UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q
                  Quarterly Report Pursuant Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For Quarterly Period Ended September 30, 2006     Commission file number 0-10661
----------------------------------------          ------------------------------

                                TRICO BANCSHARES
             (Exact name of registrant as specified in its charter)

           California                                          94-2792841
------------------------------                            -------------------
 (State or other jurisdiction                              (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                  63 Constitution Drive, Chico, California 95973
              ----------------------------------------------------
               (Address of principal executive offices) (Zip code)

                                  530-898-0300
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                            Yes  X        No
                                -----        -----

     Indicate by check mark whether the Registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer" and "large accelerated filer" in Rule 12b-2 of the Act (check one).

Large accelerated filer      Accelerated filer  X   Non-accelerated filer
                       -----                  -----                      -----

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act).

                             Yes           No  X
                                -----        -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:

Title of Class:  Common stock, no par value

Outstanding shares as of November 3, 2006:  15,857,107


<PAGE>


                                TABLE OF CONTENTS

                                                                          Page

Forward Looking Statements                                                  1

PART I - FINANCIAL INFORMATION                                              2

  Item 1 - Financial Statements                                             2

    Notes to Unaudited Condensed Consolidated Financial Statements          6

    Financial Summary                                                      18

  Item 2 - Management's Discussion and Analysis of Financial               19
           Condition and Results of Operations

  Item 3 - Quantitative and Qualitative Disclosures about Market Risk      30

  Item 4 - Controls and Procedures                                         31

PART II - OTHER INFORMATION                                                32

  Item 1 - Legal Proceedings                                               32

  Item 1A - Risk Factors                                                   32

  Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds     32

  Item 4 - Submission of Matters to a Vote of Security Holders             32

  Item 6 - Exhibits                                                        33

  Signatures                                                               35

  Exhibits                                                                 36


<PAGE>


                           FORWARD-LOOKING STATEMENTS

This  report  on Form  10-Q  contains  forward-looking  statements  about  TriCo
Bancshares (the "Company") for which it claims the protection of the safe harbor
provisions  contained in the Private  Securities  Litigation Reform Act of 1995.
These forward-looking statements are based on Management's current knowledge and
belief and include  information  concerning  the  Company's  possible or assumed
future  financial  condition and results of operations.  When you see any of the
words "believes", "expects", "anticipates", "estimates", or similar expressions,
mean making forward-looking  statements.  A number of factors, some of which are
beyond the Company's  ability to predict or control,  could cause future results
to differ  materially  from those  contemplated.  The reader is  directed to the
Company's  annual report on Form 10-K for the year ended  December 31, 2005, and
Part II, Item 1A of this report for further  discussion  of factors  which could
affect the Company's business and cause actual results to differ materially from
those expressed in any forward-looking statement made in this report.





                                       1

<PAGE>
<TABLE>
<CAPTION>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
                                TRICO BANCSHARES
                           CONSOLIDATED BALANCE SHEETS
                  (In thousands, except share data; unaudited)

                                                               At September 30,           At December 31,
                                                            2006               2005             2005
                                                      -------------------------------   -----------------
<S>                                                         <C>               <C>              <C>
Assets:
     Cash and due from banks                              $78,281           $85,413          $90,562
     Federal funds sold                                     1,387               218            2,377
                                                      -------------------------------   -----------------
         Cash and cash equivalents                         79,668            85,631           92,939

     Securities available-for-sale                        209,886           271,134          260,278
     Federal Home Loan Bank stock, at cost                  8,206             7,516            7,602
     Loans, net of allowance for loan losses
         of $16,993, $15,796 and $16,226                1,490,166         1,312,294        1,368,809
     Foreclosed assets, net of allowance for losses
         of $180, $180 and $180                                 -                 -                -
     Premises and equipment, net                           21,556            21,223           21,291
     Cash value of life insurance                          42,991            41,519           41,768
     Accrued interest receivable                            8,637             7,080            7,641
     Goodwill                                              15,519            15,519           15,519
     Other intangible assets, net                           3,361             4,373            4,407
     Other assets                                          24,014            20,567           21,021
                                                      -------------------------------   -----------------
         Total Assets                                  $1,904,004        $1,786,856       $1,841,275
                                                      ===============================   =================
Liabilities:
     Deposits:
         Noninterest-bearing demand                      $357,754          $346,456         $368,412
         Interest-bearing                               1,167,420         1,091,843        1,128,385
                                                      -------------------------------   -----------------
         Total deposits                                 1,525,174         1,438,299        1,496,797
     Federal funds purchased                              106,500           103,200           96,800
     Accrued interest payable                               7,341             3,960            4,506
     Reserve for unfunded commitments                       1,849             1,674            1,813
     Other liabilities                                     20,913            20,452           19,238
     Other borrowings                                      35,848            31,711           31,390
     Junior subordinated debt                              41,238            41,238           41,238
                                                      -------------------------------   -----------------
         Total Liabilities                              1,738,863         1,640,534        1,691,782
                                                      -------------------------------   -----------------
Commitments and contingencies
Shareholders' Equity:
Common stock, no par value: 50,000,000 shares authorized;
    issued and outstanding:
         15,857,107 at September 30, 2006                  73,545
         15,728,106 at September 30, 2005                                    71,412
         15,707,835 at December 31, 2005                                                      71,412
Retained earnings                                          95,203            77,448           81,906
Accumulated other comprehensive loss, net                 (3,607)           (2,538)          (3,825)
                                                      -------------------------------   -----------------
         Total Shareholders' Equity                       165,141           146,322          149,493
                                                      -------------------------------   -----------------
Total Liabilities and Shareholders' Equity             $1,904,004        $1,786,856       $1,841,275
                                                      ===============================   =================
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       2

<PAGE>
<TABLE>
<CAPTION>


                                TRICO BANCSHARES
                        CONSOLIDATED STATEMENTS OF INCOME
                (In thousands, except per share data; unaudited)

                                               Three months ended September 30,Nine months ended September 30,
                                                    2006            2005       2006           2005
                                               --------------------------------------------------------
<S>                                                 <C>             <C>        <C>            <C>
  Interest and dividend income:
  Loans, including fees                         $28,901         $22,254    $80,525         $62,482
  Debt securities:
  Taxable                                         1,938           2,528      6,548          7,865
  Tax exempt                                        431             468      1,338          1,297
  Dividends                                         144              80        322            218
  Federal funds sold                                  7               4         45             18
                                               --------------------------------------------------------
  Total interest income                        31,421          25,334     88,778         71,880
                                               --------------------------------------------------------
  Interest expense:
  Deposits                                      6,844           3,824     17,707         10,526
  Federal funds purchased                       1,448             696      3,367          1,117
  Other borrowings                                442             351      1,186          1,007
  Junior subordinated debt                        842             648      2,364          1,779
                                               --------------------------------------------------------
  Total interest expense                        9,576           5,519     24,624         14,429
                                               --------------------------------------------------------
  Net interest income                          21,845          19,815     64,154         57,451
                                               --------------------------------------------------------
  Provision for loan losses                       235             947      1,289          1,608
                                               --------------------------------------------------------
  Net interest income after provision for
    loan losses                                21,610          18,868     62,865         55,843
                                               --------------------------------------------------------
  Noninterest income:
  Service charges and fees                      5,056           4,795     14,869         13,362
  Gain on sale of loans                           264             474        875          1,195
  Commissions on sale of non-deposit investment
    products                                      447             535      1,529          1,727
  Increase in cash value of life insurance        420             420      1,223          1,040
  Other                                           462             408      1,132            945
                                               --------------------------------------------------------
  Total noninterest income                      6,649           6,632     19,628         18,269
                                               --------------------------------------------------------
  Noninterest expense:
  Salaries and related benefits                 9,276           8,584     27,050         25,361
  Other                                         7,750           7,096     22,674         20,949
                                               --------------------------------------------------------
  Total noninterest expense                    17,026          15,680     49,724         46,310
                                               --------------------------------------------------------
  Income before income taxes                   11,233           9,820     32,769         27,802
  Provision for income taxes                    4,413           3,859     12,857         10,865
                                               --------------------------------------------------------
  Net income                                   $6,820          $5,961    $19,912        $16,937
                                               ========================================================
  Average shares outstanding               15,855,933      15,687,547 15,797,014     15,706,380
  Diluted average shares outstanding       16,365,858      16,330,035 16,378,796     16,328,489
  Per share data:
  Basic earnings                                $0.43           $0.38      $1.26          $1.08
  Diluted earnings                              $0.42           $0.37      $1.22          $1.04
  Dividends paid                                $0.12           $0.11      $0.36          $0.33

See accompanying notes to unaudited condensed consolidated financial statements.


</TABLE>



                                       3

<PAGE>
<TABLE>
<CAPTION>

                                TRICO BANCSHARES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                (In thousands, except per share data; unaudited)

                                                                              Accumulated
                                        Shares of                                Other
                                         Common       Common      Retained   Comprehensive
                                          Stock        Stock      Earnings   (Loss) Income     Total
                                        -------------------------------------------------------------
<S>                                       <C>            <C>        <C>             <C>       <C>
Balance at December 31, 2004            15,723,317     $70,699     $67,785         ($352)   $138,132
Comprehensive income:                                                                       ---------
Net income                                                          16,937                    16,937
Change in net unrealized gain on
   Securities available for sale, net                                             (2,186)     (2,186)

Total comprehensive income                                                                    14,751
Stock options exercised                    133,289         949                                   949
Tax benefit of stock options exercised                     342                                   342
Repurchase of common stock                (128,500)       (578)     (2,085)                   (2,663)
Dividends paid ($0.33 per share)                                    (5,189)                   (5,189)
                                        -------------------------------------------------------------
Balance at September 30, 2005           15,728,106     $71,412     $77,448       ($2,538)   $146,322
                                        =============================================================

Balance at December 31, 2005            15,707,835     $71,412     $81,906       ($3,825)   $149,493
Comprehensive income:                                                                       ---------
Net income                                                          19,912                    19,912
Change in net unrealized gain on
   Securities available for sale, net                                                218         218
                                                                                            ---------
Total comprehensive income                                                                     20,130
Stock option vesting                                       468                                   468
Stock options exercised                    190,187       1,646                                 1,646
Tax benefit of stock options exercised                     205                                   205
Repurchase of common stock                 (40,915)       (186)       (923)                   (1,109)
Dividends paid ($0.36 per share)                                    (5,692)                   (5,692)
                                        -------------------------------------------------------------
Balance at September 30, 2006           15,857,107     $73,545     $95,203       ($3,607)   $165,141
                                        =============================================================
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.











                                       4

<PAGE>
<TABLE>
<CAPTION>

                                TRICO BANCSHARES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands; unaudited)

                                                              For the nine months ended September 30,
                                                                     2006               2005
                                                               ------------------------------------
<S>                                                                   <C>                <C>
Operating activities:
   Net income                                                      $19,912             $16,937
   Adjustments to reconcile net income to net cash provided
     by operating activities:
       Depreciation of property and equipment, and amortization      2,816               2,818
       Amortization of intangible assets                             1,046               1,035
       Provision for loan losses                                     1,289               1,608
       Amortization of investment securities premium, net              689                 973
       Originations of loans for resale                            (51,959)            (59,861)
       Proceeds from sale of loans originated for resale            52,338              60,396
       Gain on sale of loans                                          (875)             (1,195)
       Amortization of mortgage servicing rights                         -                 490
       Change in market value of mortgage servicing rights            (256)                  -
       Gain on sale of investments                                     (12)                  -
       Loss on disposal of fixed assets                                 27                  95
       Increase in cash value of life insurance                     (1,223)             (1,040)
       Stock option vesting expense                                    468                   -
       Change in:
         Interest receivable                                          (996)               (607)
         Interest payable                                            2,835                 679
         Other assets and liabilities, net                            (880)                234
                                                               ------------------------------------
          Net cash provided by operating activities                  25,219              22,562
                                                               ------------------------------------
   Investing activities:
   Proceeds from maturities of securities available-for-sale        40,208              45,147
   Proceeds from sales of securities available-for-sale             10,780                   -
   Purchases of securities available-for-sale                         (896)            (35,013)
   Purchases of Federal Home Loan Bank stock                          (604)               (735)
   Loan originations and principal collections, net               (122,646)           (155,460)
   Proceeds from sale of premises and equipment                          3                  24
   Purchases of premises and equipment                              (2,715)             (3,853)
                                                               ------------------------------------
     Net cash used by investing activities                         (75,870)           (149,890)
                                                               ------------------------------------
   Financing activities:
   Net increase in deposits                                         28,377              89,466
   Net increase in Federal funds purchased                           9,700              56,800
   Payments of principal on long-term other borrowings                 (44)                (38)
   Net change in short-term other borrowings                         4,502               3,597
   Repurchase of common stock                                            -              (2,663)
   Dividends paid                                                   (5,692)             (5,189)
   Exercise of stock options                                           537                 949
                                                               ------------------------------------
         Net cash provided by financing activities                  37,380             142,922
                                                               ------------------------------------
   Net change in cash and cash equivalents                         (13,271)             15,594
                                                               ------------------------------------
   Cash and cash equivalents and beginning of period                92,939              70,037
                                                               ------------------------------------
   Cash and cash equivalents at end of period                      $79,668             $85,631
                                                               ====================================
   Supplemental disclosure of noncash activities:
   Unrealized loss on securities available for sale                   $377             ($3,772)
   Income tax benefit from stock option exercises                     $205                $342
   Value of common stock tendered, in lieu of cash,
     to pay for exercise of stock options                           $1,109                   -
   Supplemental disclosure of cash flow activity:
   Cash paid for interest expense                                  $21,789             $13,750
   Cash paid for income taxes                                      $15,100             $11,030

</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements

                                       5

<PAGE>


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: General  Summary of  Significant  Accounting  Policies
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and  pursuant  to  the  rules  and  regulations  of  the
Securities and Exchange  Commission.  The results of operations  reflect interim
adjustments,  all of which are of a normal  recurring  nature and which,  in the
opinion of management,  are necessary for a fair presentation of the results for
the  interim  periods  presented.   The  interim  results  are  not  necessarily
indicative of the results expected for the full year. These unaudited  condensed
consolidated financial statements should be read in conjunction with the audited
consolidated  financial  statements  and  accompanying  notes  as well as  other
information  included in the  Company's  Annual Report on Form 10-K for the year
ended December 31, 2005.

Principles of Consolidation
The consolidated  financial  statements include the accounts of the Company, and
its  wholly-owned  subsidiary,  Tri Counties Bank (the "Bank").  All significant
intercompany accounts and transactions have been eliminated in consolidation.

Nature of  Operations
The Company  operates 32 branch  offices and 22 in-store  branch  offices in the
California  counties of Butte,  Contra Costa, Del Norte,  Fresno,  Glenn,  Kern,
Lake, Lassen, Madera,  Mendocino,  Merced, Nevada, Placer,  Sacramento,  Shasta,
Siskiyou,  Stanislaus,  Sutter,  Tehama,  Tulare,  Yolo and Yuba.  The Company's
operating policy since its inception has emphasized retail banking.  Most of the
Company's customers are retail customers and small to medium sized businesses.

Use of Estimates in the  Preparation of Financial  Statements

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  Management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting  period.  On an on-going basis,  the Company  evaluates its
estimates,  including  those  related to the adequacy of the  allowance for loan
losses,  investments,  intangible assets,  income taxes and  contingencies.  The
Company  bases its  estimates  on  historical  experience  and on various  other
assumptions  that are believed to be  reasonable  under the  circumstances,  the
results of which form the basis for making  judgments  about the carrying values
of assets and  liabilities  that are not readily  apparent  from other  sources.
Actual results may differ from these estimates  under  different  assumptions or
conditions.  The  allowance  for loan  losses,  goodwill  and  other  intangible
assessments,  income taxes, and the valuation of mortgage  servicing rights, are
the only accounting estimates that materially affect the Company's  consolidated
financial statements.

Significant Group Concentration of Credit Risk
The Company grants agribusiness,  commercial, consumer, and residential loans to
customers  located  throughout the northern San Joaquin  Valley,  the Sacramento
Valley  and  northern  mountain  regions  of  California.   The  Company  has  a
diversified  loan  portfolio  within  the  business  segments  located  in  this
geographical area.

Cash and Cash  Equivalents
For  purposes  of the  consolidated  statements  of cash  flows,  cash  and cash
equivalents include cash on hand, amounts due from banks and federal funds sold.

Investment  Securities
The Company  classifies its debt and marketable  equity  securities  into one of
three  categories:  trading,  available-for-sale  or  held-to-maturity.  Trading
securities  are bought and held  principally  for the  purpose of selling in the
near term.  Held-to-maturity  securities are those  securities which the Company
has the  ability and intent to hold until  maturity.  All other  securities  not
included in trading or  held-to-maturity  are classified as  available-for-sale.
During the nine months  ended  September  30, 2006,  and  throughout  2005,  the
Company did not have any  securities  classified as either  held-to-maturity  or
trading.

                                       6

<PAGE>

Available-for-sale  securities are recorded at fair value.  Unrealized gains and
losses,  net of the related tax effect,  on  available-for-sale  securities  are
reported as a separate  component  of other  accumulated  comprehensive  loss in
shareholders' equity until realized.

Premiums and  discounts  are  amortized or accreted over the life of the related
investment  security  as an  adjustment  to yield using the  effective  interest
method.  Dividend and interest income are recognized when earned. Realized gains
and losses for  securities  are included in earnings  and are derived  using the
specific  identification  method for  determining  the cost of securities  sold.
Unrealized  losses  due to  fluctuations  in fair  value of  securities  held to
maturity  or  available  for sale are  recognized  through  earnings  when it is
determined that an other than temporary decline in value has occurred.

Federal  Home Loan Bank Stock
The Bank is a member of the Federal  Home Loan Bank of San  Francisco  ("FHLB"),
and as a condition of membership,  it is required to purchase stock.  The amount
of FHLB  stock  required  to be  purchased  is based on the  borrowing  capacity
desired by the Bank. While technically  these are considered equity  securities,
there is no market for the FHLB stock.  Therefore,  the shares are considered as
restricted investment securities. Such investment is carried at cost.

Loans Held for Sale
Loans  originated  and intended for sale in the secondary  market are carried at
the  lower  of  aggregate  cost  or  fair  value,  as  determined  by  aggregate
outstanding  commitments from investors of current investor yield  requirements.
Net unrealized losses are recognized through a valuation allowance by charges to
income.  At September  30, 2006 and 2005,  and December 31, 2005,  the Company's
balance of loans held for sale was immaterial.

Mortgage  loans held for sale are  generally  sold with the  mortgage  servicing
rights  retained by the Company.  The carrying  value of mortgage  loans sold is
reduced by the cost allocated to the associated mortgage servicing rights. Gains
or losses on sales of  mortgage  loans are  recognized  based on the  difference
between the selling price and the carrying  value of the related  mortgage loans
sold.

Loans
Loans are reported at the principal amount  outstanding,  net of unearned income
and the allowance for loan losses.  Loan  origination  and  commitment  fees and
certain  direct  loan  origination  costs are  deferred,  and the net  amount is
amortized as an adjustment of the related  loan's yield over the estimated  life
of the loan.  Loans on which the accrual of interest has been  discontinued  are
designated  as  nonaccrual  loans.  Accrual of  interest  on loans is  generally
discontinued  either  when  reasonable  doubt  exists  as to  the  full,  timely
collection  of interest or principal or when a loan becomes  contractually  past
due by 90 days or more with respect to interest or principal.  When loans are 90
days past due, but in Management's  judgment are well secured and in the process
of  collection,  they may be  classified  as  accrual.  When a loan is placed on
nonaccrual  status,  all  interest  previously  accrued  but  not  collected  is
reversed.  Income on such loans is then  recognized only to the extent that cash
is received and where the future  collection of principal is probable.  Interest
accruals are resumed on such loans only when they are brought fully current with
respect to interest and principal and when, in the judgment of  Management,  the
loans are estimated to be fully  collectible  as to both principal and interest.
All impaired loans are classified as nonaccrual loans.

Reserve  for  Unfunded  Commitments

The reserve for unfunded  commitments  is  established  through a provision  for
losses - unfunded  commitments charged to noninterest  expense.  The reserve for
unfunded  commitments is an amount that Management  believes will be adequate to
absorb  probable  losses  inherent in  existing  commitments,  including  unused
portions of  revolving  lines of credits  and other  loans,  standby  letters of
credits,  and unused  deposit  account  overdraft  privilege.  The  reserve  for
unfunded  commitments is based on evaluations of the  collectibility,  and prior
loss experience of unfunded commitments. The evaluations take into consideration
such  factors as changes in the nature and size of the loan  portfolio,  overall
loan portfolio quality, loan concentrations,  specific problem loans and related
unfunded  commitments,  and  current  economic  conditions  that may  affect the
borrower's or depositor's ability to pay.

                                       7

<PAGE>


Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans and deposit related overdrafts are charged against the
allowance for loan losses when Management  believes that the  collectibility  of
the  principal  is unlikely  or, with  respect to  consumer  installment  loans,
according to an  established  delinquency  schedule.  The allowance is an amount
that Management  believes will be adequate to absorb probable losses inherent in
existing  loans  and  leases,   based  on  evaluations  of  the  collectibility,
impairment and prior loss experience of loans and leases.  The evaluations  take
into  consideration  such  factors  as  changes  in the  nature  and size of the
portfolio,  overall portfolio  quality,  loan  concentrations,  specific problem
loans, and current economic conditions that may affect the borrower's ability to
pay. The Company defines a loan as impaired when it is probable the Company will
be unable to collect all amounts due according to the  contractual  terms of the
loan  agreement.  Impaired  loans are  measured  based on the  present  value of
expected future cash flows discounted at the loan's original  effective interest
rate. As a practical  expedient,  impairment may be measured based on the loan's
observable  market  price or the fair  value  of the  collateral  if the loan is
collateral  dependent.  When the measure of the  impaired  loan is less than the
recorded  investment in the loan, the impairment is recorded through a valuation
allowance.

Credit  risk is inherent in the  business of lending.  As a result,  the Company
maintains  an  allowance  for loan  losses  to  absorb  losses  inherent  in the
Company's  loan  portfolio.  This is  maintained  through  periodic  charges  to
earnings.  These  charges are shown in the  Consolidated  Income  Statements  as
provision for loan losses. All specifically identifiable and quantifiable losses
are  immediately  charged off against the allowance.  However,  for a variety of
reasons,  not all losses are immediately known to the Company and, of those that
are known,  the full extent of the loss may not be quantifiable at that point in
time.  The balance of the Company's  allowance for loan losses is meant to be an
estimate of these unknown but probable  losses  inherent in the  portfolio.  For
purposes of this discussion, "loans" shall include all loans and lease contracts
that are part of the Company's portfolio.

The Company  formally  assesses  the  adequacy of the  allowance  on a quarterly
basis.  Determination  of the  adequacy is based on ongoing  assessments  of the
probable  risk in the  outstanding  loan  portfolio,  and to a lesser extent the
Company's loan commitments. These assessments include the periodic re-grading of
credits based on changes in their individual  credit  characteristics  including
delinquency,  seasoning,  recent financial performance of the borrower, economic
factors, changes in the interest rate environment,  growth of the portfolio as a
whole or by segment, and other factors as warranted.  Loans are initially graded
when  originated.  They are  re-graded as they are renewed,  when there is a new
loan to the same borrower,  when identified facts demonstrate heightened risk of
nonpayment,  or if they become  delinquent.  Re-grading of larger  problem loans
occur at least quarterly.  Confirmation of the quality of the grading process is
obtained by  independent  credit reviews  conducted by consultants  specifically
hired for this purpose and by various bank regulatory agencies.

The Company's method for assessing the appropriateness of the allowance for loan
losses and the reserve for unfunded commitments includes specific allowances for
identified problem loans and leases as determined by SFAS 114, formula allowance
factors for pools of credits, and allowances for changing  environmental factors
(e.g., interest rates, growth, economic conditions, etc.). Allowance factors for
loan  pools are based on the  previous 5 years  historical  loss  experience  by
product type.  Allowances  for specific  loans are based on SFAS 114 analysis of
individual   credits.   Allowances  for  changing   environmental   factors  are
Management's  best estimate of the probable impact these changes have had on the
loan  portfolio as a whole.  This process is explained in detail in the notes to
the  Company's  Consolidated  Financial  Statements in its Annual Report on Form
10-K for the year ended December 31, 2005.

Based on the current conditions of the loan portfolio,  Management believes that
the  allowance for loan losses and the reserve for unfunded  commitments,  which
collectively  stand at $18,842,000 at September 30, 2006, are adequate to absorb
probable losses  inherent in the Company's loan  portfolio.  No assurance can be
given, however, that adverse economic conditions or other circumstances will not
result in increased losses in the portfolio.

                                       8

<PAGE>


The  following  tables  summarize the activity in the allowance for loan losses,
reserve for unfunded  commitments,  and allowance for losses (which is comprised
of the allowance for loan losses and the reserve for unfunded  commitments)  for
the periods indicated (dollars in thousands):

<TABLE>
<CAPTION>
                                             Three months ended             Nine months ended
                                                September 30,                  September 30,
                                           ------------------------------------------------------
                                              2006          2005           2006           2005
                                           ------------------------------------------------------
<S>                                            <C>           <C>            <C>           <C>
     Allowance for loan losses:
     Balance at beginning of period         $16,893       $14,892         $16,226       $14,525
     Provision for loan losses                  235           947           1,289         1,608
     Loans charged off                         (368)         (479)         (1,289)       (1,287)
     Recoveries of previously
       charged-off loans                        233           436             767           950
                                           ------------------------------------------------------
       Net charge-offs                         (135)          (43)           (522)         (337)
                                           ------------------------------------------------------
     Balance at end of period               $16,993       $15,796         $16,993       $15,796
                                           =====================================================
     Reserve for unfunded commitments:
     Balance at beginning of period          $1,849        $1,671          $1,813        $1,532
     Provision for losses -
       Unfunded commitments                       -             3              36           142
                                           ------------------------------------------------------
     Balance at end of period                $1,849        $1,674          $1,849        $1,674
                                           =====================================================
     Balance at end of period:
     Allowance for loan losses                                            $16,993       $15,796
     Reserve for unfunded commitments                                       1,849         1,674
                                                                        -------------------------
     Allowance for losses                                                 $18,842       $17,470
                                                                        =========================
     As a percentage of total loans:
     Allowance for loan losses                                              1.13%          1.19%
     Reserve for unfunded commitments                                       0.12%          0.13%
                                                                        -------------------------
     Allowance for losses                                                   1.25%          1.32%
                                                                        =========================
</TABLE>
Mortgage  Servicing  Rights
Mortgage  servicing  rights (MSRs)  represent  the  Company's  right to a future
stream of cash flows based upon the  contractual  servicing fee associated  with
servicing mortgage loans. Our MSRs arise from residential mortgage loans that we
originate  and sell,  but retain the right to  service  the loans.  For sales of
residential  mortgage  loans, a portion of the cost of  originating  the loan is
allocated to the  servicing  right based on relative fair values of the loan and
the servicing  right.  The net gain from the retention of the servicing right is
included in gain on sale of loans in  noninterest  income when the loan is sold.
Fair  value  is  based  on  market  prices  for  comparable  mortgage  servicing
contracts, when available, or alternatively,  is based on a valuation model that
calculates  the present  value of estimated  future net  servicing  income.  The
valuation model incorporates  assumptions that market  participants would use in
estimating  future  net  servicing  income,  such as the  cost to  service,  the
discount rate, the custodial earnings rate, an inflation rate, ancillary income,
prepayment  speeds and  default  rates and  losses.  MSRs are  included in other
assets. Servicing fees are recorded in noninterest income when earned.

Effective with the Company's early adoption of SFAS 156, beginning as of January
1, 2006 MSRs are carried at fair value,  with changes in fair value  reported in
noninterest  income  in the  period  in which the  change  occurs.  On or before
December  31, 2005,  MSRs were carried at the lower of amortized  cost or market
value.  The  cumulative  effect  related  to the  adoption  of  this  change  in
accounting from lower of amortized cost or market value to fair value on January
1, 2006 was immaterial.

