8-K

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): October 26, 2016

TriCo Bancshares

(Exact name of registrant as specified in its charter)

California	0-10661	94-2792841
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. Employer 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)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On October 26, 2016, TriCo Bancshares announced its third quarter 2016 financial results. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

Item 9.01: Financial Statements and Exhibits

(d) Exhibits

99.1 Press release dated October 26, 2016

* The information furnished under Item 2.02 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: October 27, 2016	/s/ Thomas J. Reddish
	Thomas J. Reddish, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

EX-99.1

Exhibit 99.1

PRESS RELEASE	Contact:             Richard P. Smith
For Immediate Release	President & CEO (530) 898-0300

TRICO BANCSHARES ANNOUNCES QUARTERLY RESULTS

CHICO, Calif. – (October 26, 2016) – TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company of Tri Counties Bank, today announced earnings of $12,199,000, or $0.53 per diluted share, for the three months ended September 30, 2016. For the three months ended September 30, 2015 the Company reported earnings of $12,694,000, or $0.55 per diluted share. Diluted shares outstanding were 23,098,534 and 23,005,980 for the three months ended September 30, 2016 and 2015, respectively.

The following is a summary of the components of the Company’s consolidated net income, average common shares, and average diluted common shares outstanding for the periods indicated:

	Three months ended
	September 30,
(dollars and shares in thousands)	2016			2015			$ Change			% Change
Net Interest Income	$	42,270		$	39,993		$	2,277			5.7	%
Reversal of provision for loan losses		3,973			866			3,107
Noninterest income		11,066			11,642			(576	)		(4.9	%)
Noninterest expense		(37,416	)		(31,439	)		(5,977	)		19.0	%
Provision for income taxes		(7,694	)		(8,368	)		674			(8.1	%)
Net income	$	12,199		$	12,694		($	495	)		(3.9	%)
Average common shares		22,825			22,757			68			0.3	%
Average diluted common shares		23,099			23,006			93			0.4	%

The following is a summary of certain of the Company’s consolidated assets and deposits as of the dates indicated:

Ending balances	As of September 30,
($’s in thousands)	2016		2015		$ Change		% Change
Total assets	$	4,467,131	$	4,021,628	$	445,503		11.1	%
Total loans		2,712,226		2,469,566		242,660		9.8	%
Total investments		1,168,314		1,097,368		70,946		6.5	%
Total deposits	$	3,836,012	$	3,457,872	$	378,140		10.9	%
Qtrly Avg balances	As of September 30,
($’s in thousands)	2016		2015		$ Change		% Change
Total assets	$	4,407,322	$	3,953,292	$	454,030		11.5	%
Total loans		2,669,954		2,427,670		242,284		10.0	%
Total investments		1,199,941		1,093,845		106,096		9.7	%
Total deposits	$	3,784,748	$	3,390,229	$	394,519		11.6	%

Included in the period ending balances and quarterly average balances is the addition of a $45 million certificate of deposit from the State of California on September 16, 2015, bringing the total of such certificates of deposit from the State of California to $50 million, and the addition of deposits from the acquisition of three bank branches from Bank of America, that totaled $161 million on the date of acquisition, March 18, 2016. These three acquired branches are located in the cities of Arcata, Eureka, and Fortuna in Humboldt County, California. The Bank paid $3,204,000 for deposit relationships with balances of $161,231,000, loans with balances of $289,000, premises and equipment valued at $1,590,000, other assets valued at $141,000, and recorded a core deposit intangible asset of $2,046,000 and goodwill of $849,000.

Also included in the Company’s results of operations for the three months ended September 30, 2016 is the impact of the sale on August 22, 2016, of two performing loans with recorded book value of $166,000, and 48 nonperforming loans with recorded book value, including pre-sale write downs and purchase discounts, of approximately $2,757,000. The loans sold on August 22, 2016 had contractual amounts outstanding of $6,558,000. Net sale proceeds of $4,980,000 resulted in the recovery of loan balances previously charged off of $1,727,000, additional loan charge offs of $159,000, and interest income of $488,000 from the recovery of interest payments previously applied to principal balances.

