,580 1,364,480,000 59% -
Averages - - - 555,000
* RE Loan Type segment totals do not include all purchase discount adjustments Data as of 03.31.2015
AG PORTFOLIO AS OF 03.31.2015
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• Agricultural Loans (excluding RE secured) total $72.6 million in total commitments with $26 million outstanding
• The highest crop concentrations by commitments are:
Multiple Crop $22.2 million 24 loans $925,000 Avg. Commitment
Rice $21.9 million 58 loans $378,000 Avg. Commitment
Almonds $6.3 million 11 loans $573,000 Avg. Commitment
Dairy $3.4 million 10 loans $340,000 Avg. Commitment
Beef $2.8 million 10 loans $280,000 Avg. Commitment
Data as of 03.31.2015
• Construction lending totals approximately $99,616,000 outstanding with $138,486,000 in commitments
• Residential construction approx. $41,958,000 • Commercial construction approx. $57,658,000 • Total construction, land development and land
acquisition loans represent 4.2% of total loans outstanding
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CONSTRUCTION AND A&D
Data as of 06.30.2015
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TOTAL LOANS NET OF UNAMORTIZED DEFERRED LOAN FEES AND DISCOUNTS ($000’S)
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
2010 2011 2012 2013 2014 Q2 2015
$1,419,571 $1,551,032 $1,564,823 $1,672,007
$2,282,524 $2,393,763
Data as of 06.30.2015
• Mergers and Acquisitions – 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
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GROWTH OPPORTUNITIES
• Low Interest Rate Environment • Aggressive Competitors for loans • Bank Regulation • The Cost of Compliance with New Regulations • Interest Rate Risk • Global Economics • Slow Industry Consolidation • Dysfunction in Washington
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WHAT KEEPS US UP AT NIGHT?
• Big Banks – Aggressive banking in Community Bank space – Bad Reputations
• Technology and Banking – New competitors like Google and Apple – Non bank lenders
• Bank Operations and Efficiency – Managing multiple delivery channels
• Enterprise Risk Management – Many threats, so little time
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CHALLENGES WITHIN BANK STRATEGIES
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FINANCIALS
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TOTAL ASSETS ($000’S)
$1,200,000
$1,700,000
$2,200,000
$2,700,000
$3,200,000
$3,700,000
$4,200,000
2010 2011 2012 2013 2014 Q2 2015
$2,189,789
$2,555,597 $2,609,269 $2,744,066
$3,912,358 $3,893,855
Data as of 06.30.2015
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CAPITAL RATIOS ($000’S)
Data as of 06.30.2015
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
2010 2011 2012 2013 2014 Q2 2015
12.10% 12.90% 12.70% 13.30% 13.50% 14.40%
13.90% 14.20% 13.90% 14.50% 14.80%
15.60% 15.20%
8.50% 7.90% 8.20% 8.60%
9.00% 9.40%
Common Equity Tier 1 Tier 1 Total Risk Based Tangible Common
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NET INCOME ($000’S)
Data as of 06.30.2015
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
2010 2011 2012 2013 2014 2015 $1,558 $2,800 $3,931
$8,477 $7,365 $8,336 $1,320
$2,771
$5,321
$6,325 $4,859
$11,366
$1
$6,470
$5,020
$7,361
$8,234
$3,126
$6,549 $4,722
$5,236 $5,650
Q1 Q2 Q3 Q4
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NET INTEREST MARGIN
Data as of 06.30.2015
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2010 2011 2012 2013 2014 Q2 2015
0.56% 0.34% 0.20% 0.15% 0.12% 0.15%
4.45% 4.43%
4.32% 4.18% 4.17% 4.35%
Wtd. Avg. Deposit Rate Net Interest Margin
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NON INTEREST INCOME ($000’S)
Data as of 06.30.2015
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
2010 2011 2012 2013 2014 2015
$7,547 $9,350 $8,265 $7,352 $8,295 $10,180
$7,872 $8,251 $10,577
$9,127 $7,877
$12,080
$7,163 $7,198
$9,127 $10,131
$8,589
$9,881
$10,489
$10,011 $10,219
$9,755
Q1 Q2 Q3 Q4
*2010 & 2011 have been adjusted to remove Bargain Purchase Gains
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EFFICIENCY RATIO (FULLY TAXABLE EQUIVALENT)
Data as of 06.30.2015
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
2010 2011 2012 2013 2014 Q2 2015
62.5% 60.9%
70.2%
67.3%
71.2%
62.4%
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DILUTED EARNINGS PER SHARE
Data as of 06.30.2015
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
2010 2011 2012 2013 2014 2015 $0.10 $0.17 $0.25
$0.53 $0.45 $0.36 $0.08 $0.17
$0.33
$0.39 $0.30 $0.49
$0.40
$0.31
$0.45
$0.50
$0.20
$0.41 $0.29
$0.32
$0.25
Q1 Q2 Q3 Q4
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DIVIDENDS PER SHARE
Data as of 06.30.2015
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
2010 2011 2012 2013 2014 2015
0.13 0.09 0.09 0.09 0.11 0.11
0.09
0.09 0.09 0.11 0.11 0.13
0.09
0.09 0.09 0.11
0.11
0.09
0.09 0.09
0.11 0.11
Q1 Q2 Q3 Q4
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NON-PERFORMING ASSETS TO TOTAL ASSETS
Data as of 06.30.2015
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
2010 2011 2012 2013 2014 Q2 2015
3.92% 3.99%
3.07%
2.17%
1.34% 1.16%
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ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS
Data as of 06.30.2015
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2010 2011 2012 2013 2014 Q2 2015
3.00% 2.96% 2.73%
2.29%
1.60% 1.48%
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ORIGINATED ALLL TO TOTAL ORIGINATED LOANS
Data as of 06.30.2015
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2010 2011 2012 2013 2014 Q2 2015
3.07% 3.10%
2.54%
2.11% 1.85%
1.66%
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ANNUALIZED NET CHARGE-OFFS TO AVG LOANS
Data as of 06.30.2015 -0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
2010 2011 2012 2013 2014 Q2 2015
2.07%
1.35%
0.82%
0.23% -0.13% 0.07%
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Data as of 06.30.2015
RETURN ON AVERAGE ASSETS
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
2010 2011 2012 2013 2014 Q2 2015
0.27%
0.82% 0.75%
1.04%
0.87%
1.17%
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Data as of 06.30.2015
RETURN ON AVERAGE SHAREHOLDER’S EQUITY
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2010 2011 2012 2013 2014 Q2 2015
2.94%
8.93% 8.44%
11.34%
8.67%
10.56%
TRICO BANCSHARES IS COMMITTED TO:
Improving the financial success and well-being of our shareholders, customers,
communities and employees.