TriCo Bancshares (TCBK) 8-K Trico Bancshares Announces Quarterly and Annual Results

Exhibit 99.1

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

TRICO BANCSHARES ANNOUNCES QUARTERLY AND ANNUAL RESULTS

CHICO, Calif. – (January 30, 2018) – TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company of Tri Counties Bank, today announced net income of $2,989,000 for the quarter ended December 31, 2017, compared to $12,533,000 for the fourth quarter of 2016. Diluted earnings per share were $0.13 for the fourth quarter of 2017, compared to $0.54 for the fourth quarter of 2016. Net income for the fourth quarter of 2017 includes aone-time income tax expense of $7,416,000 due to there-measurement of the Company’s net deferred tax asset (“DTA”) resulting from the Tax Cuts and Jobs Act of 2017. Also included in net income for the fourth quarter of 2017 is $530,000 of merger and acquisition expenses related to the proposed merger with FNB Bancorp (“FNBB”) previously announced on December 11, 2017. Excluding the impact of the FNBB related merger expenses, and the DTAre-measurement, net income totaled $10,896,000 for the fourth quarter of 2017, or $0.47 per diluted share.

Net income was $40,554,000 for the year ended December 31, 2017, compared to $44,811,000 for the year ended December 31, 2016. Diluted earnings per share were $1.74 for the year ended December 31, 2017, compared to $1.94 for the year ended December 31, 2016. Excluding the impact of the FNBB related merger expenses, and the DTAre-measurement, net income totaled $48,462,000 for the year ended December 31, 2017, or $2.08 per diluted share. Net income for twelve months ended December 31, 2016 include the effects of $784,000 of expenses related to the acquisition of three bank branches, including $161,231,000 of deposits, during the three months ended March 31, 2016. Excluding the impact of the branch acquisition expenses, net income totaled $45,266,000 for the year ended December 31, 2016, or $1.96 per diluted share.

On December 22, 2017, President Donald Trump signed into law “H.R.1”, commonly known as the “Tax Cuts and Jobs Act”, which among other items reduces the Federal corporate tax rate from 35% to 21% effective January 1, 2018. While this decrease in the Federal corporate tax rate is expected to have a positive impact on the Company’s net income beginning January 1, 2018, the Company concluded that this caused the Company’s DTA to be reduced, and Federal income tax expense to be increased by $7,416,000 during the fourth quarter of 2017.

In addition to the nonrecurring income statement items noted above, there were other expense and revenue items during the three months ended December 31, 2017 and 2016 of less significance that may be considered nonrecurring and these items are described below in various sections of this announcement.

Performance highlights and other developments for the Company during the three months ended December 31, 2017 included the following:

• On December 11, 2017, TriCo and FNBB announced that they entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) pursuant to which FNBB will be merged with and into the Company, with the Company as the surviving corporation (the “Merger”). The Merger Agreement provides that immediately after the Merger, FNBB’s bank subsidiary, First National Bank of Northern California, will merge with and into the Company’s bank subsidiary, Tri Counties Bank, with Tri Counties Bank as the surviving bank.

• Loan balances increased $83,552,000 representing a 2.9% increase in total loans, and an annualized growth rate of 11.4%, during the three months ended December 31, 2017.

• The average rate of interest paid on deposits, including the effect of noninterest-bearing deposits, remained low at 0.11%.