Also included in the Company’s results of operations for the three and nine months ended September 30, 2016 is the impact of the purchase, on May 19, 2016 of seven performing multi-family commercial real estate loans valued at $22,503,000, and the sale, on March 31, 2016, of twenty-seven nonperforming loans, nine substandard performing loans, and three purchased credit impaired loans with total recorded book value of approximately $24,810,000.

Loans acquired through purchase, or acquisition of other banks, are classified by the Company as Purchased Not Credit Impaired (PNCI), Purchased Credit Impaired – cash basis (PCI – cash basis), or Purchased Credit Impaired – other (PCI – other). Loans not acquired in an acquisition or otherwise “purchased” are classified as “originated”. Often, such purchased loans are purchased at a discount to face value, and part of this discount is accreted into (added to) interest income over the remaining life of the loan. A loan may also be purchased at a premium to face value, in which case, the premium is amortized into (subtracted from) 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. Further details regarding interest income from loans, including fair value discount accretion, may be found under the heading “Supplemental Loan Interest Income Data” in the Consolidated Financial Data table at the end of this press release.

The Company’s primary source of revenue is net interest income, or the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Included in the Company’s net interest income is interest income from municipal bonds that is almost entirely exempt from Federal income tax. These municipal bonds are classified as investments – nontaxable, and the Company may present the interest income from these bonds on a fully tax equivalent (FTE) basis. Following is a summary of the components of net interest income for the periods indicated (dollars in thousands):

	Three months ended
	September 30,
(dollars and shares in thousands)	2016			2015			$ Change			% Change
Interest income	$	43,709		$	41,332		$	2,377			5.8	%
Interest expense		(1,439	)		(1,339	)		(100	)		7.5	%
FTE adjustment		587			299			287			96.1	%
Net interest income (FTE)	$	42,857		$	40,292		$	2,564			6.4	%
Net interest margin (FTE)		4.23	%		4.46	%
Purchased loan discount accretion:
Amount	$	2,229		$	3,125
Effect on average loan yield		0.34	%		0.51	%
Effect on net interest margin (FTE)		0.22	%		0.35	%
Interest income recovered via loan sales:
Amount	$	488		$	0
Effect on average loan yield		0.07	%		0.00	%
Effect on net interest margin (FTE)		0.05	%		0.00	%

Net interest income (FTE) during the three months ended September 30, 2016 increased $2,564,000 (6.4%) from the same period in 2015 to $42,857,000. The increase in net interest income (FTE) was primarily due to a $242,284,000 (10.0%) increase in the average balance of loans to $2,669,954,000, and a $61,996,000 (95.5%) increase in the average balance of investments – nontaxable to $126,910,000 that were partially offset by a 21 basis point decrease in the average yield on loans from 5.57% during the three months ended September 30, 2015 to 5.36% during the

three months ended September 30, 2016, and a 20 basis point decrease in the average yield on investments – taxable from 2.69% during the three months ended September 30, 2015 to 2.49% during the three months ended September 30, 2016. The decrease in average loan yields is primarily due to declines in market yields on new and renewed loans compared to yields on repricing, maturing, and paid off loans. The decrease in the average yield of investments - taxable is primarily due to declines in market yields on new investments compared to yields on existing investments, and to recent declines in mortgage rates that lead to an increase in mortgage refinancing activity that in turn lead to faster estimated mortgage prepayment speeds and an accelerated level of interest income-reducing premium amortization on existing mortgage backed investment securities. The increases in average loan and investments - nontaxable balances added $3,374,000 and $761,000, respectively, to net interest income (FTE) while the decreases in average loan and investments- taxable yields reduced net interest income (FTE) by $1,419,000 and $533,000, respectively, when compared to the year-ago quarter. Included in interest income from loans during the three months ended September 30, 2016 was $2,229,000 of discount accretion from purchased loans compared to $3,125,000 of discount accretion from purchased loans during the three months ended September 30, 2015. Included in interest income from loans during the three months ended September 30, 2016 was $488,000 of interest income that was previously applied to the principal balance of loans in nonaccrual status that were sold during the three months ended September 30, 2016. For more information related to loan interest income, including loan purchase discount accretion, see the Supplemental Loan Interest Income Data in the tables at the end of this announcement.

