KBRA Affirms Ratings for TriCo Bancshares

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Chico, California-based TriCo Bancshares (NASDAQ: TCBK) ("TriCo" or "the company"). Additionally, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for the lead subsidiary, Tri Counties Bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings are supported by TCBK’s consistently solid earnings performance including a five-year average ROA of 1.19%, most recently 1.08% for 1H25, which has been largely driven by its historically above peer NIM (3.81% in 1H25), low relative credit costs, and solid noninterest income sources (17% of revenue for 1H25). The NIM benefits from a robust funding profile, anchored by a granular retail-based deposit franchise with an average account balance of $28,000 and historically low betas. The company’s relationship-based business model is supported by a durable noninterest bearing deposit base (31% of total deposits at 2Q25), which bolsters its attractive deposit funding costs. At just 1.38% for 2Q25, TCBK’s cost of deposits remained well below the KBRA-rated median of 2.09%. Earnings are also enhanced by a strong credit culture which contributes to an overall lower level of credit costs attributable to comparatively healthy asset quality performance and a conservative credit culture, although the company experienced a jump in NCOs in 1H25 related to a C&I loan, which we recognize was an acquired loan. While we acknowledge TriCo’s above peer investor CRE exposure (289% of risk-based capital as of 2Q25), we consider TCBK’s loan underwriting standards to be conservative and geographically diversified across California, having produced favorable long-term asset quality performance highlighted by nominal credit losses. KBRA considers TCBK’s management team to be highly experienced with in-depth operating knowledge of the bank’s key markets. Bolstered by strong internal capital generation, balance sheet remixing, and muted loan growth, the company has successfully rebuilt capital to pre-acquisition levels of Valley Republic Bancorp in 1Q22 (CET1 ratio of 13.1% as of 2Q25). Given the company’s overall risk profile and earnings strength combined with strong loss absorption capacity derived from the LLR (1.79% of loans at 2Q25), KBRA views TCBK’s capital position as adequate for the rating category.

Rating Sensitivities

A rating upgrade is not expected over the medium term, though a successful track record operating as a company over $10 billion, more diversified fee income that is in line with higher-rated peers, and maintenance of solid profitability and asset quality measures, along with comparatively strong capitalization could lead to positive rating momentum over time. A rating downgrade is unlikely, though any material degradation in the credit profile or a substantial decline in regulatory capital levels or earnings performance metrics could pressure the ratings.

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