TriCo Bancshares : Announces Cash Dividend

PRESS RELEASE	Contact: Peter G. Wiese
For Immediate Release	EVP & Chief Financial Officer [phone]
	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-interestbearing 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-performingassets 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."

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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.

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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			$	2,968			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			$	6,051			34.4 %
Diluted earnings per share	$	0.79		$	0.59			$	0.20			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 %
			Three months ended
			December 31,
(dollars and shares in thousands)			2020				2019					$ Change		% Change
Net interest income	$	66,422		$	64,196			$	2,226			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			$	767			3.4 %
Diluted earnings per share	$	0.79		$	0.75			$	0.04			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 %
			Twelve months ended
			December 31,
(dollars and shares in thousands)			2020				2019					$ Change		% Change
Net interest income		$	257,727			$	257,069				$	658				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				$	(27,258)			(29.6)%
Diluted earnings per share		$	2.16			$	3.00				$	(0.84)			(28.0)%
Dividends per share	$	0.88		$	0.82			$	0.06			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 %

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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 online 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:

(dollars in thousands)

Commercial real estate: CRE non-owner occupied CRE owner occupied Multifamily

Farmland

Total commercial real estate loans Consumer:

SFR 1-4 1st lien

SFR HELOCs and junior liens Other

Total consumer loans

Commercial and industrial

Construction

Agriculture production

Leases

Total modifications

					Modification Type		Deferral Term
Modified Loan		% of Total	Interest Only		Principal and
	Balances		Category of		Interest		90 Days		180 Days
	Outstanding		Loans		Deferral		Deferral
$	19,643	1.28 %		87.1 %	12.9 %		- %	100.0 %
	2,488	0.40		71.0	29.0	71.0	29.0
	-		-	-		-		-		-
	-		-	-		-		-		-
	22,131		0.8		85.3		14.7		8.0		92.0
	457	0.1		100.0		-		-	100.0
	-		-	-		-		-		-
	-		-		-		-		-		-
	457		0.1		100.0		-		-	100.0
	772	0.2		86.1	13.9	9.0	91.0
	24,998	8.8		100.0		-		-	100.0
	-		-	-		-		-		-
	-		-	-		-		-		-
$	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.

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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,					Annualized
(dollars in thousands)		2020			2020	$	Change		% Change
Total assets	$	7,639,529		$	7,449,799		$	189,730		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	$	165,346	10.4 %

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,					Annualized
(dollars in thousands)		2020			2020			$ Change		% Change
Total assets	$	7,570,952		$	7,380,961		$	189,991		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	$	62,537	4.0 %

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		$	1,168,348		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	$	1,138,940	21.2 %

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

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