The following table shows the components of net interest income and net interest margin on a fully tax-equivalent (FTE) basis for the 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
	September 30, 2016								June 30, 2016								September 30, 2015
	Average		Income/			Yield/			Average		Income/			Yield/			Average		Income/			Yield/
	Balance		Expense			Rate			Balance		Expense			Rate			Balance		Expense			Rate
Assets
Earning assets
Loans	$	2,669,954	$	35,769			5.36	%	$	2,579,774	$	34,338			5.32	%	$	2,427,670	$	33,814			5.57	%
Investments - taxable		1,073,030		6,687			2.49	%		1,085,230		6,945			2.56	%		1,028,931		6,923			2.69	%
Investments - nontaxable		126,910		1,565			4.93	%		126,326		1,560			4.94	%		64,914		797			4.91	%
Cash at Federal Reserve and other banks		185,552		275			0.59	%		247,398		332			0.54	%		95,397		97			0.41	%
Total earning assets		4,055,446		44,296			4.37	%		4,038,728		43,175			4.28	%		3,616,912		41,631			4.60	%
Other assets, net		351,875								349,222								336,380
Total assets	$	4,407,322							$	4,387,950							$	3,953,292
Liabilities and shareholders’ equity
Interest-bearing
Demand deposits	$	888,377		111			0.05	%	$	886,417		120			0.05	%	$	813,581		117			0.06	%
Savings deposits		1,357,359		426			0.13	%		1,354,846		423			0.12	%		1,178,684		368			0.12	%
Time deposits		340,709		338			0.40	%		350,215		338			0.39	%		324,427		353			0.44	%
Other borrowings		18,951		2			0.05	%		19,152		3			0.06	%		6,994		1			0.05	%
Trust preferred securities		56,584		562			3.97	%		56,544		546			3.86	%		56,394		500			3.55	%
Total interest-bearing liabilities		2,661,981		1,439			0.22	%		2,667,174		1,430			0.21	%		2,380,081		1,339			0.23	%
Noninterest-bearing deposits		1,198,302								1,186,958								1,073,537
Other liabilities		66,464								62,456								60,314
Shareholders’ equity		480,575								471,362								439,360
Total liabilities and shareholders’ equity	$	4,407,322							$	4,387,950							$	3,953,292
Net interest rate spread							4.15	%							4.07	%							4.37	%
Net interest income/net interest margin (FTE)				42,857			4.23	%				41,745			4.13	%				40,292			4.46	%
FTE adjustment				(587	)							(585	)							(299	)
Net interest income (not FTE)			$	42,270							$	41,160							$	39,993

The Company recorded a reversal of provision for loan losses of $3,973,000 during the three months ended September 30, 2016 compared to a reversal of provision for loan losses of $866,000 during the three months ended September 30, 2015. The $3,973,000 reversal of provision for loan losses during the three months ended September 30, 2016 was primarily due to net loan recoveries of $1,568,000 associated with the sale of loans on August 22, 2016, additional net loan recoveries of $380,000 during the three months ended September 30, 2016, net credit quality upgrades of substandard performing loans, and continued low historical loan loss experience, that were partially offset by the effect of a $58,596,000 (2.2%) increase in loan balances during the three months ended September 30, 2016. A $30,465,000 (20.4%) decrease in construction loans outstanding during the three months ended September 30, 2016 also contributed to a decrease in the required allowance for loan losses at September 30, 2016, and the reversal of provision for loan losses during the three months ended September 30, 2016.

During the three months ended September 30, 2016 nonperforming loans increased $975,000 (4.9%) to $20,952,000, and represented a decrease from 1.47% of loans outstanding as of December 31, 2015, and an increase from 0.75% of loans outstanding at June 30, 2016, to 0.77% of loans outstanding as of September 30, 2016. The increase in nonperforming loans during the three months ended September 30, 2016 was due primarily to a $5,200,000 commercial real estate loan being put on nonaccrual status that was partially offset by the sale of $2,757,000 of nonperforming loans on August 22, 2016. The $5,200,000 commercial real estate loan referred to above is located in Central California, and is an owner-occupied SBA 504 loan collateralized by an industrial warehouse building.

The following table presents the key components of noninterest income for the periods indicated:

	Three months ended
	September 30,
(dollars in thousands)	2016			2015			$ Change			% Change
Service charges on deposit accounts	$	3,641		$	3,642		($	1	)		(0.0	%)
ATM fees and interchange		3,851			3,344			507			15.2	%
Other service fees		792			772			20			2.6	%
Mortgage banking service fees		537			521			16			3.1	%
Change in value of mortgage servicing rights		(799	)		(585	)		(214	)		36.6	%
Total service charges and fees		8,022			7,694			328			4.3	%
Gain on sale of loans		953			722			231			32.0	%
Commission on NDIP		747			812			(65	)		(8.0	%)
Increase in cash value of life insurance		709			770			(61	)		(7.9	%)
Change in indemnification asset		(10	)		(26	)		16			(61.5	%)
Gain on sale of foreclosed assets		69			356			(287	)		(80.6	%)
Other noninterest income		576			1,314			(738	)		(56.2	%)
Total other noninterest income		3,044			3,948			(904	)		(22.9	%)
Total noninterest income	$	11,066		$	11,642		($	576	)		(4.9	%)

Noninterest income decreased $576,000 (4.9%) to $11,066,000 during the three months ended September 30, 2016 compared to the three months ended September 30, 2015. The decrease in noninterest income was primarily due to a $738,000 decrease in other noninterest income, a $287,000 decrease in gain on sale of foreclosed assets, and a $214,000 decrease in change in value of mortgage servicing rights, that were partially offset by a $507,000 increase in ATM fees and interchange revenue, and a $231,000 increase in gain on sale of loans. The $738,000 decrease in other noninterest income was primarily due to the recovery, during the three months ended September 30, 2015, of $870,000 of recoveries of loans from acquired institutions that were charged off prior to acquisition of those institutions by the Company. As such, these “pre-acquisition charge offs” were properly not recorded by the Company, and any related recoveries are recorded in other noninterest income by the Company. Such recoveries are unusual, and none occurred during the three months ended September 30, 2016. The $287,000 decrease in gain on sale of foreclosed assets was due to a decrease in the number and balance of foreclosed assets, and the relative valuations of foreclosed assets during the three months ended September 30, 2016 compared to the three months ended September 30, 2015. The $214,000 decrease in change in value of mortgage servicing rights (MSRs) is primarily due to a change in the required rate of return on MSRs by market participants that reduced the value of such MSRs during the three months ended September 30, 2016 compared to a smaller decrease in the value of MSRs

during the three months ended September 30, 2015 that was primarily due to a decrease in estimated future MSR cash flows as a result of reduced mortgage rates and higher rates of early mortgage payoffs from mortgage refinancing. The $507,000 increase in ATM fees and interchange revenue was primarily due to the Company’s increased focus in this area, including the introduction of new services in this area during the quarter ended March 31, 2016. The $231,000 increase in gain on sale of loans was due to continued high levels of refinance and home purchase activity, and increased focus in this area by the Company when compared to the year-ago quarter. The changes in noninterest income include the effects from the operation of three branches, including $161,231,000 of deposits, acquired from Bank of America on March 18, 2016.

The following table presents the key components of the Company’s noninterest expense for the periods indicated:

	Three months ended
	September 30,
(dollars in thousands)	2016		2015			$ Change			% Change
Base salaries, overtime and temporary help, net of deferred loan origination costs	$	13,419	$	11,562		$	1,857			16.1	%
Commissions and incentives		2,798		1,674			1,124			67.1	%
Employee benefits		4,644		4,297			347			8.1	%
Total salaries and benefits expense		20,861		17,533			3,328			19.0	%
Occupancy		2,667		2,599			68			2.6	%
Equipment		1,607		1,417			190			13.4	%
Change in reserve for unfunded commitments		25		(40	)		65			(162.5	%)
Data processing and software		2,068		1,869			199			10.6	%
Telecommunications		702		658			44			6.7	%
ATM network charges		1,133		757			376			49.7	%
Professional fees		1,018		999			19			1.9	%
Advertising and marketing		1,049		926			123			13.3	%
Postage		381		314			67			21.3	%
Courier service		280		303			(23	)		(7.6	%)
Intangible amortization		359		290			69			23.8	%
Operational losses		497		201			296			147.3	%
Provision for foreclosed asset losses		9		106			(97	)		(91.5	%)
Foreclosed asset expense		37		105			(68	)		(64.8	%)
Assessments		654		642			12			1.9	%
Write down of fixed asset		716		—			716
Miscellaneous other expense		3,353		2,760			593			21.5	%
Total other noninterest expense		16,555		13,906			2,649			19.0	%
Total noninterest expense	$	37,416	$	31,439		$	5,977			19.0	%
Average full time equivalent employees		1,022		934			88			9.4	%