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 December 31,
(dollars and shares in thousands)	2017			2016			$ Change			% Change
Net Interest Income	$	45,093		$	43,155		$	1,938			4.5	%
(Provision for) reversal of loan losses		(1,677	)		1,433			(3,110	)
Noninterest income		12,478			12,462			16			0.1	%
Noninterest expense		(38,076	)		(36,563	)		(1,513	)		4.1	%
Provision for income taxes		(14,829	)		(7,954	)		(6,875	)		86.4	%
Net income	$	2,989		$	12,533		($	9,544	)		(76.2	%)
Average common shares		22,945			22,846			99			0.4	%
Average diluted common shares		23,290			23,116			174			0.8	%

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

Ending balances	As of December 31,
($’s in thousands)	2017		2016		$ Change		% Change
Total assets	$	4,761,315	$	4,517,968	$	243,347		5.4	%
Total loans		3,015,165		2,759,593		255,572		9.3	%
Total investments		1,262,683		1,169,725		92,958		7.9	%
Total deposits		4,009,131		3,895,560	$	113,571		2.9	%
Qtrly avg balances	As of December 31,
($’s in thousands)	2017		2016		$ Change		% Change
Total assets	$	4,658,677	$	4,483,251	$	175,426		3.9	%
Total loans	$	2,948,277	$	2,730,391		217,886		8.0	%
Total investments		1,254,868		1,166,410		88,458		7.6	%
Total deposits	$	3,961,422	$	3,853,432	$	107,990		2.8	%

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.

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 announcement.

Following is a summary of the components of net interest income for the periods indicated (dollars in thousands):

	Three months ended December 31,
(dollars and shares in thousands)	2017			2016			$ Change			% Change
Interest income	$	46,961		$	44,615		$	2,346			5.3	%
Interest expense		(1,868	)		(1,460	)		(408	)		27.9	%
FTE adjustment		625			619			6			1.0	%
Net interest income (FTE)	$	45,718		$	43,774		$	1,944			4.4	%
Net interest margin (FTE)		4.26	%		4.24	%
Purchased loan discount accretion:
Amount (included in interest income)	$	1,489		$	1,778
Effect on average loan yield		0.20	%		0.26	%
Effect on net interest margin (FTE)		0.14	%		0.17	%
Interest income recovered via loan sales:
Amount (included in interest income)		—		$	586
Effect on average loan yield		0.00	%		0.09	%
Effect on net interest margin (FTE)		0.00	%		0.06	%

The following table shows the components of net interest income and net interest margin on a fullytax-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
	December 31, 2017								September 30, 2017								December 31, 2016
	Average Balance		Income/ Expense			Yield/ Rate			Average Balance		Income/ Expense			Yield/ Rate			Average Balance		Income/ Expense			Yield/ Rate
Assets
Earning assets
Loans	$	2,948,277	$	38,194			5.18	%	$	2,878,944	$	37,268			5.18	%	$	2,730,391	$	36,241			5.31	%
Investments – taxable		1,118,547		7,459			2.67	%		1,114,112		7,312			2.63	%		1,031,401		7,026			2.72	%
Investments – nontaxable		136,321		1,666			4.89	%		136,095		1,665			4.89	%		135,009		1,650			4.89	%
Cash at Federal Reserve and other banks		86,511		267			1.23	%		85,337		292			1.37	%		233,169		317			0.54	%
Total earning assets		4,289,656		47,586			4.44	%		4,214,488		46,537			4.42	%		4,129,970		45,234			4.38	%
Other assets, net		369,021								357,936								353,281
Total assets	$	4,658,677							$	4,572,424							$	4,483,251
Liabilities and shareholders’ equity
Interest-bearing
Demand deposits	$	964,827		210			0.09	%	$	949,348		206			0.09	%	$	892,518		94			0.04	%
Savings deposits		1,380,384		430			0.12	%		1,365,249		419			0.12	%		1,389,676		439			0.13	%
Time deposits		307,446		422			0.55	%		310,325		403			0.52	%		338,326		339			0.40	%
Other borrowings		61,769		141			0.91	%		65,234		149			0.91	%		19,122		2			0.04	%
Trust preferred securities		56,837		665			4.68	%		56,784		652			4.59	%		56,641		586			4.14	%
Total interest-bearing liabilities		2,771,263		1,868			0.27	%		2,746,941		1,829			0.27	%		2,696,283		1,460			0.22	%
Noninterest-bearing deposits		1,308,765								1,253,261								1,232,912
Other liabilities		65,642								64,834								72,352
Shareholders’ equity		513,007								507,389								481,704
Total liabilities and shareholders’ equity	$	4,658,677							$	4,572,424							$	4,483,251
Net interest rate spread							4.17	%							4.15	%							4.16	%
Net interest income/net interest margin (FTE)				45,718			4.26	%				44,708			4.24	%				43,774			4.24	%
FTE adjustment				(625	)							(624	)							(619	)
Net interest income (not FTE)			$	45,093							$	44,084							$	43,155
Purchase loan discount accretion effect:
Amount (included in interest income)			$	1,489							$	1,364							$	1,778
Effect on avg loan yield				0.20	%							0.19	%							0.26	%
Effect on net interest margin				0.14	%							0.13	%							0.17	%
Loan sale effect:
Amount (included in interest income)				—								—							$	586
Effect on avg loan yield				0.00	%							0.00	%							0.09	%
Effect on net interest margin				0.00	%							0.00	%							0.06	%

