Equibles

8-K

TRICO BANCSHARES / (TCBK)

8-K 2021-01-27 For: 2021-01-27
View Original
Added on April 04, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

_______________

FORM 8-K

_______________

Current report pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

January 27, 2021

_______________________

tcbk-20210127_g1.jpg

(Exact name of registrant as specified in its charter)

_______________________

California 0-10661 94-2792841
(State or other jurisdiction of<br>incorporation or organization) (Commission File No.) (I.R.S. Employer<br>Identification No.)
63 Constitution Drive Chico, California 95973
--- --- --- ---
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (530) 898-0300

_______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading<br>Symbol(s) Name of each exchange<br>on which registered
Common Stock, no par value TCBK Nasdaq

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02    Results of Operations and Financial Condition

On January 27, 2021, TriCo Bancshares (the "Company") announced its financial results for the three and twelve month periods ended December 31, 2020. A copy of the press release is attached as Exhibit 99.1 to this to this Form 8-K and is incorporated herein by reference.

Item 7.01    Regulation FD Disclosure

The executive officers of the Company intend to use the materials filed herewith, in whole or in part, in one or more presentations, discussions or meetings with investors. A copy of the investor presentation is attached hereto as Exhibit 99.2.

Item 9.01    Financial Statements and Exhibits

(d) Exhibits

99.1    Press release dated January 27, 2021

99.2     Investor Presentation

The information furnished under Item 2.02, Item 7.01 and Item 9.01 of this Current Period on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of TriCo Bancshares under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TRICO BANCSHARES
Date: January 27, 2021 /s/ Peter G. Wiese
Peter G. Wiese, Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

Document

Exhibit 99.1

PRESS RELEASE Contact: Peter G. Wiese
For Immediate Release EVP & Chief Financial Officer (530) 898-0300

TRICO BANCSHARES ANNOUNCES QUARTERLY RESULTS

CHICO, CA – (January 27, 2021) – TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company of Tri Counties Bank, today announced net income of $23,657,000 for the quarter ended December 31, 2020, compared to $17,606,000 during the trailing quarter ended September 30, 2020 and $22,890,000 during the quarter ended December 31, 2019. Diluted earnings per share were $0.79 for the fourth quarter of 2020, compared to $0.59 for the third quarter of 2020 and $0.75 for the fourth quarter of 2019.

Financial Highlights

Performance highlights and other developments for the Company as of or for the three and twelve months ended December 31, 2020 included the following:

•For the three and twelve months ended December 31, 2020, the Company’s return on average assets was 1.24% and 0.91%, respectively, and the return on average equity was 10.37% and 7.18%, respectively.

•As of December 31, 2020, the Company reported total loans, total assets and total deposits of $4.76 billion, $7.64 billion and $6.51 billion, respectively.

•The loan to deposit ratio was 73.21% as of December 31, 2020, as compared to 76.12% at September 30, 2020 and 80.26% at December 31, 2019.

•For the current quarter, net interest margin was 3.79% on a tax equivalent basis as compared to 4.39% in the quarter ended December 31, 2019, an increase of 7 basis points from the 3.72% in the trailing quarter.

•Non-interest bearing deposits as a percentage of total deposits were 39.68% at December 31, 2020, as compared to 39.71% at September 30, 2020 and 34.15% at December 31, 2019.

•The average rate of interest paid on deposits, including non-interest-bearing deposits, decreased to 0.07% for the fourth quarter of 2020 as compared with 0.09% for the trailing quarter, and also decreased by 15 basis points from the average rate paid of 0.22% during the same quarter of the prior year.

•Total loan deferral modifications made under the CARES Act legislation had decreased to 28 loans totaling $48.4 million as of December 31, 2020, of which only seven loans totaling $5.8 million relate to second deferrals.

•Non-performing assets to total assets were 0.39% at December 31, 2020, as compared to 0.34% as of September 30, 2020, and 0.30% at December 31, 2019.

•Credit provision expense for loans and debt securities was $4.9 million during the quarter ended December 31, 2020, as compared to provision expense of $7.6 million during the trailing quarter ended September 30, 2020, and a reversal of provision totaling $0.3 million for the three month period ended December 31, 2019.

•Allowance for credit losses to total loans increased to 1.93% as of December 31, 2020, an increase of 12 basis points from 1.81% as of September 30, 2020, and a 78 basis point increase from January 1, 2020, following the Company's adoption of CECL.

•Gain on sale of loans for the three and twelve months ended December 31, 2020 totaled $3.5 million and $9.1 million, as compared to $1.1 million and $3.3 million for the equivalent periods ended December 31, 2019, respectively.

•The efficiency ratio was 55.11% for the fourth quarter of 2020, as compared to 59.44% in the trailing quarter and 59.92% in the same quarter of the 2019 year.

“As we close the doors to 2020 we recognize the challenges that lie ahead and acknowledge, more than ever, the need to focus on the fundamental drivers of value in our industry", commented Peter Wiese, EVP and Chief Financial Officer. Rick Smith, President and CEO added; "There was much accomplished and we have much to be thankful for about 2020, including the successful navigation of round one with PPP, the strongest residential mortgage origination year in the history of the Bank, and the implementation and utilization of new technologies to drive customer engagement, efficiency gains, and cost reductions to name just a few. We will continue to execute on our strategic priorities including organic loan and deposit growth, prudent expense management, active engagement in PPP lending and other programs for borrowers in need, and the deployment of capital through dividends and additional share repurchases."

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the period ended December 31, 2020, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.

Summary Results

For the three and twelve months ended December 31, 2020, the Company’s return on average assets was 1.24% and 0.91%, respectively, and the return on average equity was 10.37% and 7.18%, respectively. For the three and twelve months ended December 31, 2019, the Company’s return on average assets was 1.40% and 1.43%, respectively, and the return on average equity was 10.03% and 10.49%, respectively.

The following is a summary of the components of the Company’s operating results and performance ratios for the periods indicated:

Three months ended
December 31, September 30,
(dollars and shares in thousands) 2020 2020 Change % Change
Net interest income $ 66,422 $ 63,454 4.7 %
Provision for credit losses (4,850) (7,649) 2,799 (36.6) %
Noninterest income 16,580 15,137 1,443 9.5 %
Noninterest expense (45,745) (46,714) 969 (2.1) %
Provision for income taxes (8,750) (6,622) (2,128) 32.1 %
Net income $ 23,657 $ 17,606 34.4 %
Diluted earnings per share $ 0.79 $ 0.59 33.9 %
Dividends per share $ 0.22 $ 0.22 — %
Average common shares 29,757 29,764 (7) 0.0 %
Average diluted common shares 29,863 29,844 19 0.1 %
Return on average total assets 1.24 % 0.95 %
Return on average equity 10.37 % 7.79 %
Efficiency ratio 55.11 % 59.44 %

All values are in US Dollars.

Three months ended<br>December 31,
(dollars and shares in thousands) 2020 2019 Change % Change
Net interest income $ 66,422 $ 64,196 3.5 %
(Provision for) reversal of credit losses (4,850) 298 (5,148) (1,727.5) %
Noninterest income 16,580 14,186 2,394 16.9 %
Noninterest expense (45,745) (46,964) 1,219 (2.6) %
Provision for income taxes (8,750) (8,826) 76 (0.9) %
Net income $ 23,657 $ 22,890 3.4 %
Diluted earnings per share $ 0.79 $ 0.75 5.3 %
Dividends per share $ 0.22 $ 0.22 — %
Average common shares 29,757 30,520 (763) (2.5) %
Average diluted common shares 29,863 30,650 (787) (2.6) %
Return on average total assets 1.24 % 1.40 %
Return on average equity 10.37 % 10.03 %
Efficiency ratio 55.11 % 59.92 %

All values are in US Dollars.

Twelve months ended<br>December 31,
(dollars and shares in thousands) 2020 2019 Change % Change
Net interest income $ 257,727 $ 257,069 0.3 %
(Provision for) reversal of credit losses (42,813) 1,690 (44,503) (2,633.3) %
Noninterest income 55,194 53,520 1,674 3.1 %
Noninterest expense (182,758) (185,457) 2,699 (1.5) %
Provision for income taxes (22,536) (34,750) 12,214 (35.1) %
Net income $ 64,814 $ 92,072 (29.6) %
Diluted earnings per share $ 2.16 $ 3.00 (28.0) %
Dividends per share $ 0.88 $ 0.82 7.3 %
Average common shares 29,917 30,478 (561) (1.8) %
Average diluted common shares 30,028 30,645 (617) (2.0) %
Return on average total assets 0.91 % 1.43 %
Return on average equity 7.18 % 10.49 %
Efficiency ratio 58.40 % 59.71 %

All values are in US Dollars.

SBA Paycheck Protection Program

In March 2020, the Small Business Administration ("SBA") Paycheck Protection Program ("PPP") was created to help small businesses keep workers employed during the COVID-19 crisis. As a SBA Preferred Lender, the Company was able to provide PPP loans to small business customers. As of December 31, 2020, the total gross balance outstanding of PPP loans was $333,982,000 (approximately 2,300 loans) as compared to total PPP originations of $438,510,000 (approximately 2,900 loans). Included in the balance of outstanding PPP loans as of December 31, 2020 are approximately 630 loans totaling $88,623,000 that have been submitted to and are pending forgiveness by the SBA. In connection with the origination of these loans, the Company earned approximately $15,735,000 in loan fees, offset by deferred loan costs of approximately $763,000, the net of which will be recognized over the earlier of loan maturity, repayment or receipt of forgiveness confirmation. As of December 31, 2020 there was approximately $7,212,000 in net deferred fee income remaining to be recognized. During the three and twelve months ended December 31, 2020, the Company recognized $4,634,000 and $7,760,000, respectively, in fees on PPP loans.

In December 2020, the SBA announced plans for a second round of PPP lending with streamlined requirements for both borrowers and lenders. Effective Friday, January 15, 2021, Tri Counties Bank had launched and was accepting applications via an improved on-line portal which allows borrowers to open a new account and submit PPP applications under the new PPP guidance.

COVID Deferrals

Following the passage of the CARES Act legislation, the "Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus" was issued by federal bank regulators, which offers temporary relief from troubled debt restructuring accounting for loan payment deferrals for certain customers whose businesses are experiencing economic hardship due to Coronavirus. The Company continues to closely monitor the effects of the pandemic on our loan and deposit customers. Our management team continues to be focused on assessing the risks in our loan portfolio and working with our customers to mitigate where possible, the risk of potential losses. Beginning in April 2020, the Company implemented loan programs to allow certain consumers and businesses impacted by the pandemic to defer loan principal and interest payments.

