TriCo Bancshares (TCBK): what the price requires
At today's price, TriCo Bancshares (TCBK) is priced for 11.7% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TCBK
Headline
| Field | Value |
|---|---|
| Ticker | TCBK |
| Company | TriCo Bancshares |
| Sector / Industry | Financial Services / Banks—Regional |
| Current price | $60.23/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 11.7% |
| Return on equity now | 9.2% |
| ROE gap | +2.5pp |
| Price-to-book | 1.45x |
Solve inputs: computed at a 9.3% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.5pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +1.41σ |
| cohort percentile (of 119 peers) | 57 |
| sustained it ~10 years at this level | 71% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.37x | 3 | expensive |
| Earnings | 0.94x | 2 | justifies |
| Relative | 1.01x | 3 | expensive |
| Growth | 1.05x | 1 | expensive |
Families that justify the price: Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.2%); the inversion above states its own rate.
Per-Model Detail (n=9)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $33.96 | 1.77x | yes | TBVPS $31.48 × 1.08x (ROE (TTM) 9.7% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.84% allowance/loans → ×0.99, NPL 0.98% → ×0.98) |
| Relative Valuation | Relative | $49.85 | 1.21x | yes | P/E 11.54x (blended: static sector reference 10x + trailing (TTM) 15x), scenarios: 9.6x / 11.5x / 13.5x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $43.01 | 1.40x | yes | BV/sh $40.88, ROE (TTM) 9.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $44.10 | 1.37x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $57.21 | 1.05x | yes | Rev $0.4B, growth 9% (input: historical growth; tapered), Terminal P/S: 4.5x / 5.4x / 6.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $59.73 | 1.01x | yes | EPS $3.94, growth 15% (input: historical EPS growth), PEG=1.00 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $60.20 | 1.00x | yes | √(22.5 × EPS $3.94 × BVPS $40.88) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $127.13 | 0.47x | yes | EPS $3.94 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $89.60 | 0.67x | yes | EPS $3.94 × (PEG 1.5 × growth 15.2% (input: historical EPS growth)) → PE 22.7x |
| Earnings Yield | Earnings | $42.59 | 1.41x | yes | EPS $3.94 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 1.8% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- TriCo Bancshares runs Tri Counties Bank across California with an $8.4 billion deposit base and a net interest margin that widened to 4.07% in Q1 2026 from 3.73% a year earlier, driven by cheaper deposit funding.
- The biggest risk is real-estate concentration: the FY2025 10-K discloses that "approximately 92.8% of the book value of our loan portfolio consisted of loans collateralized by various types of real estate", so a California property downturn hits nearly the whole book.
- Watch capital returns and margin: the bank returned $96.1 million through dividends and buybacks over the trailing year (about 63% of earnings), and the next print will show whether the 4%-plus margin holds.
Bull Case
What a plain price-to-earnings multiple misses about TriCo is that the engine of the business is the deposit franchise, not the loan book, and that franchise just got more valuable. The FY2025 10-K shows funding costs falling even as rates stayed elevated: "costs associated with interest bearing deposits decreased by 12 basis points to 1.97%", and total interest expense dropped $15.5 million or 11.4% for the year. That is the quiet mechanic behind a net interest margin that widened to 4.07% in Q1 2026 from 3.73% a year earlier. A community bank that can hold loan yields while its deposit costs fall is manufacturing margin out of its own liability side, which no earnings multiple captures directly.
The result flows straight to the bottom line. Q1 2026 net income of $33.7 million was up 27.8% year over year, diluted earnings per share rose to $1.04 from $0.80, and the bank has produced positive free cash flow in all four trailing quarters with cash flow running ahead of net income. Loans grew 3.6% to $7.07 billion and deposits grew 2.4% to $8.40 billion, so the margin expansion is not coming at the cost of a shrinking balance sheet. This is a bank getting more profitable on a base that is still modestly growing.
Management is returning that profitability aggressively. Over the trailing year TriCo paid $45.7 million in dividends and bought back $50.4 million of stock, $96.1 million in total, roughly 63% of earnings, and repurchased 447,211 shares in Q1 at an average price of $48.30, below today's level. The tangible capital ratio of 10.5% leaves room to keep doing it. The liquidity position is deep: the 10-K reports primary liquidity of nearly $4 billion, "represented 48% of total deposits and 140% of estimated total uninsured" deposits, which is exactly the cushion that matters after the 2023 regional-bank scare. The bull case is a well-funded California franchise widening its margin and buying back stock below where it trades.