Net interest income (FTE) during the three months ended December 31, 2017 increased $1,944,000 (4.4%) to $45,718,000 compared to $43,774,000 during the three months ended December 31, 2016. The increase in net interest income (FTE) was due primarily to increases in the average balance of loans and investments that were partially offset by an increase in other borrowings, a decrease in yield on loans, and an increase in the average rate paid on interest-bearing liabilities compared to the three months ended December 31, 2016.

The table below that sets forth a summary of the changes in interest income and interest expense from changes in average asset and liability balances (volume) and changes in average interest yields and rates for each category of interest earning asset and interest paying liability for the periods indicated:

	Three months ended December 31, 2017 compared with three months ended December 31, 2016
	Volume			Yield/Rate			Total
Increase (decrease) in interest income:
Loans	$	2,892		$	(939	)	$	1,953
Investments – taxable		593			(160	)		433
Investments – nontaxable		16			—			16
Federal funds sold		(198	)		148			(50	)
Total		3,303			(951	)		2,352
Increase (decrease) in interest expense:
Demand deposits (interest-bearing)		7			109			116
Savings deposits		(3	)		(6	)		(9	)
Time deposits		(31	)		114			83
Other borrowings		4			135			139
Junior subordinated debt		2			77			79
Total		(21	)		429			408
Increase (decrease) in net interest income	$	3,324		$	(1,380	)	$	1,944

The Company recorded a provision for loan losses of $1,677,000 during the three months ended December 31, 2017 compared to a reversal of provision for loan losses of $1,433,000 during the three months ended December 31, 2016. The $1,677,000 provision for loan losses during the three months ended December 31, 2017 was due primarily to an increase in nonperforming loans, and an increase in loans classified as “special mention” that were partially offset by continued low historical loan loss experience. Nonperforming loans were $24,394,000, or 0.81% of loans outstanding as of December 31, 2017, compared to $21,955,000, or 0.75% of loans outstanding as of September 30, 2017, and $20,128,000, or 0.73% of loans outstanding as of December 31, 2016. Net loan charge-offs during the three months ended December 31, 2017 were $101,000.

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

	Three months ended December 31,
(dollars in thousands)	2017		2016			$ Change			% Change
Service charges on deposit accounts	$	3,954	$	3,816		$	138			3.6	%
ATM fees and interchange		4,255		4,723			(468	)		(9.9	%)
Other service fees		761		752			9			1.2	%
Mortgage banking service fees		515		495			20			4.0	%
Change in value of mortgage servicing rights		77		14			63			450.0	%
Total service charges and fees		9,562		9,800			(238	)		(2.4	%)
Gain on sale of loans		816		1,392			(576	)		(41.4	%)
Commission on nondeposit investment products		745		439			306			69.7	%
Increase in cash value of life insurance		642		631			11			1.7	%
Change in indemnification asset		—		(219	)		219			(100.0	%)
Gain on sale of foreclosed assets		403		44			359			815.9	%
Other noninterest income		310		375			(65	)		(17.3	%)
Total other noninterest income		2,916		2,662			254			9.5	%
Total noninterest income	$	12,478	$	12,462		$	16			0.1	%