The following is a summary of COVID related loan customer modifications with outstanding balances as of December 31, 2020:

Modification Type Deferral Term
(dollars in thousands) Modified Loan Balances Outstanding % of Total Category of Loans Interest Only Deferral Principal and Interest Deferral 90 Days 180 Days
Commercial real estate:
CRE non-owner occupied $ 19,643 1.28 % 87.1 % 12.9 % — % 100.0 %
CRE owner occupied 2,488 0.40 71.0 29.0 71.0 29.0
Multifamily — — — — — —
Farmland — — — — — —
Total commercial real estate loans 22,131 0.8 85.3 14.7 8.0 92.0
Consumer:
SFR 1-4 1st lien 457 0.1 100.0 — — 100.0
SFR HELOCs and junior liens — — — — — —
Other — — — — — —
Total consumer loans 457 0.1 100.0 — — 100.0
Commercial and industrial 772 0.2 86.1 13.9 9.0 91.0
Construction 24,998 8.8 100.0 — — 100.0
Agriculture production — — — — — —
Leases — — — — — —
Total modifications $ 48,358 1.0 % 93.0 % 7.0 % 3.7 % 96.3 %

Total loan modifications associated with CARES Act legislation made during the twelve months ended December 31, 2020 totaled approximately $427,290,000 of which $48,360,000 remained outstanding under their modified terms as of December 31, 2020. During the three months ended September 30, 2020 and December 31, 2020, newly granted deferrals, inclusive of second deferrals, totaled approximately $100,170,000 and $12,720,000, respectively. The remaining balance of loans with modified terms are expected to conclude their modification period during the first half of fiscal 2021, however, as long as the current pandemic and recessionary economic conditions continue, it is anticipated that additional borrowers may request an initial or subsequent modification to their loan terms.

The total loan modifications made under the CARES Act during 2020 are inclusive of 13 loans (10 borrowers) with loan balances totaling $31,660,000 who requested and were granted a second modification and deferral. Eight of these second modifications and deferrals were for a period of three additional months, and six of the 13 loans had concluded their second deferral period and returned to their regular payment terms and are therefore not included in the table above. The remaining borrowers who received a second loan modification have outstanding loan balances totaling $5,840,000 million as of December 31, 2020, of which $2,000,000 has been classified as troubled debt restructurings by Management due to the likelihood of further changes to the contractual loan terms being necessary.

Management believes that its analysis of each borrower receiving a loan modification supports the ability of that borrower to return to their normal payment terms at the conclusion of the modification period. However, management determined that a risk rating downgrade to each credit receiving a deferral modification was prudent until such time that the borrower's actual payment performance supported an upgrade to the pre-modification risk grade.

Balance Sheet

Total loans outstanding excluding PPP grew to $4.44 billion as of December 31, 2020, an increase of 3.0% over the same quarter of the prior year, and an annualized increase of 3.3% over the trailing quarter. Investments outstanding increased to $1.72 billion as of December 31, 2020, an increase of 66.5% annualized over the trailing quarter. Average earning assets to total average assets continued to increase to 92.4% at December 31, 2020, as compared to 92.3% and 89.8% at September 30, 2020, and December 31, 2019, respectively. The Company's loan to deposit ratio was 73.2% at December 31, 2020, as compared to 76.1% and 80.3% at September 30, 2020, and December 31, 2019, respectively.

Total shareholders' equity increased by $22,852,000 during the quarter ended December 31, 2020, primarily as a result of net income of $23,657,000 and an increase in accumulated other comprehensive income of $6,704,000, partially offset by $6,546,000 in cash dividends paid on common stock and $1,523,000 in common stock repurchases. As a result, the Company’s book value increased to $31.12 per share at December 31, 2020 as compared to $30.31 and $29.70 at September 30, 2020, and December 31, 2019, respectively. The Company’s tangible book value per share, a non-GAAP measure, calculated by subtracting goodwill and other intangible assets from total shareholders’ equity and dividing that sum by total shares outstanding, was $23.09 per share at December 31, 2020, as compared to $22.24 and $21.69 at September 30, 2020, and December 31, 2019, respectively.

Trailing Quarter Balance Sheet Change

Ending balances As of December 31, As of September 30, Change Annualized<br> % Change
(dollars in thousands) 2020 2020
Total assets $ 7,639,529 $ 7,449,799 10.2 %
Total loans 4,763,127 4,826,338 (63,211) (5.2) %
Total loans, excluding PPP 4,436,357 4,400,390 35,967 3.3 %
Total investments 1,719,102 1,473,935 245,167 66.5 %
Total deposits $ 6,505,934 $ 6,340,588 10.4 %

All values are in US Dollars.

The growth of deposit balances continued during the fourth quarter of 2020, increasing by $165,346,000 or 10.4% annualized. The available liquidity from deposit growth was allocated to fund investment growth during the period, which increased by $245,167,000, or 66.5% annualized. Total loans declined during the fourth quarter of 2020 by $63,211,000 or 5.2% on an annualized basis, largely attributed to the repayment or forgiveness of gross PPP loans outstanding, which declined by $103,811,000 during the quarter. Conversely, non-PPP loan balances increased by $35,967,000 or 3.3% of loan balances, during the quarter ended December 31, 2020.

Average Trailing Quarter Balance Sheet Change

Qtrly avg balances As of December 31, As of September 30, Change Annualized<br> % Change
(dollars in thousands) 2020 2020
Total assets $ 7,570,952 $ 7,380,961 10.3 %
Total loans 4,767,715 4,827,564 (59,849) (5.0) %
Total loans, excluding PPP 4,363,873 4,389,672 (25,799) (2.4) %
Total investments 1,572,511 1,376,212 196,299 57.1 %
Total deposits $ 6,341,175 $ 6,278,638 4.0 %

All values are in US Dollars.

The decline in average total loans excluding PPP of $25,799,000, or 2.4% on an annualized basis, during the fourth quarter of 2020 was inconsistent with the actual period end growth as compared to the trailing quarter of $35,967,000 or 3.3% due to pay-downs or payoffs occurring early in the quarter as compared to originations occurring late in the quarter. The significant growth in both ending and average balances of investment securities was a direct result of management's focus on the deployment of excess cash balances which remained elevated due to continued deposit growth during the quarter.

Year Over Year Balance Sheet Change

Ending balances As of December 31,
(dollars in thousands) 2020 2019 Change % Change
Total assets $ 7,639,529 $ 6,471,181 18.1 %
Total loans 4,763,127 4,307,366 455,761 10.6 %
Total loans, excluding PPP 4,436,357 4,307,366 128,991 3.0 %
Total investments 1,719,102 1,345,954 373,148 27.7 %
Total deposits $ 6,505,934 $ 5,366,994 21.2 %

All values are in US Dollars.

As discussed in previous quarters, the PPP program generated significant increases in volume during the twelve months ended December 31, 2020 for both loan and deposit balances. While excess deposit proceeds are ratably being allocated to the purchase of

investment securities with medium term durations to improve overall margin, we expect to maintain above average levels of liquidity through 2021, as the economic impacts of COVID-19 and amount of future stimulus both remain uncertain. Investment securities increased to $1,719,102,000 at December 31, 2020, a change of $373,148,000 or 27.7% from $1,345,954,000 at December 31, 2019.

Net Interest Income and Net Interest Margin

The following is a summary of the components of net interest income for the periods indicated:

Three months ended
December 31, September 30,
(dollars in thousands) 2020 2020 Change % Change
Interest income $ 68,081 $ 65,438 4.0 %
Interest expense (1,659) (1,984) 325 (16.4) %
Fully tax-equivalent adjustment (FTE) (1) 258 254 4 1.6 %
Net interest income (FTE) $ 66,680 $ 63,708 4.7 %
Net interest margin (FTE) 3.79 % 3.72 %
Acquired loans discount accretion, net:
Amount (included in interest income) $ 1,960 $ 1,876
Net interest margin less effect of acquired loan discount accretion(1) 3.68 % 3.61 % 0.07 %
PPP loans yield, net:
Amount (included in interest income) $ 5,676 $ 2,603
Net interest margin less effect of PPP loan yield (1) 3.68 % 3.81 % (0.13) %
Acquired loans discount accretion and PPP loan yield, net: (1)
Amount (included in interest income) $ 7,636 $ 4,479
Net interest margin less effect of acquired loan discount accretion and PPP loan yield (1) 3.56 % 3.69 % (0.13) %

All values are in US Dollars.

Three months ended<br>December 31,
(dollars in thousands) 2020 2019 Change % Change
Interest income $ 68,081 $ 67,918 0.2 %
Interest expense (1,659) (3,722) 2,063 (55.4) %
Fully tax-equivalent adjustment (FTE) (1) 258 272 (14) (5.1) %
Net interest income (FTE) $ 66,680 $ 64,468 3.4 %
Net interest margin (FTE) 3.79 % 4.39 %
Acquired loans discount accretion, net:
Amount (included in interest income) $ 1,960 $ 2,218
Net interest margin less effect of acquired loan discount accretion(1) 3.68 % 4.23 % (0.55) %

All values are in US Dollars.

Twelve months ended<br>December 31,
(dollars in thousands) 2020 2019 Change % Change
Interest income $ 267,184 $ 272,444 (1.9) %
Interest expense (9,457) (15,375) 5,918 (38.5) %
Fully tax-equivalent adjustment (FTE) (1) 1,069 1,201 (132) (11.0) %
Net interest income (FTE) $ 258,796 $ 258,270 0.2 %
Net interest margin (FTE) 3.96 % 4.47 %
Acquired loans discount accretion, net:
Amount (included in interest income) $ 8,171 $ 8,137
Net interest margin less effect of acquired loan discount accretion(1) 3.83 % 4.36 % (0.53) %
PPP loans yield, net:
Amount (included in interest income) $ 10,635 —
Net interest margin less effect of PPP loan yield (1) 3.97 % — 3.97 %
Acquired loans discount accretion and PPP loan yield, net:
Amount (included in interest income) $ 18,806 $ 8,137
Net interest margin less effect of acquired loans discount and PPP loan yield (1) 3.88 % 4.36 % (0.48) %

All values are in US Dollars.

(1)Information is presented on a fully tax-equivalent (FTE) basis. The Company believes the use of this non-generally accepted accounting principles (non-GAAP) measure provides additional clarity in assessing its results, and the presentation of these measures on a FTE basis is a common practice within the banking industry.

Loans may be acquired at a premium or discount to par value, in which case, the premium is amortized (subtracted from) or accreted (added to) interest income over the remaining life of the loan. Generally, as time goes on, the effects of loan discount accretion and loan premium amortization decrease as the purchased loans mature or pay off early. Upon the early pay off of a loan, any remaining (unaccreted) discount or (unamortized) premium is immediately taken into interest income; and as loan payoffs may vary significantly from quarter to quarter, so may the impact of discount accretion and premium amortization on interest income. As a result of the uncertain economic environment and corresponding interest rate volatility, the prepayment rate of portfolio loans, inclusive of those acquired at a premium or discount, increased during the fourth quarter of 2020. During the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, purchased loan discount accretion was $1,960,000, $1,876,000, and $2,218,000, respectively.

The following table shows the components of net interest income and net interest margin on a fully tax-equivalent (FTE) basis for the quarterly periods indicated:

ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS

(unaudited, dollars in thousands)

Three months ended Three months ended Three months ended
December 31, 2020 September 30, 2020 December 31, 2019
Average<br>Balance Income/<br>Expense Yield/<br>Rate Average<br>Balance Income/<br>Expense Yield/<br>Rate Average<br>Balance Income/<br>Expense Yield/<br>Rate
Assets
Loans, excluding PPP $ 4,363,873 $ 55,339 5.04 % $ 4,389,672 $ 55,436 5.02 % $ 4,231,347 $ 56,862 5.46 %
PPP loans 403,842 5,676 5.59 % 437,892 2,603 2.36 % — — — %
Investments-taxable 1,458,856 6,022 1.64 % 1,261,793 6,376 2.01 % 1,236,717 9,246 2.97 %
Investments-nontaxable (1) 113,656 1,121 3.92 % 114,419 1,102 3.83 % 119,350 1,179 3.92 %
Total investments 1,572,512 7,143 1.81 % 1,376,212 7,478 2.16 % 1,356,067 10,425 3.05 %
Cash at Federal Reserve and other banks 658,355 181 0.11 % 611,719 175 0.11 % 236,381 903 1.52 %
Total earning assets 6,998,582 68,339 3.88 % 6,815,495 65,692 3.83 % 5,823,795 68,190 4.65 %
Other assets, net 572,370 565,466 659,037
Total assets $ 7,570,952 $ 7,380,961 $ 6,482,832
Liabilities and shareholders’ equity
Interest-bearing demand deposits $ 1,275,550 $ 43 0.01 % $ 1,339,797 $ 56 0.02 % $ 1,227,854 $ 229 0.07 %
Savings deposits 2,145,543 405 0.08 % 2,075,077 484 0.09 % 1,859,652 1,261 0.27 %
Time deposits 362,104 661 0.73 % 387,922 872 0.89 % 453,894 1,458 1.27 %
Total interest-bearing deposits 3,783,197 1,109 0.12 % 3,802,796 1,412 0.15 % 3,541,400 2,948 0.33 %
Other borrowings 32,504 4 0.05 % 33,750 4 0.05 % 20,247 3 0.06 %
Junior subordinated debt 57,581 546 3.77 % 57,475 568 3.93 % 57,205 771 5.35 %
Total interest-bearing liabilities 3,873,282 1,659 0.17 % 3,894,021 1,984 0.20 % 3,618,852 3,722 0.41 %
Noninterest-bearing deposits 2,557,978 2,475,842 1,843,790
Other liabilities 232,224 112,112 114,605
Shareholders’ equity 907,468 898,986 905,585
Total liabilities and shareholders’ equity $ 7,570,952 $ 7,380,961 $ 6,482,832
Net interest rate spread (1) (2) 3.71 % 3.63 % 4.24 %
Net interest income and margin (1) (3) $ 66,680 3.79 % $ 63,708 3.72 % $ 64,468 4.39 %

(1)Fully taxable equivalent (FTE). All yields and rates are calculated using specific day counts for the period and year as applicable.

(2)Net interest spread is the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(3)Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets.

Net interest income (FTE) during the three months ended December 31, 2020 increased $2,972,000 or 4.7% to $66,680,000 compared to $63,708,000 during the three months ended September 30, 2020. Over the same period, net interest margin increased 7 basis points to 3.79% as compared to 3.72% in the trailing quarter. The 7 basis point increase is attributed to a 2 basis point increase in non-PPP loan yields, a 3 basis point decrease in the rate paid on interest-bearing liabilities, and an increase in yields on the PPP loans, which

earned 5.59% during the three months ended December 31, 2020, as compared to 2.36% during the trailing quarter. The quarterly increase in yield on PPP loans is due to an acceleration of deferred loan fee accretion resulting from approximately $103,633,000 in PPP loans being approved by the SBA for forgiveness. Those increases were partially offset by declines in investment security yields which were 1.81% during the three months ended December 31, 2020, as compared to 2.16% during the trailing quarter.

As compared to the same quarter in the prior year, average loan yields, excluding PPP, decreased 42 basis points from 5.46% during the three months ended December 31, 2019, to 5.04% during the three months ended December 31, 2020. Of the 42 basis point decrease in yields on loans during the comparable three month periods ended December 31, 2020 and 2019, 39 basis points was attributable to decreases in market yields while 3 basis points was lost from the decline in accretion of purchased loan discounts. The index utilized in a significant portion of the Company’s variable rate loans, Wall Street Journal Prime, remained unchanged at 3.25% during the quarter ended December 31, 2020, as compared to the trailing quarter, but has decreased from 4.75% at December 31, 2019.

The decline in interest expense when compared to the trailing quarter is primarily attributed to the reduction in the cost of interest bearing liabilities, which decreased by 3 basis points as of December 31, 2020, to 0.17% from 0.20% at September 30, 2020, as a direct result of the aforementioned declining interest rate environment.

In addition, the growth of noninterest-bearing deposits has benefited the average costs of total deposits. Specifically, the ratio of average total noninterest-bearing deposits to total average deposits grew to 40.3% from 34.2% in the quarter ended December 31, 2020 as compared to the same quarter in the prior year which has allowed the average cost of total deposits to decrease to 0.07% from 0.22% in the comparable periods.

ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS

(unaudited, dollars in thousands)

Twelve months ended December 31, 2020 Twelve months ended December 31, 2019
Average<br>Balance Income/<br>Expense Yield/<br>Rate Average<br>Balance Income/<br>Expense Yield/<br>Rate
Assets
Loans, excluding PPP $ 4,361,679 $ 223,086 5.11 % $ 4,111,093 $ 223,750 5.44 %
PPP loans 284,326 10,635 3.74 % — — — %
Investments-taxable 1,302,367 28,659 2.20 % 1,360,793 41,095 3.02 %
Investments-nontaxable (1) 116,717 4,636 3.97 % 133,733 5,203 3.89 %
Total investments 1,419,084 33,295 2.35 % 1,494,526 46,298 3.10 %
Cash at Federal Reserve and other banks 467,376 1,237 0.26 % 171,021 3,597 2.10 %
Total earning assets 6,532,465 268,253 4.11 % 5,776,640 273,645 4.74 %
Other assets, net 590,966 660,455
Total assets $ 7,123,431 $ 6,437,095
Liabilities and shareholders’ equity
Interest-bearing demand deposits $ 1,313,804 $ 332 0.03 % $ 1,254,375 $ 1,089 0.09 %
Savings deposits 2,015,134 2,595 0.13 % 1,883,964 4,892 0.26 %
Time deposits 397,216 3,958 1.00 % 446,142 5,735 1.29 %
Total interest-bearing deposits 3,726,154 6,885 0.18 % 3,584,481 11,716 0.33 %
Other borrowings 28,863 17 0.06 % 15,484 387 2.50 %
Junior subordinated debt 57,426 2,555 4.45 % 57,133 3,272 5.73 %
Total interest-bearing liabilities 3,812,443 9,457 0.25 % 3,657,098 15,375 0.42 %
Noninterest-bearing deposits 2,289,168 1,780,746
Other liabilities 119,710 121,933
Shareholders’ equity 902,110 877,318
Total liabilities and shareholders’ equity $ 7,123,431 $ 6,437,095
Net interest rate spread (1) (2) 3.86 % 4.32 %
Net interest income and margin (1) (3) $ 258,796 3.96 % $ 258,270 4.47 %

(1)Fully taxable equivalent (FTE). All yields and rates are calculated using specific day counts for the period and year as applicable.

(2)Net interest spread is the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(3)Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets.

Interest Rates and Loan Portfolio Composition

During 2020, declines in several market interest rates, including many rates that serve as reference indices for variable rate loans, declined markedly from previous levels. As of December 31, 2020, the Company's loan portfolio consisted of approximately $4.80 billion in outstanding principal with a weighted average coupon rate of 4.35%, inclusive of the PPP program loans. Excluding PPP loans, the Company's loan portfolio has approximately $4.47 billion outstanding with a weighted average coupon rate of 4.60% as of December 31, 2020. Included in the December 31, 2020 loan total, exclusive of PPP loans, are variable rate loans totaling $3.02 billion of which 88.2% or $2.66 billion were at their floor rate. The remaining variable rate loans totaling $357.0 million, which carried a weighted average coupon rate of 5.03% as of December 31, 2020, are subject to further rate adjustment. If those remaining variable rate loans were to collectively, through future rate adjustments, be reduced to their respective floors, they would have a weighted average coupon rate of approximately 4.36% which would result in the reduction of the weighted average coupon rate of the total loan portfolio, exclusive of PPP loans, from 4.60% to approximately 4.55%.

As of September 30, 2020, the Company's loan portfolio consisted of approximately $4.87 billion in outstanding principal with a weighted average coupon rate of 4.34%, inclusive of the PPP program loans. Excluding these loans, the Company's loan portfolio has approximately $4.43 billion outstanding with a weighted average coupon rate of 4.66% as of September 30, 2020. Included in this September 30, 2020 loan total, exclusive of PPP loans, are variable rate loans totaling $3.0 billion of which 87.7% or $2.62 billion were at their floor rate. The remaining variable rate loans totaling $369.0 million which carried a weighted average coupon rate of 5.07% as of September 30, 2020, are subject to further rate adjustment. If those remaining variable rate loans were to collectively, through future rate adjustments, be reduced to their respective floors, they would have a weighted average coupon rate of approximately 4.36% which would result in the reduction of the weighted average coupon rate of the total loan portfolio, exclusive of PPP loans, from 4.66% to approximately 4.61%.

Asset Quality and Credit Loss Provisioning

The Company adopted CECL on January 1, 2020. During the three months ended December 31, 2020, the Company recorded a provision for credit losses of $4,850,000, as compared to $7,649,000 for the trailing quarter, and a reversal of provision expense of $298,000 during the fourth quarter of 2019.

The following table presents details of the provision for credit losses for the periods indicated:

Three months ended
(dollars in thousands) December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020
Addition to allowance for credit losses $ 4,450 $ 7,649 $ 22,089 $ 8,000
Addition to reserve for unfunded loan commitments 400 — 155 70
Total provision for credit losses $ 4,850 $ 7,649 $ 22,244 $ 8,070

The allowance for credit losses (ACL) was $91,847,000 as of quarter ended December 31, 2020, a net increase of $4,272,000 over the immediately preceding quarter. More specifically, the changes in loan volume and changes in credit quality associated with levels of classified, past due and non-performing loans, in addition to changes in qualitative factors, resulted in the need for a provision for credit losses of $4,450,000, offset by net charge-offs totaled $178,000 during the current quarter. The portfolio-wide qualitative indicators associated with the forecast levels of California Unemployment contributed to the majority of the increase in credit reserves on loans as of December 31, 2020 as compared to the trailing quarter, adding approximately $5,250,000 to the required reserves. These increases were partially offset by reductions in required reserves of approximately $1,910,000 associated with historical loss rates which have continued to remain low despite the current economic recession.

The Company utilizes a forecast period of approximately eight quarters and obtains the forecast data from publicly available sources as of the balance sheet date. This forecast data continues to evolve and included significant shifts in the magnitude of changes for both the unemployment and GDP factors leading up to the balance sheet date. Management noted that the majority of economic forecasts utilized in the ACL calculation have continued to identify an expanded duration of the current recessionary period as caused by the global pandemic and partially offset by the governmental stimulus that has been or is expected to be provided.

Loans past due 30 days or more decreased by $3,321,000 during the quarter ended December 31, 2020 to $6,767,000, as compared to $10,522,000 at September 30, 2020. Non-performing loans were $26,864,000 at December 31, 2020, an increase of $3,901,000 and $10,000,000, respectively, from $22,963,000 and $16,864,000 as of September 30, 2020, and December 31, 2019, respectively.

The following table illustrates the total loans by risk rating and their respective percentage of total loans for the periods presented.

December 31, % of Total Loans September 30, % of Total Loans December 31, % of Total Loans
(dollars in thousands) 2020 2020 2019
Risk Rating:
Pass $ 4,555,154 95.6 % $ 4,630,266 95.9 % $ 4,228,453 98.2 %
Special Mention 158,241 3.4 % 147,343 3.1 % 44,217 1.0 %
Substandard 49,732 1.0 % 48,729 1.0 % 34,696 0.8 %
Total $ 4,763,127 $ 4,826,338 $ 4,307,366
Classified loans to total loans 1.04 % 1.01 % 0.81 %
Loans past due 30+ days to total loans 0.14 % 0.22 % 0.25 %

The Company's loan portfolio for non-classified loans (loans graded special mention or better) remains generally consistent for the quarter ended December 31, 2020, as compared to the trailing quarter September 30, 2020, representing 99.0% of total loans outstanding, respectively. Loans risk graded special mention increased by approximately $10,898,000 during the quarter ended December 31, 2020 as compared to the trailing quarter. The downgrades to special mention were largely focused in one relationship of two loans totaling approximately $10,355,000 secured by commercial real estate properties which have received second COVID deferrals, but are believed to have more than sufficient collateral support.

Additions to other real estate owned totaled $609,000, representing three loans from the same borrower, during the quarter ended December 31, 2020. There were no sales during the same period. As of December 31, 2020, other real estate owned consisted of seven properties with a carrying value of $2,844,000. As of December 31, 2019, other real estate owned included five properties with a carrying value of $2,541,000.

Allocation of Credit Loss Reserves by Loan Type

As of December 31, 2020 As of September 30, 2020 As of June 30, 2020
(dollars in thousands) Amount % of Credit Outstanding Amount % of Loans Outstanding Amount % of Loans Outstanding
Commercial real estate:
CRE - Non Owner Occupied $ 29,380 1.91 % $ 28,847 1.80 % $ 26,091 1.63 %
CRE - Owner Occupied 10,860 1.74 % 9,625 1.66 % 8,710 1.50 %
Multifamily 11,472 1.79 % 10,032 1.67 % 8,581 1.49 %
Farmland 1,980 1.30 % 1,790 1.17 % 1,468 0.97 %
Total commercial real estate loans 53,692 1.82 % 50,294 1.71 % 44,850 1.54 %
Consumer:
SFR 1-4 1st Liens 10,117 1.83 % 8,937 1.72 % 8,015 1.58 %
SFR HELOCs and Junior Liens 11,771 3.59 % 11,676 3.51 % 12,108 3.38 %
Other 3,261 4.20 % 3,394 4.18 % 3,042 3.73 %
Total consumer loans 25,149 2.62 % 24,007 2.57 % 23,165 2.45 %
Commercial and Industrial 4,252 0.81 % 4,534 0.72 % 4,018 0.63 %
Construction 7,540 2.65 % 7,640 2.68 % 6,775 2.43 %
Agricultural Production 1,209 2.74 % 1,093 2.69 % 919 2.59 %
Leases 5 0.13 % 7 0.19 % 12 0.68 %
Allowance for credit losses 91,847 1.93 % 87,575 1.81 % 79,739 1.66 %
Reserve for unfunded loan commitments 3,400 3,000 3,000
Total allowance for credit losses $ 95,247 $ 90,575 1.88 % $ 82,739 1.72 %

For the periods presented in the table above and for purposes of calculating the "% of Credit Outstanding", PPP loans are included in the segment "Commercial and Industrial." PPP loans are fully guaranteed and therefore would not require any loss reserve allocation. Excluding the net outstanding balances of PPP loans from the ratio of the ACL to total loans results in a reserve ratio of approximately 2.07% as of December 31, 2020. In addition to the allowance for credit losses above, the Company has acquired various performing loans whose fair value as of the acquisition date was determined to be less than the principal balance owed on those loans. This difference represents the collective discount of credit, interest rate and liquidity measurements which is expected to be amortized over the life of the loans. As of December 31, 2020, the unamortized discount associated with acquired loans totaled $25,461,000 and if aggregated with the ACL would collectively represent 2.45% of total gross loans and 2.63% total loans less PPP loans.

Non-interest Income

The following table presents the key components of non-interest income for the current and trailing quarterly periods indicated:

Three months ended
(dollars in thousands) December 31, 2020 September 30, 2020 Change % Change
ATM and interchange fees $ 5,747 $ 5,637 2.0 %
Service charges on deposit accounts 3,518 3,334 184 5.5 %
Other service fees 860 805 55 6.8 %
Mortgage banking service fees 469 457 12 2.6 %
Change in value of mortgage servicing rights (376) 236 (612) (259.3) %
Total service charges and fees 10,218 10,469 (251) (2.4) %
Increase in cash value of life insurance 746 773 (27) (3.5) %
Asset management and commission income 745 667 78 11.7 %
Gain on sale of loans 3,460 3,035 425 14.0 %
Lease brokerage income 173 175 (2) (1.1) %
Sale of customer checks 111 91 20 22.0 %
Gain on sale of investment securities — 7 (7) n/m
Loss on marketable equity securities (8) — (8) n/m
Other 1,135 (80) 1,215 (1518.8) %
Total other non-interest income 6,362 4,668 1,694 36.3 %
Total non-interest income $ 16,580 $ 15,137 9.5 %

All values are in US Dollars.

Non-interest income increased $1,443,000 or 9.5% to $16,580,000 during the three months ended December 31, 2020 compared to $15,137,000 during the trailing quarter September 30, 2020. Mortgage loan origination volume increased during the period ended December 31, 2020 as a result of the continued favorable interest rate environment, leading to a $425,000 increase in gain on sale of loans, as compared to the trailing quarter. Additionally, other non-interest income contributed $1,135,000 during the quarter ended December 31, 2020, an increase of $1,215,000 from the trailing quarter. This increase was largely the result of a one-time death benefit totaling $498,000 realized during the quarter ended December 31, 2020. As an offset to the increased non-interest income discussed above, the change in valuation of mortgage servicing rights decreased by $376,000 during the quarter, which represented a decline of $612,000 in income as compared to the trailing quarter ended September 30, 2020.

The following table presents the key components of non-interest income for the periods indicated:

Three months ended<br>December 31,
(dollars in thousands) 2020 2019 Change % Change
ATM and interchange fees $ 5,747 $ 5,227 9.9 %
Service charges on deposit accounts 3,518 4,268 (750) (17.6) %
Other service fees 860 817 43 5.3 %
Mortgage banking service fees 469 476 (7) (1.5) %
Change in value of mortgage servicing rights (376) (159) (217) 136.5 %
Total service charges and fees 10,218 10,629 (411) (3.9) %
Increase in cash value of life insurance 746 735 11 1.5 %
Asset management and commission income 745 775 (30) (3.9) %
Gain on sale of loans 3,460 1,059 2,401 226.7 %
Lease brokerage income 173 247 (74) (30.0) %
Sale of customer checks 111 128 (17) (13.3) %
Gain on sale of investment securities — 3 (3) n/m
Gain on marketable equity securities (8) (14) 6 (42.9) %
Other 1,135 624 511 81.9 %
Total other non-interest income 6,362 3,557 2,805 78.9 %
Total non-interest income $ 16,580 $ 14,186 16.9 %

All values are in US Dollars.

In addition to the discussion above within the non-interest income for the three months ended December 31, 2020 and trailing September 30, 2020, overall fee generating deposit account activity remains depressed as a result of the COVID-19 pandemic, declining $750,000 or 17.6% during the three months ended December 31, 2020 when compared to the same period in the prior year, however, a slight increase of $184,000 or 5.5% over the trailing quarter was observed. These changes were benefited by continued

increases in ATM and interchange fees which increased by $110,000 and $530,000 over the trailing quarter and same quarter in the prior year, respectively.

The following table presents the key components of non-interest income for the current and prior year twelve month periods indicated:

Twelve months ended<br>December 31,
(dollars in thousands) 2020 2019 Change % Change
ATM and interchange fees $ 21,660 $ 20,639 4.9 %
Service charges on deposit accounts 13,944 16,657 (2,713) (16.3) %
Other service fees 3,156 3,015 141 4.7 %
Mortgage banking service fees 1,855 1,917 (62) (3.2) %
Change in value of mortgage servicing rights (2,634) (1,811) (823) 45.4 %
Total service charges and fees 37,981 40,417 (2,436) (6.0) %
Increase in cash value of life insurance 2,949 3,029 (80) (2.6) %
Asset management and commission income 2,989 2,877 112 3.9 %
Gain on sale of loans 9,122 3,282 5,840 177.9 %
Lease brokerage income 668 878 (210) (23.9) %
Sale of customer checks 414 529 (115) (21.7) %
Gain on sale of investment securities 7 110 (103) (93.6) %
Gain on marketable equity securities 64 86 (22) (25.6) %
Other 1,000 2,312 (1,312) (56.7) %
Total other non-interest income 17,213 13,103 4,110 31.4 %
Total non-interest income $ 55,194 $ 53,520 3.1 %

All values are in US Dollars.

Non-interest income increased $1,674,000 or 3.1% to $55,194,000 during the twelve months ended December 31, 2020, compared to $53,520,000 during the equivalent period in 2019. This increase was primarily attributed to an increase in gains from the sale of mortgage loans, which resulted from increased volume, and contributed $5,840,000 to the overall increase in non-interest income during the year ended December 31, 2020 as compared to December 31, 2019. Non-interest income was negatively impacted by changes in the fair value of the Company’s mortgage servicing assets, as noted above, which contributed to a $823,000 decline for the year. Further, fee generative deposit account activity was impacted by reductions in the volume of returned check fees, declining by $2,713,000 to $13,944,000 for the twelve months ended December 31, 2020. Other non-interest income also declined by $1,312,000 during 2020, partially from decreases in the fair value of assets used to fund acquired deferred compensation plans totaling $514,000, as compared to 2019, as well as from a reduction in one-time death benefits realized during the years ended 2020 and 2019 of $498,000 and $831,000, respectively.

Non-interest Expense

The following table presents the key components of non-interest expense for the current and trailing quarterly periods indicated:

Three Months Ended
(dollars in thousands) December 31, 2020 September 30, 2020 Change % Change
Base salaries, net of deferred loan origination costs $ 16,510 $ 18,754 (12.0) %
Incentive compensation 2,342 2,184 158 7.2 %
Benefits and other compensation costs 9,621 8,383 1,238 14.8 %
Total salaries and benefits expense 28,473 29,321 (848) (2.9) %
Occupancy 3,815 3,440 375 10.9 %
Data processing and software 2,919 3,561 (642) (18.0) %
Equipment 1,293 1,549 (256) (16.5) %
Intangible amortization 1,430 1,431 (1) (0.1) %
Advertising 762 869 (107) (12.3) %
ATM and POS network charges 1,536 1,314 222 16.9 %
Professional fees 823 955 (132) (13.8) %
Telecommunications 618 619 (1) (0.2) %
Regulatory assessments and insurance 601 538 63 11.7 %
Postage 377 118 259 219.5 %
Operational losses 609 154 455 295.5 %
Courier service 401 345 56 16.2 %
Gain on sale or acquisition of foreclosed assets (177) — (177) n/m
Loss on disposal of fixed assets 30 22 8 36.4 %
Other miscellaneous expense 2,236 2,478 (242) (9.8) %
Total other non-interest expense 17,273 17,393 (120) (0.7) %
Total non-interest expense $ 45,746 $ 46,714 (2.1) %
Average full-time equivalent staff 1,030 1,105 (75) (6.8) %

All values are in US Dollars.

Non-interest expense for the quarter ended December 31, 2020 decreased $968,000 or 2.1% to $45,746,000 as compared to $46,714,000 during the trailing quarter ended September 30, 2020. Salaries, net of deferred loan origination costs decreased by $2,244,000 to $16,510,000 for the three months ended December 31, 2020 due to a decrease in average full-time equivalent staff in addition to reductions in overtime and temporary help. Benefits related expenses increased by $1,238,000 to $9,621,000 during the quarter primarily as a result of increases in expenses associated with retirement obligations and insurance costs. Data processing and software expense declined by $642,000 for the quarter ended December 31, 2020, due to negotiated changes to the Company's data processing pricing structure and a temporary reduction in volume of variable priced services requested from the Company's vendor.

The following table presents the key components of non-interest expense for the current and prior year quarterly periods indicated:

Three months ended December 31,
(dollars in thousands) 2020 2019 Change % Change
Base salaries, net of deferred loan origination costs $ 16,510 $ 18,594 (11.2) %
Incentive compensation 2,342 3,042 (700) (23.0) %
Benefits and other compensation costs 9,621 5,683 3,938 69.3 %
Total salaries and benefits expense 28,473 27,319 1,154 4.2 %
Occupancy 3,815 3,670 145 4.0 %
Data processing and software 2,919 3,403 (484) (14.2) %
Equipment 1,293 1,724 (431) (25.0) %
Intangible amortization 1,430 1,430 — — %
Advertising 762 1,411 (649) (46.0) %
ATM and POS network charges 1,536 1,511 25 1.7 %
Professional fees 823 859 (36) (4.2) %
Telecommunications 618 753 (135) (17.9) %
Regulatory assessments and insurance 601 93 508 546.2 %
Postage 377 195 182 93.3 %
Operational losses 609 307 302 98.4 %
Courier service 401 269 132 49.1 %
Gain on sale or acquisition of foreclosed assets (177) — (177) n/m
Loss on disposal of fixed assets 30 — 30 n/m
Other miscellaneous expense 2,236 4,020 (1,784) (44.4) %
Total other non-interest expense 17,273 19,645 (2,372) (12.1) %
Total non-interest expense $ 45,746 $ 46,964 (2.6) %
Average full-time equivalent staff 1,030 1,160 (130) (11.2) %

All values are in US Dollars.

Non-interest expense decreased by $1,218,000 or 2.6% to $45,746,000 during the three months ended December 31, 2020 as compared to $46,964,000 for the three months ended December 31, 2019. For reasons similar to those discussed above salary and benefit expense increased by $1,154,000 or 4.2% to $28,473,000 during the three months ended December 31, 2020 as compared to $27,319,000 for the same period in 2019. Offsetting this increase were declines in miscellaneous expenses, which decreased during the period by $1,784,000 or 44.4% to $2,236,000, and were primarily attributed to a $1,174,000 reduction in travel and outside training expenses as associated with the precautionary and restricted travel environment associated with the pandemic. Further, advertising expense was reduced by $649,000 or 46.0%, to $762,000 during the three months ended December 31, 2020 as compared to $1,411,000 for the same period in 2019.

The following table presents the key components of non-interest income for the current and prior year twelve month periods indicated:

Twelve months ended December 31,
(dollars in thousands) 2020 2019 Change % Change
Base salaries, net of deferred loan origination costs $ 70,164 $ 70,218 (0.1) %
Incentive compensation 10,022 13,106 (3,084) (23.5) %
Benefits and other compensation costs 31,935 22,741 9,194 40.4 %
Total salaries and benefits expense 112,121 106,065 6,056 5.7 %
Occupancy 14,528 14,893 (365) (2.5) %
Data processing and software 13,504 13,517 (13) (0.1) %
Equipment 5,704 7,022 (1,318) (18.8) %
Intangible amortization 5,723 5,723 — — %
Advertising 2,827 5,633 (2,806) (49.8) %
ATM and POS network charges 5,433 5,447 (14) (0.3) %
Professional fees 3,222 3,754 (532) (14.2) %
Telecommunications 2,601 3,190 (589) (18.5) %
Regulatory assessments and insurance 1,594 1,188 406 34.2 %
Postage 1,068 1,258 (190) (15.1) %
Operational losses 1,168 986 182 18.5 %
Courier service 1,414 1,308 106 8.1 %
Gain on sale or acquisition of foreclosed assets (234) (246) 12 (4.9) %
Loss on disposal of fixed assets 67 82 (15) (18.3) %
Other miscellaneous expense 12,018 15,637 (3,619) (23.1) %
Total other non-interest expense 70,637 79,392 (8,755) (11.0) %
Total non-interest expense $ 182,758 $ 185,457 (1.5) %
Average full-time equivalent staff 1,093 1,150 (57) (5.0) %

All values are in US Dollars.

Non-interest expense decreased by $2,699,000 or 1.5% to $182,758,000 during the twelve months ended December 31, 2020 as compared to $185,457,000 for the same period in 2019. Reductions in advertising expenses totaling $2,806,000 or 49.8% to $2,827,000 contributed to this beneficial change, as did declines in miscellaneous expenses totaling $3,619,000 or 23.1% attributed primarily to a $1,681,000 reduction in travel and training expenses as a result of state-wide shelter-in-place restrictions and a reduction of $418,000 in third party services, which were partially offset by the indirect loan documentation and administrative costs associated with PPP lending activity. These declines were offset by a net increase in salaries and benefits expense by $6,056,000 or 5.7% to $112,121,000 during the twelve months ended December 31, 2020 as compared to $106,065,000 for the same period in 2019.

Provision for Income Taxes

The Company’s effective tax rate was 25.8% for the year ended December 31, 2020, as compared to 27.4% for the year ended December 31, 2019. The reduction in effective tax rate was made possible through the provisions of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which provided the Company with an opportunity to file amended tax returns and generate proposed refunds of approximately $805,000. Other differences between the Company's effective tax rate and applicable federal and state statutory rates are due to the proportion of non-taxable revenue and low income housing tax credits as compared to the levels of pre-tax earnings.

About TriCo Bancshares

Established in 1975, Tri Counties Bank is a wholly-owned subsidiary of TriCo Bancshares (NASDAQ: TCBK) headquartered in Chico, California, providing a unique brand of customer Service with Solutions available in traditional stand-alone and in-store bank branches in communities throughout Northern and Central California. Tri Counties Bank provides an extensive and competitive breadth of consumer, small business and commercial banking financial services, along with convenient around-the-clock ATM, online and mobile banking access. Brokerage services are provided by Tri Counties Advisors through affiliation with Raymond James Financial Services, Inc. Visit www.TriCountiesBank.com to learn more.

Forward-Looking 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; the future operating or financial performance of the Company, including our outlook for future growth, 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, 2019, and Quarterly Reports on form 10-Q for the periods ended September 30, 2020, June 30, 2020, and March 31, 2020, which have 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.

TRICO BANCSHARES—CONDENSED CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands, except share data)

Three months ended
December 31,<br>2020 September 30,<br>2020 June 30,<br>2020 March 31,<br>2020 December 31,<br>2019
Revenue and Expense Data
Interest income $ 68,081 $ 65,438 $ 67,148 $ 66,517 $ 67,918
Interest expense 1,659 1,984 2,489 3,325 3,722
Net interest income 66,422 63,454 64,659 63,192 64,196
Provision for (benefit from) credit losses 4,850 7,649 22,244 8,070 (298)
Noninterest income:
Service charges and fees 10,218 10,469 8,168 9,126 10,629
Gain on sale of investment securities — 7 — — 3
Other income 6,362 4,661 3,489 2,694 3,554
Total noninterest income 16,580 15,137 11,657 11,820 14,186
Noninterest expense:
Salaries and benefits 28,473 29,321 27,055 27,272 27,319
Occupancy and equipment 5,108 4,989 4,748 5,387 5,394
Data processing and network 4,455 4,875 4,867 4,740 4,914
Other noninterest expense 7,709 7,529 8,880 7,350 9,337
Total noninterest expense 45,745 46,714 45,550 44,749 46,964
Total income before taxes 32,407 24,228 8,522 22,193 31,716
Provision for income taxes 8,750 6,622 1,092 6,072 8,826
Net income $ 23,657 $ 17,606 $ 7,430 $ 16,121 $ 22,890
Share Data
Basic earnings per share $ 0.80 $ 0.59 $ 0.25 $ 0.53 $ 0.75
Diluted earnings per share $ 0.79 $ 0.59 $ 0.25 $ 0.53 $ 0.75
Dividends per share $ 0.22 $ 0.22 $ 0.22 $ 0.22 $ 0.22
Book value per common share $ 31.12 $ 30.31 $ 29.76 $ 28.91 $ 29.70
Tangible book value per common share (1) $ 23.09 $ 22.24 $ 21.64 $ 20.80 $ 21.69
Shares outstanding 29,727,214 29,769,389 29,759,209 29,973,516 30,523,824
Weighted average shares 29,756,831 29,763,898 29,753,699 30,394,904 30,520,490
Weighted average diluted shares 29,863,478 29,844,396 29,883,193 30,522,842 30,650,071
Credit Quality
Allowance for credit losses to gross loans 1.93 % 1.81 % 1.66 % 1.32 % 0.71 %
Loans past due 30 days or more $ 6,767 $ 10,522 $ 16,622 $ 28,693 $ 9,024
Total nonperforming loans $ 26,864 $ 22,963 $ 20,730 $ 17,955 $ 16,864
Total nonperforming assets $ 29,708 $ 25,020 $ 22,652 $ 20,184 $ 19,405
Loans charged-off $ 560 $ 194 $ 491 $ 510 $ 1,098
Loans recovered $ 382 $ 381 $ 230 $ 892 $ 475
Selected Financial Ratios
Return on average total assets 1.24 % 0.95 % 0.43 % 1.00 % 1.40 %
Return on average equity 10.37 % 7.79 % 3.39 % 7.14 % 10.03 %
Average yield on loans, excluding PPP 5.04 % 5.02 % 5.17 % 5.23 % 5.33 %
Average yield on interest-earning assets 3.88 % 3.83 % 4.26 % 4.57 % 4.65 %
Average rate on interest-bearing deposits 0.12 % 0.15 % 0.20 % 0.29 % 0.33 %
Average cost of total deposits 0.07 % 0.09 % 0.12 % 0.19 % 0.22 %
Average rate on borrowings & subordinated debt 2.43 % 2.49 % 3.25 % 3.89 % 3.96 %
Average rate on interest-bearing liabilities 0.17 % 0.20 % 0.27 % 0.37 % 0.41 %
Net interest margin (fully tax-equivalent) (1) 3.79 % 3.72 % 4.10 % 4.34 % 4.39 %
Loans to deposits 73.21 % 76.12 % 76.84 % 81.05 % 80.26 %
Efficiency ratio 55.11 % 59.44 % 59.69 % 59.66 % 59.92 %
Supplemental Loan Interest Income Data
Discount accretion on acquired loans $ 1,960 $ 1,876 $ 2,587 $ 1,748 $ 2,218
All other loan interest income (excluding PPP) $ 53,379 $ 53,560 $ 53,466 $ 54,510 $ 54,644
Total loan interest income (excluding PPP) $ 55,339 $ 55,436 $ 56,053 $ 56,258 $ 56,862

(1) Non-GAAP measure

TRICO BANCSHARES—CONDENSED CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands)

Balance Sheet Data December 31,<br>2020 September 30,<br>2020 June 30,<br>2020 March 31,<br>2020 December 31,<br>2019
Cash and due from banks $ 669,551 $ 652,582 $ 705,852 $ 185,466 $ 276,507
Securities, available for sale, net 1,417,289 1,145,989 999,313 1,005,006 953,098
Securities, held to maturity, net 284,563 310,696 337,165 359,770 375,606
Restricted equity securities 17,250 17,250 17,250 17,250 17,250
Loans held for sale 6,268 6,570 8,352 2,695 5,265
Loans:
Commercial loans 570,202 673,281 667,263 285,830 283,707
Consumer loans 284,835 400,711 416,490 428,313 445,542
Real estate mortgage loans 3,522,639 3,466,307 3,437,960 3,422,440 3,328,290
Real estate construction loans 385,451 286,039 279,692 242,479 249,827
Total loans, gross 4,763,127 4,826,338 4,801,405 4,379,062 4,307,366
Allowance for credit losses (91,847) (87,575) (79,739) (57,911) (30,616)
Total loans, net 4,671,280 4,738,763 4,721,666 4,321,151 4,276,750
Premises and equipment 83,731 84,856 85,292 86,304 87,086
Cash value of life insurance 118,870 120,026 119,254 118,543 117,823
Accrued interest receivable 20,004 19,557 20,337 18,575 18,897
Goodwill 220,872 220,872 220,872 220,872 220,872
Other intangible assets 17,833 19,264 20,694 22,126 23,557
Operating leases, right-of-use 27,846 28,879 29,842 30,221 27,879
Other assets 84,172 84,495 74,182 86,330 70,591
Total assets $ 7,639,529 $ 7,449,799 $ 7,360,071 $ 6,474,309 $ 6,471,181
Deposits:
Noninterest-bearing demand deposits $ 2,581,517 $ 2,517,819 $ 2,487,120 $ 1,883,143 $ 1,832,665
Interest-bearing demand deposits 1,414,908 1,346,716 1,318,951 1,243,192 1,242,274
Savings deposits 2,164,942 2,099,780 2,043,593 1,857,684 1,851,549
Time certificates 344,567 376,273 398,594 418,679 440,506
Total deposits 6,505,934 6,340,588 6,248,258 5,402,698 5,366,994
Accrued interest payable 1,362 1,571 1,734 1,986 2,407
Operating lease liability 27,973 28,894 29,743 30,007 27,540
Other liabilities 94,597 91,902 98,684 96,560 91,984
Other borrowings 26,914 27,055 38,544 19,309 18,454
Junior subordinated debt 57,635 57,527 57,422 57,323 57,232
Total liabilities 6,714,415 6,547,537 6,474,385 5,607,883 5,564,611
Common stock 530,835 531,075 530,422 534,623 543,998
Retained earnings 381,999 365,611 354,645 356,935 367,794
Accum. other comprehensive income (loss) 12,280 5,576 619 (25,132) (5,222)
Total shareholders’ equity $ 925,114 $ 902,262 $ 885,686 $ 866,426 $ 906,570
Quarterly Average Balance Data
Average loans, excluding PPP $ 4,363,873 $ 4,389,672 $ 4,363,481 $ 4,329,357 $ 4,231,347
Average interest-earning assets $ 6,998,582 $ 6,815,495 $ 6,365,865 $ 5,883,750 $ 5,823,795
Average total assets $ 7,570,952 $ 7,380,961 $ 7,027,735 $ 6,506,587 $ 6,482,832
Average deposits $ 6,341,175 $ 6,278,638 $ 5,937,294 $ 5,395,933 $ 5,385,190
Average borrowings and subordinated debt $ 90,085 $ 91,225 $ 83,685 $ 80,062 $ 77,452
Average total equity $ 907,468 $ 898,986 $ 880,405 $ 908,633 $ 905,585
Capital Ratio Data
Total risk based capital ratio 15.2 % 15.2 % 15.1 % 15.1 % 15.1 %
Tier 1 capital ratio 14.0 % 14.0 % 13.9 % 13.9 % 14.4 %
Tier 1 common equity ratio 12.9 % 12.9 % 12.8 % 12.8 % 13.3 %
Tier 1 leverage ratio 9.9 % 10.0 % 10.3 % 11.2 % 11.6 %
Tangible capital ratio (1) 9.3 % 9.2 % 9.1 % 10.0 % 10.6 %

(1) Non-GAAP measure

TRICO BANCSHARES—NON-GAAP FINANCIAL MEASURES

(Unaudited. Dollars in thousands)

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this press release because it believes that they provide useful and comparative information to assess trends in the Company's core operations reflected in the current quarter's results, and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below:

Three months ended Twelve months ended
(dollars in thousands) December 31,<br>2020 September 30,<br>2020 December 31,<br>2019 December 31,<br>2020 December 31,<br>2019
Net interest margin
Acquired loans discount accretion, net:
Amount (included in interest income) $ 1,960 $ 1,876 $ 2,218 $ 8,171 $ 8,137
Effect on average loan yield 0.18 % 0.17 % 0.21 % 0.19 % 0.20 %
Effect on net interest margin (FTE) 0.11 % 0.11 % 0.15 % 0.13 % 0.14 %
Net interest margin (FTE) 3.79 % 3.72 % 4.39 % 3.96 % 4.47 %
Net interest margin less effect of acquired loan discount accretion (Non-GAAP) 3.68 % 3.61 % 4.24 % 3.84 % 4.33 %
PPP loans yield, net:
Amount (included in interest income) $ 5,676 $ 2,603 none $ 10,635 none
Effect on net interest margin (FTE) 0.11 % (0.09) % — (0.01) % —
Net interest margin less effect of PPP loan yield (Non-GAAP) 3.68 % 3.81 % — 3.97 % —
Acquired loan discount accretion and PPP loan yield, net:
Amount (included in interest income) $ 7,636 $ 4,479 $ 2,218 $ 18,806 $ 8,137
Effect on net interest margin (FTE) 0.23 % 0.02 % 0.15 % 0.12 % 0.14 %
Net interest margin less effect of acquired loan discount accretion and PPP yields, net (Non-GAAP) 3.56 % 3.70 % 4.24 % 3.84 % 4.33 %
Three months ended Twelve months ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
(dollars in thousands) December 31,<br>2020 September 30,<br>2020 December 31,<br>2019 December 31,<br>2020 December 31,<br>2019
Pre-tax pre-provision return on average assets or equity
Net income (GAAP) $ 23,657 17,606 $ 22,890 $ 64,814 $ 92,072
Exclude income tax expense 8,750 6,622 8,826 22,536 34,750
Exclude provision (benefit) for credit losses 4,850 7,649 (298) 42,813 (1,690)
Net income before income tax and provision expense (Non-GAAP) $ 37,257 $ 31,877 $ 31,418 $ 130,163 $ 125,132
Average assets (GAAP) $ 7,570,952 $ 7,380,961 $ 6,452,470 $ 7,123,431 $ 6,437,095
Average equity (GAAP) 907,468 898,986 905,585 902,110 877,318
Return on average assets (GAAP) (annualized) 1.24 % 0.95 % 1.40 % 0.91 % 1.43 %
Pre-tax pre-provision return on average assets (Non-GAAP) (annualized) 1.96 % 1.72 % 1.93 % 1.83 % 1.94 %
Return on average equity (GAAP) (annualized) 10.37 % 7.79 % 10.03 % 7.18 % 10.49 %
Pre-tax pre-provision return on average equity (Non-GAAP) (annualized) 16.33 % 14.11 % 13.76 % 14.43 % 14.26 %
Three months ended Twelve months ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
(dollars in thousands) December 31,<br>2020 September 30,<br>2020 December 31,<br>2019 December 31,<br>2020 December 31,<br>2019
Return on tangible common equity
Average total shareholders' equity $ 907,468 $ 898,986 $ 905,585 $ 902,110 $ 877,318
Exclude average goodwill 220,872 220,872 220,872 220,872 220,922
Exclude average other intangibles 18,549 19,979 24,273 20,695 26,419
Average tangible common equity (Non-GAAP) $ 668,047 $ 658,135 $ 660,441 $ 660,543 $ 629,978
Net income (GAAP) $ 23,657 $ 17,606 $ 22,890 $ 64,814 $ 92,072
Exclude amortization of intangible assets, net of tax effect 1,007 1,008 1,007 4,031 4,031
Tangible net income available to common shareholders (Non-GAAP) $ 24,664 18,614 $ 23,897 $ 68,845 $ 96,103
Return on average equity 10.37 % 7.79 % 10.03 % 7.18 % 10.49 %
Return on average tangible common equity (Non-GAAP) 14.69 % 11.25 % 14.39 % 10.42 % 15.26 %
Three months ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
(dollars in thousands) December 31,<br>2020 September 30,<br>2020 June 30,<br>2020 March 31,<br>2020 December 31,<br>2019
Tangible common shareholders' equity to tangible assets
Shareholders' equity (GAAP) $ 925,114 $ 902,262 $ 885,686 $ 866,426 $ 906,570
Exclude goodwill and other intangible assets, net 238,705 240,136 241,566 242,998 244,429
Tangible s/h equity (Non-GAAP) $ 686,409 $ 662,126 $ 644,120 $ 623,428 $ 662,141
Total assets (GAAP) $ 7,639,529 $ 7,449,799 $ 7,360,071 $ 6,474,309 $ 6,471,181
Exclude goodwill and other intangible assets, net 238,705 240,136 241,566 242,998 244,429
Total tangible assets (Non-GAAP) $ 7,400,824 $ 7,209,663 $ 7,118,505 $ 6,231,311 $ 6,226,752
Common s/h equity to total assets (GAAP) 12.11 % 12.11 % 12.03 % 13.38 % 14.01 %
Tangible common shareholders' equity to tangible assets (Non-GAAP) 9.27 % 9.18 % 9.05 % 10.00 % 10.63 %
Three months ended
--- --- --- --- --- --- --- --- --- --- ---
(dollars in thousands) December 31,<br>2020 September 30,<br>2020 June 30,<br>2020 March 31,<br>2020 December 31,<br>2019
Tangible common shareholders' equity per share
Tangible s/h equity (Non-GAAP) $ 686,409 $ 662,126 $ 644,120 $ 623,428 $ 662,141
Tangible assets (Non-GAAP) 7,400,824 7,209,663 7,118,505 6,231,311 6,226,752
Common shares outstanding at end of period 29,727,214 29,769,389 29,759,209 29,973,516 30,523,824
Common s/h equity (book value) per share (GAAP) $ 31.12 $ 30.31 $ 29.76 $ 28.91 $ 29.70
Tangible common shareholders' equity (tangible book value) per share (Non-GAAP) $ 23.09 $ 22.24 $ 21.64 $ 20.80 $ 21.69

*****************

18

a2020-q4investorpresenta

January 2021 Richard P. Smith – President & Chief Executive Officer John S. Fleshood – EVP & Chief Operating Officer Peter G. Wiese – EVP & Chief Financial Officer Investor Presentation Fourth Quarter 2020

January 2021 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; the future operating or financial performance of the Company, including our outlook for future growth, 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, 2019, and Quarterly Reports on form 10-Q for the periods ended September 30, 2020, June 30, 2020, and March 31, 2020, which have 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. 2

January 2021 AGENDA • Most Recent Quarter Recap • Company Overview • Lending Overview • Deposit Overview • Financials 3

January 2021 MOST RECENT QUARTER HIGHLIGHTS 4 Consistent Profitability  Pre-tax pre-provision return on average assets and average equity was 1.96% and 16.33%, respectively and 1.83% and 14.43%, respectively for the three- and twelve-month respective periods ended December 31, 2020.  Revenues benefited from mortgage origination and sale activities as well as PPP fee recognition.  Previous actions related to expense management strategies were realized. Net Interest Margin  Net interest margin was 3.79% for Q4 2020 versus 3.72% for Q3 2020 and 4.39% in Q4 2019.  Non-interest-bearing deposits were 39.7% of total deposits.  Excess Balance sheet liquidity continues to provide net interest margin pressure, while deployment of those resources is benefiting net interest income growth efforts. Credit Quality  Nonperforming assets to total assets of 0.39% 0.34%, and 0.30% at Q4 2020, Q3 2020, and Q4 2019; while COVID related deferrals are considered low and have continued to decline.  The ratio of loan loss reserves to total loans was 1.93%, or 2.07%, excluding PPP loans at Q4 2020.  Net (charge-offs) recoveries for the three and twelve months ended December 31, 2020 were ($178,000) and $130,000, respectively. Experienced and Proven Team  Track record of well executed and accretive acquisitions.  Prudent and proactive risk management focus is complementary to strong asset quality.  Well positioned balance sheet to capitalize on opportunities as they arise. Diverse Deposit Base  Cost of total deposits was 0.07% in Q4 2020 versus 0.09% in Q3 2020 and 0.22% in Q4 2019. Capital and Liquidity Strength  Consistent payment of quarterly dividends with routine periodic increases.  We remain well capitalized across all regulatory capital ratios.  Active share repurchase program with demonstrated utilization.

January 2021 COMPANY OVERVIEW 5

January 2021 COMPANY OVERVIEW Nasdaq: TCBK Headquarters: Chico, California Stock Price*: $35.28 Market Capitalization: $1.0 Billion Asset Size: $7.6 Billion Deposits: $6.5 Billion Loans: $4.8 Billion Bank Branches: 75 ATMs: 97 Market Area: TriCo currently serves 29 counties throughout Northern and Central California. These counties represent over 30% of California’s population. * As of close of business December 31, 2020 6

January 2021 EXECUTIVE TEAM Rick Smith President & CEO TriCo since 1993 John Fleshood EVP Chief Operating Officer TriCo since 2016 Dan Bailey EVP Chief Banking Officer TriCo since 2007 Craig Carney EVP Chief Credit Officer TriCo since 1996 Peter Wiese EVP Chief Financial Officer TriCo since 2018 7 Judi Giem SVP Chief HR Officer TriCo since 2020 Greg Gehlmann SVP General Counsel TriCo since 2017

January 2021 POSITIVE EARNINGS TRACK RECORD 8 * Impact of the Tax Cut and Jobs Act results in adjusted quarterly diluted EPS of $0.45. Q2'17 Q3'17 Q4'17 * Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Net Income ($MM) $13.6 $11.9 $3.0 $13.9 $15.0 $16.2 $23.2 $22.7 $23.1 $23.4 $22.9 $16.1 $7.4 $17.6 $23.6 Qtrly Diluted EPS $0.58 $0.51 $0.13 $0.60 $0.65 $0.53 $0.76 $0.74 $0.75 $0.76 $0.75 $0.53 $0.25 $0.59 $0.79 Adj EPS $0.58 $0.51 $0.45 $0.60 $0.65 $0.53 $0.76 $0.74 $0.75 $0.76 $0.75 $0.53 $0.25 $0.59 $0.79 $0.00 $0.20 $0.40 $0.60 $0.80 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 Q tr ly E P S ( d ilu te d ) E a rn in g s (i n M ill io n s)

January 2021 SHAREHOLDER RETURNS 9 Dividends per Share: 11.1% CAGR Dividends as % of Earnings Return on Avg. Shareholder Equity Diluted EPS $0.11 $0.15 $0.15 $0.17 $0.19 $0.22 $0.13 $0.15 $0.17 $0.17 $0.19 $0.22 $0.13 $0.15 $0.17 $0.17 $0.22 $0.22 $0.15 $0.15 $0.17 $0.19 $0.22 $0.22 $0.52 $0.60 $0.66 $0.70 $0.82 $0.88 2015 2016 2017 2018 2019 2020 Q1 Q2 Q3 Q4 10.04% 9.47% 8.10% 10.75% 10.49% 7.18% 2015 2016 2017 2018 2019 2020 $0.36 $0.46 $0.52 $0.60 $0.74 $0.53 $0.49 $0.41 $0.58 $0.65 $0.75 $0.25 $0.55 $0.53 $0.51 $0.53 $0.76 $0.59 $0.50 $0.54 $0.76 $0.75 $0.79 $1.91 $1.94 $1.74 $2.54 $3.00 $2.16 2015 2016 2017 2018 2019 2020 Q1 Q2 Q3 Q4 31% 31% 37% 27% 27% 41% 2015 2016 2017 2018 2019 2020

January 202110 Dollars in millions. Total Assets for periods ending 2005 – Q4 2020. CONSISTENT ORGANIC GROWTH & DISCIPLINED ACQUIRER

January 2021 • Fiscal Policy Changes, Vaccine Distribution, and the Long- Term Timing and Magnitude of Small Business Growth • Leveraging Technologies for Talent and Customer Acquisition • Expansion and Streamlined Execution of PPP…Round II • Building and Growing the Bank of the Future • Timing and Execution of Meaningful Acquisition Strategies • Relentless Pursuit of Greater Operational Efficiency • Duration of a Low Rate Environment – Maximizing Margin and Growing Earning Assets • Maintaining Our Culture and Sense of Team…Virtually • Deployment of Capital – Dividends & Share Repurchases “TOP OF MIND THEMES & EXECUTIVE TOPICS” 11

January 2021 LOANS & CREDIT QUALITY 12

January 2021 CONSISTENT LOAN GROWTH 13 *Note: Q3 2018 includes acquisition of FNB Bancorp (Loan Yield was 5.04%) End of period balances include LHFS. Yields based on avg balance and quarterly interest income. $423 $426 $327 5.32% 5.16% 5.24% 5.48% 5.50% 5.46% 5.33% 5.23% 5.05% 4.78% 5.09% 3.00% 4.00% 5.00% 6.00% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 2016 2017 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 T o ta l L o a n s (M ill io n s) Non-PPP PPP Loans Loan Yield Loan Yield Excl PPP

January 2021 $1,539 $621 $639 $553 $526 $327 $285 $197 $82 $1,610 $546 $519 $515 $246 $362 $248 $178 $81 CRE Non-Owner Occupied CRE-Owner Occupied Multifamily SFR 1-4 Term Commercial & Industrial SFR HELOC and Junior Liens Construction Agriculture & Farmland Auto & Other 4Q-2020 4Q-2019  Dollars in millions, Net Book Value at period end, excludes LHFS; Auto & other includes Leases DIVERSIFIED LOAN PORTFOLIO 14 CRE Non-Owner Occupied 32% CRE-Owner Occupied 13% Multifamily 13% SFR 1-4 Term 12% Commercial & Industrial 11% SFR HELOC and Junior Liens 7% Construction 6% Agriculture & Farmland 4% Auto & Other 2%

January 2021 CRE COLLATERAL VALUES 15 79% 50% 55% 62% 62% 64% 40% 47% 21% 44% 42% 37% 38% 31% 54% 44% 0% 5% 2% 2% 1% 4% 6% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Hotel/Motel Office Building Retail Building Warehouse Self Storage Other Multifamily CRE Owner Occupied <= 60% > 60% - 75% > 75%

January 2021 $1,557 $1,630 $324 $359 $530 $247 $643 $522 $628 $556 $557 $523 $288 $251 $197 $179 $76 $80 $88 $84 $535 $542 $372 $254 $40 $28 $27 $20 $0 $0 $221 $223 $62 $45 $11 $64 4Q-2020 4Q-2019 4Q-2020 4Q-2019 4Q-2020 4Q-2019 4Q-2020 4Q-2019 4Q-2020 4Q-2019 4Q-2020 4Q-2019 4Q-2020 4Q-2019 4Q-2020 4Q-2019 4Q-2020 4Q-2019 CRE NOO SFR HELOC and Junior Liens C&I Multifamily CRE Owner Occupied SFR 1-4 Term Construction Agriculture & Farmland Consumer & Other Outstanding Principal ($MM) Unfunded Commitment ($MM)  Outstanding Principal excludes unearned fees and discounts/premiums ($ in millions)  Excludes Leases, DDA Overdraft, and Credit Card commitments  C&I includes PPP loans for $334 mln in Outstanding Principal. HELOC - BY VINTAGE Total Unfunded Commitments as of Q4 2020: $1.36 billion* UNFUNDED LOAN COMMITMENTS 16

January 2021 $249 $248 $243 $247 $262 $208 $205 $197 $219 $207 $221 $254 $235 $265 $273 $372 53.3% 54.5% 52.4% 49.3% 52.7% 44.0% 42.9% 34.5% 0% 10% 20% 30% 40% 50% 60% $0 $100 $200 $300 $400 $500 $600 1Q-2019 2Q-2019 3Q-2019 4Q-2019 1Q-2020 2Q-2020 3Q-2020 4Q-2020 M ill io n s o f $ Outstanding Principal ($MM) Unfunded Commitment ($MM) Utilization  Outstanding Principal excludes unearned fees and discounts/premiums ($ millions) C&I UTILIZATION 17

January 2021  Dollars in millions, Wtd Avg Rate (weighted average rate) is as of 12/31/2020 and based upon outstanding principal and does not include impact of unearned fees nor accretion/amortization therein LOAN YIELD COMPOSITION • Variable rate loans at their floor have remained steady at 88% of variable loans from Q3 to Q4. • The most prominent index for the variable portfolio is 5 Year Treasury CMT 18 Fixed 32% Variable At Floor 60% Variable Above Floor 6% Variable No Floor 2% Fixed vs. Variable, Total Loans (ex-PPP)

January 2021  Rating migration change includes upgrades and downgrades.  Changes in econometric factors  California Unemployment remains the largest driver to Q4 factors. ALLOWANCE FOR CREDIT LOSSES Drivers of Change Under CECL  Dollars in thousands Total reserve increase of $4.3 million Q4 2020 1.81% of Total Loans 1.99% Excluding PPP 19 1.93% of Total Loans 2.07% Excluding PPP  Includes volume and mix change due to originations, draws, pay downs, and payoffs  Gross charge offs $560 thousand  Gross recoveries $382 thousand

January 2021 ALLOWANCE FOR CREDIT LOSSES Allocation of Allowance by Segment  Dollars in thousands 20

January 2021 RISK GRADE MIGRATION 21  Zero balance in Doubtful and Loss 82.1%82.2%83.9% 92.9%93.2% 13.6%13.8% 14.0% 4.8%5.0% 3.3%3.0%1.3%1.4% 1.0% 1.0%1.0%0.9%0.8%0.8% 4Q-20203Q-20202Q-20201Q-20204Q-2019 % o f L o a n P o rt fo lio O u ts ta n d in g , b y R is k G ra d e Pass Watch Special Mention Substandard

January 2021 0.57% 0.53% 0.54% 0.45% 0.45% 0.32% 0.35% 0.30% 0.28% 0.30% 0.31% 0.33% 0.39% 0.70% 0.77% 0.77% 0.64% 0.58% 0.59% 0.61% 0.54% 0.47% 0.73% 0.53% 0.58% 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 TCBK Peers COVERAGE RATIO Allowance as a % of Non-Performing Loans NPAs have remained below peers while loss coverage has expanded, with CECL transition and allowance build up resulting in a coverage ratio nearly 2X that of peers.  Peer group consists of 99 closest peers in terms of asset size, range $4.1-8.8 Billion source: BankRegData.com  NPA and NPL ratios displayed are net of guarantees 22 ASSET QUALITY Non-Performing Assets as a % of Total Assets 126% 125% 118% 120% 124% 174% 159% 180% 193% 343% 385% 395% 342% 1 5 7 % 1 3 7 % 1 2 9 % 1 2 5 % 1 3 4 % 1 3 1 % 1 2 9 % 1 4 5 % 1 5 6 % 1 3 9 % 2 0 2 % 1 9 1 % 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 TCBK Peers

January 2021 DEPOSITS 23

January 2021 Non Interest- bearing Demand Deposits, 38.4% Interest-bearing Demand & Savings Deposits, 53.3% Time Deposits, 5.1% Borrowings & Subordinated Debt, 1.3% Other liabilities, 1.8% Total Deposits = $6.51 billion 96.9% of Total Liabilities DEPOSITS: STRENGTH IN FUNDING 24 Liability Mix 12/31/2020  Peer group consists of 99 closest peers in terms of asset size, range $4.1-8.8 Billion; source: BankRegData.com  Net Loans includes LHFS and Allowance for Credit Loss; Core Deposits = Total Deposits less CDs > 250k 7 6 .9 7 6 .8 7 9 .1 8 0 .7 7 6 .3 7 5 .5 7 8 .1 8 0 .6 8 1 .6 8 1 .6 7 6 .9 7 5 .9 7 2 .7 0 20 40 60 80 100 120 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 Loans to Core Deposits TCBK Peers 3 4 .1 3 3 .3 3 3 .6 3 3 .6 3 2 .8 3 2 .4 3 3 .3 3 3 .6 3 4 .1 3 4 .9 3 9 .8 3 9 .7 3 9 .7 0 10 20 30 40 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 Non Interest-bearing Deposits as % of Total DepositsTCBK Peers

January 2021 Cost of Deposits FY 2017 FY 2018 QTD Q1'19 QTD Q2'19 QTD Q3'19 QTD Q4'19 QTD Q1'20 QTD Q2'20 QTD Q3'20 QTD Q4'20 Noninterest-Bearing Demand - - - - - - - - - - Int-Bearing Demand & Savings 0.10% 0.14% 0.18% 0.20% 0.19% 0.19% 0.16% 0.09% 0.06% 0.05% Time Deposits 0.48% 0.86% 1.18% 1.28% 1.39% 1.27% 1.23% 1.09% 0.89% 0.73% Total Deposits 0.10% 0.15% 0.20% 0.22% 0.23% 0.22% 0.19% 0.12% 0.09% 0.07% Interest-bearing Deposits 0.15% 0.23% 0.30% 0.33% 0.34% 0.33% 0.29% 0.20% 0.15% 0.12% $305 $432 $446 $441 $451 $441 $419 $399 $376 $345 $2,336 $3,174 $3,223 $3,121 $3,067 $3,094 $3,101 $3,363 $3,446 $3,580 $1,368 $1,761 $1,762 $1,780 $1,777 $1,833 $1,883 $2,487 $2,518 $2,582 $4,009 $5,366 $5,430 $5,342 $5,295 $5,367 $5,403 $6,248 $6,341 $6,506 2017 2018 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 DEPOSITS: STRENGTH IN COST OF FUNDS 25  Q2 2020 includes $413 million increase QvQ directly attributed to PPP borrowers  2018 includes FNB acquisition  Regulated bank level deposits

January 2021 FINANCIALS 26

January 2021 CONSISTENT OPERATING METRICS 27 Net Interest Margin (FTE) PPNR as % of Average Assets Efficiency Ratio ROAA 4.32% 4.23% 4.22% 4.30% 4.47% 3.96% 2015 2016 2017 2018 2019 2020 65.1% 68.7% 65.4% 63.7% 59.7% 58.4% 2015 2016 2017 2018 2019 2020 1.79% 1.60% 1.70% 1.73% 1.94% 1.83% 2015 2016 2017 2018 2019 2020 1.11% 1.02% 0.89% 1.24% 1.43% 0.91% 2015 2016 2017 2018 2019 2020

January 2021 WELL CAPITALIZED 28 Tier 1 Capital Ratio Total Risk Based Capital Ratio CET1 Ratio Tangible Common Equity Ratio 13.8% 13.7% 13.2% 13.7% 14.4% 14.0% 2015 2016 2017 2018 2019 2020 12.2% 12.2% 11.7% 12.5% 13.3% 12.9% 2015 2016 2017 2018 2019 2020 15.1% 14.8% 14.1% 14.4% 15.1% 15.2% 2015 2016 2017 2018 2019 2020 9.2% 9.1% 9.3% 9.5% 10.6% 9.3% 2015 2016 2017 2018 2019 2020

January 202129 Aug st 2020

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