The determination of fair value of our MSRs requires management judgment because
they are not actively traded.  The determination of fair value for MSRs requires
valuation  processes  which combine the use of  discounted  cash flow models and
extensive  analysis  of current  market  data to arrive at an  estimate  of fair
value. The cash flow and prepayment assumptions used in our discounted cash flow
model are based on empirical data drawn from the  historical  performance of our
MSRs,   which  we  believe  are  consistent  with  assumptions  used  by  market
participants  valuing similar MSRs, and from data obtained on the performance of
similar MSRs. The key assumptions used in the valuation of MSRs include mortgage
prepayment  speeds and the discount  rate.  These  variables  can, and generally
will, change from quarter to quarter as market conditions and projected interest
rates change.  The key risks inherent with MSRs are prepayment speed and changes
in interest rates.

                                       9

<PAGE>

The following tables summarize the activity in, and the main assumptions we used
to  determine  the fair  value of  mortgage  servicing  rights  for the  periods
indicated (dollars in thousands):

                                        Nine months ended September 30,
                                        ------------------------------
                                              2006         2005
                                        ------------------------------
Mortgage servicing rights:
Balance at beginning of period               $3,638        $3,476
Additions                                       496           659
Amortization                                      -          (490)
Change in fair value                           (256)            -
                                        ------------------------------
Balance at end of period                     $3,878        $3,645
                                        ==============================
Servicing fees received                        $712          $695
Balance of loans serviced at:
     Beginning of period                   $373,163      $368,435
     End of period                         $384,862      $368,622
Weighted-average prepayment speed (CPR)        12.1%         12.3%
Discount rate                                  10.0%         10.0%


Off-Balance Sheet Credit Related Financial Instruments
In the ordinary course of business,  the Company has entered into commitments to
extend credit, including commitments under credit card arrangements,  commercial
letters of credit, and standby letters of credit. Such financial instruments are
recorded when they are funded.

Premises  and  Equipment
Land is carried at cost. Buildings and equipment, including those acquired under
capital  lease,   are  stated  at  cost  less   accumulated   depreciation   and
amortization.  Depreciation  and  amortization  expenses are computed  using the
straight-line  method over the estimated  useful lives of the related  assets or
lease terms.  Asset lives range from 3-10 years for  furniture and equipment and
15-40 years for land improvements and buildings.

Foreclosed Assets
Assets acquired  through,  or in lieu of, loan foreclosure are held for sale and
are initially recorded at fair value at the date of foreclosure,  establishing a
new cost basis.  Subsequent to  foreclosure,  management  periodically  performs
valuations  and the assets are carried at the lower of  carrying  amount or fair
value less cost to sell. Revenue and expenses from operations and changes in the
valuation allowance are included in other noninterest expense.

Goodwill and Other  Intangible  Assets
Goodwill  represents the excess of costs over fair value of assets of businesses
acquired.  Goodwill and other intangible  assets acquired in a purchase business
combination and determined to have an indefinite  useful life are not amortized,
but instead  tested for  impairment at least  annually.  Intangible  assets with
estimable  useful lives are amortized  over their  respective  estimated  useful
lives to their estimated residual values, and reviewed for impairment.

The  Company has  identifiable  intangible  assets  consisting  of core  deposit
premiums and minimum  pension  liability.  Core deposit  premiums are  amortized
using an  accelerated  method  over a period  of ten  years.  Intangible  assets
related to minimum pension  liability are adjusted annually based upon actuarial
estimates.

The following  table  summarizes  the Company's  core deposit  intangibles as of
September 30, 2006 and December 31, 2005.

                                  December 31,                     September 30,
   (Dollar in Thousands)             2005     Additions  Reductions    2006
                                  ----------------------------------------------
   Core deposit intangibles       $13,643           -           -       $13,643
   Accumulated amortization       (10,582)          -     (1,046)       (11,628)
                                  ----------------------------------------------
   Core deposit intangibles, net   $3,061           -     (1,046)        $2,015
                                  ==============================================

                                       10

<PAGE>


Core deposit  intangibles are amortized over their expected  useful lives.  Such
lives are  periodically  reassessed  to  determine  if any  amortization  period
adjustments are indicated.

The following table summarizes the Company's  estimated core deposit  intangible
amortization  for each of the five  succeeding  years:

                                        Estimated Core Deposit
                                       Intangible Amortization
                    Years Ended          (Dollar in thousands)
                    -----------       ------------------------
                        2006                   $1,395
                        2007                     $490
                        2008                     $523
                        2009                     $328
                        2010                     $260
                     Thereafter                   $65

The  following  table  summarizes  the  Company's   minimum  pension   liability
intangible as of September 30, 2006 and December 31, 2005.

                                 December 31,                      September 30,
  (Dollar in Thousands)              2005      Additions   Reductions    2006
                                  ----------------------------------------------
  Minimum pension liability
    intangible                      $1,346          -            -      $1,346
                                  ==============================================

Intangible  assets related to minimum  pension  liability are adjusted  annually
based upon actuarial estimates.

The following table summarizes the Company's goodwill intangible as of September
30, 2006 and December 31, 2005.

                                  December 31,                     September 30,
  (Dollar in Thousands)              2005      Additions   Reductions    2006
                                  ----------------------------------------------
   Goodwill                        $15,519          -            -     $15,519
                                  ==============================================

Impairment of Long-Lived Assets and Goodwill
Long-lived  assets,  such as premises and equipment,  and purchased  intangibles
subject to amortization,  are reviewed for impairment whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying amount of an asset to estimated  undiscounted  future
cash flows expected to be generated by the asset.  If the carrying  amount of an
asset  exceeds  its  estimated  future  cash  flows,  an  impairment  charge  is
recognized  by the amount by which the carrying  amount of the asset exceeds the
fair value of the asset. Assets to be disposed of would be separately  presented
in the balance  sheet and reported at the lower of the  carrying  amount or fair
value  less  costs  to sell,  and are no  longer  depreciated.  The  assets  and
liabilities of a disposed  group  classified as held for sale would be presented
separately in the appropriate asset and liability sections of the balance sheet.

On December 31 of each year,  goodwill is tested for  impairment,  and is tested
for impairment  more  frequently if events and  circumstances  indicate that the
asset might be impaired. An impairment loss is recognized to the extent that the
carrying amount exceeds the asset's fair value.  This  determination  is made at
the  reporting  unit  level  and  consists  of two  steps.  First,  the  Company
determines  the fair value of a reporting  unit and  compares it to its carrying
amount.  Second,  if the  carrying  amount of a reporting  unit exceeds its fair
value, an impairment loss is recognized for any excess of the carrying amount of
the reporting unit's goodwill over the implied fair value of that goodwill.  The
implied fair value of goodwill is determined by allocating the fair value of the
reporting unit in a manner similar to a purchase price allocation.  The residual
fair value after this allocation is the implied fair value of the reporting unit
goodwill.

Income Taxes
The  Company's  accounting  for income taxes is based on an asset and  liability
approach.  The Company  recognizes the amount of taxes payable or refundable for
the current  year,  and deferred tax assets and  liabilities  for the future tax
consequences  that have  been  recognized  in its  financial  statements  or tax
returns.  The  measurement  of  tax  assets  and  liabilities  is  based  on the
provisions of enacted tax laws.

                                       11

<PAGE>

Stock-Based  Compensation
On  January  1, 2006 the  Company  adopted  Statement  of  Financial  Accounting
Standards No. 123 (revised  2004),  Share-Based  Payment (SFAS 123R),  using the
modified-prospective   transition   method.   Under  this   transition   method,
compensation  cost  recognized  during the nine months ended  September 30, 2006
includes: (a) compensation cost for all share-based awards granted prior to, but
not yet vested as of, January 1, 2006,  based on the  grant-date  fair value and
related service period  estimates in accordance with the original  provisions of
SFAS 123 and (b) compensation cost for all share-based awards granted subsequent
to January 1,  2006,  based on the  grant-date  fair value and  related  service
periods  estimated in accordance  with the  provisions  of SFAS 123R.  Under the
provisions of the modified-prospective  transition method, results for the three
and nine  month  periods  ended  September  30,  2005  have  not been  restated.
Historically,  stock options are the only type of  share-based  award granted by
the Company.

Prior to the adoption of SFAS 123R, the Company used the intrinsic  value method
to account for its stock  option plans (in  accordance  with the  provisions  of
Accounting  Principles Board Opinion No. 25).  Intrinsic value is the difference
between share fair market value and option  exercise  price.  Under this method,
compensation  expense was recognized for awards of options to purchase shares of
common stock to employees under compensatory plans only if the fair market value
of the stock at the option grant date (or other  measurement date, if later) was
greater  than the amount the  employee was required to pay to acquire the stock.
Statement of Financial  Accounting Standards No. 123, Accounting for Stock-Based
Compensation  (SFAS 123),  permitted  companies to continue  using the intrinsic
value  method or to adopt a fair value based  method to account for stock option
plans.  The fair value based method would have resulted in the  recognition,  as
expense over the vesting period, of the fair value of all stock-based  awards on
the date of grant.

SFAS 123R  clarifies  and  expands the  guidance  in SFAS 123 in several  areas,
including  measuring fair value and attributing  compensation  cost to reporting
periods.  SFAS 123R  includes a  requirement  to: (a)  estimate  forfeitures  of
share-based awards at the date of grant, (b) expense  share-based awards granted
to  retirement  eligible  employees  and those  employees  with  non-substantive
non-compete  agreements   immediately,   (c)  attribute  compensation  costs  of
share-based  award grants to the stated  future  vesting  period,  (d) recognize
compensation cost of all share-based awards based upon the grant-date fair value
(including pre-2006 options).

The Company did not recognize  any gain or loss  resulting  from the  cumulative
effect of a change in accounting principle upon adoption of SFAS 123R on January
1, 2006. Based on the stock-based compensation awards outstanding as of December
31,  2005,  for which the  requisite  service  was not fully  rendered  prior to
January 1, 2006, and any subsequent  option grants as of September 30, 2006, the
Company expects to recognize total pre-tax  compensation  cost of  approximately
$1,608,000  related to outstanding  stock option  grants,  of which $468,000 was
recognized in the first nine months of 2006, in accordance  with the  accounting
requirements  of SFAS 123R.  The  after-tax  effect of adopting  SFAS 123R was a
reduction of net income of $326,000 and $0, and a reduction in diluted  earnings
per  share of  $0.02  and $0,  for the  first  nine  months  of 2006  and  2005,
respectively.   Future  levels  of  compensation  cost  recognized   related  to
stock-based   compensation   awards  may  be  impacted  by  new  awards   and/or
modifications, repurchases and cancellations of existing awards before and after
the adoption SFAS 123R.

                                       12

<PAGE>


For the three and nine month periods ended September 30, 2005, had  compensation
cost for the Company's option plans been determined using the fair-value  method
of SFAS 123,  the  Company's  net income and  earnings per share would have been
reduced to the pro forma amounts indicated below (in thousands, except per share
amounts):


                                          Three Months Ended   Nine Months Ended
(in thousands, except per share amounts)  September 30, 2005  September 30, 2006
                                          --------------------------------------
Net income                   As reported          $5,961               $16,937
                               Pro forma          $5,865               $16,642
Basic earnings per share     As reported           $0.38                 $1.08
                               Pro forma           $0.37                 $1.06
Diluted earnings per share   As reported           $0.37                 $1.04
                               Pro forma           $0.36                 $1.02
Stock-based employee compensation
   cost, net of related tax effects,
   included in net income    As reported              $0                    $0
                               Pro forma             $96                  $295

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes option pricing.

In May 2001,  the Company  adopted the TriCo  Bancshares  2001 Stock Option Plan
(2001 Plan) covering officers,  employees,  directors of, and consultants to the
Company.  Under the 2001  Plan,  the option  price  cannot be less than the fair
market  value of the  Common  Stock at the date of grant  except  in the case of
substitute options. Options for the 2001 Plan expire on the tenth anniversary of
the  grant  date.   Vesting   schedules  under  the  2001  Plan  are  determined
individually for each grant.

In May 1995,  the Company  adopted the TriCo  Bancshares  1995  Incentive  Stock
Option Plan (1995 Plan) covering key employees.  Under the 1995 Plan, the option
price  cannot be less than the fair market value of the Common Stock at the date
of grant. Options for the 1995 Plan expire on the tenth anniversary of the grant
date. Vesting schedules under the 1995 Plan are determined individually for each
grant.

As of  September  30,  2006,  options  for the  purchase of 416,430 and 0 common
shares remained available for grant under the 2001 and 1995 Plans, respectively.
Shares  issued under the  Company's  option plans are "new issue"  shares rather
than treasury shares.

Stock option activity for the nine months ended September 30, 2006 and 2005 is
summarized in the following tables:

                                                            Weighted    Weighted
                                                             Average     Average
                            Number         Option Price     Exercise  Fair Value
                          Of Shares         Per Share        Price     of Grants
Outstanding at
   December 31, 2005       1,636,762      $5.65  to $20.58   $11.44
     Options granted          87,000     $24.46  to $25.91   $25.16      $7.10
     Options exercised      (190,187)     $6.13  to $17.40    $8.65
     Options forfeited          (994)     $5.90  to  $5.90    $5.90
                           ----------------------------------------
Outstanding at
   September 30, 2006      1,532,581      $5.65 to  $25.91   $12.57
                           ========================================

Outstanding at
   December 31, 2004       1,661,547      $2.62  to $17.40   $10.52
     Options granted         112,000     $19.35  to $20.58   $19.87      $4.30
     Options exercised      (133,289)     $2.62  to $17.40    $7.12
     Options forfeited          (496)     $5.65  to  $5.65    $5.65
                           ----------------------------------------
Outstanding at
   September 30, 2005      1,639,762      $5.37  to $20.58   $11.43
                           ========================================

                                       13

<PAGE>


During the nine months ended  September 30, 2006, the intrinsic value of options
exercised  and the  fair  value of  options  that  vested  were  $3,444,000  and
$468,000, respectively. The fair value of options granted during the nine months
ended September 30, 2006 was based on the following average  expectations:  term
of 7.1 years,  volatility of 32.6%, annual rate of quarterly dividends of 1.91%,
and a discount rate of 4.86%.

During the nine months ended  September 30, 2005, the intrinsic value of options
exercised  and the  fair  value of  options  that  vested  were  $1,938,000  and
$492,000, respectively. The fair value of options granted during the nine months
ended  September 30, 2005 was based on the following  expectations:  term of 6.5
years,  volatility of 21.2%,  annual rate of quarterly dividends of 2.22%, and a
discount rate of 3.90%.

The total  intrinsic  value of stock  options  exercised  during the nine months
ended  September 30, 2006 was  $3,444,000 for which no  compensation  costs were
previously recognized nor tax benefits recognized in equity upon issuance.  Cash
received  from the  exercise  of stock  options  during  the nine  months  ended
September 30, 2006 totaled $537,000. In addition, 40,915 shares of the Company's
common  stock with market value of  $1,109,000  were  tendered by optionees  and
repurchased at market value by the Company, in lieu of cash, to exercise options
during the nine months ended  September  30, 2006 as permitted by the  Company's
option plans.

The following table shows the number,  weighted-average  exercise price, and the
weighted  average  remaining  contractual life of options  outstanding,  and the
number  and  weighted-average  exercise  price  of  options  exercisable  as  of
September 30, 2006 by range of exercise price:


<TABLE>
<CAPTION>
                                             Outstanding Options                            Exercisable Options
                      --------------------------------------------------------    -----------------------------
                                                               Weighted-Average
       Range of                           Weighted-Average          Remaining                        Weighted-Average
     Exercise Price           Number        Exercise Price   Contractual Term (yrs.)     Number        Exercise Price
          <S>                 <C>               <C>                  <C>                 <C>               <C>
           $4-$6                 448            $5.65               3.50                    448            $5.65
          $8-$10             696,040            $8.25               4.24                696,040            $8.25
         $10-$12              40,000           $11.72               6.19                 24,000           $11.72
         $12-$14             373,000           $12.72               6.66                295,000           $12.69
         $16-$18             224,093           $17.38               7.41                147,485           $17.38
         $18-$20              65,000           $19.35               8.40                 26,000           $19.35
         $20-$22              47,000           $20.58               8.65                 44,000           $20.58
         $24-$26              87,000           $25.16               9.77                      -             -

</TABLE>

The following table shows the number, weighted-average exercise price, intrinsic
value,  weighted average remaining  contractual life,  average remaining vesting
period,  and remaining  compensation  cost to be  recognized  over the remaining
vesting period of options  exercisable,  options not yet  exercisable  and total
options  outstanding  as of September  30, 2006:

<TABLE>
<CAPTION>
                                                      Currently    Currently Not      Total
(dollars in thousands except exercise price)         Exercisable     Exercisable   Outstanding
<S>                                                      <C>             <C>           <C>
Number of options                                     1,232,973        299,608      1,532,581
Weighted average exercise price                          $11.14         $18.43         $12.57
Intrinsic value                                         $16,777         $1,892         18,669
Weighted average remaining contractual term (yrs.)         5.48           7.98           5.97

</TABLE>

The 299,608 options that are not currently  exercisable as of September 30, 2006
are expected to vest, on a weighted-average basis, over the next 1.68 years, and
the Company is expected to recognize  $1,140,000 of pre-tax  compensation  costs
related to these options as they vest.

                                       14

<PAGE>


Earnings Per Share
Basic  earnings per share  represents  income  available to common  shareholders
divided by the  weighted-average  number of common shares outstanding during the
period.  Diluted earnings per share reflects additional common shares that would
have been outstanding if dilutive  potential  common shares had been issued,  as
well as any  adjustments  to income  that would  result from  assumed  issuance.
Potential  common  shares that may be issued by the Company  relate  solely from
outstanding  stock options,  and are determined using the treasury stock method.
In applying  the treasury  method,  the Company uses the entire tax benefit that
would result from the assumed issuance.

Earnings per share have been computed based on the following:

<TABLE>
<CAPTION>

                                                                Three Months         Nine Months
                                                            Ended September 30,  Ended September 30,
(in thousands)                                                2006       2005       2006     2005
                                                            ------------------    ----------------
<S>                                                            <C>        <C>        <C>      <C>
Net income                                                   $6,820     $5,961    $19,912  $16,937

Average number of common shares outstanding                  15,856     15,688     15,797   15,706
Effect of dilutive stock options                                510        642        582      622
                                                            ------------------    ----------------
Average number of common shares outstanding
   used to calculate diluted earnings per share              16,366     16,330     16,379   16,328
                                                            ======================================

</TABLE>

There  were  42,000  and 0 options  excluded  from the  computation  of  diluted
earnings per share for the nine month periods ended September 30, 2006 and 2005,
respectively, because the effect of these options was antidilutive.

Comprehensive  Income
Accounting principles generally require that recognized revenue, expenses, gains
and losses be  included in net income.  Although  certain  changes in assets and
liabilities,   such  as  unrealized  gains  and  losses  on   available-for-sale
securities,  are reported as a separate  component of the equity  section of the
balance  sheet,   such  items,   along  with  net  income,   are  components  of
comprehensive income.

The components of other comprehensive income (loss) and related tax effects are
as follows:

<TABLE>
<CAPTION>


                                           Three months ended September 30,     Nine Months Ended September 30,
                                             --------------------------          -------------------------
                                                 2006          2005                 2006           2005
                                             --------------------------          -------------------------
<S>                                              <C>           <C>                  <C>             <C>
(in thousands)
Unrealized holding gains (losses) on
   available-for-sale securities                $3,490       ($1,846)                $377        ($3,772)
Tax effect                                      (1,468)          776                 (159)         1,586
                                             --------------------------          -------------------------
Unrealized holding gains (losses) on
   available-for-sale securities, net of tax    $2,022       ($1,070)                $218        ($2,186)
                                             ==========================          =========================

</TABLE>

The   components  of  accumulated   other   comprehensive   loss,   included  in
shareholders' equity, are as follows:

<TABLE>
<CAPTION>

                                                                      September 30,      December 31,
                                                                          2006               2005
                                                                     -------------------------------
                                                                              (in thousands)
<S>                                                                     <C>                <C>
Net unrealized losses on available-for-sale securities                 ($4,373)            ($4,750)
Tax effect                                                               1,838               1,997
                                                                     -------------------------------
    Unrealized holding losses on
    available-for-sale securities, net of tax                          ($2,535)             (2,753)
                                                                     -------------------------------

Minimum pension liability                                               (1,851)             (1,851)
Tax effect                                                                 779                 779
                                                                     -------------------------------
    Minimum pension liability, net of tax                                (1,072)             (1,072)
                                                                     -------------------------------
Accumulated other comprehensive loss                                   ($3,607)            ($3,825)
                                                                     ===============================

</TABLE>

                                       15

<PAGE>


Retirement  Plans
The  Company  has  supplemental  retirement  plans  covering  directors  and key
executives.  These  plans  are  non-qualified  defined  benefit  plans  and  are
unsecured and unfunded.  The Company has purchased insurance on the lives of the
participants  and  intends to use the cash  values of these  policies to pay the
retirement obligations.

The following table sets forth the net periodic benefit cost recognized for the
plans:

<TABLE>
<CAPTION>


                                                                Three Months         Nine Months
                                                            Ended September 30,  Ended September 30,
(in thousands)                                                2006       2005       2006     2005
                                                              ----       ----       ----     ----
<S>                                                            <C>        <C>        <C>      <C>
Net pension cost included the following components:
Service cost-benefits earned during the period                $139       $104       $417     $313
Interest cost on projected benefit obligation                  132        134        396      402
Amortization of net obligation at transition                     1         56          2      168
Amortization of prior service cost                              50         24        150       72
Recognized net actuarial loss                                   34          -        102        2
                                                             --------------------------------------
Net periodic pension cost                                     $356       $318     $1,067     $957
                                                             ======================================
</TABLE>

During  the  nine  months  ended  September  30,  2006  and  2005,  the  Company
contributed  and paid out as benefits  $409,000 and $393,000,  respectively,  to
participants under the plans. For the year ending December 31, 2006, the Company
expects to contribute and pay out as benefits $530,000 to participants under the
plans.

Recent Accounting Pronouncements
In December 2004, the Financial  Accounting  Standards  Board (FASB) issued FASB
Statement of Financial Accounting Standards No. 123 (revised 2004),  Share-Based
Payment (SFAS 123R),  which replaces SFAS No. 123,  Accounting  for  Stock-Based
Compensation, (SFAS 123) and supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees.  SFAS 123R requires all share-based  payments to employees,
including  grants of employee stock  options,  to be recognized in the financial
statements based on their fair values beginning with the first interim reporting
period of the Company's  fiscal year beginning  after June 15, 2005,  with early
adoption encouraged.  The pro forma disclosures  previously permitted under SFAS
123 no longer will be an alternative  to financial  statement  recognition.  The
Company  adopted  SFAS 123R on  January  1, 2006  using a  modified  version  of
prospective  application  ("modified prospective  application").  Under modified
prospective  application,  as it is applicable to the Company, SFAS 123R applies
to new grants and to grants modified, repurchased, or cancelled after January 1,
2006.  Additionally,  compensation  cost for the portion of grants for which the
requisite  service has not been  rendered  (generally  referring  to  non-vested
grants) that are  outstanding  as of January 1, 2006 must be  recognized  as the
remaining  requisite service is rendered during the period of and/or the periods
after the adoption of SFAS 123R. The attribution of compensation  cost for those
earlier grants will be based on the same method and on the same  grant-date fair
values  previously  determined  for  the  pro  forma  disclosures  required  for
companies that did not adopt the fair value  accounting  method for  stock-based
employee compensation.

The Company did not recognize  any gain or loss  resulting  from the  cumulative
effect of a change in accounting principle upon adoption of SFAS 123R on January
1, 2006. Based on the stock-based compensation awards outstanding as of December
31,  2005,  for which the  requisite  service  was not fully  rendered  prior to
January 1, 2006, and any subsequent  option grants as of September 30, 2006, the
Company expects to recognize total pre-tax  compensation  cost of  approximately
$1,608,000  related to outstanding  stock option  grants,  of which $468,000 was
recognized in the first nine months of 2006, in accordance  with the  accounting
requirements  of SFAS 123R.  The  after-tax  effect of adopting  SFAS 123R was a
reduction of net income of $326,000 and $0, and a reduction in diluted  earnings
per  share of  $0.02  and $0,  for the  first  nine  months  of 2006  and  2005,
respectively.   Future  levels  of  compensation  cost  recognized   related  to
stock-based   compensation   awards  may  be  impacted  by  new  awards   and/or
modifications, repurchases and cancellations of existing awards before and after
the adoption SFAS 123R.

In March 2006, the FASB issued FASB Statement of Financial  Accounting Standards
No. 156,  Accounting for Servicing of Financial Assets,  (SFAS 156) an amendment
of FASB Statement No. 140. SFAS 156 requires all separately-recognized servicing
assets and  liabilities  to be  initially  measured at fair  value,  and permits
companies to elect, on a  class-by-class  basis, to account for servicing assets
and  liabilities on either a lower of cost or market value basis or a fair value
measurement basis.

                                       16

<PAGE>


The Company elected to early adopt SFAS 156 as of January 1, 2006 and to measure
residential  mortgage  servicing  rights  (MSRs) at fair value.  At December 31,
2005,  MSRs were  accounted  for at the lower of amortized  cost or market value
basis.  As a result of adopting  SFAS 156,  there was no  adjustment  to opening
retained earnings as of January 1, 2006,  representing the effect of remeasuring
all MSRs that  existed at December  31, 2005 from a lower of  amortized  cost or
market basis to a fair value basis, as this amount was immaterial.

In  September  2006,  the FASB issued FASB  Statement  of  Financial  Accounting
Standards No. 157,  Fair Value  Measurements  (SFAS 157).  SFAS 157 defines fair
value,  establishes a framework for measuring  fair value in generally  accepted
accounting  principles,  and expands  disclosures about fair value measurements.
SFAS 157 is effective  for the Company on January 1, 2008 and is not expected to
have a significant impact on the Company's financial statements.

In  September  2006,  the FASB issued FASB  Statement  of  Financial  Accounting
Standards No. 158,  Employers'  Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statements No. 87, 88 106, and 132(R)
(SFAS  158).  SFAS 158  requires  an employer to  recognize  the  overfunded  or
underfunded  status of  defined  benefit  postretirement  plans as an asset or a
liability in its statement of financial position.  The funded status is measured
as the difference  between plan assets at fair value and the benefit  obligation
(the projected benefit  obligation for pension plans or the accumulated  benefit
obligation for other postretirement benefit plans). An employer is also required
to measure the funded status of a plan as of the date of its year-end  statement
of financial  position  with  changes in the funded  status  recognized  through
comprehensive  income. SFAS 158 also requires certain disclosures  regarding the
effects on net  periodic  benefit  cost for the next fiscal year that arise from
delayed recognition of gains or losses,  prior service costs or credits, and the
transition  asset or  obligation.  The Company will be required to recognize the
funded  status  of its  defined  benefit  postretirement  benefit  plans  in its
financial  statements for the year ended  December 31, 2006. The  requirement to
measure  plan  assets and  benefit  obligations  as of the date of the  year-end
statement  of  financial  position  is  effective  for the  Company's  financial
statements  beginning with the year ended after  December 31, 2008.  SFAS 158 is
not expected to have a significant impact on the Company's financial statements.

In June  2006,  the FASB  issued  FASB  Interpretation  No. 48,  Accounting  for
Uncertainty in Income Taxes, an  interpretation  of FASB Statement 109 (FIN 48).
FIN 48  prescribes a recognition  threshold and a measurement  attribute for the
financial  statement  recognition  and  measurement  of a tax position  taken or
expected  to be taken in a tax return.  Benefits  from tax  positions  should be
recognized in the financial statements only when it is more likely than not that
the tax position will be sustained upon  examination by the  appropriate  taxing
authority  that would have full  knowledge  of all relevant  information.  A tax
position that meets the  more-likely-than-not  recognition threshold is measured
at the largest  amount of benefit that is greater than fifty  percent  likely of
being realized upon ultimate settlement. Tax positions that previously failed to
meet the more-likely-than-not  recognition threshold should be recognized in the
first  subsequent  financial  reporting  period in which that  threshold is met.
Previously recognized tax positions that no longer meet the more-likely-than-not
recognition  threshold should be derecognized in the first subsequent  financial
reporting  period in which that threshold is no longer met. FIN 48 also provides
guidance on the  accounting  for and  disclosure of  unrecognized  tax benefits,
interest and  penalties.  FIN 48 is effective for the Company on January 1, 2007
and is not  expected to have a  significant  impact on the  Company's  financial
statements.

In September  2006,  the U.S.  Securities and Exchange  Commission  issued Staff
Accounting   Bulletin  No.  108,   Considering  the  Effects  of  a  Prior  Year
Misstatements   When   Quantifying   Misstatements  in  Current  Year  Financial
Statements  (SAB  108).  SAB  108  addresses  how  the  effects  of  prior  year
uncorrected  errors  must be  considered  in  quantifying  misstatements  in the
current year financial statements.  The effects of prior year uncorrected errors
include the  potential  accumulation  of improper  amounts  that may result in a
material  misstatement  on the balance  sheet or the  reversal  of prior  period
errors in the  current  period  that  result in a material  misstatement  of the
current period income statement amounts.  Adjustments to current or prior period
financial  statements  would be required in the event that after  application of
various approaches for assessing materiality of a misstatement in current period
financial  statements  and  consideration  of  all  relevant   quantitative  and
qualitative  factors, a misstatement is determined to be material.  SAB 108 will
be applicable to all financial  statements  issued by the Company after November
15, 2006.

Reclassifications
Certain amounts previously  reported in the 2005 financial  statements have been
reclassified to conform to the 2006 presentation.  These  reclassifications  did
not affect previously reported net income or total shareholders' equity.

                                       17

<PAGE>

<PAGE>
<TABLE>
<CAPTION>

                                TRICO BANCSHARES
                                Financial Summary
           (dollars in thousands, except per share amounts; unaudited)

                                                       Three months ended            Nine months ended
                                                          September 30,                 September 30,
                                                ------------------------------------------------------------
                                                      2006             2005        2006            2005
                                                ------------------------------------------------------------
<S>                                                   <C>              <C>         <C>             <C>
Net Interest Income (FTE)                           $22,077          $20,086     $64,903         $58,203
Provision for loan losses                               235              947       1,289           1,608
Noninterest income                                    6,649            6,632      19,628          18,269
Noninterest expense                                  17,026           15,680      49,724          46,310
Provision for income taxes (FTE)                      4,645            4,130      13,606          11,617
                                                ------------------------------------------------------------
     Net income                                      $6,820           $5,961     $19,912         $16,937
                                                ============================================================
Earnings per share:
     Basic                                            $0.43            $0.38       $1.26            $1.08
     Diluted                                          $0.42            $0.37       $1.22            $1.04
Per share:
     Dividends paid                                   $0.12            $0.11       $0.36            $0.33
     Book value at period end                        $10.41            $9.30
     Tangible book value at period end                $9.22            $8.04

Average common shares outstanding                    15,856           15,688      15,797           15,706
Average diluted shares outstanding                   16,366           16,330      16,379           16,328
Shares outstanding at period end                     15,857           15,728
At period end:
     Loans, net                                  $1,490,166       $1,312,294
     Total assets                                 1,904,004        1,786,856
     Total deposits                               1,525,174        1,438,299
     Other borrowings                                35,848           31,711
     Junior subordinated debt                        41,238           41,238
     Shareholders' equity                          $165,141         $146,322
Financial Ratios:
During the period (annualized):
     Return on assets                                 1.45%            1.37%       1.43%            1.34%
     Return on equity                                16.64%           16.26%      16.75%           15.71%
     Net interest margin(1)                           5.19%            5.10%       5.17%            5.12%
     Net loan charge-offs to average loans            0.04%            0.01%       0.05%            0.04%
     Efficiency ratio)                               59.27%           58.69%      58.82%           60.56%
At Period End:
     Equity to assets                                 8.67%            8.19%
     Total capital to risk assets                    11.08%           11.19%
     Allowance for losses to loans(2)                 1.25%            1.32%
</TABLE>

(1)  Fully taxable equivalent (FTE)
(2)  Allowance  for losses  includes  allowance  for loan losses and reserve for
     unfunded commitments.

                                       18

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations

As TriCo  Bancshares (the  "Company") has not commenced any business  operations
independent of Tri Counties Bank (the "Bank"), the following discussion pertains
primarily  to the  Bank.  Average  balances,  including  such  balances  used in
calculating  certain financial ratios, are generally  comprised of average daily
balances  for the  Company.  Within  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations,  interest income and net interest
income are generally presented on a fully tax-equivalent (FTE) basis.

Critical Accounting Policies and Estimates
The Company's  discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States of America.  The preparation of these financial  statements
requires the Company to make  estimates and  judgments  that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent  assets and liabilities.  On an on-going basis, the Company evaluates
its estimates, including those related to the adequacy of the allowance for loan
losses, intangible assets, and contingencies. The Company bases its estimates on
historical  experience and on various other  assumptions that are believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates under different assumptions or conditions. (See caption "Allowance for
Loan Losses" for a more detailed discussion).

Results of Operations
The  following   discussion  and  analysis  is  designed  to  provide  a  better
understanding  of the significant  changes and trends related to the Company and
the  Bank's  financial  condition,   operating  results,   asset  and  liability
management,  liquidity and capital  resources and should be read in  conjunction
with the Consolidated  Financial Statements of the Company and the Notes thereto
in this report.

Following is a summary of the components of fully taxable equivalent ("FTE") net
income for the periods indicated (dollars in thousands):


                                  Three months ended       Nine months ended
                                      September 30,          September 30,
                                  ----------------------------------------------
                                    2006       2005          2006       2005
                                  ----------------------------------------------
Net Interest Income (FTE)          $22,077   $20,086     $64,903       $58,203
Provision for loan losses              235       947       1,289         1,608
Noninterest income                   6,649     6,632      19,628        18,269
Noninterest expense                 17,026    15,680      49,724        46,310
Provision for income taxes (FTE)     4,645     4,130      13,606        11,617
                                   ---------------------------------------------
Net income                          $6,820    $5,961     $19,912       $16,937
                                   =============================================

The Company had quarterly  earnings of  $6,820,000,  or $0.42 per diluted share,
for the three months ended September 30, 2006.  These results  represent a 13.5%
increase from the $0.37 earnings per diluted share reported for the three months
ended  September 30, 2005 on earnings of $5,961,000.  The improvement in results
from the  year-ago  quarter  was due to a  $1,991,000  (9.9%)  increase in fully
tax-equivalent  net  interest  income to  $22,077,000,  and a  $712,000  (75.2%)
decrease in provision for loan losses. These contributing factors were partially
offset by a $1,346,000 (8.6%) increase in noninterest expense to $17,026,000 for
the quarter ended September 30, 2006.

The Company  reported  earnings of $19,912,000,  or $1.22 per diluted share, for
the nine months  ended  September  30,  2006.  These  results  represent a 17.3%
increase from the $1.04  earnings per diluted share reported for the nine months
ended September 30, 2005 on earnings of $16,937,000.  The improvement in results
from the year-ago period was primarily due to a $6,700,000  (11.5%)  increase in
fully  tax-equivalent  net interest  income to $64,903,000,  a $319,000  (19.8%)
decrease in provision  for loan  losses,  and a  $1,359,000  (7.4%)  increase in
noninterest  income to $19,628,000.  These  contributing  factors were partially
offset by a $3,414,000 (7.4%) increase in noninterest expense to $49,724,000 for
the nine months ended September 30, 2006.

                                       19

<PAGE>


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

                                Three months ended             Nine months ended
                                   September 30,                 September 30,
                               -------------------------------------------------
                                  2006       2005             2006        2005
                               -------------------------------------------------
     Interest income          $31,421      $25,334          $88,778     $71,880
     Interest expense          (9,576)      (5,519)         (24,624)    (14,429)
     FTE adjustment               232          271              749         752
                               -------------------------------------------------
     Net interest income(FTE) $22,077      $20,086          $64,903      $58,203
                               =================================================
     Average interest-earning
        assets             $1,701,166   $1,574,392       $1,675,027   $1,517,013

     Net interest margin (FTE)  5.19%        5.10%            5.17%        5.12%

The  Company's  primary  source  of  revenue  is  net  interest  income,  or the
difference  between  interest  income on  interest-earning  assets and  interest
expense in interest-bearing liabilities.

Net interest income (FTE) during the third quarter of 2006 increased  $1,991,000
(9.9%) from the same period in 2005 to $22,077,000. The increase in net interest
income (FTE) was due to a $126,774,000  (8.1%)  increase in average  balances of
interest-earning  assets to $1,701,166,000  and a 0.09% increase in net interest
margin (FTE) to 5.19%.

Net  interest  income  (FTE)  during  the first  nine  months of 2006  increased
$6,700,000 (11.5%) from the same period in 2005 to $64,903,000.  The increase in
net interest income (FTE) was due to a $158,014,000  (10.4%) increase in average
balances of  interest-earning  assets to $1,675,027,000  and a 0.05% increase in
net interest margin (FTE) to 5.17%.


Interest and Fee Income
Interest and fee income (FTE) for the third quarter of 2006 increased $6,048,000
(23.6%) from the third quarter of 2005.  The increase was due to a  $126,774,000
(8.1%) increase in average interest-earning assets to $1,701,166,000 and a 0.93%
increase in the yield on those  average  interest-earning  assets to 7.44%.  The
growth in interest-earning  assets was due to a $192,574,000 (15.0%) increase in
average loan balances to $1,477,551,000  that was partially offset by a decrease
of $65,932,000  (22.8%) in average balances of investments to $223,031,000.  The
increase  in the yield on  average  interest-earning  assets was mainly due to a
0.89%  increase  in yield on loans to 7.82% and a change  in the mix of  earning
assets from lower-earning investments towards higher-earning loans. The increase
in loan yields from the  year-ago  period is mainly due to the effect of a 2.00%
increase in the prime rate of lending from June 30, 2005 to September  30, 2006,
tempered by long-term  lending rates having generally held steady or fallen over
this period, and new prime based loans such as home equity lines of credit being
offered  at  spreads  to the prime  rate  that are  lower  than they were in the
year-ago period.

Interest  and fee income  (FTE) for the nine  months  ended  September  30, 2006
increased $16,895,000 (23.3%) from the same period of 2005. The increase was the
net effect of a $158,014,000 (10.4%) increase in average interest-earning assets
to  $1,675,027,000   and  a  0.75%  increase  in  the  yield  on  those  average
interest-earning  assets to 7.13%. The growth in interest-earning assets was due
to a  $209,490,000  (17.2%)  increase in average loan balances to  1,430,204,000
that was  partially  offset by a  decrease  of  $51,867,000  (17.6%)  in average
balances of  investments to  $243,590,000.  The increase in the yield on average
interest-earning  assets was mainly due to a 0.69% increase in yield on loans to
7.51% and a change in the mix of earning assets from  lower-earning  investments
towards  higher-earning  loans.  The  increase in loan yields from the  year-ago
period is mainly  due to the  effect of a 3.00%  increase  in the prime  rate of
lending  from  December 31, 2004 to  September  30, 2006,  tempered by long-term
lending rates having  generally held steady or fallen over this period,  and new
prime based loans such as home equity lines of credit  being  offered at spreads
to the prime rate that are lower than they were in the year-ago period.

                                       20

<PAGE>


Interest Expense
Interest expense increased $4,057,000 (73.5%) to $9,576,000 in the third quarter
of  2006   compared  to  the   year-ago   quarter.   The   average   balance  of
interest-bearing  liabilities increased $104,184,000 (8.4%) to $1,337,596,000 in
the third quarter compared to the year-ago quarter.  The increase in the average
balance of  interest-bearing  liabilities was  concentrated in time deposits (up
$163,878,000  or 43.2%),  and Federal funds purchased (up $30,830,000 or 40.4%).
In  addition,  the average  balance of savings  deposits  decreased  $82,858,000
(18.0%) from the  year-ago  quarter.  The average rate paid on  interest-bearing
liabilities  in the quarter ended  September 30, 2006  increased  1.07% to 2.86%
compared to the year-ago  quarter as a result of  increases  in market  interest
rates and  changes in the mix of  interest-bearing  liabilities  towards  higher
paying time deposits and Federal funds purchased.

Interest  expense  increased  $10,195,000  (70.6%) to  $24,624,000  for the nine
months ended September 30, 2006 compared to $14,429,000 in the year-ago  period.
The  average  balance of  interest-bearing  liabilities  increased  $125,369,000
(10.5%) to $1,315,450,000  for the nine months ended September 30, 2006 compared
to the  year-ago  period.  The  increase  in  interest-bearing  liabilities  was
concentrated  in time  deposits (up  $145,981,000  or 40.5%),  and Federal funds
purchased  (up  $43,593,000  or 94.8%).  In addition,  for the nine months ended
September  30,  2006,  the  average  balance  of  savings   deposits   decreased
$67,297,000  (14.3%)  from  the  year-ago  period.  The  average  rate  paid  on
interest-bearing  liabilities in the nine month period ended  September 30, 2006
increased  0.88%  to 2.50%  compared  to the  year-ago  period  as a  result  of
increases in market  interest  rates and changes in the mix of  interest-bearing
liabilities towards higher paying time deposits and Federal funds purchased.



Net Interest Margin (FTE)
The  following  table  summarizes  the  components of the Company's net interest
margin for the periods indicated:

<TABLE>
<CAPTION>

                                            Three months ended            Nine months ended
                                                September 30,                September 30,
                                         ---------------------------------------------------
                                           2006          2005             2006          2005
                                         ---------------------------------------------------
<S>                                         <C>           <C>             <C>           <C>
Yield on interest-earning assets           7.44%        6.51%           7.13%        6.38%
Rate paid on interest-bearing
     Liabilities                           2.86%        1.79%           2.50%        1.62%
                                         ---------------------------------------------------
     Net interest spread                   4.58%        4.72%           4.63%        4.76%
Impact of all other net
     noninterest-bearing funds             0.61%        0.38%           0.54%        0.36%
                                         ---------------------------------------------------
        Net interest margin                5.19%        5.10%           5.17%        5.12%
                                         ===================================================

</TABLE>

Net  interest  margin for the three months ended  September  30, 2006  increased
0.09%  compared to the three months ended  September 30, 2005.  This increase in
net  interest  margin was mainly due to an 0.23%  increase  in the impact of net
noninterest-bearing funds to 0.61% from 0.38% in the year-ago three month period
that was  partially  offset by a 0.14%  decrease in net  interest  spread as the
average yield on interest-earning  assets increased 0.93% while the average rate
paid on  interest-bearing  liabilities  increased  1.07% from the year-ago three
month period.

Net interest margin for the nine months ended September 30, 2006 increased 0.05%
compared to the nine months  ended  September  30,  2005.  This  increase in net
interest  margin  was  mainly  due to a  0.18%  increase  in the  impact  of net
noninterest-bearing funds to 0.54% from 0.36% in the year-ago nine month period.
The increase in the impact of net noninterest-bearing funds was partially offset
by  a  0.13%   decrease  in  net  interest   spread  as  the  average  yield  on
interest-earning   assets  increased  0.75%  while  the  average  rate  paid  on
interest-bearing  liabilities  increased  0.88%  from the  year-ago  nine  month
period.

                                       21

<PAGE>


Summary  of  Average  Balances,   Yields/Rates  and  Interest  Differential
The following tables present, for the periods indicated,  information  regarding
the Company's consolidated average assets, liabilities and shareholders' equity,
the  amounts  of  interest  income  from  average  interest-earning  assets  and
resulting  yields,  and the amount of interest expense paid on  interest-bearing
liabilities.  Average loan balances include nonperforming loans. Interest income
includes  proceeds  from  loans on  nonaccrual  loans  only to the  extent  cash
payments have been received and applied to interest income. Yields on securities
and  certain  loans have been  adjusted  upward to reflect  the effect of income
thereon  exempt from federal income  taxation at the current  statutory tax rate
(dollars in thousands).
<TABLE>
<CAPTION>

                                                          For the three months ended
                                       ----------------------------------------------------------------
                                             September 30, 2006                 September 30, 2005
                                       -----------------------------    -------------------------------
                                                   Interest    Rates               Interest    Rates
                                         Average   Income/    Earned     Average   Income/    Earned
                                         Balance   Expense     Paid      Balance   Expense     Paid
                                       -----------------------------    -------------------------------
<S>                                       <C>        <C>       <C>          <C>      <C>        <C>

Assets:
Loans                                  $1,477,551  $28,901    7.82%     $1,284,977 $22,254     6.93%
Investment securities - taxable           188,021    2,082    4.43%        252,547   2,608     4.13%
Investment securities - nontaxable         35,010      663    7.58%         36,416     739     8.12%
Federal funds sold                            584        7    4.79%            452       4     3.54%
                                       -----------------------------    -------------------------------
Total interest-earning assets           1,701,166   31,653    7.44%      1,574,392  25,605     6.51%
Other assets                              178,863   ------                 169,623  ------
                                       ----------                       ----------
Total assets                           $1,880,029                       $1,744,015
                                       ==========                       ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits         $231,919      118    0.20%       $244,821     124     0.20%
Savings deposits                          377,346      906    0.96%        460,204     861     0.75%
Time deposits                             543,564    5,820    4.28%        379,686   2,839     2.99%
Federal funds purchased                   107,202    1,448    5.40%         76,372     696     3.65%
Other borrowings                           36,327      442    4.87%         31,091     351     4.52%
Junior subordinated debt                   41,238      842    8.17%         41,238     648     6.29%
                                        ---------------------------     -------------------------------
Total interest-bearing liabilities      1,337,596    9,576    2.86%      1,233,412   5,519     1.79%
Noninterest-bearing deposits              348,801   ------                322,920   ------
Other liabilities                          29,713                           27,599
Shareholders' equity                      163,919                          146,660
                                        ---------                       ----------
Total liabilities & shareholders'
  equity                               $1,880,029                       $1,744,015
                                       ==========                       ==========
Net interest spread(1)                                        4.58%                            4.72%
Net interest income and interest margin(2)         $22,077    5.19%                $20,086     5.10%
                                                   ================                =================

</TABLE>


(1)  Net interest spread represents the average yield earned on interest-earning
     assets minus the average rate paid on interest-bearing liabilities.
(2)  Net  interest  margin is computed by  calculating  the  difference  between
     interest   income  and   expense,   divided  by  the  average   balance  of
     interest-earning assets.

                                       22

<PAGE>
<TABLE>
<CAPTION>

                                                           For the nine months ended
                                       ----------------------------------------------------------------
                                             September 30, 2006                 September 30, 2005
                                       -----------------------------    -------------------------------
                                                   Interest    Rates               Interest    Rates
                                         Average   Income/    Earned     Average   Income/    Earned
                                         Balance   Expense     Paid      Balance   Expense     Paid
                                       -----------------------------    -------------------------------
<S>                                       <C>        <C>       <C>          <C>      <C>        <C>
Assets:
Loans                                  $1,430,204  $80,525    7.51%     $1,220,714 $62,482     6.82%
Investment securities - taxable           208,667    6,870    4.39%        261,542   8,083     4.12%
Investment securities - nontaxable         34,923    2,087    7.97%         33,915   2,049     8.06%
Federal funds sold                          1,233       45    4.87%            842      18     2.85%
                                       -----------------------------     ------------------------------
Total interest-earning assets           1,751,027   89,527     7.13%      1,517,013  72,632     6.38%
Other assets                              176,118  -------                  167,481  ------
                                       ----------                        ----------
Total assets                           $1,851,478                        $1,684,494
                                       ==========                        ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits          $240,385      362    0.20%       $241,856     366     0.20%
Savings deposits                           404,099    2,562    0.85%        471,396   2,600     0.74%
Time deposits                              506,593   14,783    3.89%        360,612   7,560     2.80%
Federal funds purchased                     89,592    3,367    5.01%         45,999   1,117     3.24%
Other borrowings                            33,543    1,186    4.71%         28,980   1,007     4.63%
Junior subordinated debt                    41,238    2,364    7.64%         41,238   1,779     5.75%
                                       -----------------------------     ------------------------------
Total interest-bearing liabilities      1,315,450   24,624     2.50%      1,190,081  14,429     1.62%
Noninterest-bearing deposits              348,278  -------                  323,485  ------
Other liabilities                          28,867                            27,205
Shareholders' equity                      158,550                           143,723
                                       ----------                        ----------
Total liabilities and shareholders'
  equity                               $1,851,145                        $1,684,494
                                       ==========                        ==========
Net interest spread(1)                                         4.63%                            4.76%
Net interest income and interest margin(2)         $64,903     5.17%                $58,203     5.12%
                                                   =================                =================

</TABLE>

1)   Net interest spread represents the average yield earned on interest-earning
     assets minus the average rate paid on interest-bearing liabilities.
(2)  Net  interest  margin is computed by  calculating  the  difference  between
     interest   income  and   expense,   divided  by  the  average   balance  of
     interest-earning assets.

                                       23

<PAGE>


Summary of  Changes in  Interest  Income and  Expense  due to Changes in Average
Asset & Liability Balances and Yields Earned & Rates Paid

The following tables set forth a summary of the changes in interest income (FTE)
and  interest  expense  from  changes in average  asset and  liability  balances
(volume)  and  changes  in average  interest  rates for the  periods  indicated.
Changes  not  solely  attributable  to volume or rates  have been  allocated  in
proportion to the respective volume and rate components (dollars in thousands).

                                           Three months ended September 30, 2006
                                             compared with three month ended
                                                   September 30, 2005
                                           -------------------------------------
                                           Volume           Rate           Total
                                           -------------------------------------
Increase (decrease) in interest income:
Loans                                      $3,336         $3,311         $6,647
Investment securities                        (695)            93           (602)
Federal funds sold                              1              2              3
                                           -------------------------------------
   Total interest-earning assets            2,642          3,406          6,048
                                           -------------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits               (6)             -             (6)
Savings deposits                             (155)           200             45
Time deposits                               1,225          1,756          2,981
Federal funds purchased                       281            471            752
Other borrowings                               59             32             91
Junior subordinated debt                        -            194            194
                                           -------------------------------------
   Total interest-bearing liabilities       1,404          2,653          4,057
                                           -------------------------------------
Increase (decrease) in Net Interest Income $1,238           $753         $1,991
                                           =====================================


                                           Nine  months ended September 30, 2006
                                              compared with nine months ended
                                                    September 30, 2005

                                           Volume           Rate           Total
                                          --------------------------------------
Increase (decrease) in interest income:
Loans                                     $10,715         $7,328        $18,043
Investment securities                      (1,573)           398         (1,175)
Federal funds sold                              8             19             27
                                          --------------------------------------
   Total interest-earning assets            9,150          7,745         16,895
                                          --------------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits               (2)            (2)            (4)
Savings deposits                             (373)           335            (38)
Time deposits                               3,066          4,157          7,223
Federal funds purchased                     1,059          1,191          2,250
Other borrowings                              158             21            179
Junior subordinated debt                        -            585            585
                                          --------------------------------------
   Total interest-bearing liabilities        3,908          6,287         10,195
                                          --------------------------------------
Increase (decrease) in Net Interest Income $5,242         $1,458         $6,700
                                          ======================================

                                       24

<PAGE>


Provision for Loan Losses
The  Company  provided  $235,000  for loan  losses in the third  quarter of 2006
versus $947,000 in the third quarter of 2005.  During the third quarter of 2006,
the Company recorded $135,000 of net loan charge offs versus $43,000 of net loan
charge-offs in the year earlier quarter.

The Company  provided  $1,289,000  for loan losses  during the nine months ended
September 30, 2006 versus  $1,608,000 during the nine months ended September 30,
2005.  During the nine months ended  September  30, 2006,  the Company  recorded
$522,000 of net loan charge-offs  versus $337,000 of net loan charge-offs in the
year earlier nine-month period.

Noninterest Income
The following  table  summarizes the  components of  noninterest  income for the
periods indicated (dollars in thousands).
<TABLE>
<CAPTION>
                                                 Three months ended             Nine months ended
                                                   September 30,                 September 30,
                                               ----------------------------------------------------
                                                  2006           2005           2006         2005
                                               ----------------------------------------------------
     <S>                                          <C>           <C>             <C>           <C>
     Service charges on deposit accounts         $3,703        $3,653         $10,883       $10,030
     ATM fees and interchange                       927           822           2,641         2,315
     Other service fees                             544           504           1,601         1,507
     Amortization of mortgage servicing rights        -          (184)              -          (490)
     Change in value of mortgage servicing rights  (118)         -               (256)            -
     Gain on sale of loans                          264           474             875         1,195
     Commissions on sale of
       nondeposit investment products               447           535           1,529         1,727
     Increase in cash value of life insurance       420           420           1,223         1,040
     Gain on sale of investments                      -             -              12             -
     Other noninterest income                       462           408           1,120           945
                                               ----------------------------------------------------
     Total noninterest income                    $6,649        $6,632         $19,628       $18,269
                                               ====================================================
</TABLE>

Noninterest  income for the third quarter of 2006 increased  $17,000 (0.3%) from
the  year-ago  quarter.  The  increase in  noninterest  income from the year-ago
quarter  was  mainly due to a $50,000  (1.4%)  increase  in  service  charges on
deposit  accounts to  $3,703,000,  a $105,000  (12.8%)  increase in ATM fees and
interchange to $927,000,  and a $66,000  decrease in amortization  (or change in
value) of mortgage  servicing  rights,  that were partially  offset by a $88,000
(16.4%)  decrease in  commissions on sale of nondeposit  investment  products to
$447,000,  and a $210,000 (44.3%) decrease in gain on sale of loans to $264,000.
The increase in service charges on deposit  accounts was primarily due to growth
in customer count. The increase in ATM fees and interchange was due to growth in
customer count and expansion of ATM network as part of new branch openings.  The
decrease in amortization  (or change in value) of mortgage  servicing rights was
due primarily to a slowdown in  residential  mortgage  refinance  activity which
generally  increases  the value of  mortgage  servicing  rights.  The shift from
amortization  of  mortgage  servicing  rights  to  change  in value of  mortgage
servicing  rights is due to the adoption of market value accounting for mortgage
servicing  rights  effective  January 1, 2006 and the  related  change in market
value from July 1, 2006 to September  30, 2006.  The decrease in gain on sale of
loans is due to a slowdown in residential mortgage refinance activity.

Noninterest  income for the nine  months  ended  September  30,  2006  increased
$1,359,000  (7.4%) to $19,628,000  from the same period in 2005. The increase in
noninterest  income from the year-ago  nine months ended  September 30, 2005 was
mainly due to a $853,000 (8.5%) increase in service charges on deposit  accounts
to  $10,883,000,  a $326,000  (14.1%)  increase in ATM fees and  interchange  to
$2,641,000,  a $183,000  (17.6%)  improvement  in increase in cash value of life
insurance to $1,223,000,  and a $234,000  decrease in amortization (or change in
value) of mortgage  servicing  rights,  that were partially offset by a $198,000
(11.5%)  decrease in  commissions on sale of nondeposit  investment  products to
$1,529,000,  and a  $320,000  (26.8%)  decrease  in gain on  sale  of  loans  to
$875,000.  The increase in service charges on deposit accounts was primarily due
to the introduction of a business overdraft  privilege product in March 2005 and
growth in customer  count.  The increase in ATM fees and  interchange was due to
growth in  customer  count and  expansion  of ATM  network as part of new branch
openings.  The  decrease  in  amortization  (or  change in  value)  of  mortgage
servicing  rights  was due  primarily  to a  slowdown  in  residential  mortgage
refinance  activity which  generally  increases the value of mortgage  servicing
rights.  The shift from  amortization of mortgage  servicing rights to change in
value of  mortgage  servicing  rights is due to the  adoption  of  market  value
accounting  for  mortgage  servicing  rights  effective  January 1, 2006 and the
related  change in market value from January 1, 2006 to September 30, 2006.  The
decrease in gain on sale of loans is due to a slowdown in  residential  mortgage
refinance activity.

                                       25

<PAGE>


Noninterest Expense
The following  table  summarizes the  components of noninterest  expense for the
periods indicated (dollars in thousands).

                                Three months ended             Nine months ended
                                   September 30,                 September 30,
                             ---------------------------------------------------
                               2006          2005           2006           2005
                             ---------------------------------------------------
     Salaries & benefits      $9,276        $8,584         $27,050       $25,361
     Occupancy                 1,170         1,034           3,298         3,019
     Equipment                 1,018         1,023           3,187         3,092
     Advertising and marketing   655           579           1,628         1,283
     ATM network charges         475           430           1,375         1,209
     Data processing & software  453           419           1,259         1,203
     Telecommunications          380           344           1,165         1,137
     Professional fees           375           287           1,265           968
     Intangible amortization     350           346           1,046         1,035
     Courier service             312           292             925           860
     Postage                     260           263             753           734
     Operational losses           89            25             218            97
     Assessments                  83            80             243           233
     Other                     2,130         1,974           6,312         6,079
                             ---------------------------------------------------
     Total                   $17,026       $15,680         $49,724       $46,310
                             ===================================================
     Average full time
      equivalent staff           630           592             619           577
     Noninterest expense
        to revenue (FTE)      59.27%        58.69%         59.82%         60.56%

Noninterest  expense for the third quarter of 2006 increased  $1,346,000  (8.6%)
compared to the third quarter of 2005.  Salaries and benefits expense  increased
$692,000 (8.1%) to $9,276,000. The increase in salaries and benefits expense was
mainly  due to annual  salary  increases,  and new  employees  at the  Company's
recently  opened branches in  Roseville-Pleasant  Grove  (November  2005),  Yuba
City-Marketplace (January 2006), Folsom-Empire Ranch (March 2006), Natomas-Arena
Blvd (April 2006),  Antelope  (May 2006),  Anderson  (June 2006),  and Elk Grove
(August 2006). Other categories of noninterest  expense including  occupancy and
ATM network charges also increased, in part, due to these newly opened branches.
Advertising  and  marketing  expense  increased  $76,000  (13.1%)  to  $655,000.
Professional  fees increased  $88,000 (30.7%) to $375,000 due to increased audit
fees.

Noninterest  expense  for the nine months  ended  September  30, 2006  increased
$3,414,000 (7.4%) compared to the nine months ended September 30, 2005. Salaries
and benefits expense increased $1,689,000 (6.7%) to $27,050,000. The increase in
salaries and benefits expense was mainly due to annual salary increases, and new
employees at the Company's  recently opened branches in Lincoln (February 2005),
Folsom-East Bidwell (March 2005), Roseville-Pleasant Grove (November 2005), Yuba
City-Marketplace (January 2006), Folsom-Empire Ranch (March 2006), Natomas-Arena
Blvd (April 2006),  Antelope  (May 2006),  Anderson  (June 2006),  and Elk Grove
(August 2006). Other categories of noninterest  expense including  occupancy and
ATM network charges also increased, in part, due to these newly opened branches.
Advertising  and marketing  expense  increased  $345,000  (26.9%) to $1,628,000.
Professional fees increase $297,000 (30.7%) to $1,265,000 due to increased audit
fees and increased legal fees related to loan collection efforts.

Provision for Income Tax
The effective  tax rate for the three months ended  September 30, 2006 was 39.3%
and reflects no change from 39.3% for the three months ended September 30, 2005.
The  effective  tax rate for the nine months ended  September 30, 2006 was 39.2%
and  reflects an increase  from 39.1% for the nine months  ended  September  30,
2005.  The  provision  for income  taxes for all periods  presented is primarily
attributable to the respective  level of earnings and the incidence of allowable
deductions,  particularly  from  increase  in  cash  value  of  life  insurance,
tax-exempt loans and state and municipal securities.

                                       26

<PAGE>


Classified Assets
The  Company  closely  monitors  the  markets in which it  conducts  its lending
operations  and  continues  its strategy to control  exposure to loans with high
credit risk.  Asset reviews are performed  using grading  standards and criteria
similar to those employed by bank regulatory  agencies.  Assets receiving lesser
grades  fall  under  the  "classified  assets"  category,   which  includes  all
nonperforming  assets and potential problem loans, and receive an elevated level
of attention to ensure collection.

The following is a summary of classified assets on the dates indicated (dollars
in thousands):

                              At September 30, 2006         At December 31, 2005
                           ------------------------     ------------------------
                              Gross Guaranteed  Net       Gross Guaranteed   Net
                           -----------------------------------------------------
Classified loans           $13,671   $6,654   $7,017    $13,086  $7,110   $5,976
Other classified assets          -        -        -          -       -        -
                           -----------------------------------------------------
Total classified assets    $13,671   $6,654   $7,017    $13,086  $7,110   $5,976
                           =====================================================
Allowance for loan losses
     /classified loans                        242.2%                      271.5%


Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies and its government-sponsored  agencies at September 30, 2006, increased
$1,041,000 (17.4%) to $7,017,000 from $5,976,000 at December 31, 2005.

Nonperforming Loans
Loans are reviewed on an  individual  basis for  reclassification  to nonaccrual
status when any one of the following  occurs:  the loan becomes 90 days past due
as to  interest  or  principal,  the full and timely  collection  of  additional
interest or principal becomes  uncertain,  the loan is classified as doubtful by
internal credit review or bank regulatory  agencies,  a portion of the principal
balance has been charged off, or the Company takes possession of the collateral.
Loans that are placed on nonaccrual even though the borrowers  continue to repay
the  loans as  scheduled  are  classified  as  "performing  nonaccrual"  and are
included  in  total  nonperforming  loans.  The  reclassification  of  loans  as
nonaccrual does not necessarily reflect Management's judgment as to whether they
are collectible.

Interest income is not accrued on loans where Management has determined that the
borrowers  will  be  unable  to  meet  contractual   principal  and/or  interest
obligations,  unless the loan is well secured and in the process of  collection.
When a loan is placed on nonaccrual,  any previously accrued but unpaid interest
is  reversed.  Income on such loans is then  recognized  only to the extent that
cash is received  and where the future  collection  of  principal  is  probable.
Interest  accruals  are resumed on such loans only when they are  brought  fully
current  with  respect to interest and  principal  and when,  in the judgment of
Management, the loans are estimated to be fully collectible as to both principal
and interest.

Interest income on nonaccrual loans, which would have been recognized during the
nine months,  ended  September  30, 2006,  if all such loans had been current in
accordance with their original terms, totaled $895,000. Interest income actually
recognized on these loans during the nine months ended  September 30, 2006 was $
598,000.

The  Company's  policy is to place loans 90 days or more past due on  nonaccrual
status.  In some instances  when a loan is 90 days past due Management  does not
place  it on  nonaccrual  status  because  the loan is well  secured  and in the
process of  collection.  A loan is considered to be in the process of collection
if, based on a probable  specific  event,  it is expected  that the loan will be
repaid or brought current. Generally, this collection period would not exceed 30
days. Loans where the collateral has been repossessed are classified as OREO or,
if the collateral is personal  property,  the loan is classified as other assets
on the Company's consolidated financial statements.

Management considers both the adequacy of the collateral and the other resources
of the  borrower  in  determining  the steps to be taken to  collect  nonaccrual
loans.   Alternatives  that  are  considered  are  foreclosure,   collecting  on
guarantees, restructuring the loan or collection lawsuits.

                                       27

<PAGE>


As shown in the following table, total nonperforming assets net of guarantees of
the  U.S.  Government,  including  its  agencies  and  its  government-sponsored
agencies,  increased  $1,562,000  (52.8%)  to  $4,523,000  during the first nine
months of 2006.  Nonperforming assets net of guarantees represent 0.24% of total
assets.  All nonaccrual loans are considered to be impaired when determining the
need  for a  specific  valuation  allowance.  The  Company  continues  to make a
concerted  effort to work problem and potential  problem loans to reduce risk of
loss.
<TABLE>
<CAPTION>
 (dollars in thousands):
                                                At September 30, 2006         At December 31, 2005
                                              -------------------------    -------------------------
                                                Gross Guaranteed  Net       Gross Guaranteed   Net
                                              ------------------------------------------------------
<S>                                             <C>       <C>      <C>       <C>      <C>      <C>

Performing nonaccrual loans                   $10,571   $6,511   $4,060     $9,315  $6,933   $2,382
Nonperforming, nonaccrual loans                   463        -      463        579       -      579
                                              ------------------------------------------------------
     Total nonaccrual loans                    11,034    6,511    4,523      9,894   6,933    2,961
Loans 90 days past due and still accruing           -        -        -          -       -        -
                                              ------------------------------------------------------
Total nonperforming loans                      11,034    6,511    4,523      9,894   6,933    2,961
Other real estate owned                             -        -        -          -       -        -
                                              ------------------------------------------------------
Total nonperforming assets                    $11,034   $6,511   $4,523     $9,894  $6,933   $2,961
                                              ======================================================
Nonperforming loans to total loans                                0.30%                        0.21%
Nonperforming assets to total assets                              0.24%                        0.16%
Allowance for loan losses to nonperforming loans                   376%                        548%

</TABLE>

Capital Resources
The  current  and  projected  capital  position of the Company and the impact of
capital plans and long-term strategies are reviewed regularly by Management.

On March 11, 2004,  the Board of  Directors  approved an increase in the maximum
number of shares to be repurchased  under the Company's  stock  repurchase  plan
originally announced on July 31, 2003 from 250,000 to 500,000 effective on April
9, 2004,  solely to conform with the two-for-one  stock split effective on April
9, 2004. The 250,000 shares originally authorized for repurchase under this plan
represented  approximately 3.2% of the Company's  approximately 7,852,000 common
shares  outstanding as of July 31, 2003. This plan has no stated expiration date
for the  repurchases,  which  may occur  from time to time as market  conditions
allow.  As of September 30, 2006,  the Company had  repurchased  374,371  shares
under this plan as adjusted for the 2-for-1  stock split paid on April 30, 2004,
which left 125,629 shares available for repurchase under the plan.

The  Company's  primary  capital  resource is  shareholders'  equity,  which was
$165,141,000  at  September  30,  2006.  This amount  represents  an increase of
$15,648,000 from December 31, 2005, the net result of  comprehensive  income for
the period of  $20,130,000,  the  issuance of common  shares via the exercise of
stock  options of  $1,646,000,  the tax  effects of stock  option  exercises  of
$205,000,  and the effect of stock option vesting of $468,000,  partially offset
by the  retirement  of  common  stock  with  value  of  $1,109,000  tendered  by
employees,  in lieu of cash, to exercise  stock  options,  and dividends paid of
$5,692,000.  The Company's ratio of equity to total assets was 8.67%, 8.19%, and
8.12% as of September  30,  2006,  September  30,  2005,  and December 31, 2005,
respectively.

The following  summarizes the ratios of capital to risk-adjusted  assets for the
periods indicated:

                                At September 30,       At            Minimum
                               -----------------   December 31,    Regulatory
                               2006       2005        2005         Requirement
                               ------------------------------------------------
     Tier I Capital            10.07%     10.13%      9.76%           4.00%
     Total Capital             11.08%     11.19%     10.79%           8.00%
     Leverage ratio            10.13%      9.83%      9.72%           4.00%

                                       28

<PAGE>


Off-Balance Sheet Items
The Bank has certain  ongoing  commitments  under  operating and capital leases.
These commitments do not significantly impact operating results. As of September
30, 2006  commitments  to extend  credit and  commitments  related to the Bank's
deposit overdraft  privilege product were the Bank's only financial  instruments
with  off-balance  sheet risk.  The Bank has not entered into any  contracts for
financial  derivative   instruments  such  as  futures,   swaps,  options,  etc.
Commitments to extend credit were $622,446,000 and $626,490,000 at September 30,
2006 and December 31, 2005, respectively, and represent 41.3% of the total loans
outstanding at September 30, 2006 versus 45.2% at December 31, 2005. Commitments
related to the Bank's deposit overdraft  privilege  product totaled  $36,560,000
and $35,002,000 at September 30, 2006 and December 31, 2005, respectively.

Certain Contractual Obligations
The following chart summarizes certain contractual obligations of the Company as
of December 31, 2005:
<TABLE>
<CAPTION>

                                                              Less than        1-3          3-5       More than
(dollars in thousands)                             Total      one year        years        years       5 years
                                                  -------------------------------------------------------------
<S>                                                  <C>           <C>         <C>           <C>            <C>

Federal funds purchased                            $96,800      $96,800            -            -            -
FHLB loan, fixed rate of 5.41%
   payable on April 7, 2008, callable
   in its entirety by FHLB on a quarterly
   basis beginning April 7, 2003                    20,000            -       20,000            -            -
FHLB loan, fixed rate of 5.35%
   payable on December 9, 2008                       1,500            -        1,500            -            -
FHLB loan, fixed rate of 5.77%
   payable on February 23, 2009                      1,000            -            -        1,000            -
Capital lease obligation on premises,
   effective rate of 13% payable
   monthly in varying amounts
   through December 1, 2009                            293            -            -          293            -
Other collateralized borrowings,
   fixed rate of  1.44% payable on January 3, 2006   8,597        8,597            -            -            -
Junior subordinated debt, adjustable rate
   of three-month LIBOR plus 3.05%,
   callable in whole or in part by the
   Company on a quarterly basis beginning
   October 7, 2008, matures October 7, 2033         20,619            -            -            -       20,619
Junior subordinated debt, adjustable rate
   of three-month LIBOR plus 2.55%,
   callable in whole or in part by the
   Company on a quarterly basis beginning
   July 23, 2009, matures July 23, 2034             20,619            -            -            -       20,619
Operating lease obligations                          7,095        1,522        2,600        1,888        1,085
Deferred compensation(1)                             1,464          264          481          454          265
Supplemental retirement plans(1)                     4,528          477          938          926        2,187
Employment agreements                                  119          119            -            -            -
                                                  -------------------------------------------------------------
Total contractual obligations                     $182,634     $107,779      $25,519       $4,561      $44,775
                                                  =============================================================
</TABLE>
(1)  These amounts  represent known certain  payments to participants  under the
     Company's  deferred  compensation  and supplemental  retirement  plans. See
     "Retirement  Plans"  at  Part  I,  Item 1 of  this  report  for  additional
     information related to the Company's deferred compensation and supplemental
     retirement plan liabilities.

                                       29

<PAGE>


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Asset and Liability Management
The goal for managing the assets and  liabilities  of the Company is to maximize
shareholder  value and earnings while  maintaining a high quality  balance sheet
without exposing the Company to undue interest rate risk. The Board of Directors
has overall  responsibility  for the  Company's  interest  rate risk  management
policies.  The Company has an Asset and Liability  Management  Committee  (ALCO)
which establishes and monitors guidelines to control the sensitivity of earnings
to changes in interest rates.

Activities involved in asset/liability management include but are not limited to
lending,  accepting and placing  deposits,  investing in securities  and issuing
debt.   Interest  rate  risk  is  the  primary  market  risk   associated   with
asset/liability  management.  Sensitivity  of earnings to interest  rate changes
arises when yields on assets change in a different time period or in a different
amount from that of interest  costs on  liabilities.  To mitigate  interest rate
risk, the structure of the balance sheet is managed with the goal that movements
of interest  rates on assets and  liabilities  are  correlated and contribute to
earnings  even in  periods  of  volatile  interest  rates.  The  asset/liability
management  policy  sets  limits on the  acceptable  amount of  variance  in net
interest margin,  net income and market value of equity under changing  interest
environments.  Market value of equity is the net present value of estimated cash
flows from the Company's  assets,  liabilities and off-balance  sheet items. The
Company uses simulation  models to forecast net interest margin,  net income and
market value of equity.

Simulation of net interest  margin,  net income and market value of equity under
various  interest  rate  scenarios is the primary tool used to measure  interest
rate risk. Using computer-modeling  techniques,  the Company is able to estimate
the potential  impact of changing  interest  rates on net interest  margin,  net
income and market value of equity.  A balance sheet  forecast is prepared  using
inputs  of  actual  loan,   securities  and  interest-bearing   liability  (i.e.
deposits/borrowings) positions as the beginning base.

In the simulation of net interest  margin and net income under various  interest
rate scenarios,  the forecast balance sheet is processed  against seven interest
rate  scenarios.  These  seven  interest  rate  scenarios  include  a flat  rate
scenario,  which assumes  interest  rates are  unchanged in the future,  and six
additional rate ramp scenarios ranging from +300 to -300 basis points around the
flat scenario in 100 basis point  increments.  These ramp scenarios  assume that
interest  rates  increase  or  decrease  evenly  (in a  "ramp"  fashion)  over a
twelve-month period and remain at the new levels beyond twelve months.

In the  simulation  of  market  value of  equity  under  various  interest  rate
scenarios,  the forecast balance sheet is processed  against seven interest rate
scenarios.  These seven interest rate  scenarios  include the flat rate scenario
described  above,  and six additional rate shock scenarios  ranging from +300 to
-300 basis points around the flat scenario in 100 basis point increments.  These
rate shock scenarios assume that interest rates increase or decrease immediately
(in a "shock" fashion) and remain at the new level in the future.

At September 30, 2006, the results of the simulations  noted above indicate that
given a "flat"  balance  sheet  scenario,  and if deposit  rates  track  general
interest  rate changes by  approximately  50%, the  Company's  balance  sheet is
slightly  liability  sensitive.  "Liability  sensitive"  implies  that  earnings
decrease when interest rates rise,  and increase when interest  rates  decrease.
The  magnitude of all the  simulation  results  noted above is within the Bank's
policy guidelines. The asset liability management policy limits aggregate market
risk, as measured in this fashion,  to an acceptable level within the context of
risk-return trade-offs.

The simulation  results noted above do not incorporate  any management  actions,
which might  moderate the negative  consequences  of interest  rate  deviations.
Therefore,  they do not reflect likely actual results, but serve as conservative
estimates of interest rate risk.

At  September  30,  2006 and  2005,  the  Company  had no  derivative  financial
instruments.

                                       30

<PAGE>


Liquidity
The  Company's  principal  source of asset  liquidity is federal  funds sold and
marketable  investment  securities  available  for sale.  At September 30, 2006,
federal  funds  sold  and  investment  securities  available  for  sale  totaled
$211,273,000,  representing a decrease of $51,382,000  (19.6%) from December 31,
2005,  and a decrease  of  $60,079,000  (22.1%)  from  September  30,  2005.  In
addition,   the  Company  generates  additional  liquidity  from  its  operating
activities.  The  Company's  profitability  during the first nine months of 2006
generated  cash flows from  operations of  $25,219,000  compared to  $22,562,000
during the first nine months of 2005.  Additional  cash flows may be provided by
financing  activities,  primarily the acceptance of deposits and borrowings from
banks.  Maturities and sales of investment  securities  produced cash inflows of
$40,208,000 and $10,780,000 respectively, during the nine months ended September
30, 2006 compared to $45,147,000 and $0, respectively, for the nine months ended
September 30, 2005. During the nine months ended September 30, 2006, the Company
invested   $896,000  and   $122,646,000  in  securities  and  net  loan  growth,
respectively,  compared to $35,013,000  and  $155,460,000  in securities and net
loan growth,  respectively,  during the first nine months of 2005. These changes
in  investment  and loan  balances  contributed  to net cash used for  investing
activities  of  $75,870,000  during the nine months  ended  September  30, 2006,
compared to net cash used for investing  activities of  $149,890,000  during the
nine months ended September 30, 2005.  Financing activities provided net cash of
$37,380,000  during the nine months ended  September  30, 2006,  compared to net
cash  provided by financing  activities of  $142,922,000  during the nine months
ended  September  30,  2005.   Increases  in  deposit  balances   accounted  for
$28,377,000 and $89,466,000 of financing sources of funds, respectively,  during
the nine months ended September 30, 2006 and 2005,  respectively.  Federal funds
borrowed  increased  $9,700,000 and $56,800,000  during the first nine months of
2006 and 2005,  respectively.  Short-term other borrowings  increased $4,502,000
and  $3,597,000  during  the nine  months  ended  September  30,  2006 and 2005,
respectively.  Dividends paid used  $5,692,000 and $5,189,000 of cash during the
nine months ended  September  30, 2006 and  September  30,  2005,  respectively.
Repurchase of common stock used  $2,663,000 of cash during the nine months ended
September  30, 2005.  Also,  the  Company's  liquidity is dependent on dividends
received  from  the  Bank.  Dividends  from  the Bank  are  subject  to  certain
regulatory restrictions.

Item 4.  Controls and Procedures
The Chief Executive  Officer,  Richard Smith,  and the Chief Financial  Officer,
Thomas Reddish, evaluated the effectiveness of the Company's disclosure controls
and  procedures  as of September  30, 2006  ("Evaluation  Date").  Based on that
evaluation,  they  concluded  that  as of  the  Evaluation  Date  the  Company's
disclosure  controls and procedures are effective to allow timely  communication
to them of  information  relating  to the  Company  and the Bank  required to be
disclosed in its filings with the  Securities  and Exchange  Commission  ("SEC")
under  the  Securities  Exchange  Act of  1934,  as  amended  ("Exchange  Act").
Disclosure  controls and  procedures are Company  controls and other  procedures
that are  designed to ensure that  information  required to be  disclosed by the
Company  in the  reports  that it files  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms.

No changes in the Company's  internal control over financial  reporting occurred
during  the first  nine  months of 2006 that have  materially  affected,  or are
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.

                                       31

<PAGE>

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

Due to the nature of the banking business, the Bank is at times party to various
legal actions;  all such actions are of a routine nature and arise in the normal
course of business of the Bank.

Item 1A - Risk Factors

There have been no material changes to the risk factors previously  disclosed in
Item 1A to Part I of our Annual Report on Form 10-K for the year ended  December
31, 2005.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows information concerning the common stock repurchased by
the Company  during the third quarter of 2006  pursuant to the  Company's  stock
repurchase plan  originally  announced on July 31, 2003, as amended on March 11,
2004, to conform with the Company's  two-for-one  stock split effective on April
9, 2004,  which is discussed in more detail under  "Capital  Resources"  in this
report:

<TABLE>
<CAPTION>

Period          (a) Total number    (b) Average price   (c) Total number of     (d) Maximum number
                of Shares purchased  paid per share     shares purchased as     of shares that may yet
                                                        part of publicly        be purchased under the
                                                        announced plans or      plans or programs
                                                        programs
-----------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>                      <C>                  <C>
July 1-31, 2006             -              -                        -                 125,629
Aug. 1-31, 2006             -              -                        -                 125,629
Sep. 1-30, 2006             -              -                        -                 125,629
-----------------------------------------------------------------------------------------------------------
Total                       -              -                        -                 125,629

</TABLE>

                                       32

<PAGE>

Item 6 - Exhibits

     3.1*      Restated  Articles of  Incorporation  dated May 9, 2003, filed as
               Exhibit  3.1 to  TriCo's  Quarterly  Report  on Form 10-Q for the
               quarter ended March 31, 2003.

     3.2*      Bylaws of TriCo Bancshares,  as amended,  filed as Exhibit 3.2 to
               TriCo's Form S-4  Registration  Statement  dated January 16, 2003
               (No. 333-102546).

     4*        Certificate of  Determination  of Preferences of Series AA Junior
               Participating  Preferred  Stock  filed as Exhibit  3.3 to TriCo's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2001.

    10.1*      Rights  Agreement  dated June 25, 2001,  between TriCo and Mellon
               Investor  Services  LLC filed as  Exhibit 1 to  TriCo's  Form 8-A
               dated July 25, 2001.

    10.2*      Form of  Change of  Control  Agreement  dated  August  25,  2005,
               between  TriCo  and  each of Bruce  Belton,  Craig  Carney,  Gary
               Coelho, W.R. Hagstrom,  Andrew Mastorakis,  Rick Miller,  Richard
               O'Sullivan, Thomas Reddish, and Ray Rios filed as Exhibit 10.2 to
               TriCo's  Quarterly  Report  on Form  10-Q for the  quarter  ended
               September 30, 2005.

    10.3*      TriCo's 1995 Incentive  Stock Option Plan filed as Exhibit 4.1 to
               TriCo's  Form S-8  Registration  Statement  dated August 23, 1995
               (No. 33-62063).

    10.4*      TriCo's 2001 Stock  Option Plan as amended  filed as Exhibit 10.7
               to TriCo's  Quarterly  Report on Form 10-Q for the quarter  ended
               June 30, 2005.

    10.5*      Amended  Employment  Agreement  between  TriCo and Richard  Smith
               dated as of August  23,  2005  filed as  Exhibit  10.8 to TriCo's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2005.

    10.6*      Tri Counties Bank Executive  Deferred  Compensation Plan restated
               April 1,  1992 and  January  1,  2005  filed as  Exhibit  10.9 to
               TriCo's  Quarterly  Report  on Form  10-Q for the  quarter  ended
               September 30, 2005.

    10.7*      Tri  Counties  Bank  Deferred  Compensation  Plan  for  Directors
               effective  January  1, 2005  filed as  Exhibit  10.10 to  TriCo's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2005.

    10.8*      2005 Tri Counties Bank Deferred Compensation Plan effective as of
               January  1, 2005  filed as  Exhibit  10.11 to  TriCo's  Quarterly
               Report on Form 10-Q for the quarter ended September 30,2005.

    10.9*      Tri Counties  Bank  Supplemental  Retirement  Plan for  Directors
               dated September 1, 1987, as restated January 1, 2001, and amended
               and  restated  January 1, 2004 filed as Exhibit  10.12 to TriCo's
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               2004.

    10.10*     2004 TriCo Bancshares  Supplemental Retirement Plan for Directors
               effective  January  1, 2004  filed as  Exhibit  10.13 to  TriCo's
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               2004.

    10.11*     Tri  Counties  Bank   Supplemental   Executive   Retirement  Plan
               effective  September 1, 1987, as amended and restated  January 1,
               2004 filed as Exhibit 10.14 to TriCo's  Quarterly  Report on Form
               10-Q for the quarter ended June 30, 2004.

                                      33

<PAGE>

    10.12*     2004 TriCo  Bancshares  Supplemental  Executive  Retirement  Plan
               effective  January  1, 2004  filed as  Exhibit  10.15 to  TriCo's
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               2004.

    10.13*     Form of Joint  Beneficiary  Agreement  effective  March 31,  2003
               between  Tri  Counties  Bank and each of  Craig  Carney,  Richard
               Miller,  Andrew Mastorakis,  Richard O'Sullivan,  Thomas Reddish,
               and Richard  Smith,  filed as Exhibit 10.14 to TriCo's  Quarterly
               Report on Form 10-Q for the quarter ended September 30, 2003.

    10.14*     Form of Joint  Beneficiary  Agreement  effective  March 31,  2003
               between Tri Counties Bank and each of Don Amaral,  William Casey,
               Craig Compton,  John Hasbrook,  Michael  Koehnen,  Donald Murphy,
               Carroll Taresh,  and Alex  Vereshagin,  filed as Exhibit 10.15 to
               TriCo's  Quarterly  Report  on Form  10-Q for the  quarter  ended
               September 30, 2003.

    10.15*     Form of  Tri-Counties  Bank  Executive  Long Term Care  Agreement
               effective  June 10, 2003  between Tri  Counties  Bank and each of
               Craig  Carney,   Andrew  Mastorakis,   Richard  Miller,   Richard
               O'Sullivan, and Thomas Reddish, filed as Exhibit 10.16 to TriCo's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2003.

    10.16*     Form of  Tri-Counties  Bank  Director  Long Term  Care  Agreement
               effective June 10, 2003 between Tri Counties Bank and each of Don
               Amaral,  William  Casey,  Craig Compton,  John Hasbrook,  Michael
               Koehnen,  Donald Murphy,  Carroll Taresh,  and Alex  Verischagin,
               filed as Exhibit 10.17 to TriCo's  Quarterly  Report on Form 10-Q
               for the quarter ended September 30, 2003.

    10.17*     Form of  Indemnification  Agreement between TriCo  Bancshares/Tri
               Counties Bank and each of the  directors of TriCo  Bancshares/Tri
               Counties  Bank  effective on the date that each director is first
               elected,  filed as Exhibit 10.18 to TriCo'S Annual Report on Form
               10-K for the year ended December 31, 2003.

    10.18*     Form of  Indemnification  Agreement between TriCo  Bancshares/Tri
               Counties Bank and each of Craig  Carney,  W.R.  Hagstrom,  Andrew
               Mastorakis, Rick Miller, Richard O'Sullivan,  Thomas Reddish, Ray
               Rios,  and  Richard  Smith  filed as  Exhibit  10.21  to  TriCo's
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               2004.

    21.1       Tri  Counties  Bank,  a  California  banking  corporation,  TriCo
               Capital  Trust I, a Delaware  business  trust,  and TriCo Capital
               Trust II, a Delaware business trust, are the only subsidiaries of
               Registrant

    31.1       Rule 13a-14(a)/15d-14(a) Certification of CEO
    31.2       Rule 13a-14(a)/15d-14(a) Certification of CFO

    32.1       Section 1350 Certification of CEO
    32.2       Section 1350 Certification of CFO

       * Previously filed and incorporated by reference.

                                      34

<PAGE>

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 hereunto duly authorized.

                                     TRICO BANCSHARES
                                       (Registrant)

Date:  November 3, 2006              /s/ Thomas J. Reddish
                                     -----------------------------------
                                     Thomas J. Reddish
                                     Executive Vice President and
                                     Chief Financial Officer



                                      35

<PAGE>

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification of CEO

I, Richard P. Smith, certify that;

    1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  TriCo
          Bancshares;
    2.    Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;
    3.    Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;
   4.     The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in  Exchange  Act Rules  13a-15 and  15d-15(e))  and  internal
          control  over  financial  reporting  (as defined in Exchange Act Rules
          13a-15(f) and 15d-15(f)) for the registrant and we have:
          a.   Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               registrant,  including its consolidated subsidiary, is made known
               to us by others within those  entities,  particularly  during the
               period in which this quarterly report is being prepared;
          b.   Designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;
          c.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and procedures  and presented in this  quarterly  report
               our  conclusions   about  the  effectiveness  of  the  disclosure
               controls and  procedures,  as of the end of the period covered by
               this quarterly report based on such evaluation; and
          d.   Disclosed in this report any change in the registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               registrant's  most  recent  fiscal  quarter  that has  materially
               affected,  or is  reasonably  likely to  materially  affect,  the
               registrant's internal control over financial reporting;
    5.    The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation  of  internal  control  over  financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors;
          a.   All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability to record, process,  summarize and report financial data;
               and
          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal control over financial reporting.


Date: November 3, 2006                  /s/ Richard P. Smith
                                        ----------------------------------------
                                        Richard P. Smith
                                        President and Chief Executive Officer



<PAGE>

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification of CFO

I, Thomas J. Reddish, certify that;

    1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  TriCo
          Bancshares;
    2.    Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;
    3.    Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;
    4.    The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in  Exchange  Act Rules  13a-15 and  15d-15(e))  and  internal
          control  over  financial  reporting  (as defined in Exchange Act Rules
          13a-15(f) and 15d-15(f)) for the registrant and we have:
          a.   Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               registrant,  including its consolidated subsidiary, is made known
               to us by others within those  entities,  particularly  during the
               period in which this quarterly report is being prepared;
          b.   Designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;
          c.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and procedures  and presented in this  quarterly  report
               our  conclusions   about  the  effectiveness  of  the  disclosure
               controls and  procedures,  as of the end of the period covered by
               this quarterly report based on such evaluation; and
          d.   Disclosed in this report any change in the registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               registrant's  most  recent  fiscal  quarter  that has  materially
               affected,  or is  reasonably  likely to  materially  affect,  the
               registrant's internal control over financial reporting;
    5.    The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation  of  internal  control  over  financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors;
          a.   All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability to record, process,  summarize and report financial data;
               and
          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal control over financial reporting.


Date: November 3, 2006                  /s/ Thomas J. Reddish
                                        ----------------------------------------
                                        Thomas J. Reddish
                                        Executive Vice President and Chief
                                        Financial Officer



<PAGE>

Exhibit 32.1

Section 1350 Certification of CEO

In connection with the Quarterly  Report of TriCo  Bancshares (the "Company") on
Form 10-Q for the period ended  September 30, 2006 as filed with the  Securities
and Exchange Commission on the date hereof (the "Report"),  I, Richard P. Smith,
President and Chief Executive  Officer of the Company,  certify,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

        (1)    The Report fully complies with the  requirements of section 13(a)
               or 15(d) of the Securities Exchange Act of 1934; and
        (2)    The information  contained in the Report fairly presents,  in all
               material  respects,   the  financial  condition  and  results  of
               operations of the Company.


          /s/ Richard P. Smith
          -------------------------------------
          Richard P. Smith
          President and Chief Executive Officer

A signed  original of this  written  statement  required by Section 906 has been
provided  to TriCo  Bancshares  and will be  retained  by TriCo  Bancshares  and
furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

Section 1350 Certification of CFO

In connection with the Quarterly  Report of TriCo  Bancshares (the "Company") on
Form 10-Q for the period ended  September 30, 2006 as filed with the  Securities
and Exchange Commission on the date hereof (the "Report"), I, Thomas J. Reddish,
Executive Vice President and Chief  Financial  Officer of the Company,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

        (1)    The Report fully complies with the  requirements of section 13(a)
               or 15(d) of the Securities Exchange Act of 1934; and
        (2)    The information  contained in the Report fairly presents,  in all
               material  respects,   the  financial  condition  and  results  of
               operations of the Company.


          /s/ Thomas J. Reddish
          -------------------------------------
          Thomas J. Reddish
          Executive Vice President and Chief
          Financial Officer

A signed  original of this  written  statement  required by Section 906 has been
provided  to TriCo  Bancshares  and will be  retained  by TriCo  Bancshares  and
furnished to the Securities and Exchange Commission or its staff upon request.
[{"type": "10-Q", "sequence": "1", "filename": "tcb10q3q06.txt", "description": "TCBK10Q3Q06", "secsgml_size_bytes": 171775}]
{"company-data": {"conformed-name": "TRICO BANCSHARES /", "cik": "0000356171", "assigned-sic": "6022", "irs-number": "942792841", "state-of-incorporation": "CA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-10661", "film-number": "061193317"}, "business-address": {"street1": "TRICO BANCSHARES", "street2": "63 CONSTITUTION DRIVE", "city": "CHICO", "state": "CA", "zip": "95973", "phone": "5308980300"}, "mail-address": {"street1": "TRICO BANCSHARES", "street2": "63 CONSTITUTION DRIVE", "city": "CHICO", "state": "CA", "zip": "95973"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q
                  Quarterly Report Pursuant Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For Quarterly Period Ended September 30, 2006     Commission file number 0-10661
----------------------------------------          ------------------------------

                                TRICO BANCSHARES
             (Exact name of registrant as specified in its charter)

           California                                          94-2792841
------------------------------                            -------------------
 (State or other jurisdiction                              (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                  63 Constitution Drive, Chico, California 95973
              ----------------------------------------------------
               (Address of principal executive offices) (Zip code)

                                  530-898-0300
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                            Yes  X        No
                                -----        -----

     Indicate by check mark whether the Registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer" and "large accelerated filer" in Rule 12b-2 of the Act (check one).

Large accelerated filer      Accelerated filer  X   Non-accelerated filer
                       -----                  -----                      -----

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act).

                             Yes           No  X
                                -----        -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:

Title of Class:  Common stock, no par value

Outstanding shares as of November 3, 2006:  15,857,107
TABLE OF CONTENTS

                                                                          Page

Forward Looking Statements                                                  1

PART I - FINANCIAL INFORMATION                                              2

  Item 1 - Financial Statements                                             2

    Notes to Unaudited Condensed Consolidated Financial Statements          6

    Financial Summary                                                      18

  Item 2 - Management's Discussion and Analysis of Financial               19
           Condition and Results of Operations

  Item 3 - Quantitative and Qualitative Disclosures about Market Risk      30

  Item 4 - Controls and Procedures                                         31

PART II - OTHER INFORMATION                                                32

  Item 1 - Legal Proceedings                                               32

  Item 1A - Risk Factors                                                   32

  Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds     32

  Item 4 - Submission of Matters to a Vote of Security Holders             32

  Item 6 - Exhibits                                                        33

  Signatures                                                               35

  Exhibits                                                                 36
FORWARD-LOOKING STATEMENTS

This  report  on Form  10-Q  contains  forward-looking  statements  about  TriCo
Bancshares (the "Company") for which it claims the protection of the safe harbor
provisions  contained in the Private  Securities  Litigation Reform Act of 1995.
These forward-looking statements are based on Management's current knowledge and
belief and include  information  concerning  the  Company's  possible or assumed
future  financial  condition and results of operations.  When you see any of the
words "believes", "expects", "anticipates", "estimates", or similar expressions,
mean making forward-looking  statements.  A number of factors, some of which are
beyond the Company's  ability to predict or control,  could cause future results
to differ  materially  from those  contemplated.  The reader is  directed to the
Company's  annual report on Form 10-K for the year ended  December 31, 2005, and
Part II, Item 1A of this report for further  discussion  of factors  which could
affect the Company's business and cause actual results to differ materially from
those expressed in any forward-looking statement made in this report.

                                       1
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
                                TRICO BANCSHARES
                           CONSOLIDATED BALANCE SHEETS
                  (In thousands, except share data; unaudited)

                                                               At September 30,           At December 31,
                                                            2006               2005             2005
                                                      -------------------------------   -----------------
Assets:
     Cash and due from banks                              $78,281           $85,413          $90,562
     Federal funds sold                                     1,387               218            2,377
                                                      -------------------------------   -----------------
         Cash and cash equivalents                         79,668            85,631           92,939

     Securities available-for-sale                        209,886           271,134          260,278
     Federal Home Loan Bank stock, at cost                  8,206             7,516            7,602
     Loans, net of allowance for loan losses
         of $16,993, $15,796 and $16,226                1,490,166         1,312,294        1,368,809
     Foreclosed assets, net of allowance for losses
         of $180, $180 and $180                                 -                 -                -
     Premises and equipment, net                           21,556            21,223           21,291
     Cash value of life insurance                          42,991            41,519           41,768
     Accrued interest receivable                            8,637             7,080            7,641
     Goodwill                                              15,519            15,519           15,519
     Other intangible assets, net                           3,361             4,373            4,407
     Other assets                                          24,014            20,567           21,021
                                                      -------------------------------   -----------------
         Total Assets                                  $1,904,004        $1,786,856       $1,841,275
                                                      ===============================   =================
Liabilities:
     Deposits:
         Noninterest-bearing demand                      $357,754          $346,456         $368,412
         Interest-bearing                               1,167,420         1,091,843        1,128,385
                                                      -------------------------------   -----------------
         Total deposits                                 1,525,174         1,438,299        1,496,797
     Federal funds purchased                              106,500           103,200           96,800
     Accrued interest payable                               7,341             3,960            4,506
     Reserve for unfunded commitments                       1,849             1,674            1,813
     Other liabilities                                     20,913            20,452           19,238
     Other borrowings                                      35,848            31,711           31,390
     Junior subordinated debt                              41,238            41,238           41,238
                                                      -------------------------------   -----------------
         Total Liabilities                              1,738,863         1,640,534        1,691,782
                                                      -------------------------------   -----------------
Commitments and contingencies
Shareholders' Equity:
Common stock, no par value: 50,000,000 shares authorized;
    issued and outstanding:
         15,857,107 at September 30, 2006                  73,545
         15,728,106 at September 30, 2005                                    71,412
         15,707,835 at December 31, 2005                                                      71,412
Retained earnings                                          95,203            77,448           81,906
Accumulated other comprehensive loss, net                 (3,607)           (2,538)          (3,825)
                                                      -------------------------------   -----------------
         Total Shareholders' Equity                       165,141           146,322          149,493
                                                      -------------------------------   -----------------
Total Liabilities and Shareholders' Equity             $1,904,004        $1,786,856       $1,841,275
                                                      ===============================   =================
See accompanying notes to unaudited condensed consolidated financial statements.

                                       2
TRICO BANCSHARES
                        CONSOLIDATED STATEMENTS OF INCOME
                (In thousands, except per share data; unaudited)

                                               Three months ended September 30,Nine months ended September 30,
                                                    2006            2005       2006           2005
                                               --------------------------------------------------------
Interest and dividend income:
  Loans, including fees                         $28,901         $22,254    $80,525         $62,482
  Debt securities:
  Taxable                                         1,938           2,528      6,548          7,865
  Tax exempt                                        431             468      1,338          1,297
  Dividends                                         144              80        322            218
  Federal funds sold                                  7               4         45             18
                                               --------------------------------------------------------
  Total interest income                        31,421          25,334     88,778         71,880
                                               --------------------------------------------------------
  Interest expense:
  Deposits                                      6,844           3,824     17,707         10,526
  Federal funds purchased                       1,448             696      3,367          1,117
  Other borrowings                                442             351      1,186          1,007
  Junior subordinated debt                        842             648      2,364          1,779
                                               --------------------------------------------------------
  Total interest expense                        9,576           5,519     24,624         14,429
                                               --------------------------------------------------------
  Net interest income                          21,845          19,815     64,154         57,451
                                               --------------------------------------------------------
  Provision for loan losses                       235             947      1,289          1,608
                                               --------------------------------------------------------
  Net interest income after provision for
    loan losses                                21,610          18,868     62,865         55,843
                                               --------------------------------------------------------
  Noninterest income:
  Service charges and fees                      5,056           4,795     14,869         13,362
  Gain on sale of loans                           264             474        875          1,195
  Commissions on sale of non-deposit investment
    products                                      447             535      1,529          1,727
  Increase in cash value of life insurance        420             420      1,223          1,040
  Other                                           462             408      1,132            945
                                               --------------------------------------------------------
  Total noninterest income                      6,649           6,632     19,628         18,269
                                               --------------------------------------------------------
  Noninterest expense:
  Salaries and related benefits                 9,276           8,584     27,050         25,361
  Other                                         7,750           7,096     22,674         20,949
                                               --------------------------------------------------------
  Total noninterest expense                    17,026          15,680     49,724         46,310
                                               --------------------------------------------------------
  Income before income taxes                   11,233           9,820     32,769         27,802
  Provision for income taxes                    4,413           3,859     12,857         10,865
                                               --------------------------------------------------------
  Net income                                   $6,820          $5,961    $19,912        $16,937
                                               ========================================================
  Average shares outstanding               15,855,933      15,687,547 15,797,014     15,706,380
  Diluted average shares outstanding       16,365,858      16,330,035 16,378,796     16,328,489
  Per share data:
  Basic earnings                                $0.43           $0.38      $1.26          $1.08
  Diluted earnings                              $0.42           $0.37      $1.22          $1.04
  Dividends paid                                $0.12           $0.11      $0.36          $0.33

See accompanying notes to unaudited condensed consolidated financial statements.
3
TRICO BANCSHARES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                (In thousands, except per share data; unaudited)

                                                                              Accumulated
                                        Shares of                                Other
                                         Common       Common      Retained   Comprehensive
                                          Stock        Stock      Earnings   (Loss) Income     Total
                                        -------------------------------------------------------------
Balance at December 31, 2004            15,723,317     $70,699     $67,785         ($352)   $138,132
Comprehensive income:                                                                       ---------
Net income                                                          16,937                    16,937
Change in net unrealized gain on
   Securities available for sale, net                                             (2,186)     (2,186)

Total comprehensive income                                                                    14,751
Stock options exercised                    133,289         949                                   949
Tax benefit of stock options exercised                     342                                   342
Repurchase of common stock                (128,500)       (578)     (2,085)                   (2,663)
Dividends paid ($0.33 per share)                                    (5,189)                   (5,189)
                                        -------------------------------------------------------------
Balance at September 30, 2005           15,728,106     $71,412     $77,448       ($2,538)   $146,322
                                        =============================================================

Balance at December 31, 2005            15,707,835     $71,412     $81,906       ($3,825)   $149,493
Comprehensive income:                                                                       ---------
Net income                                                          19,912                    19,912
Change in net unrealized gain on
   Securities available for sale, net                                                218         218
                                                                                            ---------
Total comprehensive income                                                                     20,130
Stock option vesting                                       468                                   468
Stock options exercised                    190,187       1,646                                 1,646
Tax benefit of stock options exercised                     205                                   205
Repurchase of common stock                 (40,915)       (186)       (923)                   (1,109)
Dividends paid ($0.36 per share)                                    (5,692)                   (5,692)
                                        -------------------------------------------------------------
Balance at September 30, 2006           15,857,107     $73,545     $95,203       ($3,607)   $165,141
                                        =============================================================
See accompanying notes to unaudited condensed consolidated financial statements.

                                       4
TRICO BANCSHARES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands; unaudited)

                                                              For the nine months ended September 30,
                                                                     2006               2005
                                                               ------------------------------------
Operating activities:
   Net income                                                      $19,912             $16,937
   Adjustments to reconcile net income to net cash provided
     by operating activities:
       Depreciation of property and equipment, and amortization      2,816               2,818
       Amortization of intangible assets                             1,046               1,035
       Provision for loan losses                                     1,289               1,608
       Amortization of investment securities premium, net              689                 973
       Originations of loans for resale                            (51,959)            (59,861)
       Proceeds from sale of loans originated for resale            52,338              60,396
       Gain on sale of loans                                          (875)             (1,195)
       Amortization of mortgage servicing rights                         -                 490
       Change in market value of mortgage servicing rights            (256)                  -
       Gain on sale of investments                                     (12)                  -
       Loss on disposal of fixed assets                                 27                  95
       Increase in cash value of life insurance                     (1,223)             (1,040)
       Stock option vesting expense                                    468                   -
       Change in:
         Interest receivable                                          (996)               (607)
         Interest payable                                            2,835                 679
         Other assets and liabilities, net                            (880)                234
                                                               ------------------------------------
          Net cash provided by operating activities                  25,219              22,562
                                                               ------------------------------------
   Investing activities:
   Proceeds from maturities of securities available-for-sale        40,208              45,147
   Proceeds from sales of securities available-for-sale             10,780                   -
   Purchases of securities available-for-sale                         (896)            (35,013)
   Purchases of Federal Home Loan Bank stock                          (604)               (735)
   Loan originations and principal collections, net               (122,646)           (155,460)
   Proceeds from sale of premises and equipment                          3                  24
   Purchases of premises and equipment                              (2,715)             (3,853)
                                                               ------------------------------------
     Net cash used by investing activities                         (75,870)           (149,890)
                                                               ------------------------------------
   Financing activities:
   Net increase in deposits                                         28,377              89,466
   Net increase in Federal funds purchased                           9,700              56,800
   Payments of principal on long-term other borrowings                 (44)                (38)
   Net change in short-term other borrowings                         4,502               3,597
   Repurchase of common stock                                            -              (2,663)
   Dividends paid                                                   (5,692)             (5,189)
   Exercise of stock options                                           537                 949
                                                               ------------------------------------
         Net cash provided by financing activities                  37,380             142,922
                                                               ------------------------------------
   Net change in cash and cash equivalents                         (13,271)             15,594
                                                               ------------------------------------
   Cash and cash equivalents and beginning of period                92,939              70,037
                                                               ------------------------------------
   Cash and cash equivalents at end of period                      $79,668             $85,631
                                                               ====================================
   Supplemental disclosure of noncash activities:
   Unrealized loss on securities available for sale                   $377             ($3,772)
   Income tax benefit from stock option exercises                     $205                $342
   Value of common stock tendered, in lieu of cash,
     to pay for exercise of stock options                           $1,109                   -
   Supplemental disclosure of cash flow activity:
   Cash paid for interest expense                                  $21,789             $13,750
   Cash paid for income taxes                                      $15,100             $11,030
See accompanying notes to unaudited condensed consolidated financial statements

                                       5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: General  Summary of  Significant  Accounting  Policies
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and  pursuant  to  the  rules  and  regulations  of  the
Securities and Exchange  Commission.  The results of operations  reflect interim
adjustments,  all of which are of a normal  recurring  nature and which,  in the
opinion of management,  are necessary for a fair presentation of the results for
the  interim  periods  presented.   The  interim  results  are  not  necessarily
indicative of the results expected for the full year. These unaudited  condensed
consolidated financial statements should be read in conjunction with the audited
consolidated  financial  statements  and  accompanying  notes  as well as  other
information  included in the  Company's  Annual Report on Form 10-K for the year
ended December 31, 2005.

Principles of Consolidation
The consolidated  financial  statements include the accounts of the Company, and
its  wholly-owned  subsidiary,  Tri Counties Bank (the "Bank").  All significant
intercompany accounts and transactions have been eliminated in consolidation.

Nature of  Operations
The Company  operates 32 branch  offices and 22 in-store  branch  offices in the
California  counties of Butte,  Contra Costa, Del Norte,  Fresno,  Glenn,  Kern,
Lake, Lassen, Madera,  Mendocino,  Merced, Nevada, Placer,  Sacramento,  Shasta,
Siskiyou,  Stanislaus,  Sutter,  Tehama,  Tulare,  Yolo and Yuba.  The Company's
operating policy since its inception has emphasized retail banking.  Most of the
Company's customers are retail customers and small to medium sized businesses.

Use of Estimates in the  Preparation of Financial  Statements

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  Management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting  period.  On an on-going basis,  the Company  evaluates its
estimates,  including  those  related to the adequacy of the  allowance for loan
losses,  investments,  intangible assets,  income taxes and  contingencies.  The
Company  bases its  estimates  on  historical  experience  and on various  other
assumptions  that are believed to be  reasonable  under the  circumstances,  the
results of which form the basis for making  judgments  about the carrying values
of assets and  liabilities  that are not readily  apparent  from other  sources.
Actual results may differ from these estimates  under  different  assumptions or
conditions.  The  allowance  for loan  losses,  goodwill  and  other  intangible
assessments,  income taxes, and the valuation of mortgage  servicing rights, are
the only accounting estimates that materially affect the Company's  consolidated
financial statements.

Significant Group Concentration of Credit Risk
The Company grants agribusiness,  commercial, consumer, and residential loans to
customers  located  throughout the northern San Joaquin  Valley,  the Sacramento
Valley  and  northern  mountain  regions  of  California.   The  Company  has  a
diversified  loan  portfolio  within  the  business  segments  located  in  this
geographical area.

Cash and Cash  Equivalents
For  purposes  of the  consolidated  statements  of cash  flows,  cash  and cash
equivalents include cash on hand, amounts due from banks and federal funds sold.

Investment  Securities
The Company  classifies its debt and marketable  equity  securities  into one of
three  categories:  trading,  available-for-sale  or  held-to-maturity.  Trading
securities  are bought and held  principally  for the  purpose of selling in the
near term.  Held-to-maturity  securities are those  securities which the Company
has the  ability and intent to hold until  maturity.  All other  securities  not
included in trading or  held-to-maturity  are classified as  available-for-sale.
During the nine months  ended  September  30, 2006,  and  throughout  2005,  the
Company did not have any  securities  classified as either  held-to-maturity  or
trading.

                                       6
Available-for-sale  securities are recorded at fair value.  Unrealized gains and
losses,  net of the related tax effect,  on  available-for-sale  securities  are
reported as a separate  component  of other  accumulated  comprehensive  loss in
shareholders' equity until realized.

Premiums and  discounts  are  amortized or accreted over the life of the related
investment  security  as an  adjustment  to yield using the  effective  interest
method.  Dividend and interest income are recognized when earned. Realized gains
and losses for  securities  are included in earnings  and are derived  using the
specific  identification  method for  determining  the cost of securities  sold.
Unrealized  losses  due to  fluctuations  in fair  value of  securities  held to
maturity  or  available  for sale are  recognized  through  earnings  when it is
determined that an other than temporary decline in value has occurred.

Federal  Home Loan Bank Stock
The Bank is a member of the Federal  Home Loan Bank of San  Francisco  ("FHLB"),
and as a condition of membership,  it is required to purchase stock.  The amount
of FHLB  stock  required  to be  purchased  is based on the  borrowing  capacity
desired by the Bank. While technically  these are considered equity  securities,
there is no market for the FHLB stock.  Therefore,  the shares are considered as
restricted investment securities. Such investment is carried at cost.

Loans Held for Sale
Loans  originated  and intended for sale in the secondary  market are carried at
the  lower  of  aggregate  cost  or  fair  value,  as  determined  by  aggregate
outstanding  commitments from investors of current investor yield  requirements.
Net unrealized losses are recognized through a valuation allowance by charges to
income.  At September  30, 2006 and 2005,  and December 31, 2005,  the Company's
balance of loans held for sale was immaterial.

Mortgage  loans held for sale are  generally  sold with the  mortgage  servicing
rights  retained by the Company.  The carrying  value of mortgage  loans sold is
reduced by the cost allocated to the associated mortgage servicing rights. Gains
or losses on sales of  mortgage  loans are  recognized  based on the  difference
between the selling price and the carrying  value of the related  mortgage loans
sold.

Loans
Loans are reported at the principal amount  outstanding,  net of unearned income
and the allowance for loan losses.  Loan  origination  and  commitment  fees and
certain  direct  loan  origination  costs are  deferred,  and the net  amount is
amortized as an adjustment of the related  loan's yield over the estimated  life
of the loan.  Loans on which the accrual of interest has been  discontinued  are
designated  as  nonaccrual  loans.  Accrual of  interest  on loans is  generally
discontinued  either  when  reasonable  doubt  exists  as to  the  full,  timely
collection  of interest or principal or when a loan becomes  contractually  past
due by 90 days or more with respect to interest or principal.  When loans are 90
days past due, but in Management's  judgment are well secured and in the process
of  collection,  they may be  classified  as  accrual.  When a loan is placed on
nonaccrual  status,  all  interest  previously  accrued  but  not  collected  is
reversed.  Income on such loans is then  recognized only to the extent that cash
is received and where the future  collection of principal is probable.  Interest
accruals are resumed on such loans only when they are brought fully current with
respect to interest and principal and when, in the judgment of  Management,  the
loans are estimated to be fully  collectible  as to both principal and interest.
All impaired loans are classified as nonaccrual loans.

Reserve  for  Unfunded  Commitments

The reserve for unfunded  commitments  is  established  through a provision  for
losses - unfunded  commitments charged to noninterest  expense.  The reserve for
unfunded  commitments is an amount that Management  believes will be adequate to
absorb  probable  losses  inherent in  existing  commitments,  including  unused
portions of  revolving  lines of credits  and other  loans,  standby  letters of
credits,  and unused  deposit  account  overdraft  privilege.  The  reserve  for
unfunded  commitments is based on evaluations of the  collectibility,  and prior
loss experience of unfunded commitments. The evaluations take into consideration
such  factors as changes in the nature and size of the loan  portfolio,  overall
loan portfolio quality, loan concentrations,  specific problem loans and related
unfunded  commitments,  and  current  economic  conditions  that may  affect the
borrower's or depositor's ability to pay.

                                       7
Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans and deposit related overdrafts are charged against the
allowance for loan losses when Management  believes that the  collectibility  of
the  principal  is unlikely  or, with  respect to  consumer  installment  loans,
according to an  established  delinquency  schedule.  The allowance is an amount
that Management  believes will be adequate to absorb probable losses inherent in
existing  loans  and  leases,   based  on  evaluations  of  the  collectibility,
impairment and prior loss experience of loans and leases.  The evaluations  take
into  consideration  such  factors  as  changes  in the  nature  and size of the
portfolio,  overall portfolio  quality,  loan  concentrations,  specific problem
loans, and current economic conditions that may affect the borrower's ability to
pay. The Company defines a loan as impaired when it is probable the Company will
be unable to collect all amounts due according to the  contractual  terms of the
loan  agreement.  Impaired  loans are  measured  based on the  present  value of
expected future cash flows discounted at the loan's original  effective interest
rate. As a practical  expedient,  impairment may be measured based on the loan's
observable  market  price or the fair  value  of the  collateral  if the loan is
collateral  dependent.  When the measure of the  impaired  loan is less than the
recorded  investment in the loan, the impairment is recorded through a valuation
allowance.

Credit  risk is inherent in the  business of lending.  As a result,  the Company
maintains  an  allowance  for loan  losses  to  absorb  losses  inherent  in the
Company's  loan  portfolio.  This is  maintained  through  periodic  charges  to
earnings.  These  charges are shown in the  Consolidated  Income  Statements  as
provision for loan losses. All specifically identifiable and quantifiable losses
are  immediately  charged off against the allowance.  However,  for a variety of
reasons,  not all losses are immediately known to the Company and, of those that
are known,  the full extent of the loss may not be quantifiable at that point in
time.  The balance of the Company's  allowance for loan losses is meant to be an
estimate of these unknown but probable  losses  inherent in the  portfolio.  For
purposes of this discussion, "loans" shall include all loans and lease contracts
that are part of the Company's portfolio.

The Company  formally  assesses  the  adequacy of the  allowance  on a quarterly
basis.  Determination  of the  adequacy is based on ongoing  assessments  of the
probable  risk in the  outstanding  loan  portfolio,  and to a lesser extent the
Company's loan commitments. These assessments include the periodic re-grading of
credits based on changes in their individual  credit  characteristics  including
delinquency,  seasoning,  recent financial performance of the borrower, economic
factors, changes in the interest rate environment,  growth of the portfolio as a
whole or by segment, and other factors as warranted.  Loans are initially graded
when  originated.  They are  re-graded as they are renewed,  when there is a new
loan to the same borrower,  when identified facts demonstrate heightened risk of
nonpayment,  or if they become  delinquent.  Re-grading of larger  problem loans
occur at least quarterly.  Confirmation of the quality of the grading process is
obtained by  independent  credit reviews  conducted by consultants  specifically
hired for this purpose and by various bank regulatory agencies.

The Company's method for assessing the appropriateness of the allowance for loan
losses and the reserve for unfunded commitments includes specific allowances for
identified problem loans and leases as determined by SFAS 114, formula allowance
factors for pools of credits, and allowances for changing  environmental factors
(e.g., interest rates, growth, economic conditions, etc.). Allowance factors for
loan  pools are based on the  previous 5 years  historical  loss  experience  by
product type.  Allowances  for specific  loans are based on SFAS 114 analysis of
individual   credits.   Allowances  for  changing   environmental   factors  are
Management's  best estimate of the probable impact these changes have had on the
loan  portfolio as a whole.  This process is explained in detail in the notes to
the  Company's  Consolidated  Financial  Statements in its Annual Report on Form
10-K for the year ended December 31, 2005.

Based on the current conditions of the loan portfolio,  Management believes that
the  allowance for loan losses and the reserve for unfunded  commitments,  which
collectively  stand at $18,842,000 at September 30, 2006, are adequate to absorb
probable losses  inherent in the Company's loan  portfolio.  No assurance can be
given, however, that adverse economic conditions or other circumstances will not
result in increased losses in the portfolio.

                                       8
The  following  tables  summarize the activity in the allowance for loan losses,
reserve for unfunded  commitments,  and allowance for losses (which is comprised
of the allowance for loan losses and the reserve for unfunded  commitments)  for
the periods indicated (dollars in thousands):
Three months ended             Nine months ended
                                                September 30,                  September 30,
                                           ------------------------------------------------------
                                              2006          2005           2006           2005
                                           ------------------------------------------------------
Allowance for loan losses:
     Balance at beginning of period         $16,893       $14,892         $16,226       $14,525
     Provision for loan losses                  235           947           1,289         1,608
     Loans charged off                         (368)         (479)         (1,289)       (1,287)
     Recoveries of previously
       charged-off loans                        233           436             767           950
                                           ------------------------------------------------------
       Net charge-offs                         (135)          (43)           (522)         (337)
                                           ------------------------------------------------------
     Balance at end of period               $16,993       $15,796         $16,993       $15,796
                                           =====================================================
     Reserve for unfunded commitments:
     Balance at beginning of period          $1,849        $1,671          $1,813        $1,532
     Provision for losses -
       Unfunded commitments                       -             3              36           142
                                           ------------------------------------------------------
     Balance at end of period                $1,849        $1,674          $1,849        $1,674
                                           =====================================================
     Balance at end of period:
     Allowance for loan losses                                            $16,993       $15,796
     Reserve for unfunded commitments                                       1,849         1,674
                                                                        -------------------------
     Allowance for losses                                                 $18,842       $17,470
                                                                        =========================
     As a percentage of total loans:
     Allowance for loan losses                                              1.13%          1.19%
     Reserve for unfunded commitments                                       0.12%          0.13%
                                                                        -------------------------
     Allowance for losses                                                   1.25%          1.32%
                                                                        =========================
Mortgage  Servicing  Rights
Mortgage  servicing  rights (MSRs)  represent  the  Company's  right to a future
stream of cash flows based upon the  contractual  servicing fee associated  with
servicing mortgage loans. Our MSRs arise from residential mortgage loans that we
originate  and sell,  but retain the right to  service  the loans.  For sales of
residential  mortgage  loans, a portion of the cost of  originating  the loan is
allocated to the  servicing  right based on relative fair values of the loan and
the servicing  right.  The net gain from the retention of the servicing right is
included in gain on sale of loans in  noninterest  income when the loan is sold.
Fair  value  is  based  on  market  prices  for  comparable  mortgage  servicing
contracts, when available, or alternatively,  is based on a valuation model that
calculates  the present  value of estimated  future net  servicing  income.  The
valuation model incorporates  assumptions that market  participants would use in
estimating  future  net  servicing  income,  such as the  cost to  service,  the
discount rate, the custodial earnings rate, an inflation rate, ancillary income,
prepayment  speeds and  default  rates and  losses.  MSRs are  included in other
assets. Servicing fees are recorded in noninterest income when earned.

Effective with the Company's early adoption of SFAS 156, beginning as of January
1, 2006 MSRs are carried at fair value,  with changes in fair value  reported in
noninterest  income  in the  period  in which the  change  occurs.  On or before
December  31, 2005,  MSRs were carried at the lower of amortized  cost or market
value.  The  cumulative  effect  related  to the  adoption  of  this  change  in
accounting from lower of amortized cost or market value to fair value on January
1, 2006 was immaterial.

The determination of fair value of our MSRs requires management judgment because
they are not actively traded.  The determination of fair value for MSRs requires
valuation  processes  which combine the use of  discounted  cash flow models and
extensive  analysis  of current  market  data to arrive at an  estimate  of fair
value. The cash flow and prepayment assumptions used in our discounted cash flow
model are based on empirical data drawn from the  historical  performance of our
MSRs,   which  we  believe  are  consistent  with  assumptions  used  by  market
participants  valuing similar MSRs, and from data obtained on the performance of
similar MSRs. The key assumptions used in the valuation of MSRs include mortgage
prepayment  speeds and the discount  rate.  These  variables  can, and generally
will, change from quarter to quarter as market conditions and projected interest
rates change.  The key risks inherent with MSRs are prepayment speed and changes
in interest rates.

                                       9
The following tables summarize the activity in, and the main assumptions we used
to  determine  the fair  value of  mortgage  servicing  rights  for the  periods
indicated (dollars in thousands):

                                        Nine months ended September 30,
                                        ------------------------------
                                              2006         2005
                                        ------------------------------
Mortgage servicing rights:
Balance at beginning of period               $3,638        $3,476
Additions                                       496           659
Amortization                                      -          (490)
Change in fair value                           (256)            -
                                        ------------------------------
Balance at end of period                     $3,878        $3,645
                                        ==============================
Servicing fees received                        $712          $695
Balance of loans serviced at:
     Beginning of period                   $373,163      $368,435
     End of period                         $384,862      $368,622
Weighted-average prepayment speed (CPR)        12.1%         12.3%
Discount rate                                  10.0%         10.0%

Off-Balance Sheet Credit Related Financial Instruments
In the ordinary course of business,  the Company has entered into commitments to
extend credit, including commitments under credit card arrangements,  commercial
letters of credit, and standby letters of credit. Such financial instruments are
recorded when they are funded.

Premises  and  Equipment
Land is carried at cost. Buildings and equipment, including those acquired under
capital  lease,   are  stated  at  cost  less   accumulated   depreciation   and
amortization.  Depreciation  and  amortization  expenses are computed  using the
straight-line  method over the estimated  useful lives of the related  assets or
lease terms.  Asset lives range from 3-10 years for  furniture and equipment and
15-40 years for land improvements and buildings.

Foreclosed Assets
Assets acquired  through,  or in lieu of, loan foreclosure are held for sale and
are initially recorded at fair value at the date of foreclosure,  establishing a
new cost basis.  Subsequent to  foreclosure,  management  periodically  performs
valuations  and the assets are carried at the lower of  carrying  amount or fair
value less cost to sell. Revenue and expenses from operations and changes in the
valuation allowance are included in other noninterest expense.

Goodwill and Other  Intangible  Assets
Goodwill  represents the excess of costs over fair value of assets of businesses
acquired.  Goodwill and other intangible  assets acquired in a purchase business
combination and determined to have an indefinite  useful life are not amortized,
but instead  tested for  impairment at least  annually.  Intangible  assets with
estimable  useful lives are amortized  over their  respective  estimated  useful
lives to their estimated residual values, and reviewed for impairment.

The  Company has  identifiable  intangible  assets  consisting  of core  deposit
premiums and minimum  pension  liability.  Core deposit  premiums are  amortized
using an  accelerated  method  over a period  of ten  years.  Intangible  assets
related to minimum pension  liability are adjusted annually based upon actuarial
estimates.

The following  table  summarizes  the Company's  core deposit  intangibles as of
September 30, 2006 and December 31, 2005.

                                  December 31,                     September 30,
   (Dollar in Thousands)             2005     Additions  Reductions    2006
                                  ----------------------------------------------
   Core deposit intangibles       $13,643           -           -       $13,643
   Accumulated amortization       (10,582)          -     (1,046)       (11,628)
                                  ----------------------------------------------
   Core deposit intangibles, net   $3,061           -     (1,046)        $2,015
                                  ==============================================

                                       10
Core deposit  intangibles are amortized over their expected  useful lives.  Such
lives are  periodically  reassessed  to  determine  if any  amortization  period
adjustments are indicated.

The following table summarizes the Company's  estimated core deposit  intangible
amortization  for each of the five  succeeding  years:

                                        Estimated Core Deposit
                                       Intangible Amortization
                    Years Ended          (Dollar in thousands)
                    -----------       ------------------------
                        2006                   $1,395
                        2007                     $490
                        2008                     $523
                        2009                     $328
                        2010                     $260
                     Thereafter                   $65

The  following  table  summarizes  the  Company's   minimum  pension   liability
intangible as of September 30, 2006 and December 31, 2005.

                                 December 31,                      September 30,
  (Dollar in Thousands)              2005      Additions   Reductions    2006
                                  ----------------------------------------------
  Minimum pension liability
    intangible                      $1,346          -            -      $1,346
                                  ==============================================

Intangible  assets related to minimum  pension  liability are adjusted  annually
based upon actuarial estimates.

The following table summarizes the Company's goodwill intangible as of September
30, 2006 and December 31, 2005.

                                  December 31,                     September 30,
  (Dollar in Thousands)              2005      Additions   Reductions    2006
                                  ----------------------------------------------
   Goodwill                        $15,519          -            -     $15,519
                                  ==============================================

Impairment of Long-Lived Assets and Goodwill
Long-lived  assets,  such as premises and equipment,  and purchased  intangibles
subject to amortization,  are reviewed for impairment whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying amount of an asset to estimated  undiscounted  future
cash flows expected to be generated by the asset.  If the carrying  amount of an
asset  exceeds  its  estimated  future  cash  flows,  an  impairment  charge  is
recognized  by the amount by which the carrying  amount of the asset exceeds the
fair value of the asset. Assets to be disposed of would be separately  presented
in the balance  sheet and reported at the lower of the  carrying  amount or fair
value  less  costs  to sell,  and are no  longer  depreciated.  The  assets  and
liabilities of a disposed  group  classified as held for sale would be presented
separately in the appropriate asset and liability sections of the balance sheet.

On December 31 of each year,  goodwill is tested for  impairment,  and is tested
for impairment  more  frequently if events and  circumstances  indicate that the
asset might be impaired. An impairment loss is recognized to the extent that the
carrying amount exceeds the asset's fair value.  This  determination  is made at
the  reporting  unit  level  and  consists  of two  steps.  First,  the  Company
determines  the fair value of a reporting  unit and  compares it to its carrying
amount.  Second,  if the  carrying  amount of a reporting  unit exceeds its fair
value, an impairment loss is recognized for any excess of the carrying amount of
the reporting unit's goodwill over the implied fair value of that goodwill.  The
implied fair value of goodwill is determined by allocating the fair value of the
reporting unit in a manner similar to a purchase price allocation.  The residual
fair value after this allocation is the implied fair value of the reporting unit
goodwill.

Income Taxes
The  Company's  accounting  for income taxes is based on an asset and  liability
approach.  The Company  recognizes the amount of taxes payable or refundable for
the current  year,  and deferred tax assets and  liabilities  for the future tax
consequences  that have  been  recognized  in its  financial  statements  or tax
returns.  The  measurement  of  tax  assets  and  liabilities  is  based  on the
provisions of enacted tax laws.

                                       11
Stock-Based  Compensation
On  January  1, 2006 the  Company  adopted  Statement  of  Financial  Accounting
Standards No. 123 (revised  2004),  Share-Based  Payment (SFAS 123R),  using the
modified-prospective   transition   method.   Under  this   transition   method,
compensation  cost  recognized  during the nine months ended  September 30, 2006
includes: (a) compensation cost for all share-based awards granted prior to, but
not yet vested as of, January 1, 2006,  based on the  grant-date  fair value and
related service period  estimates in accordance with the original  provisions of
SFAS 123 and (b) compensation cost for all share-based awards granted subsequent
to January 1,  2006,  based on the  grant-date  fair value and  related  service
periods  estimated in accordance  with the  provisions  of SFAS 123R.  Under the
provisions of the modified-prospective  transition method, results for the three
and nine  month  periods  ended  September  30,  2005  have  not been  restated.
Historically,  stock options are the only type of  share-based  award granted by
the Company.

Prior to the adoption of SFAS 123R, the Company used the intrinsic  value method
to account for its stock  option plans (in  accordance  with the  provisions  of
Accounting  Principles Board Opinion No. 25).  Intrinsic value is the difference
between share fair market value and option  exercise  price.  Under this method,
compensation  expense was recognized for awards of options to purchase shares of
common stock to employees under compensatory plans only if the fair market value
of the stock at the option grant date (or other  measurement date, if later) was
greater  than the amount the  employee was required to pay to acquire the stock.
Statement of Financial  Accounting Standards No. 123, Accounting for Stock-Based
Compensation  (SFAS 123),  permitted  companies to continue  using the intrinsic
value  method or to adopt a fair value based  method to account for stock option
plans.  The fair value based method would have resulted in the  recognition,  as
expense over the vesting period, of the fair value of all stock-based  awards on
the date of grant.

SFAS 123R  clarifies  and  expands the  guidance  in SFAS 123 in several  areas,
including  measuring fair value and attributing  compensation  cost to reporting
periods.  SFAS 123R  includes a  requirement  to: (a)  estimate  forfeitures  of
share-based awards at the date of grant, (b) expense  share-based awards granted
to  retirement  eligible  employees  and those  employees  with  non-substantive
non-compete  agreements   immediately,   (c)  attribute  compensation  costs  of
share-based  award grants to the stated  future  vesting  period,  (d) recognize
compensation cost of all share-based awards based upon the grant-date fair value
(including pre-2006 options).

The Company did not recognize  any gain or loss  resulting  from the  cumulative
effect of a change in accounting principle upon adoption of SFAS 123R on January
1, 2006. Based on the stock-based compensation awards outstanding as of December
31,  2005,  for which the  requisite  service  was not fully  rendered  prior to
January 1, 2006, and any subsequent  option grants as of September 30, 2006, the
Company expects to recognize total pre-tax  compensation  cost of  approximately
$1,608,000  related to outstanding  stock option  grants,  of which $468,000 was
recognized in the first nine months of 2006, in accordance  with the  accounting
requirements  of SFAS 123R.  The  after-tax  effect of adopting  SFAS 123R was a
reduction of net income of $326,000 and $0, and a reduction in diluted  earnings
per  share of  $0.02  and $0,  for the  first  nine  months  of 2006  and  2005,
respectively.   Future  levels  of  compensation  cost  recognized   related  to
stock-based   compensation   awards  may  be  impacted  by  new  awards   and/or
modifications, repurchases and cancellations of existing awards before and after
the adoption SFAS 123R.

                                       12
For the three and nine month periods ended September 30, 2005, had  compensation
cost for the Company's option plans been determined using the fair-value  method
of SFAS 123,  the  Company's  net income and  earnings per share would have been
reduced to the pro forma amounts indicated below (in thousands, except per share
amounts):

                                          Three Months Ended   Nine Months Ended
(in thousands, except per share amounts)  September 30, 2005  September 30, 2006
                                          --------------------------------------
Net income                   As reported          $5,961               $16,937
                               Pro forma          $5,865               $16,642
Basic earnings per share     As reported           $0.38                 $1.08
                               Pro forma           $0.37                 $1.06
Diluted earnings per share   As reported           $0.37                 $1.04
                               Pro forma           $0.36                 $1.02
Stock-based employee compensation
   cost, net of related tax effects,
   included in net income    As reported              $0                    $0
                               Pro forma             $96                  $295

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes option pricing.

In May 2001,  the Company  adopted the TriCo  Bancshares  2001 Stock Option Plan
(2001 Plan) covering officers,  employees,  directors of, and consultants to the
Company.  Under the 2001  Plan,  the option  price  cannot be less than the fair
market  value of the  Common  Stock at the date of grant  except  in the case of
substitute options. Options for the 2001 Plan expire on the tenth anniversary of
the  grant  date.   Vesting   schedules  under  the  2001  Plan  are  determined
individually for each grant.

In May 1995,  the Company  adopted the TriCo  Bancshares  1995  Incentive  Stock
Option Plan (1995 Plan) covering key employees.  Under the 1995 Plan, the option
price  cannot be less than the fair market value of the Common Stock at the date
of grant. Options for the 1995 Plan expire on the tenth anniversary of the grant
date. Vesting schedules under the 1995 Plan are determined individually for each
grant.

As of  September  30,  2006,  options  for the  purchase of 416,430 and 0 common
shares remained available for grant under the 2001 and 1995 Plans, respectively.
Shares  issued under the  Company's  option plans are "new issue"  shares rather
than treasury shares.

Stock option activity for the nine months ended September 30, 2006 and 2005 is
summarized in the following tables:

                                                            Weighted    Weighted
                                                             Average     Average
                            Number         Option Price     Exercise  Fair Value
                          Of Shares         Per Share        Price     of Grants
Outstanding at
   December 31, 2005       1,636,762      $5.65  to $20.58   $11.44
     Options granted          87,000     $24.46  to $25.91   $25.16      $7.10
     Options exercised      (190,187)     $6.13  to $17.40    $8.65
     Options forfeited          (994)     $5.90  to  $5.90    $5.90
                           ----------------------------------------
Outstanding at
   September 30, 2006      1,532,581      $5.65 to  $25.91   $12.57
                           ========================================

Outstanding at
   December 31, 2004       1,661,547      $2.62  to $17.40   $10.52
     Options granted         112,000     $19.35  to $20.58   $19.87      $4.30
     Options exercised      (133,289)     $2.62  to $17.40    $7.12
     Options forfeited          (496)     $5.65  to  $5.65    $5.65
                           ----------------------------------------
Outstanding at
   September 30, 2005      1,639,762      $5.37  to $20.58   $11.43
                           ========================================

                                       13
During the nine months ended  September 30, 2006, the intrinsic value of options
exercised  and the  fair  value of  options  that  vested  were  $3,444,000  and
$468,000, respectively. The fair value of options granted during the nine months
ended September 30, 2006 was based on the following average  expectations:  term
of 7.1 years,  volatility of 32.6%, annual rate of quarterly dividends of 1.91%,
and a discount rate of 4.86%.

During the nine months ended  September 30, 2005, the intrinsic value of options
exercised  and the  fair  value of  options  that  vested  were  $1,938,000  and
$492,000, respectively. The fair value of options granted during the nine months
ended  September 30, 2005 was based on the following  expectations:  term of 6.5
years,  volatility of 21.2%,  annual rate of quarterly dividends of 2.22%, and a
discount rate of 3.90%.

The total  intrinsic  value of stock  options  exercised  during the nine months
ended  September 30, 2006 was  $3,444,000 for which no  compensation  costs were
previously recognized nor tax benefits recognized in equity upon issuance.  Cash
received  from the  exercise  of stock  options  during  the nine  months  ended
September 30, 2006 totaled $537,000. In addition, 40,915 shares of the Company's
common  stock with market value of  $1,109,000  were  tendered by optionees  and
repurchased at market value by the Company, in lieu of cash, to exercise options
during the nine months ended  September  30, 2006 as permitted by the  Company's
option plans.

The following table shows the number,  weighted-average  exercise price, and the
weighted  average  remaining  contractual life of options  outstanding,  and the
number  and  weighted-average  exercise  price  of  options  exercisable  as  of
September 30, 2006 by range of exercise price:
Outstanding Options                            Exercisable Options
                      --------------------------------------------------------    -----------------------------
                                                               Weighted-Average
       Range of                           Weighted-Average          Remaining                        Weighted-Average
     Exercise Price           Number        Exercise Price   Contractual Term (yrs.)     Number        Exercise Price
$4-$6                 448            $5.65               3.50                    448            $5.65
          $8-$10             696,040            $8.25               4.24                696,040            $8.25
         $10-$12              40,000           $11.72               6.19                 24,000           $11.72
         $12-$14             373,000           $12.72               6.66                295,000           $12.69
         $16-$18             224,093           $17.38               7.41                147,485           $17.38
         $18-$20              65,000           $19.35               8.40                 26,000           $19.35
         $20-$22              47,000           $20.58               8.65                 44,000           $20.58
         $24-$26              87,000           $25.16               9.77                      -             -
The following table shows the number, weighted-average exercise price, intrinsic
value,  weighted average remaining  contractual life,  average remaining vesting
period,  and remaining  compensation  cost to be  recognized  over the remaining
vesting period of options  exercisable,  options not yet  exercisable  and total
options  outstanding  as of September  30, 2006:
Currently    Currently Not      Total
(dollars in thousands except exercise price)         Exercisable     Exercisable   Outstanding
Number of options                                     1,232,973        299,608      1,532,581
Weighted average exercise price                          $11.14         $18.43         $12.57
Intrinsic value                                         $16,777         $1,892         18,669
Weighted average remaining contractual term (yrs.)         5.48           7.98           5.97
The 299,608 options that are not currently  exercisable as of September 30, 2006
are expected to vest, on a weighted-average basis, over the next 1.68 years, and
the Company is expected to recognize  $1,140,000 of pre-tax  compensation  costs
related to these options as they vest.

                                       14
Earnings Per Share
Basic  earnings per share  represents  income  available to common  shareholders
divided by the  weighted-average  number of common shares outstanding during the
period.  Diluted earnings per share reflects additional common shares that would
have been outstanding if dilutive  potential  common shares had been issued,  as
well as any  adjustments  to income  that would  result from  assumed  issuance.
Potential  common  shares that may be issued by the Company  relate  solely from
outstanding  stock options,  and are determined using the treasury stock method.
In applying  the treasury  method,  the Company uses the entire tax benefit that
would result from the assumed issuance.

Earnings per share have been computed based on the following:
Three Months         Nine Months
                                                            Ended September 30,  Ended September 30,
(in thousands)                                                2006       2005       2006     2005
                                                            ------------------    ----------------
Net income                                                   $6,820     $5,961    $19,912  $16,937

Average number of common shares outstanding                  15,856     15,688     15,797   15,706
Effect of dilutive stock options                                510        642        582      622
                                                            ------------------    ----------------
Average number of common shares outstanding
   used to calculate diluted earnings per share              16,366     16,330     16,379   16,328
                                                            ======================================
There  were  42,000  and 0 options  excluded  from the  computation  of  diluted
earnings per share for the nine month periods ended September 30, 2006 and 2005,
respectively, because the effect of these options was antidilutive.

Comprehensive  Income
Accounting principles generally require that recognized revenue, expenses, gains
and losses be  included in net income.  Although  certain  changes in assets and
liabilities,   such  as  unrealized  gains  and  losses  on   available-for-sale
securities,  are reported as a separate  component of the equity  section of the
balance  sheet,   such  items,   along  with  net  income,   are  components  of
comprehensive income.

The components of other comprehensive income (loss) and related tax effects are
as follows:
Three months ended September 30,     Nine Months Ended September 30,
                                             --------------------------          -------------------------
                                                 2006          2005                 2006           2005
                                             --------------------------          -------------------------
(in thousands)
Unrealized holding gains (losses) on
   available-for-sale securities                $3,490       ($1,846)                $377        ($3,772)
Tax effect                                      (1,468)          776                 (159)         1,586
                                             --------------------------          -------------------------
Unrealized holding gains (losses) on
   available-for-sale securities, net of tax    $2,022       ($1,070)                $218        ($2,186)
                                             ==========================          =========================
The   components  of  accumulated   other   comprehensive   loss,   included  in
shareholders' equity, are as follows:
September 30,      December 31,
                                                                          2006               2005
                                                                     -------------------------------
                                                                              (in thousands)
Net unrealized losses on available-for-sale securities                 ($4,373)            ($4,750)
Tax effect                                                               1,838               1,997
                                                                     -------------------------------
    Unrealized holding losses on
    available-for-sale securities, net of tax                          ($2,535)             (2,753)
                                                                     -------------------------------

Minimum pension liability                                               (1,851)             (1,851)
Tax effect                                                                 779                 779
                                                                     -------------------------------
    Minimum pension liability, net of tax                                (1,072)             (1,072)
                                                                     -------------------------------
Accumulated other comprehensive loss                                   ($3,607)            ($3,825)
                                                                     ===============================
15
Retirement  Plans
The  Company  has  supplemental  retirement  plans  covering  directors  and key
executives.  These  plans  are  non-qualified  defined  benefit  plans  and  are
unsecured and unfunded.  The Company has purchased insurance on the lives of the
participants  and  intends to use the cash  values of these  policies to pay the
retirement obligations.

The following table sets forth the net periodic benefit cost recognized for the
plans:
Three Months         Nine Months
                                                            Ended September 30,  Ended September 30,
(in thousands)                                                2006       2005       2006     2005
                                                              ----       ----       ----     ----
Net pension cost included the following components:
Service cost-benefits earned during the period                $139       $104       $417     $313
Interest cost on projected benefit obligation                  132        134        396      402
Amortization of net obligation at transition                     1         56          2      168
Amortization of prior service cost                              50         24        150       72
Recognized net actuarial loss                                   34          -        102        2
                                                             --------------------------------------
Net periodic pension cost                                     $356       $318     $1,067     $957
                                                             ======================================
During  the  nine  months  ended  September  30,  2006  and  2005,  the  Company
contributed  and paid out as benefits  $409,000 and $393,000,  respectively,  to
participants under the plans. For the year ending December 31, 2006, the Company
expects to contribute and pay out as benefits $530,000 to participants under the
plans.