Noninterest income increased $16,000 (0.1%) to $12,478,000 during the three months ended December 31, 2017 compared to the three months ended December 31, 2016. The increase in noninterest income was due primarily to a $359,000 (816%) increase in gain on sale of foreclosed assets, a $306,000 (69.7%) increase in commission on nondeposit investment products, and a $219,000 increase in change in indemnification asset that were partially offset by a $576,000 decrease in gain on sale of loans. The $359,000 increase in gain on sale of foreclosed asset was due primarily to $378,000 of previously deferred gain on sale of foreclosed assets being recorded into noninterest income as the conditions requiring its deferral were alleviated during the three months ended December 31, 2017. The $306,000 increase in commissions on nondeposit investment products was due to continued focus in this area. The $219,000 increase in change in indemnification asset was due to a $219,000 decrease in the indemnification asset during the fourth quarter of 2016, and no such change during the fourth quarter of 2017 as the Company and the FDIC terminated their loss sharing agreements during the second quarter of 2017. The $576,000 decrease in gain on sale of loans was due primarily to decreased residential mortgage refinance activity compared to theyear-ago quarter.

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

	Three months ended December 31,
(dollars in thousands)	2017		2016			$ Change			% Change
Base salaries, overtime and temporary help, net of deferred loan origination costs	$	13,942	$	14,074			($132	)		(0.9	%)
Commissions and incentives		2,247		1,864			383			20.5	%
Employee benefits		4,421		4,616			(195	)		(4.2	%)
Total salaries and benefits expense		20,610		20,554			56			0.3	%
Occupancy		2,698		2,635			63			2.4	%
Equipment		1,797		1,760			37			2.1	%
Provision for losses unfunded		175		(189	)		364			(192.6	%)
Data processing and software		3,116		2,580			536			20.8	%
Telecommunications		686		664			22			3.3	%
ATM & POS network charges		1,399		1,076			323			30.0	%
Professional fees		1,388		2,226			(838	)		(37.6	%)
Advertising and marketing		928		808			120			14.9	%
Postage		238		417			(179	)		(42.9	%)
Courier service		283		182			101			55.5	%
Intangible amortization		339		360			(21	)		(5.8	%)
Operational losses		228		558			(330	)		(59.1	%)
Provision for OREO losses		—		100			(100	)		(100.0	%)
OREO expense		114		69			45			65.2	%
Assessments		424		241			183			75.9	%
Merger & acquisition expense		530		—			530
Other		3,123		2,522			601			23.8	%
Total other noninterest expense		17,466		16,009			1,457			9.1	%
Total noninterest expense	$	38,076	$	36,563			$1,513			4.1	%
Average full time equivalent employees		981		1,008			(27	)		(2.7	%)
Merger & acquisition expense:
Professional fees	$	513		—
Miscellaneous other expense		17		—
Total merger & acquisition expense	$	530	$	0

Salary and benefit expenses increased $56,000 (0.3%) to $20,610,000 during the three months ended December 31, 2017 compared to $20,554,000 during the three months ended December 31, 2016. Base salaries, net of deferred loan origination costs decreased $132,000 (0.9%) to 13,942,000. The decrease in base salaries was due primarily to annual merit increases that were more than offset by a 2.7% decrease in average full time equivalent employees to 981 from 1,008 in theyear-ago quarter, and a decrease in temporary help expense. Commissions and incentive compensation increased $383,000 (20.5%) to $2,247,000 during the three months ended December 31, 2017 compared to theyear-ago quarter due primarily to increases in almost every category of incentive compensation. Benefits & other compensation expense decreased $195,000 (4.2%) to $4,421,000 during the three months ended December 31, 2017 due primarily to decreases in group medical expense.

Other noninterest expense increased $1,457,000 (9.1%) to $17,466,000 during the three months ended December 31, 2017 compared to the three months ended December 31, 2016. The increase in other noninterest expense was due primarily to $530,000 of expenses incurred in the fourth quarter of 2017 related to the proposed merger with FNBB, a $536,000 (20.8%) increase in data processing and software expense, a $323,000 increase in ATM & POS network charges, and a $364,000 increase in provision for losses for unfunded loan commitments that were partially offset by decreases of $838,000 in professional fees, and $330,000 in operational losses. The increase in data processing and software expense and ATM & POS network charges were due primarily to system enhancements and capacity expansion. The increase in change in reserve for unfunded commitments was due primarily to a larger increase in unfunded loan commitments during the three months ended December 31, 2017, compared to the three months ended December 31, 2016. The decrease in professional fees was due primarily to consulting fees incurred in the fourth quarter of 2016 related to system enhancements and capacity expansion.

The effective combined Federal and State income tax rate on income was 83.2% and 38.8% for the three months ended December 31, 2017 and 2016, respectively. The effective combined Federal and State income tax rate was greater than the Federal statutory tax rate of 35.0% due to a Federal tax expense of $7,416,000 related to the DTAre-measurement in the fourth quarter of 2017, and State income tax expense of $1,973,000 and $2,195,000, for the three months ended December 31, 2017 and 2016, respectively, that were partially offset by the effects oftax-exempt income of $1,041,000 and $1,031,000, respectively, from investment securities, $641,000 and $631,000, respectively, from increase in cash value of life insurance,low-income housing tax credits of ($123,000) and $62,000, respectively, and $59,000 and $0, respectively, of equity compensation excess tax benefits. The low income housing tax credits and the equity compensation excess tax benefits represent direct reductions in tax expense.

The provisions for income taxes applicable to income before taxes differ from amounts computed by applying the statutory Federal income tax rates to income before taxes. The effective tax rate and the statutory federal income tax rate are reconciled for the periods indicated as follows:

	Three months ended December 31,
	2017			2016
Federal statutory income tax rate		35.0	%		35.0	%
State income taxes, net of federal tax benefit		7.2			7.0
Tax-exempt interest on municipal obligations		(2.0	)		(1.8	)
Increase in cash value of insurance policies		(1.3	)		(1.1	)
Low income housing tax credits		0.7			(0.3	)
Equity compensation		(0.3	)		—
Nondeductible merger expenses		0.9			—
DTAre-measurement		41.6			—
Other		1.4			—
Effective Tax Rate		83.2	%		38.8	%

The Company’s financial statements are prepared in conformity with generally accepted accounting principles in the United States of America (GAAP). The Company uses certainnon-GAAP measures to provide supplemental information regarding performance. Net income and the effective tax rate for the three and twelve months ended December 31, 2017 include the effects of $530,000 of expenses related to the proposed merger with FNBB, of which $438,000 isnon-deductible for taxes, and aone-time charge of $7,416,000 due to there-measurement of the Company’s DTA resulting from the Tax Cuts and Jobs Act of 2017. Net income for the twelve months ended December 31, 2016 include the effects of $784,000 of expenses, all of which were deductible for taxes, related to the acquisition of three bank branches, including $161,231,000 of deposits, during the three months ended March 31, 2016. The Company believes that presenting the effective tax rate, net income, return on average assets (ROAA), return on average equity (ROAE), and earnings per common share, excluding the impact of merger & acquisition expenses and there-measurement of the Company’s DTA, provides additional clarity to the users of the financial statements regarding core financial performance. The following table presents a comparison of the effective tax rate, net income, ROAA, ROAE, and earnings per common share as reported, and as adjusted for the impact of merger & acquisition expenses and there-measurement of the Company’s DTA, for the periods indicated.

	Three months ended December 31,						Year ended December 31,
($’s in thousands except per share amounts)	2017			2016			2017			2016
Income tax expense	$	14,829		$	7,954		$	36,958		$	27,712
Effect ofnon-deductible merger expense		(184	)		—			(184	)		—
Effect of income tax rate change DTAre-measurement		(7,416	)		—			(7,416	)		—
Adjusted income tax expense	$	7,229		$	7,954		$	29,358		$	27,712
Effective tax rate		83.2	%		38.8	%		47.7	%		38.2	%
Adjusted effective tax rate		40.6	%		38.8	%		37.9	%		38.2	%
Net income	$	2,989		$	12,533		$	40,554		$	44,811
Effect of merger expense		491			—			491			454
Effect of income tax rate change DTAre-measurement		7,416			—			7,416			—
Adjusted net income	$	10,896		$	12,533		$	48,462		$	45,266
ROAA		0.26	%		1.12	%		0.89	%		1.02	%
Adjusted ROAA		0.94	%		1.12	%		1.06	%		1.04	%
ROAE		2.33	%		10.41	%		8.10	%		9.46	%
Adjusted ROAE	��	8.50	%		10.41	%		9.68	%		9.55	%
Earnings per common share:
Basic	$	0.13		$	0.55		$	1.77		$	1.96
Diluted	$	0.13		$	0.54		$	1.74		$	1.94
Adjusted earnings per common share:
Basic	$	0.47		$	0.55		$	2.12		$	1.98
Diluted	$	0.47		$	0.54		$	2.08		$	1.96
M&A expense	$	530		$	—		$	530		$	784
Non-deductible M&A expense	$	438		$	—		$	438		$	—
Average assets	$	4,658,677		$	4,483,251		$	4,554,505		$	4,373,022
Average equity	$	513,007		$	481,704		$	500,653		$	473,829
Weighted average shares		22,944,523			22,845,623			22,911,611			22,814,002
Weighted average diluted shares		23,289,545			23,115,708			23,249,887			23,086,460

Richard P. Smith, President and CEO of the Company commented, “The fourth quarter of 2017 was a very busy and successful quarter for the company. Lending activity across our footprint remains strong, with total loans eclipsing $3.0 billion for the first time. Total loans grew by 2.9% during the quarter, or at 11.4% annualized. Similarly, total deposits exceeded $4.0 billion during the quarter, growing $102 million or 2.6%. Just as importantly, the bank continues to be positioned well for rising rates, with demand deposits representing 34% of total deposits and the overall average cost of deposits at just 0.11%

Smith added, “Key events for the quarter were the passing of the Tax Cuts and Jobs Act and our announced acquisition of First National Bank of Northern California. While the reduction in the corporate tax rate resulted in the recognition of immediate revaluation expense against our deferred tax assets, we expect a lower corporate tax rate to have a continuing positive impact on the Company’s net income beginning in January 2018. We remain enthusiastic about our organic growth and momentum as we enter 2018, along with the completion of our previously announced strategic acquisition of First National Bank of Northern California. We continue to believe this transaction is an important element in our overall growth strategy and squarely align with our goal of being Northern California’s #1 community bank.

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 the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions 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 the Company conducts 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; mergers and acquisitions, including costs or difficulties related to the integration of acquired companies; changes in the level of the Company’s nonperforming assets and charge-offs; 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 the Company; changes in consumer spending, borrowing and savings habits; ability to attract deposits and other sources of liquidity; changes in the financial performance and/or condition of our borrowers; the impact of competition from financial and bank holding companies and other financial service providers; unanticipated regulatory or judicial proceedings; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; and the Company’s 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 Form10-K for the year ended December 31, 2016, which is on file with the Securities and Exchange Commission (the “SEC”) and 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.

Statements concerning the potential merger of the Company and FNB Bancorp may also be forward-looking statements. Please refer to each of the Company’s and FNB’s Annual Report on Form10-K for the year ended December 31, 2016, as well as their other filings with the SEC, for a more detailed discussion of risks, uncertainties and factors that could cause actual results to differ from those discussed in the forward-looking statements.

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 customerService with Solutions available in traditional stand-alone andin-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 convenientaround-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.Visitwww.TriCountiesBank.com to learn more.

TRICO BANCSHARES – CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands, except share data)

	Three months ended
	December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016
Statement of Income Data
Interest income	$	46,961		$	45,913		$	45,044		$	43,484		$	44,615
Interest expense		1,868			1,829			1,610			1,491			1,460
Net interest income		45,093			44,084			43,434			41,993			43,155
Provision (benefit from reversal of provision) for loan losses		1,677			765			(796	)		(1,557	)		(1,433	)
Noninterest income:
Service charges and fees		9,562			9,475			9,479			8,907			9,800
Other income		2,916			3,455			3,431			2,796			2,662
Total noninterest income		12,478			12,930			12,910			11,703			12,462
Noninterest expense:
Base salaries net of deferred loan origination costs		13,942			13,600			13,657			13,390			14,074
Incentive compensation expense		2,247			2,609			2,173			2,198			1,864
Employee benefits and other compensation expense		4,421			4,724			4,664			5,305			4,616
Total salaries and benefits expense		20,610			20,933			20,494			20,893			20,554
Other noninterest expense		17,466			16,289			15,410			14,929			16,009
Total noninterest expense		38,076			37,222			35,904			35,822			36,563
Income before taxes		17,818			19,027			21,236			19,431			20,487
Net income	$	2,989		$	11,897		$	13,589		$	12,079		$	12,533
Share Data
Basic earnings per share	$	0.13		$	0.52		$	0.59		$	0.53		$	0.55
Diluted earnings per share	$	0.13		$	0.51		$	0.58		$	0.52		$	0.54
Book value per common share	$	22.03		$	22.09		$	21.76		$	21.28		$	20.87
Tangible book value per common share	$	19.01		$	19.04		$	18.70		$	18.20		$	17.77
Shares outstanding		22,955,963			22,941,464			22,925,069			22,873,305			22,867,802
Weighted average shares		22,944,523			22,931,855			22,899,600			22,870,467			22,845,623
Weighted average diluted shares		23,289,545			23,244,235			23,240,112			23,231,778			23,115,708
Credit Quality
Nonperforming originated loans	$	15,463		$	11,689		$	10,581		$	13,234		$	12,894
Total nonperforming loans		24,394			21,955			17,429			19,511			20,128
Foreclosed assets, net of allowance		3,226			3,071			3,489			3,529			3,986
Loanscharged-off		627			862			2,512			409			635
Loans recovered		526			701			434			480			1,087
Selected Financial Ratios
Return on average total assets		0.26	%		1.04	%		1.21	%		1.08	%		1.12	%
Return on average equity		2.33	%		9.38	%		10.93	%		9.97	%		10.41	%
Average yield on loans		5.18	%		5.18	%		5.23	%		5.06	%		5.31	%
Average yield on interest-earning assets		4.44	%		4.42	%		4.42	%		4.27	%		4.38	%
Average rate on interest-bearing liabilities		0.27	%		0.27	%		0.24	%		0.22	%		0.22	%
Net interest margin (fullytax-equivalent)		4.26	%		4.24	%		4.26	%		4.13	%		4.24	%
Supplemental Loan Interest Income Data:
Discount accretion PCI – cash basis loans	$	516		$	398		$	386		$	112		$	483
Discount accretion PCI – other loans		445			407			797			631			658
Discount accretion PNCI loans		528			559			987			798			637
All other loan interest income		36,705			35,904			34,248			33,373			34,463
Total loan interest income	$	38,194		$	37,268		$	36,418		$	34,914		$	36,241

TRICO BANCSHARES – CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands)

	Three months ended
	December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016
Balance Sheet Data
Cash and due from banks	$	205,428		$	188,034		$	167,649		$	323,706		$	305,612
Securities, available for sale		730,883			678,236			672,569			571,719			550,233
Securities, held to maturity		514,844			536,567			559,518			580,137			602,536
Restricted equity securities		16,956			16,956			16,956			16,956			16,956
Loans held for sale		4,616			2,733			2,537			1,176			2,998
Loans:
Commercial loans		220,500			227,479			225,743			212,685			217,047
Consumer loans		365,113			361,320			360,782			357,593			366,111
Real estate mortgage loans		2,291,995			2,194,874			2,106,567			2,066,372			2,054,016
Real estate construction loans		137,557			147,940			133,301			124,542			122,419
Total loans, gross		3,015,165			2,931,613			2,826,393			2,761,192			2,759,593
Allowance for loan losses		(30,323	)		(28,747	)		(28,143	)		(31,017	)		(32,503	)
Foreclosed assets		3,226			3,071			3,489			3,529			3,986
Premises and equipment		57,742			54,995			51,558			49,508			48,406
Cash value of life insurance		97,783			97,142			96,410			95,783			95,912
Goodwill		64,311			64,311			64,311			64,311			64,311
Other intangible assets		5,174			5,513			5,852			6,204			6,563
Mortgage servicing rights		6,687			6,419			6,596			6,860			6,595
Accrued interest receivable		13,772			12,656			11,605			11,236			12,027
Other assets		55,051			86,936			62,635			66,654			74,743
Total assets	$	4,761,315		$	4,656,435		$	4,519,935		$	4,527,954		$	4,517,968
Deposits:
Noninterest-bearing demand deposits	$	1,368,218		$	1,283,949		$	1,261,355		$	1,254,431		$	1,275,745
Interest-bearing demand deposits		971,459			965,480			956,690			947,006			887,625
Savings deposits		1,364,518			1,367,597			1,346,016			1,370,015			1,397,036
Time certificates		304,936			310,430			314,361			327,432			335,154
Total deposits		4,009,131			3,927,456			3,878,422			3,898,884			3,895,560
Accrued interest payable		930			867			781			770			818
Reserve for unfunded commitments		3,164			2,989			2,599			2,734			2,719
Other liabilities		63,258			62,850			59,868			66,938			67,364
Other borrowings		122,166			98,730			22,560			15,197			17,493
Junior subordinated debt		56,858			56,810			56,761			56,713			56,667
Total liabilities	$	4,255,507		$	4,149,702		$	4,020,991		$	4,041,236		$	4,040,621
Total shareholders’ equity	$	505,808		$	506,733		$	498,944		$	486,718		$	477,347
Accumulated other comprehensive gain (loss)		(5,228	)		(4,612	)		(4,501	)		(7,402	)		(7,913	)
Average loans	$	2,948,277		$	2,878,944		$	2,783,686		$	2,758,544		$	2,730,391
Average interest-earning assets		4,289,656			4,214,488			4,135,021			4,130,469			4,129,970
Average total assets		4,658,677			4,572,424			4,492,389			4,493,657			4,483,251
Average deposits		3,961,422			3,878,183			3,851,519			3,862,793			3,853,432
Average total equity		513,007			507,389			497,225			484,811			481,704
Total risk based capital ratio		14.1	%		14.4	%		14.8	%		15.0	%		14.8	%
Tier 1 capital ratio		13.2	%		13.6	%		13.9	%		14.0	%		13.7	%
Tier 1 common equity ratio		11.7	%		12.1	%		12.3	%		12.4	%		12.2	%
Tier 1 leverage ratio		10.8	%		11.0	%		11.0	%		10.8	%		10.6	%
Tangible capital ratio		9.3	%		9.5	%		9.6	%		9.3	%		9.1	%

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