Salary and benefit expenses increased $3,328,000 (19.0%) to $20,861,000 during the three months ended September 30, 2016 compared to $17,533,000 during the three months ended September 30, 2015. Base salaries, overtime and temporary help, net of deferred loan origination costs increased $1,857,000 (16.1%) to $13,419,000. Base salaries, net of deferred loan origination costs increased $1,502,000 (13.4%) to $12,747,000 primarily due to annual merit increases, and an increase in average full-time equivalent employees of 88 (9.4%) to 1,022 for the three months ended September 30, 2016. Overtime expense increased $107,000 to $405,000 during the three months ended September 30, 2016. Temporary help expense increased $248,000 to $267,000 during the three months ended September 30, 2016. During the three months ended September 30, 2016, the Company incurred $109,000 of nonrecurring overtime expense and $179,000 of nonrecurring temporary help expense related to various information and customer service system conversions. These system conversions were initiated during the three months ended September 2016, and were completed on October 24, 2016.

Commissions and incentive compensation increased $1,124,000 (67.1%) to $2,798,000 during the three months ended September 30, 2016. All categories of incentive compensation expense were higher than the year-ago quarter except commission expense related to the sale of nondeposit investment products. The increases in the other categories of incentive compensation, compared to the year-ago quarter, were primarily due to increased loan production and other performance measures to which incentive compensation is tied compared to such measures in the year-ago quarter.

Benefits & other compensation expense increased $347,000 (8.1%) to $4,644,000 during the three months ended September 30, 2016 primarily due to the increases in average full-time equivalent employees and salaries expense, and their effects on group insurance and employer payroll tax expenses.

Other noninterest expense increased $2,649,000 (19.0%) to $16,555,000 during the three months ended September 30, 2016 compared to the three months ended September 30, 2015. The $2,649,000 increase in other noninterest expense was primarily due to a $716,000 expense related to a closed branch building, the value of which was written down to current market value, and subsequently sold during the three months ended September 30, 2016, a $593,000 increase in miscellaneous other expense, a $376,000 increase in ATM network charges, a $296,000 increase in operational losses, a $199,000 increase in data processing and software expense, and a $190,000 increase in Equipment expense.

The $593,000 increase in miscellaneous other noninterest expense included a $126,000 (69.8%) increase in debit card production and transaction processing expense, and a $98,000 (30.4%) increase in business meals and travel expense. Small increases in many other types of miscellaneous other noninterest expense accounted for the rest of the $593,000 increase in miscellaneous other noninterest expense. Included in miscellaneous other noninterest expense for the three months ended September 30, 2016 were $25,000 of nonrecurring training and business travel expenses related to the system conversions noted above. Included in other noninterest expense for the three months ended September 30, 2016 were $36,000 of nonrecurring ATM network charges related to the system conversions noted above.

The $296,000 increase in operational losses was primarily due to an increase in losses from fraudulent ATM and point of sale transactions.

The $199,000 increase in data processing and software expense was primarily due to increased use of outsourced data processing services. The $190,000 increase in equipment expense was primarily due to increased depreciation and rental expense from recently purchased and rented equipment and furniture.

Richard Smith, President and CEO of the Company commented, “We are pleased with the operating results in the quarter. During the third quarter many significant projects were implemented which were necessary to build out our technology infrastructure to facilitate our growth and expansion. We transferred our core system software to an outsourced solution along with our debit and ATM card services, and introduced a new business online and mobile banking solution for our customers. These system changes are major steps in our efforts to provide competitive new solutions and operating efficiencies for our company.”

Smith added, “While technology projects dominated our workload during the quarter, core banking activities remained very active. Loan demand and loan balances continue to increase at a strong annual pace. In addition, our strong deposit market share continues to increase in the majority of the counties we serve in Northern California.”

In addition to the historical information contained herein, this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Company’s actual results could differ materially. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, interest rate fluctuations, economic conditions in the Company’s primary market area, demand for loans, regulatory and accounting changes, loan losses, expenses, rates charged on loans and earned on securities investments, rates paid on deposits, competitive effects, fee and other noninterest income earned, the outcome of litigation, as well as other factors detailed in the Company’s reports filed with the Securities and Exchange Commission which are incorporated herein by reference, including the Form 10-K for the year ended December 31, 2015. These reports and this entire press release should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Company’s business. The Company does not intend to update any of the forward-looking statements after the date of this release.

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 the Bank’s investment services through affiliation with Raymond James Financial Services, Inc. Visit www.TriCountiesBank.com to learn more.

TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands, except share data)

	Three months ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2016			2016			2016			2015			2015
Statement of Income Data
Interest income	$	43,709		$	42,590		$	42,794		$	42,490		$	41,332
Interest expense		1,439			1,430			1,392			1,349			1,339
Net interest income		42,270			41,160			41,402			41,141			39,993
(Benefit from reversal of) provision for loan losses		(3,973	)		(773	)		209			(908	)		(866	)
Noninterest income:
Service charges and fees		8,022			8,099			7,305			7,935			7,694
Other income		3,044			3,146			2,485			3,510			3,948
Total noninterest income		11,066			11,245			9,790			11,445			11,642
Noninterest expense:
Base salaries net of deferred loan origination costs		13,419			12,968			12,708			12,014			11,562
Incentive compensation expense		2,798			2,471			1,739			2,304			1,674
Employee benefits and other compensation expense		4,644			4,606			4,818			4,212			4,297
Total salaries and benefits expense		20,861			20,045			19,265			18,530			17,533
Other noninterest expense		16,555			18,222			14,486			16,154			13,906
Total noninterest expense		37,416			38,267			33,751			34,684			31,439
Income before taxes		19,893			14,911			17,232			18,810			21,062
Net income	$	12,199		$	9,405		$	10,674		$	11,422		$	12,694
Share Data
Basic earnings per share	$	0.53		$	0.41		$	0.47		$	0.50		$	0.56
Diluted earnings per share	$	0.53		$	0.41		$	0.46		$	0.50		$	0.55
Book value per common share	$	21.11		$	20.76		$	20.34		$	19.85		$	19.48
Tangible book value per common share	$	17.99		$	17.63		$	17.18		$	16.81		$	16.42
Shares outstanding		22,827,277			22,822,325			22,785,173			22,775,173			22,764,295
Weighted average shares		22,824,868			22,802,653			22,782,865			22,769,793			22,757,453
Weighted average diluted shares		23,098,534			23,070,151			23,046,165			23,055,900			23,005,980
Credit Quality
Nonperforming originated loans	$	13,083		$	10,022		$	12,660		$	22,824		$	24,052
Total nonperforming loans		20,952			19,977			24,034			37,119			38,898
Foreclosed assets, net of allowance		4,124			3,842			4,471			5,369			5,285
Loans charged-off		664			641			1,289			380			687
Loans recovered	$	2,612		$	536		$	1,457		$	781		$	2,616
Selected Financial Ratios
Return on average total assets		1.11	%		0.86	%		1.01	%		1.11	%		1.28	%
Return on average equity		10.15	%		7.98	%		9.25	%		10.14	%		11.56	%
Average yield on loans		5.36	%		5.32	%		5.48	%		5.60	%		5.57	%
Average yield on interest-earning assets		4.37	%		4.28	%		4.47	%		4.53	%		4.60	%
Average rate on interest-bearing liabilities		0.22	%		0.21	%		0.22	%		0.22	%		0.23	%
Net interest margin (fully tax-equivalent)		4.23	%		4.13	%		4.33	%		4.39	%		4.46	%
Supplemental Loan Interest Income Data:
Discount accretion PCI - cash basis loans	$	777		$	426		$	269		$	302		$	445
Discount accretion PCI - other loans		569			415			(45	)		1,392			1,090
Discount accretion PNCI loans		883			1,459			868			573			1,590
All other loan interest income	$	33,540			32,038			33,646			32,571			30,689
Total loan interest income	$	35,769		$	34,338		$	34,738		$	34,838		$	33,814

TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands)

	Three months ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2016			2016			2016			2015			2015
Balance Sheet Data
Cash and due from banks	$	315,088		$	216,786		$	388,878		$	303,461		$	209,298
Securities, available for sale		510,209			529,017			477,454			404,885			329,361
Securities, held to maturity		641,149			674,412			705,133			726,530			751,051
Restricted equity securities		16,956			16,956			16,956			16,956			16,956
Loans held for sale		7,777			2,904			2,240			1,873			5,152
Loans:
Commercial loans		217,110			209,840			197,695			194,913			199,330
Consumer loans		377,016			381,114			401,076			395,283			403,081
Real estate mortgage loans		1,998,913			1,913,024			1,813,933			1,811,832			1,757,082
Real estate construction loans		119,187			149,652			128,843			120,909			110,073
Total loans, gross		2,712,226			2,653,630			2,541,547			2,522,937			2,469,566
Allowance for loan losses		(33,484	)		(35,509	)		(36,388	)		(36,011	)		(36,518	)
Foreclosed assets		4,124			3,842			4,471			5,369			5,285
Premises and equipment		49,448			51,728			51,522			43,811			42,334
Cash value of life insurance		95,281			94,572			95,256			94,560			94,458
Goodwill		64,311			64,311			64,311			63,462			63,462
Other intangible assets		6,923			7,282			7,641			5,894			6,184
Mortgage servicing rights		6,208			6,720			7,140			7,618			7,467
Accrued interest receivable		10,819			11,602			11,075			10,786			10,212
Other assets		60,096			54,239			57,720			48,591			47,360
Total assets	$	4,467,131			4,352,492			4,394,956			4,220,722			4,021,628
Deposits:
Noninterest-bearing demand deposits		1,221,503			1,181,702			1,178,001			1,155,695			1,100,607
Interest-bearing demand deposits		910,638			867,638			884,638			853,961			817,034
Savings deposits		1,366,892			1,346,269			1,368,644			1,281,540			1,187,238
Time certificates		336,979			345,787			353,757			340,070			352,993
Total deposits		3,836,012			3,741,396			3,785,040			3,631,266			3,457,872
Accrued interest payable		774			727			751			774			795
Reserve for unfunded commitments		2,908			2,883			2,475			2,475			2,085
Other liabilities		69,695			57,587			68,064			65,293			53,681
Other borrowings		19,235			19,464			18,671			12,328			6,859
Junior subordinated debt		56,617			56,567			56,519			56,470			56,991
Total liabilities		3,985,241			3,878,624			3,931,520			3,768,606			3,578,283
Total shareholders’ equity		481,890			473,868			463,436			452,116			443,345
Accumulated other comprehensive gain (loss)		4,953			6,073			1,772			(1,778	)		(2,298	)
Average loans		2,669,954			2,579,774			2,537,574			2,489,406			2,427,670
Average interest-earning assets		4,055,446			4,038,728			3,876,786			3,777,144			3,616,912
Average total assets		4,407,322			4,387,950			4,212,388			4,115,369			3,953,292
Average deposits		3,784,748			3,778,436			3,616,618			3,543,423			3,390,229
Average total equity	$	480,575		$	471,362		$	461,520		$	450,413		$	439,360
Total risk based capital ratio		14.7	%		14.7	%		15.1	%		15.1	%		15.2	%
Tier 1 capital ratio		13.6	%		13.6	%		13.9	%		13.8	%		13.9	%
Tier 1 common equity ratio		12.0	%		12.0	%		12.3	%		12.2	%		12.3	%
Tier 1 leverage ratio		10.6	%		10.4	%		10.7	%		10.8	%		11.0	%
Tangible capital ratio		9.3	%		9.4	%		9.1	%		9.2	%		9.5	%

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