Recent Accounting Pronouncements
In December 2004, the Financial  Accounting  Standards  Board (FASB) issued FASB
Statement of Financial Accounting Standards No. 123 (revised 2004),  Share-Based
Payment (SFAS 123R),  which replaces SFAS No. 123,  Accounting  for  Stock-Based
Compensation, (SFAS 123) and supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees.  SFAS 123R requires all share-based  payments to employees,
including  grants of employee stock  options,  to be recognized in the financial
statements based on their fair values beginning with the first interim reporting
period of the Company's  fiscal year beginning  after June 15, 2005,  with early
adoption encouraged.  The pro forma disclosures  previously permitted under SFAS
123 no longer will be an alternative  to financial  statement  recognition.  The
Company  adopted  SFAS 123R on  January  1, 2006  using a  modified  version  of
prospective  application  ("modified prospective  application").  Under modified
prospective  application,  as it is applicable to the Company, SFAS 123R applies
to new grants and to grants modified, repurchased, or cancelled after January 1,
2006.  Additionally,  compensation  cost for the portion of grants for which the
requisite  service has not been  rendered  (generally  referring  to  non-vested
grants) that are  outstanding  as of January 1, 2006 must be  recognized  as the
remaining  requisite service is rendered during the period of and/or the periods
after the adoption of SFAS 123R. The attribution of compensation  cost for those
earlier grants will be based on the same method and on the same  grant-date fair
values  previously  determined  for  the  pro  forma  disclosures  required  for
companies that did not adopt the fair value  accounting  method for  stock-based
employee compensation.

The Company did not recognize  any gain or loss  resulting  from the  cumulative
effect of a change in accounting principle upon adoption of SFAS 123R on January
1, 2006. Based on the stock-based compensation awards outstanding as of December
31,  2005,  for which the  requisite  service  was not fully  rendered  prior to
January 1, 2006, and any subsequent  option grants as of September 30, 2006, the
Company expects to recognize total pre-tax  compensation  cost of  approximately
$1,608,000  related to outstanding  stock option  grants,  of which $468,000 was
recognized in the first nine months of 2006, in accordance  with the  accounting
requirements  of SFAS 123R.  The  after-tax  effect of adopting  SFAS 123R was a
reduction of net income of $326,000 and $0, and a reduction in diluted  earnings
per  share of  $0.02  and $0,  for the  first  nine  months  of 2006  and  2005,
respectively.   Future  levels  of  compensation  cost  recognized   related  to
stock-based   compensation   awards  may  be  impacted  by  new  awards   and/or
modifications, repurchases and cancellations of existing awards before and after
the adoption SFAS 123R.

In March 2006, the FASB issued FASB Statement of Financial  Accounting Standards
No. 156,  Accounting for Servicing of Financial Assets,  (SFAS 156) an amendment
of FASB Statement No. 140. SFAS 156 requires all separately-recognized servicing
assets and  liabilities  to be  initially  measured at fair  value,  and permits
companies to elect, on a  class-by-class  basis, to account for servicing assets
and  liabilities on either a lower of cost or market value basis or a fair value
measurement basis.

                                       16
The Company elected to early adopt SFAS 156 as of January 1, 2006 and to measure
residential  mortgage  servicing  rights  (MSRs) at fair value.  At December 31,
2005,  MSRs were  accounted  for at the lower of amortized  cost or market value
basis.  As a result of adopting  SFAS 156,  there was no  adjustment  to opening
retained earnings as of January 1, 2006,  representing the effect of remeasuring
all MSRs that  existed at December  31, 2005 from a lower of  amortized  cost or
market basis to a fair value basis, as this amount was immaterial.

In  September  2006,  the FASB issued FASB  Statement  of  Financial  Accounting
Standards No. 157,  Fair Value  Measurements  (SFAS 157).  SFAS 157 defines fair
value,  establishes a framework for measuring  fair value in generally  accepted
accounting  principles,  and expands  disclosures about fair value measurements.
SFAS 157 is effective  for the Company on January 1, 2008 and is not expected to
have a significant impact on the Company's financial statements.

In  September  2006,  the FASB issued FASB  Statement  of  Financial  Accounting
Standards No. 158,  Employers'  Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statements No. 87, 88 106, and 132(R)
(SFAS  158).  SFAS 158  requires  an employer to  recognize  the  overfunded  or
underfunded  status of  defined  benefit  postretirement  plans as an asset or a
liability in its statement of financial position.  The funded status is measured
as the difference  between plan assets at fair value and the benefit  obligation
(the projected benefit  obligation for pension plans or the accumulated  benefit
obligation for other postretirement benefit plans). An employer is also required
to measure the funded status of a plan as of the date of its year-end  statement
of financial  position  with  changes in the funded  status  recognized  through
comprehensive  income. SFAS 158 also requires certain disclosures  regarding the
effects on net  periodic  benefit  cost for the next fiscal year that arise from
delayed recognition of gains or losses,  prior service costs or credits, and the
transition  asset or  obligation.  The Company will be required to recognize the
funded  status  of its  defined  benefit  postretirement  benefit  plans  in its
financial  statements for the year ended  December 31, 2006. The  requirement to
measure  plan  assets and  benefit  obligations  as of the date of the  year-end
statement  of  financial  position  is  effective  for the  Company's  financial
statements  beginning with the year ended after  December 31, 2008.  SFAS 158 is
not expected to have a significant impact on the Company's financial statements.

In June  2006,  the FASB  issued  FASB  Interpretation  No. 48,  Accounting  for
Uncertainty in Income Taxes, an  interpretation  of FASB Statement 109 (FIN 48).
FIN 48  prescribes a recognition  threshold and a measurement  attribute for the
financial  statement  recognition  and  measurement  of a tax position  taken or
expected  to be taken in a tax return.  Benefits  from tax  positions  should be
recognized in the financial statements only when it is more likely than not that
the tax position will be sustained upon  examination by the  appropriate  taxing
authority  that would have full  knowledge  of all relevant  information.  A tax
position that meets the  more-likely-than-not  recognition threshold is measured
at the largest  amount of benefit that is greater than fifty  percent  likely of
being realized upon ultimate settlement. Tax positions that previously failed to
meet the more-likely-than-not  recognition threshold should be recognized in the
first  subsequent  financial  reporting  period in which that  threshold is met.
Previously recognized tax positions that no longer meet the more-likely-than-not
recognition  threshold should be derecognized in the first subsequent  financial
reporting  period in which that threshold is no longer met. FIN 48 also provides
guidance on the  accounting  for and  disclosure of  unrecognized  tax benefits,
interest and  penalties.  FIN 48 is effective for the Company on January 1, 2007
and is not  expected to have a  significant  impact on the  Company's  financial
statements.

In September  2006,  the U.S.  Securities and Exchange  Commission  issued Staff
Accounting   Bulletin  No.  108,   Considering  the  Effects  of  a  Prior  Year
Misstatements   When   Quantifying   Misstatements  in  Current  Year  Financial
Statements  (SAB  108).  SAB  108  addresses  how  the  effects  of  prior  year
uncorrected  errors  must be  considered  in  quantifying  misstatements  in the
current year financial statements.  The effects of prior year uncorrected errors
include the  potential  accumulation  of improper  amounts  that may result in a
material  misstatement  on the balance  sheet or the  reversal  of prior  period
errors in the  current  period  that  result in a material  misstatement  of the
current period income statement amounts.  Adjustments to current or prior period
financial  statements  would be required in the event that after  application of
various approaches for assessing materiality of a misstatement in current period
financial  statements  and  consideration  of  all  relevant   quantitative  and
qualitative  factors, a misstatement is determined to be material.  SAB 108 will
be applicable to all financial  statements  issued by the Company after November
15, 2006.

Reclassifications
Certain amounts previously  reported in the 2005 financial  statements have been
reclassified to conform to the 2006 presentation.  These  reclassifications  did
not affect previously reported net income or total shareholders' equity.

                                       17
TRICO BANCSHARES
                                Financial Summary
           (dollars in thousands, except per share amounts; unaudited)

                                                       Three months ended            Nine months ended
                                                          September 30,                 September 30,
                                                ------------------------------------------------------------
                                                      2006             2005        2006            2005
                                                ------------------------------------------------------------
Net Interest Income (FTE)                           $22,077          $20,086     $64,903         $58,203
Provision for loan losses                               235              947       1,289           1,608
Noninterest income                                    6,649            6,632      19,628          18,269
Noninterest expense                                  17,026           15,680      49,724          46,310
Provision for income taxes (FTE)                      4,645            4,130      13,606          11,617
                                                ------------------------------------------------------------
     Net income                                      $6,820           $5,961     $19,912         $16,937
                                                ============================================================
Earnings per share:
     Basic                                            $0.43            $0.38       $1.26            $1.08
     Diluted                                          $0.42            $0.37       $1.22            $1.04
Per share:
     Dividends paid                                   $0.12            $0.11       $0.36            $0.33
     Book value at period end                        $10.41            $9.30
     Tangible book value at period end                $9.22            $8.04

Average common shares outstanding                    15,856           15,688      15,797           15,706
Average diluted shares outstanding                   16,366           16,330      16,379           16,328
Shares outstanding at period end                     15,857           15,728
At period end:
     Loans, net                                  $1,490,166       $1,312,294
     Total assets                                 1,904,004        1,786,856
     Total deposits                               1,525,174        1,438,299
     Other borrowings                                35,848           31,711
     Junior subordinated debt                        41,238           41,238
     Shareholders' equity                          $165,141         $146,322
Financial Ratios:
During the period (annualized):
     Return on assets                                 1.45%            1.37%       1.43%            1.34%
     Return on equity                                16.64%           16.26%      16.75%           15.71%
     Net interest margin(1)                           5.19%            5.10%       5.17%            5.12%
     Net loan charge-offs to average loans            0.04%            0.01%       0.05%            0.04%
     Efficiency ratio)                               59.27%           58.69%      58.82%           60.56%
At Period End:
     Equity to assets                                 8.67%            8.19%
     Total capital to risk assets                    11.08%           11.19%
     Allowance for losses to loans(2)                 1.25%            1.32%
(1)  Fully taxable equivalent (FTE)
(2)  Allowance  for losses  includes  allowance  for loan losses and reserve for
     unfunded commitments.

                                       18
Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations

As TriCo  Bancshares (the  "Company") has not commenced any business  operations
independent of Tri Counties Bank (the "Bank"), the following discussion pertains
primarily  to the  Bank.  Average  balances,  including  such  balances  used in
calculating  certain financial ratios, are generally  comprised of average daily
balances  for the  Company.  Within  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations,  interest income and net interest
income are generally presented on a fully tax-equivalent (FTE) basis.

Critical Accounting Policies and Estimates
The Company's  discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States of America.  The preparation of these financial  statements
requires the Company to make  estimates and  judgments  that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent  assets and liabilities.  On an on-going basis, the Company evaluates
its estimates, including those related to the adequacy of the allowance for loan
losses, intangible assets, and contingencies. The Company bases its estimates on
historical  experience and on various other  assumptions that are believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates under different assumptions or conditions. (See caption "Allowance for
Loan Losses" for a more detailed discussion).

Results of Operations
The  following   discussion  and  analysis  is  designed  to  provide  a  better
understanding  of the significant  changes and trends related to the Company and
the  Bank's  financial  condition,   operating  results,   asset  and  liability
management,  liquidity and capital  resources and should be read in  conjunction
with the Consolidated  Financial Statements of the Company and the Notes thereto
in this report.

Following is a summary of the components of fully taxable equivalent ("FTE") net
income for the periods indicated (dollars in thousands):

                                  Three months ended       Nine months ended
                                      September 30,          September 30,
                                  ----------------------------------------------
                                    2006       2005          2006       2005
                                  ----------------------------------------------
Net Interest Income (FTE)          $22,077   $20,086     $64,903       $58,203
Provision for loan losses              235       947       1,289         1,608
Noninterest income                   6,649     6,632      19,628        18,269
Noninterest expense                 17,026    15,680      49,724        46,310
Provision for income taxes (FTE)     4,645     4,130      13,606        11,617
                                   ---------------------------------------------
Net income                          $6,820    $5,961     $19,912       $16,937
                                   =============================================

The Company had quarterly  earnings of  $6,820,000,  or $0.42 per diluted share,
for the three months ended September 30, 2006.  These results  represent a 13.5%
increase from the $0.37 earnings per diluted share reported for the three months
ended  September 30, 2005 on earnings of $5,961,000.  The improvement in results
from the  year-ago  quarter  was due to a  $1,991,000  (9.9%)  increase in fully
tax-equivalent  net  interest  income to  $22,077,000,  and a  $712,000  (75.2%)
decrease in provision for loan losses. These contributing factors were partially
offset by a $1,346,000 (8.6%) increase in noninterest expense to $17,026,000 for
the quarter ended September 30, 2006.

The Company  reported  earnings of $19,912,000,  or $1.22 per diluted share, for
the nine months  ended  September  30,  2006.  These  results  represent a 17.3%
increase from the $1.04  earnings per diluted share reported for the nine months
ended September 30, 2005 on earnings of $16,937,000.  The improvement in results
from the year-ago period was primarily due to a $6,700,000  (11.5%)  increase in
fully  tax-equivalent  net interest  income to $64,903,000,  a $319,000  (19.8%)
decrease in provision  for loan  losses,  and a  $1,359,000  (7.4%)  increase in
noninterest  income to $19,628,000.  These  contributing  factors were partially
offset by a $3,414,000 (7.4%) increase in noninterest expense to $49,724,000 for
the nine months ended September 30, 2006.

                                       19
Net Interest  Income
Following is a summary of the components of net interest  income for the periods
indicated (dollars in thousands):

                                Three months ended             Nine months ended
                                   September 30,                 September 30,
                               -------------------------------------------------
                                  2006       2005             2006        2005
                               -------------------------------------------------
     Interest income          $31,421      $25,334          $88,778     $71,880
     Interest expense          (9,576)      (5,519)         (24,624)    (14,429)
     FTE adjustment               232          271              749         752
                               -------------------------------------------------
     Net interest income(FTE) $22,077      $20,086          $64,903      $58,203
                               =================================================
     Average interest-earning
        assets             $1,701,166   $1,574,392       $1,675,027   $1,517,013

     Net interest margin (FTE)  5.19%        5.10%            5.17%        5.12%

The  Company's  primary  source  of  revenue  is  net  interest  income,  or the
difference  between  interest  income on  interest-earning  assets and  interest
expense in interest-bearing liabilities.

Net interest income (FTE) during the third quarter of 2006 increased  $1,991,000
(9.9%) from the same period in 2005 to $22,077,000. The increase in net interest
income (FTE) was due to a $126,774,000  (8.1%)  increase in average  balances of
interest-earning  assets to $1,701,166,000  and a 0.09% increase in net interest
margin (FTE) to 5.19%.

Net  interest  income  (FTE)  during  the first  nine  months of 2006  increased
$6,700,000 (11.5%) from the same period in 2005 to $64,903,000.  The increase in
net interest income (FTE) was due to a $158,014,000  (10.4%) increase in average
balances of  interest-earning  assets to $1,675,027,000  and a 0.05% increase in
net interest margin (FTE) to 5.17%.

Interest and Fee Income
Interest and fee income (FTE) for the third quarter of 2006 increased $6,048,000
(23.6%) from the third quarter of 2005.  The increase was due to a  $126,774,000
(8.1%) increase in average interest-earning assets to $1,701,166,000 and a 0.93%
increase in the yield on those  average  interest-earning  assets to 7.44%.  The
growth in interest-earning  assets was due to a $192,574,000 (15.0%) increase in
average loan balances to $1,477,551,000  that was partially offset by a decrease
of $65,932,000  (22.8%) in average balances of investments to $223,031,000.  The
increase  in the yield on  average  interest-earning  assets was mainly due to a
0.89%  increase  in yield on loans to 7.82% and a change  in the mix of  earning
assets from lower-earning investments towards higher-earning loans. The increase
in loan yields from the  year-ago  period is mainly due to the effect of a 2.00%
increase in the prime rate of lending from June 30, 2005 to September  30, 2006,
tempered by long-term  lending rates having generally held steady or fallen over
this period, and new prime based loans such as home equity lines of credit being
offered  at  spreads  to the prime  rate  that are  lower  than they were in the
year-ago period.

Interest  and fee income  (FTE) for the nine  months  ended  September  30, 2006
increased $16,895,000 (23.3%) from the same period of 2005. The increase was the
net effect of a $158,014,000 (10.4%) increase in average interest-earning assets
to  $1,675,027,000   and  a  0.75%  increase  in  the  yield  on  those  average
interest-earning  assets to 7.13%. The growth in interest-earning assets was due
to a  $209,490,000  (17.2%)  increase in average loan balances to  1,430,204,000
that was  partially  offset by a  decrease  of  $51,867,000  (17.6%)  in average
balances of  investments to  $243,590,000.  The increase in the yield on average
interest-earning  assets was mainly due to a 0.69% increase in yield on loans to
7.51% and a change in the mix of earning assets from  lower-earning  investments
towards  higher-earning  loans.  The  increase in loan yields from the  year-ago
period is mainly  due to the  effect of a 3.00%  increase  in the prime  rate of
lending  from  December 31, 2004 to  September  30, 2006,  tempered by long-term
lending rates having  generally held steady or fallen over this period,  and new
prime based loans such as home equity lines of credit  being  offered at spreads
to the prime rate that are lower than they were in the year-ago period.

                                       20
Interest Expense
Interest expense increased $4,057,000 (73.5%) to $9,576,000 in the third quarter
of  2006   compared  to  the   year-ago   quarter.   The   average   balance  of
interest-bearing  liabilities increased $104,184,000 (8.4%) to $1,337,596,000 in
the third quarter compared to the year-ago quarter.  The increase in the average
balance of  interest-bearing  liabilities was  concentrated in time deposits (up
$163,878,000  or 43.2%),  and Federal funds purchased (up $30,830,000 or 40.4%).
In  addition,  the average  balance of savings  deposits  decreased  $82,858,000
(18.0%) from the  year-ago  quarter.  The average rate paid on  interest-bearing
liabilities  in the quarter ended  September 30, 2006  increased  1.07% to 2.86%
compared to the year-ago  quarter as a result of  increases  in market  interest
rates and  changes in the mix of  interest-bearing  liabilities  towards  higher
paying time deposits and Federal funds purchased.

Interest  expense  increased  $10,195,000  (70.6%) to  $24,624,000  for the nine
months ended September 30, 2006 compared to $14,429,000 in the year-ago  period.
The  average  balance of  interest-bearing  liabilities  increased  $125,369,000
(10.5%) to $1,315,450,000  for the nine months ended September 30, 2006 compared
to the  year-ago  period.  The  increase  in  interest-bearing  liabilities  was
concentrated  in time  deposits (up  $145,981,000  or 40.5%),  and Federal funds
purchased  (up  $43,593,000  or 94.8%).  In addition,  for the nine months ended
September  30,  2006,  the  average  balance  of  savings   deposits   decreased
$67,297,000  (14.3%)  from  the  year-ago  period.  The  average  rate  paid  on
interest-bearing  liabilities in the nine month period ended  September 30, 2006
increased  0.88%  to 2.50%  compared  to the  year-ago  period  as a  result  of
increases in market  interest  rates and changes in the mix of  interest-bearing
liabilities towards higher paying time deposits and Federal funds purchased.

Net Interest Margin (FTE)
The  following  table  summarizes  the  components of the Company's net interest
margin for the periods indicated:
Three months ended            Nine months ended
                                                September 30,                September 30,
                                         ---------------------------------------------------
                                           2006          2005             2006          2005
                                         ---------------------------------------------------
Yield on interest-earning assets           7.44%        6.51%           7.13%        6.38%
Rate paid on interest-bearing
     Liabilities                           2.86%        1.79%           2.50%        1.62%
                                         ---------------------------------------------------
     Net interest spread                   4.58%        4.72%           4.63%        4.76%
Impact of all other net
     noninterest-bearing funds             0.61%        0.38%           0.54%        0.36%
                                         ---------------------------------------------------
        Net interest margin                5.19%        5.10%           5.17%        5.12%
                                         ===================================================
Net  interest  margin for the three months ended  September  30, 2006  increased
0.09%  compared to the three months ended  September 30, 2005.  This increase in
net  interest  margin was mainly due to an 0.23%  increase  in the impact of net
noninterest-bearing funds to 0.61% from 0.38% in the year-ago three month period
that was  partially  offset by a 0.14%  decrease in net  interest  spread as the
average yield on interest-earning  assets increased 0.93% while the average rate
paid on  interest-bearing  liabilities  increased  1.07% from the year-ago three
month period.

Net interest margin for the nine months ended September 30, 2006 increased 0.05%
compared to the nine months  ended  September  30,  2005.  This  increase in net
interest  margin  was  mainly  due to a  0.18%  increase  in the  impact  of net
noninterest-bearing funds to 0.54% from 0.36% in the year-ago nine month period.
The increase in the impact of net noninterest-bearing funds was partially offset
by  a  0.13%   decrease  in  net  interest   spread  as  the  average  yield  on
interest-earning   assets  increased  0.75%  while  the  average  rate  paid  on
interest-bearing  liabilities  increased  0.88%  from the  year-ago  nine  month
period.

                                       21
Summary  of  Average  Balances,   Yields/Rates  and  Interest  Differential
The following tables present, for the periods indicated,  information  regarding
the Company's consolidated average assets, liabilities and shareholders' equity,
the  amounts  of  interest  income  from  average  interest-earning  assets  and
resulting  yields,  and the amount of interest expense paid on  interest-bearing
liabilities.  Average loan balances include nonperforming loans. Interest income
includes  proceeds  from  loans on  nonaccrual  loans  only to the  extent  cash
payments have been received and applied to interest income. Yields on securities
and  certain  loans have been  adjusted  upward to reflect  the effect of income
thereon  exempt from federal income  taxation at the current  statutory tax rate
(dollars in thousands).
For the three months ended
                                       ----------------------------------------------------------------
                                             September 30, 2006                 September 30, 2005
                                       -----------------------------    -------------------------------
                                                   Interest    Rates               Interest    Rates
                                         Average   Income/    Earned     Average   Income/    Earned
                                         Balance   Expense     Paid      Balance   Expense     Paid
                                       -----------------------------    -------------------------------
Assets:
Loans                                  $1,477,551  $28,901    7.82%     $1,284,977 $22,254     6.93%
Investment securities - taxable           188,021    2,082    4.43%        252,547   2,608     4.13%
Investment securities - nontaxable         35,010      663    7.58%         36,416     739     8.12%
Federal funds sold                            584        7    4.79%            452       4     3.54%
                                       -----------------------------    -------------------------------
Total interest-earning assets           1,701,166   31,653    7.44%      1,574,392  25,605     6.51%
Other assets                              178,863   ------                 169,623  ------
                                       ----------                       ----------
Total assets                           $1,880,029                       $1,744,015
                                       ==========                       ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits         $231,919      118    0.20%       $244,821     124     0.20%
Savings deposits                          377,346      906    0.96%        460,204     861     0.75%
Time deposits                             543,564    5,820    4.28%        379,686   2,839     2.99%
Federal funds purchased                   107,202    1,448    5.40%         76,372     696     3.65%
Other borrowings                           36,327      442    4.87%         31,091     351     4.52%
Junior subordinated debt                   41,238      842    8.17%         41,238     648     6.29%
                                        ---------------------------     -------------------------------
Total interest-bearing liabilities      1,337,596    9,576    2.86%      1,233,412   5,519     1.79%
Noninterest-bearing deposits              348,801   ------                322,920   ------
Other liabilities                          29,713                           27,599
Shareholders' equity                      163,919                          146,660
                                        ---------                       ----------
Total liabilities & shareholders'
  equity                               $1,880,029                       $1,744,015
                                       ==========                       ==========
Net interest spread(1)                                        4.58%                            4.72%
Net interest income and interest margin(2)         $22,077    5.19%                $20,086     5.10%
                                                   ================                =================
(1)  Net interest spread represents the average yield earned on interest-earning
     assets minus the average rate paid on interest-bearing liabilities.
(2)  Net  interest  margin is computed by  calculating  the  difference  between
     interest   income  and   expense,   divided  by  the  average   balance  of
     interest-earning assets.

                                       22
For the nine months ended
                                       ----------------------------------------------------------------
                                             September 30, 2006                 September 30, 2005
                                       -----------------------------    -------------------------------
                                                   Interest    Rates               Interest    Rates
                                         Average   Income/    Earned     Average   Income/    Earned
                                         Balance   Expense     Paid      Balance   Expense     Paid
                                       -----------------------------    -------------------------------
Assets:
Loans                                  $1,430,204  $80,525    7.51%     $1,220,714 $62,482     6.82%
Investment securities - taxable           208,667    6,870    4.39%        261,542   8,083     4.12%
Investment securities - nontaxable         34,923    2,087    7.97%         33,915   2,049     8.06%
Federal funds sold                          1,233       45    4.87%            842      18     2.85%
                                       -----------------------------     ------------------------------
Total interest-earning assets           1,751,027   89,527     7.13%      1,517,013  72,632     6.38%
Other assets                              176,118  -------                  167,481  ------
                                       ----------                        ----------
Total assets                           $1,851,478                        $1,684,494
                                       ==========                        ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits          $240,385      362    0.20%       $241,856     366     0.20%
Savings deposits                           404,099    2,562    0.85%        471,396   2,600     0.74%
Time deposits                              506,593   14,783    3.89%        360,612   7,560     2.80%
Federal funds purchased                     89,592    3,367    5.01%         45,999   1,117     3.24%
Other borrowings                            33,543    1,186    4.71%         28,980   1,007     4.63%
Junior subordinated debt                    41,238    2,364    7.64%         41,238   1,779     5.75%
                                       -----------------------------     ------------------------------
Total interest-bearing liabilities      1,315,450   24,624     2.50%      1,190,081  14,429     1.62%
Noninterest-bearing deposits              348,278  -------                  323,485  ------
Other liabilities                          28,867                            27,205
Shareholders' equity                      158,550                           143,723
                                       ----------                        ----------
Total liabilities and shareholders'
  equity                               $1,851,145                        $1,684,494
                                       ==========                        ==========
Net interest spread(1)                                         4.63%                            4.76%
Net interest income and interest margin(2)         $64,903     5.17%                $58,203     5.12%
                                                   =================                =================
1)   Net interest spread represents the average yield earned on interest-earning
     assets minus the average rate paid on interest-bearing liabilities.
(2)  Net  interest  margin is computed by  calculating  the  difference  between
     interest   income  and   expense,   divided  by  the  average   balance  of
     interest-earning assets.

                                       23
Summary of  Changes in  Interest  Income and  Expense  due to Changes in Average
Asset & Liability Balances and Yields Earned & Rates Paid

The following tables set forth a summary of the changes in interest income (FTE)
and  interest  expense  from  changes in average  asset and  liability  balances
(volume)  and  changes  in average  interest  rates for the  periods  indicated.
Changes  not  solely  attributable  to volume or rates  have been  allocated  in
proportion to the respective volume and rate components (dollars in thousands).

                                           Three months ended September 30, 2006
                                             compared with three month ended
                                                   September 30, 2005
                                           -------------------------------------
                                           Volume           Rate           Total
                                           -------------------------------------
Increase (decrease) in interest income:
Loans                                      $3,336         $3,311         $6,647
Investment securities                        (695)            93           (602)
Federal funds sold                              1              2              3
                                           -------------------------------------
   Total interest-earning assets            2,642          3,406          6,048
                                           -------------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits               (6)             -             (6)
Savings deposits                             (155)           200             45
Time deposits                               1,225          1,756          2,981
Federal funds purchased                       281            471            752
Other borrowings                               59             32             91
Junior subordinated debt                        -            194            194
                                           -------------------------------------
   Total interest-bearing liabilities       1,404          2,653          4,057
                                           -------------------------------------
Increase (decrease) in Net Interest Income $1,238           $753         $1,991
                                           =====================================

                                           Nine  months ended September 30, 2006
                                              compared with nine months ended
                                                    September 30, 2005

                                           Volume           Rate           Total
                                          --------------------------------------
Increase (decrease) in interest income:
Loans                                     $10,715         $7,328        $18,043
Investment securities                      (1,573)           398         (1,175)
Federal funds sold                              8             19             27
                                          --------------------------------------
   Total interest-earning assets            9,150          7,745         16,895
                                          --------------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits               (2)            (2)            (4)
Savings deposits                             (373)           335            (38)
Time deposits                               3,066          4,157          7,223
Federal funds purchased                     1,059          1,191          2,250
Other borrowings                              158             21            179
Junior subordinated debt                        -            585            585
                                          --------------------------------------
   Total interest-bearing liabilities        3,908          6,287         10,195
                                          --------------------------------------
Increase (decrease) in Net Interest Income $5,242         $1,458         $6,700
                                          ======================================

                                       24
Provision for Loan Losses
The  Company  provided  $235,000  for loan  losses in the third  quarter of 2006
versus $947,000 in the third quarter of 2005.  During the third quarter of 2006,
the Company recorded $135,000 of net loan charge offs versus $43,000 of net loan
charge-offs in the year earlier quarter.