Bear Case
The valuation methods split on TriCo, and reading which ones defend the price tells you where the risk sits. The earnings-power and peer-multiple lenses find the stock modestly cheap, and only the asset-value lens finds it expensive, the price sitting about 30% above tangible book. That is the conservative read, and it is the honest one for a bank: paying 1.3x book for a return on equity the market assumes will be about 10.9% is a bet that a return of that quality persists. The bank has recently been earning about 9.2%, so the price needs the current, stronger profitability to become the durable rate, not the peak.
The reason to doubt durability is concentration. The FY2025 10-K is explicit that "approximately 92.8% of the book value of our loan portfolio consisted of loans collateralized by various types of real estate", and warns that if collateral values fall, "the real estate collateral could then be diminished and we would be more likely to suffer losses on defaulted loans". This is a bank almost entirely levered to California property values, spanning agribusiness, commercial, and residential borrowers concentrated in one state's economy.
The margin tailwind also cuts both ways. The recent expansion came from falling deposit costs; if rates fall further and loan yields reprice down faster than the remaining deposit costs, the same mechanic that lifted the margin to 4.07% reverses. The quant composite scores the name below its peers, and the pattern is a bank priced for continued outperformance in profitability and credit at a point in the cycle where both are near their best. The growth-oriented method reaches the price only by extending today's conditions; the value-oriented methods, which credit less, land below it. When the conservative methods are the ones sitting under the price, they are usually the more honest read.
Valuation
A bank is priced off its book value and the return it earns on that book. At $53.65 (July 11, 2026), TriCo trades at about 1.3x its book value of $40.88 per share, and inverting the price says the market assumes a sustained return on equity of about 10.9%. The bank has recently been earning about 9.2%, and on a trailing basis closer to 9.7%, so the assumption is within reach of what the franchise has shown rather than a stretch beyond it. That is a within-range bet, not an aggressive one, and it sits in the lower half of the peer group's price-to-book, so the market is not paying a premium multiple for this name.
The methods mostly agree the price is reasonable, with one dissent worth naming. The earnings-power lens, the peer-multiple lens, and the growth-oriented method all land at or slightly above today's price; only the asset-value lens reads it as expensive, about 30% above tangible book. That spread is the ordinary gap between a profitable bank's earning power and its bare book value, and it says the price rests on the earnings continuing rather than on the balance sheet alone. The earnings themselves come from the margin: the 10-K attributes the improvement to lower funding costs, with interest expense down $15.5 million as deposit costs fell to "1.97%", and Q1 2026 carried the net interest margin to 4.07%.
The solvency frame for a bank is capital and payout, and TriCo reads well on both. The tangible capital ratio is 10.5%, the payout capacity is about 63% of earnings returned through dividends and buybacks, and primary liquidity covers 48% of total deposits and 140% of uninsured deposits per the 10-K. The share count is shrinking. The price is not stretched against most methods; it is a bet that a mid-single-digits-growing California bank sustains its recently improved profitability, and the capital and liquidity cushions give it room to defend that profitability through a softer stretch.
Catalysts
The first quarter of 2026 was the strongest recent print. TriCo reported net income of $33.7 million, up 27.8% year over year, with diluted earnings per share of $1.04 against $0.80 a year earlier. The driver was margin: net interest margin improved to 4.07% from 3.73% a year ago, up 5 basis points from 4.02% in the prior quarter, as deposit funding costs continued to ease. Total loans grew 3.6% year over year to $7.07 billion and deposits grew 2.4% to $8.40 billion.
Credit and capital both held up. The allowance for credit losses stood at 1.81% of loans and non-performing assets were 0.77% of total assets, and the tangible capital ratio was 10.5%. The company paid a $0.36 quarterly dividend and repurchased 447,211 shares at an average of $48.30. The items to watch from here are whether the net interest margin holds above 4% if rate conditions shift, whether the real-estate-heavy loan book shows any deterioration in the non-performing and allowance ratios, and the pace of buybacks given the average repurchase price sits below the current market. The next quarterly report is the immediate checkpoint.
Peer Cohorts (Per Segment, With Filing Citations)
Community Banking (reported)
- VLY (VALLEY NATIONAL BANCORP)
- (no filing in the citation store)
- FULT (FULTON FINANCIAL CORP)
- (no filing in the citation store)
- BANR (Banner Corporation)
- (no filing in the citation store)
- FRME (FIRST MERCHANTS CORP)
- (no filing in the citation store)
- TRMK (Trustmark Corporation)
- (no filing in the citation store)
- CATY (Cathay General Bancorp)
- (no filing in the citation store)
- CVBF (CVB FINANCIAL CORP.)
- (no filing in the citation store)
- STBA (S&T BANCORP INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings release