Earnings - Investor Presentation October 2021

Published: 2021-10-26 11:16:32 ET TCBK

INVESTOR PRESENTATION

Third Quarter 2021

Richard P. Smith - President & Chief Executive 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. There can be no assurance that future developments affecting us will be the same as those anticipated by management. 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 strength 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; inflation, interest rate, market and monetary fluctuations; the impact of changes in financial services policies, laws and regulations; technological changes; weather, natural disasters and other catastrophic events that may or may not be caused by climate change and their effects on economic and business environments in which the Company operates; the continuing adverse impact on the U.S. economy, including the markets in which we operate due to the COVID-19 global pandemic, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products; the costs or effects of mergers, acquisitions or dispositions we may make, whether we are able to obtain any required governmental approvals in connection with any such mergers, acquisitions or dispositions, and/or our ability to realize the contemplated financial business benefits associated with any such activities; the ability to execute business plans in new lending market; the future operating or financial performance of the Company, including our outlook for future growth and changes in the level of our nonperforming assets and charge-offs; the appropriateness of the allowance for credit losses, including the timing and effects of the implementation of the current expected credit losses model; any deterioration in values of California real estate, both residential and commercial; the effect of changes in accounting standards and practices; possible other-than-temporary impairment of securities held by us; changes in consumer spending, borrowing and savings habits; our ability to attract and maintain deposits and other sources of liquidity; changes in the financial performance and/or condition of our borrowers; our noninterest expense and the efficiency ratio; competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional providers including retail businesses and technology companies; the challenges of integrating and retaining key employees; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks and the cost to defend against such attacks; change to U.S. tax policies, including our effective income tax rate; the effect of a fall in stock market prices on our brokerage and wealth management businesses; the discontinuation of the London Interbank Offered Rate and other reference rates; and our ability to manage the risks involved in the foregoing. 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, 2020, which has been filed with the Securities and Exchange Commission (the "SEC") and are available in the "Investor Relations" section of our website, https://www.tcbk.com/investor-relations and in other documents we file with the SEC. Annualized, pro forma, projections and estimates are not forecasts and may not reflect actual results. We are under 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.

AGENDA

MOST RECENT QUARTER HIGHLIGHTS

Consistent Profitability

• Pre-taxpre-provision ROAA and ROAE were 1.78% and 15.08%, respectively, for the quarter ended

September 30, 2021, and 1.72% and 14.11%, respectively, for the same quarter in the prior year.

• Management remains focused on disciplined expense management with increases in the current quarter

being largely correlated to, merger and acquisition costs, the opening and buildout of loan production offices

and the timing of donation and advertising activities.

• Our efficiency ratio was 52.9% during the first nine months of 2021, compared to 59.6% during the same

nine-month period of the prior year.

Growth to Drive Results

• Organic non-PPP loan production levels were $303 million, a 6.3% increase over the trailing quarter, while

gross payoffs also grew to $244 million or a 27.1% increase over the trailing quarter.

• While the start-up costs associated with newly opened loan production offices currently exceed revenues,

those loan production teams have generated more than $60 million of in-process underwriting volumes

• Management is actively monitoring a variety of acquisition opportunities.

Net Interest Income and

• Net interest margin (FTE) was 3.50% for Q3 2021, compared to 3.58% for Q2 2021, and 3.72% in Q3 2020.

Margin

Compression in NIM has been driven by growth in the investment security portfolio as a percent of average

total earning assets which was 27.7% at Q3 2021 compared to 20.2% at Q3 2020.

• Growth in non-interest-bearing deposits continue to drive improved funding costs where total cost of deposits

was 0.05% in Q3 2021 compared to 0.09% Q3 2020.

Credit Quality

• Excluding PPP, loan loss reserves were 1.78% of total loans compared to 1.83% as of June 30, 2021 and

2.07% as of December 31, 2020 .

• Approximately 98% of all round one and 25% of all round two PPP loans have been forgiven by the SBA.

• Meaningful decreases in the volume of COVID related loan payment deferral modifications, the balance of

total non-performing loans, and a continued low ratio of classified loans to total loans.

Diverse Deposit Base

• Non-interest-bearing deposits comprise 40.7% of total deposits, and core deposits have grown 14.1% YOY

Capital Strategies

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

• We remain well capitalized across all regulatory capital ratios.

• Consistent quarterly dividend payments with a history of periodic increases.

• Active share repurchase program with demonstrated utilization, albeit currently on hold as a result of the

pending merger.

COMPANY OVERVIEW

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Disclaimer

TriCo Bancshares published this content on 26 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2021 15:15:04 UTC.