The Company  provided  $1,289,000  for loan losses  during the nine months ended
September 30, 2006 versus  $1,608,000 during the nine months ended September 30,
2005.  During the nine months ended  September  30, 2006,  the Company  recorded
$522,000 of net loan charge-offs  versus $337,000 of net loan charge-offs in the
year earlier nine-month period.

Noninterest Income
The following  table  summarizes the  components of  noninterest  income for the
periods indicated (dollars in thousands).
Three months ended             Nine months ended
                                                   September 30,                 September 30,
                                               ----------------------------------------------------
                                                  2006           2005           2006         2005
                                               ----------------------------------------------------
Service charges on deposit accounts         $3,703        $3,653         $10,883       $10,030
     ATM fees and interchange                       927           822           2,641         2,315
     Other service fees                             544           504           1,601         1,507
     Amortization of mortgage servicing rights        -          (184)              -          (490)
     Change in value of mortgage servicing rights  (118)         -               (256)            -
     Gain on sale of loans                          264           474             875         1,195
     Commissions on sale of
       nondeposit investment products               447           535           1,529         1,727
     Increase in cash value of life insurance       420           420           1,223         1,040
     Gain on sale of investments                      -             -              12             -
     Other noninterest income                       462           408           1,120           945
                                               ----------------------------------------------------
     Total noninterest income                    $6,649        $6,632         $19,628       $18,269
                                               ====================================================
Noninterest  income for the third quarter of 2006 increased  $17,000 (0.3%) from
the  year-ago  quarter.  The  increase in  noninterest  income from the year-ago
quarter  was  mainly due to a $50,000  (1.4%)  increase  in  service  charges on
deposit  accounts to  $3,703,000,  a $105,000  (12.8%)  increase in ATM fees and
interchange to $927,000,  and a $66,000  decrease in amortization  (or change in
value) of mortgage  servicing  rights,  that were partially  offset by a $88,000
(16.4%)  decrease in  commissions on sale of nondeposit  investment  products to
$447,000,  and a $210,000 (44.3%) decrease in gain on sale of loans to $264,000.
The increase in service charges on deposit  accounts was primarily due to growth
in customer count. The increase in ATM fees and interchange was due to growth in
customer count and expansion of ATM network as part of new branch openings.  The
decrease in amortization  (or change in value) of mortgage  servicing rights was
due primarily to a slowdown in  residential  mortgage  refinance  activity which
generally  increases  the value of  mortgage  servicing  rights.  The shift from
amortization  of  mortgage  servicing  rights  to  change  in value of  mortgage
servicing  rights is due to the adoption of market value accounting for mortgage
servicing  rights  effective  January 1, 2006 and the  related  change in market
value from July 1, 2006 to September  30, 2006.  The decrease in gain on sale of
loans is due to a slowdown in residential mortgage refinance activity.

Noninterest  income for the nine  months  ended  September  30,  2006  increased
$1,359,000  (7.4%) to $19,628,000  from the same period in 2005. The increase in
noninterest  income from the year-ago  nine months ended  September 30, 2005 was
mainly due to a $853,000 (8.5%) increase in service charges on deposit  accounts
to  $10,883,000,  a $326,000  (14.1%)  increase in ATM fees and  interchange  to
$2,641,000,  a $183,000  (17.6%)  improvement  in increase in cash value of life
insurance to $1,223,000,  and a $234,000  decrease in amortization (or change in
value) of mortgage  servicing  rights,  that were partially offset by a $198,000
(11.5%)  decrease in  commissions on sale of nondeposit  investment  products to
$1,529,000,  and a  $320,000  (26.8%)  decrease  in gain on  sale  of  loans  to
$875,000.  The increase in service charges on deposit accounts was primarily due
to the introduction of a business overdraft  privilege product in March 2005 and
growth in customer  count.  The increase in ATM fees and  interchange was due to
growth in  customer  count and  expansion  of ATM  network as part of new branch
openings.  The  decrease  in  amortization  (or  change in  value)  of  mortgage
servicing  rights  was due  primarily  to a  slowdown  in  residential  mortgage
refinance  activity which  generally  increases the value of mortgage  servicing
rights.  The shift from  amortization of mortgage  servicing rights to change in
value of  mortgage  servicing  rights is due to the  adoption  of  market  value
accounting  for  mortgage  servicing  rights  effective  January 1, 2006 and the
related  change in market value from January 1, 2006 to September 30, 2006.  The
decrease in gain on sale of loans is due to a slowdown in  residential  mortgage
refinance activity.

                                       25
Noninterest Expense
The following  table  summarizes the  components of noninterest  expense for the
periods indicated (dollars in thousands).

                                Three months ended             Nine months ended
                                   September 30,                 September 30,
                             ---------------------------------------------------
                               2006          2005           2006           2005
                             ---------------------------------------------------
     Salaries & benefits      $9,276        $8,584         $27,050       $25,361
     Occupancy                 1,170         1,034           3,298         3,019
     Equipment                 1,018         1,023           3,187         3,092
     Advertising and marketing   655           579           1,628         1,283
     ATM network charges         475           430           1,375         1,209
     Data processing & software  453           419           1,259         1,203
     Telecommunications          380           344           1,165         1,137
     Professional fees           375           287           1,265           968
     Intangible amortization     350           346           1,046         1,035
     Courier service             312           292             925           860
     Postage                     260           263             753           734
     Operational losses           89            25             218            97
     Assessments                  83            80             243           233
     Other                     2,130         1,974           6,312         6,079
                             ---------------------------------------------------
     Total                   $17,026       $15,680         $49,724       $46,310
                             ===================================================
     Average full time
      equivalent staff           630           592             619           577
     Noninterest expense
        to revenue (FTE)      59.27%        58.69%         59.82%         60.56%

Noninterest  expense for the third quarter of 2006 increased  $1,346,000  (8.6%)
compared to the third quarter of 2005.  Salaries and benefits expense  increased
$692,000 (8.1%) to $9,276,000. The increase in salaries and benefits expense was
mainly  due to annual  salary  increases,  and new  employees  at the  Company's
recently  opened branches in  Roseville-Pleasant  Grove  (November  2005),  Yuba
City-Marketplace (January 2006), Folsom-Empire Ranch (March 2006), Natomas-Arena
Blvd (April 2006),  Antelope  (May 2006),  Anderson  (June 2006),  and Elk Grove
(August 2006). Other categories of noninterest  expense including  occupancy and
ATM network charges also increased, in part, due to these newly opened branches.
Advertising  and  marketing  expense  increased  $76,000  (13.1%)  to  $655,000.
Professional  fees increased  $88,000 (30.7%) to $375,000 due to increased audit
fees.

Noninterest  expense  for the nine months  ended  September  30, 2006  increased
$3,414,000 (7.4%) compared to the nine months ended September 30, 2005. Salaries
and benefits expense increased $1,689,000 (6.7%) to $27,050,000. The increase in
salaries and benefits expense was mainly due to annual salary increases, and new
employees at the Company's  recently opened branches in Lincoln (February 2005),
Folsom-East Bidwell (March 2005), Roseville-Pleasant Grove (November 2005), Yuba
City-Marketplace (January 2006), Folsom-Empire Ranch (March 2006), Natomas-Arena
Blvd (April 2006),  Antelope  (May 2006),  Anderson  (June 2006),  and Elk Grove
(August 2006). Other categories of noninterest  expense including  occupancy and
ATM network charges also increased, in part, due to these newly opened branches.
Advertising  and marketing  expense  increased  $345,000  (26.9%) to $1,628,000.
Professional fees increase $297,000 (30.7%) to $1,265,000 due to increased audit
fees and increased legal fees related to loan collection efforts.

Provision for Income Tax
The effective  tax rate for the three months ended  September 30, 2006 was 39.3%
and reflects no change from 39.3% for the three months ended September 30, 2005.
The  effective  tax rate for the nine months ended  September 30, 2006 was 39.2%
and  reflects an increase  from 39.1% for the nine months  ended  September  30,
2005.  The  provision  for income  taxes for all periods  presented is primarily
attributable to the respective  level of earnings and the incidence of allowable
deductions,  particularly  from  increase  in  cash  value  of  life  insurance,
tax-exempt loans and state and municipal securities.

                                       26
Classified Assets
The  Company  closely  monitors  the  markets in which it  conducts  its lending
operations  and  continues  its strategy to control  exposure to loans with high
credit risk.  Asset reviews are performed  using grading  standards and criteria
similar to those employed by bank regulatory  agencies.  Assets receiving lesser
grades  fall  under  the  "classified  assets"  category,   which  includes  all
nonperforming  assets and potential problem loans, and receive an elevated level
of attention to ensure collection.

The following is a summary of classified assets on the dates indicated (dollars
in thousands):

                              At September 30, 2006         At December 31, 2005
                           ------------------------     ------------------------
                              Gross Guaranteed  Net       Gross Guaranteed   Net
                           -----------------------------------------------------
Classified loans           $13,671   $6,654   $7,017    $13,086  $7,110   $5,976
Other classified assets          -        -        -          -       -        -
                           -----------------------------------------------------
Total classified assets    $13,671   $6,654   $7,017    $13,086  $7,110   $5,976
                           =====================================================
Allowance for loan losses
     /classified loans                        242.2%                      271.5%

Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies and its government-sponsored  agencies at September 30, 2006, increased
$1,041,000 (17.4%) to $7,017,000 from $5,976,000 at December 31, 2005.

Nonperforming Loans
Loans are reviewed on an  individual  basis for  reclassification  to nonaccrual
status when any one of the following  occurs:  the loan becomes 90 days past due
as to  interest  or  principal,  the full and timely  collection  of  additional
interest or principal becomes  uncertain,  the loan is classified as doubtful by
internal credit review or bank regulatory  agencies,  a portion of the principal
balance has been charged off, or the Company takes possession of the collateral.
Loans that are placed on nonaccrual even though the borrowers  continue to repay
the  loans as  scheduled  are  classified  as  "performing  nonaccrual"  and are
included  in  total  nonperforming  loans.  The  reclassification  of  loans  as
nonaccrual does not necessarily reflect Management's judgment as to whether they
are collectible.

Interest income is not accrued on loans where Management has determined that the
borrowers  will  be  unable  to  meet  contractual   principal  and/or  interest
obligations,  unless the loan is well secured and in the process of  collection.
When a loan is placed on nonaccrual,  any previously accrued but unpaid interest
is  reversed.  Income on such loans is then  recognized  only to the extent that
cash is received  and where the future  collection  of  principal  is  probable.
Interest  accruals  are resumed on such loans only when they are  brought  fully
current  with  respect to interest and  principal  and when,  in the judgment of
Management, the loans are estimated to be fully collectible as to both principal
and interest.

Interest income on nonaccrual loans, which would have been recognized during the
nine months,  ended  September  30, 2006,  if all such loans had been current in
accordance with their original terms, totaled $895,000. Interest income actually
recognized on these loans during the nine months ended  September 30, 2006 was $
598,000.

The  Company's  policy is to place loans 90 days or more past due on  nonaccrual
status.  In some instances  when a loan is 90 days past due Management  does not
place  it on  nonaccrual  status  because  the loan is well  secured  and in the
process of  collection.  A loan is considered to be in the process of collection
if, based on a probable  specific  event,  it is expected  that the loan will be
repaid or brought current. Generally, this collection period would not exceed 30
days. Loans where the collateral has been repossessed are classified as OREO or,
if the collateral is personal  property,  the loan is classified as other assets
on the Company's consolidated financial statements.

Management considers both the adequacy of the collateral and the other resources
of the  borrower  in  determining  the steps to be taken to  collect  nonaccrual
loans.   Alternatives  that  are  considered  are  foreclosure,   collecting  on
guarantees, restructuring the loan or collection lawsuits.

                                       27
As shown in the following table, total nonperforming assets net of guarantees of
the  U.S.  Government,  including  its  agencies  and  its  government-sponsored
agencies,  increased  $1,562,000  (52.8%)  to  $4,523,000  during the first nine
months of 2006.  Nonperforming assets net of guarantees represent 0.24% of total
assets.  All nonaccrual loans are considered to be impaired when determining the
need  for a  specific  valuation  allowance.  The  Company  continues  to make a
concerted  effort to work problem and potential  problem loans to reduce risk of
loss.
(dollars in thousands):
                                                At September 30, 2006         At December 31, 2005
                                              -------------------------    -------------------------
                                                Gross Guaranteed  Net       Gross Guaranteed   Net
                                              ------------------------------------------------------
Performing nonaccrual loans                   $10,571   $6,511   $4,060     $9,315  $6,933   $2,382
Nonperforming, nonaccrual loans                   463        -      463        579       -      579
                                              ------------------------------------------------------
     Total nonaccrual loans                    11,034    6,511    4,523      9,894   6,933    2,961
Loans 90 days past due and still accruing           -        -        -          -       -        -
                                              ------------------------------------------------------
Total nonperforming loans                      11,034    6,511    4,523      9,894   6,933    2,961
Other real estate owned                             -        -        -          -       -        -
                                              ------------------------------------------------------
Total nonperforming assets                    $11,034   $6,511   $4,523     $9,894  $6,933   $2,961
                                              ======================================================
Nonperforming loans to total loans                                0.30%                        0.21%
Nonperforming assets to total assets                              0.24%                        0.16%
Allowance for loan losses to nonperforming loans                   376%                        548%
Capital Resources
The  current  and  projected  capital  position of the Company and the impact of
capital plans and long-term strategies are reviewed regularly by Management.

On March 11, 2004,  the Board of  Directors  approved an increase in the maximum
number of shares to be repurchased  under the Company's  stock  repurchase  plan
originally announced on July 31, 2003 from 250,000 to 500,000 effective on April
9, 2004,  solely to conform with the two-for-one  stock split effective on April
9, 2004. The 250,000 shares originally authorized for repurchase under this plan
represented  approximately 3.2% of the Company's  approximately 7,852,000 common
shares  outstanding as of July 31, 2003. This plan has no stated expiration date
for the  repurchases,  which  may occur  from time to time as market  conditions
allow.  As of September 30, 2006,  the Company had  repurchased  374,371  shares
under this plan as adjusted for the 2-for-1  stock split paid on April 30, 2004,
which left 125,629 shares available for repurchase under the plan.

The  Company's  primary  capital  resource is  shareholders'  equity,  which was
$165,141,000  at  September  30,  2006.  This amount  represents  an increase of
$15,648,000 from December 31, 2005, the net result of  comprehensive  income for
the period of  $20,130,000,  the  issuance of common  shares via the exercise of
stock  options of  $1,646,000,  the tax  effects of stock  option  exercises  of
$205,000,  and the effect of stock option vesting of $468,000,  partially offset
by the  retirement  of  common  stock  with  value  of  $1,109,000  tendered  by
employees,  in lieu of cash, to exercise  stock  options,  and dividends paid of
$5,692,000.  The Company's ratio of equity to total assets was 8.67%, 8.19%, and
8.12% as of September  30,  2006,  September  30,  2005,  and December 31, 2005,
respectively.

The following  summarizes the ratios of capital to risk-adjusted  assets for the
periods indicated:

                                At September 30,       At            Minimum
                               -----------------   December 31,    Regulatory
                               2006       2005        2005         Requirement
                               ------------------------------------------------
     Tier I Capital            10.07%     10.13%      9.76%           4.00%
     Total Capital             11.08%     11.19%     10.79%           8.00%
     Leverage ratio            10.13%      9.83%      9.72%           4.00%

                                       28
Off-Balance Sheet Items
The Bank has certain  ongoing  commitments  under  operating and capital leases.
These commitments do not significantly impact operating results. As of September
30, 2006  commitments  to extend  credit and  commitments  related to the Bank's
deposit overdraft  privilege product were the Bank's only financial  instruments
with  off-balance  sheet risk.  The Bank has not entered into any  contracts for
financial  derivative   instruments  such  as  futures,   swaps,  options,  etc.
Commitments to extend credit were $622,446,000 and $626,490,000 at September 30,
2006 and December 31, 2005, respectively, and represent 41.3% of the total loans
outstanding at September 30, 2006 versus 45.2% at December 31, 2005. Commitments
related to the Bank's deposit overdraft  privilege  product totaled  $36,560,000
and $35,002,000 at September 30, 2006 and December 31, 2005, respectively.

Certain Contractual Obligations
The following chart summarizes certain contractual obligations of the Company as
of December 31, 2005:
Less than        1-3          3-5       More than
(dollars in thousands)                             Total      one year        years        years       5 years
                                                  -------------------------------------------------------------
Federal funds purchased                            $96,800      $96,800            -            -            -
FHLB loan, fixed rate of 5.41%
   payable on April 7, 2008, callable
   in its entirety by FHLB on a quarterly
   basis beginning April 7, 2003                    20,000            -       20,000            -            -
FHLB loan, fixed rate of 5.35%
   payable on December 9, 2008                       1,500            -        1,500            -            -
FHLB loan, fixed rate of 5.77%
   payable on February 23, 2009                      1,000            -            -        1,000            -
Capital lease obligation on premises,
   effective rate of 13% payable
   monthly in varying amounts
   through December 1, 2009                            293            -            -          293            -
Other collateralized borrowings,
   fixed rate of  1.44% payable on January 3, 2006   8,597        8,597            -            -            -
Junior subordinated debt, adjustable rate
   of three-month LIBOR plus 3.05%,
   callable in whole or in part by the
   Company on a quarterly basis beginning
   October 7, 2008, matures October 7, 2033         20,619            -            -            -       20,619
Junior subordinated debt, adjustable rate
   of three-month LIBOR plus 2.55%,
   callable in whole or in part by the
   Company on a quarterly basis beginning
   July 23, 2009, matures July 23, 2034             20,619            -            -            -       20,619
Operating lease obligations                          7,095        1,522        2,600        1,888        1,085
Deferred compensation(1)                             1,464          264          481          454          265
Supplemental retirement plans(1)                     4,528          477          938          926        2,187
Employment agreements                                  119          119            -            -            -
                                                  -------------------------------------------------------------
Total contractual obligations                     $182,634     $107,779      $25,519       $4,561      $44,775
                                                  =============================================================
(1)  These amounts  represent known certain  payments to participants  under the
     Company's  deferred  compensation  and supplemental  retirement  plans. See
     "Retirement  Plans"  at  Part  I,  Item 1 of  this  report  for  additional
     information related to the Company's deferred compensation and supplemental
     retirement plan liabilities.

                                       29
Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Asset and Liability Management
The goal for managing the assets and  liabilities  of the Company is to maximize
shareholder  value and earnings while  maintaining a high quality  balance sheet
without exposing the Company to undue interest rate risk. The Board of Directors
has overall  responsibility  for the  Company's  interest  rate risk  management
policies.  The Company has an Asset and Liability  Management  Committee  (ALCO)
which establishes and monitors guidelines to control the sensitivity of earnings
to changes in interest rates.

Activities involved in asset/liability management include but are not limited to
lending,  accepting and placing  deposits,  investing in securities  and issuing
debt.   Interest  rate  risk  is  the  primary  market  risk   associated   with
asset/liability  management.  Sensitivity  of earnings to interest  rate changes
arises when yields on assets change in a different time period or in a different
amount from that of interest  costs on  liabilities.  To mitigate  interest rate
risk, the structure of the balance sheet is managed with the goal that movements
of interest  rates on assets and  liabilities  are  correlated and contribute to
earnings  even in  periods  of  volatile  interest  rates.  The  asset/liability
management  policy  sets  limits on the  acceptable  amount of  variance  in net
interest margin,  net income and market value of equity under changing  interest
environments.  Market value of equity is the net present value of estimated cash
flows from the Company's  assets,  liabilities and off-balance  sheet items. The
Company uses simulation  models to forecast net interest margin,  net income and
market value of equity.

Simulation of net interest  margin,  net income and market value of equity under
various  interest  rate  scenarios is the primary tool used to measure  interest
rate risk. Using computer-modeling  techniques,  the Company is able to estimate
the potential  impact of changing  interest  rates on net interest  margin,  net
income and market value of equity.  A balance sheet  forecast is prepared  using
inputs  of  actual  loan,   securities  and  interest-bearing   liability  (i.e.
deposits/borrowings) positions as the beginning base.

In the simulation of net interest  margin and net income under various  interest
rate scenarios,  the forecast balance sheet is processed  against seven interest
rate  scenarios.  These  seven  interest  rate  scenarios  include  a flat  rate
scenario,  which assumes  interest  rates are  unchanged in the future,  and six
additional rate ramp scenarios ranging from +300 to -300 basis points around the
flat scenario in 100 basis point  increments.  These ramp scenarios  assume that
interest  rates  increase  or  decrease  evenly  (in a  "ramp"  fashion)  over a
twelve-month period and remain at the new levels beyond twelve months.

In the  simulation  of  market  value of  equity  under  various  interest  rate
scenarios,  the forecast balance sheet is processed  against seven interest rate
scenarios.  These seven interest rate  scenarios  include the flat rate scenario
described  above,  and six additional rate shock scenarios  ranging from +300 to
-300 basis points around the flat scenario in 100 basis point increments.  These
rate shock scenarios assume that interest rates increase or decrease immediately
(in a "shock" fashion) and remain at the new level in the future.

At September 30, 2006, the results of the simulations  noted above indicate that
given a "flat"  balance  sheet  scenario,  and if deposit  rates  track  general
interest  rate changes by  approximately  50%, the  Company's  balance  sheet is
slightly  liability  sensitive.  "Liability  sensitive"  implies  that  earnings
decrease when interest rates rise,  and increase when interest  rates  decrease.
The  magnitude of all the  simulation  results  noted above is within the Bank's
policy guidelines. The asset liability management policy limits aggregate market
risk, as measured in this fashion,  to an acceptable level within the context of
risk-return trade-offs.

The simulation  results noted above do not incorporate  any management  actions,
which might  moderate the negative  consequences  of interest  rate  deviations.
Therefore,  they do not reflect likely actual results, but serve as conservative
estimates of interest rate risk.

At  September  30,  2006 and  2005,  the  Company  had no  derivative  financial
instruments.

                                       30
Liquidity
The  Company's  principal  source of asset  liquidity is federal  funds sold and
marketable  investment  securities  available  for sale.  At September 30, 2006,
federal  funds  sold  and  investment  securities  available  for  sale  totaled
$211,273,000,  representing a decrease of $51,382,000  (19.6%) from December 31,
2005,  and a decrease  of  $60,079,000  (22.1%)  from  September  30,  2005.  In
addition,   the  Company  generates  additional  liquidity  from  its  operating
activities.  The  Company's  profitability  during the first nine months of 2006
generated  cash flows from  operations of  $25,219,000  compared to  $22,562,000
during the first nine months of 2005.  Additional  cash flows may be provided by
financing  activities,  primarily the acceptance of deposits and borrowings from
banks.  Maturities and sales of investment  securities  produced cash inflows of
$40,208,000 and $10,780,000 respectively, during the nine months ended September
30, 2006 compared to $45,147,000 and $0, respectively, for the nine months ended
September 30, 2005. During the nine months ended September 30, 2006, the Company
invested   $896,000  and   $122,646,000  in  securities  and  net  loan  growth,
respectively,  compared to $35,013,000  and  $155,460,000  in securities and net
loan growth,  respectively,  during the first nine months of 2005. These changes
in  investment  and loan  balances  contributed  to net cash used for  investing
activities  of  $75,870,000  during the nine months  ended  September  30, 2006,
compared to net cash used for investing  activities of  $149,890,000  during the
nine months ended September 30, 2005.  Financing activities provided net cash of
$37,380,000  during the nine months ended  September  30, 2006,  compared to net
cash  provided by financing  activities of  $142,922,000  during the nine months
ended  September  30,  2005.   Increases  in  deposit  balances   accounted  for
$28,377,000 and $89,466,000 of financing sources of funds, respectively,  during
the nine months ended September 30, 2006 and 2005,  respectively.  Federal funds
borrowed  increased  $9,700,000 and $56,800,000  during the first nine months of
2006 and 2005,  respectively.  Short-term other borrowings  increased $4,502,000
and  $3,597,000  during  the nine  months  ended  September  30,  2006 and 2005,
respectively.  Dividends paid used  $5,692,000 and $5,189,000 of cash during the
nine months ended  September  30, 2006 and  September  30,  2005,  respectively.
Repurchase of common stock used  $2,663,000 of cash during the nine months ended
September  30, 2005.  Also,  the  Company's  liquidity is dependent on dividends
received  from  the  Bank.  Dividends  from  the Bank  are  subject  to  certain
regulatory restrictions.

Item 4.  Controls and Procedures
The Chief Executive  Officer,  Richard Smith,  and the Chief Financial  Officer,
Thomas Reddish, evaluated the effectiveness of the Company's disclosure controls
and  procedures  as of September  30, 2006  ("Evaluation  Date").  Based on that
evaluation,  they  concluded  that  as of  the  Evaluation  Date  the  Company's
disclosure  controls and procedures are effective to allow timely  communication
to them of  information  relating  to the  Company  and the Bank  required to be
disclosed in its filings with the  Securities  and Exchange  Commission  ("SEC")
under  the  Securities  Exchange  Act of  1934,  as  amended  ("Exchange  Act").
Disclosure  controls and  procedures are Company  controls and other  procedures
that are  designed to ensure that  information  required to be  disclosed by the
Company  in the  reports  that it files  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms.

No changes in the Company's  internal control over financial  reporting occurred
during  the first  nine  months of 2006 that have  materially  affected,  or are
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.

                                       31
PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

Due to the nature of the banking business, the Bank is at times party to various
legal actions;  all such actions are of a routine nature and arise in the normal
course of business of the Bank.

Item 1A - Risk Factors

There have been no material changes to the risk factors previously  disclosed in
Item 1A to Part I of our Annual Report on Form 10-K for the year ended  December
31, 2005.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows information concerning the common stock repurchased by
the Company  during the third quarter of 2006  pursuant to the  Company's  stock
repurchase plan  originally  announced on July 31, 2003, as amended on March 11,
2004, to conform with the Company's  two-for-one  stock split effective on April
9, 2004,  which is discussed in more detail under  "Capital  Resources"  in this
report:
Period          (a) Total number    (b) Average price   (c) Total number of     (d) Maximum number
                of Shares purchased  paid per share     shares purchased as     of shares that may yet
                                                        part of publicly        be purchased under the
                                                        announced plans or      plans or programs
                                                        programs
-----------------------------------------------------------------------------------------------------------
July 1-31, 2006             -              -                        -                 125,629
Aug. 1-31, 2006             -              -                        -                 125,629
Sep. 1-30, 2006             -              -                        -                 125,629
-----------------------------------------------------------------------------------------------------------
Total                       -              -                        -                 125,629
32
Item 6 - Exhibits

     3.1*      Restated  Articles of  Incorporation  dated May 9, 2003, filed as
               Exhibit  3.1 to  TriCo's  Quarterly  Report  on Form 10-Q for the
               quarter ended March 31, 2003.

     3.2*      Bylaws of TriCo Bancshares,  as amended,  filed as Exhibit 3.2 to
               TriCo's Form S-4  Registration  Statement  dated January 16, 2003
               (No. 333-102546).

     4*        Certificate of  Determination  of Preferences of Series AA Junior
               Participating  Preferred  Stock  filed as Exhibit  3.3 to TriCo's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2001.

    10.1*      Rights  Agreement  dated June 25, 2001,  between TriCo and Mellon
               Investor  Services  LLC filed as  Exhibit 1 to  TriCo's  Form 8-A
               dated July 25, 2001.

    10.2*      Form of  Change of  Control  Agreement  dated  August  25,  2005,
               between  TriCo  and  each of Bruce  Belton,  Craig  Carney,  Gary
               Coelho, W.R. Hagstrom,  Andrew Mastorakis,  Rick Miller,  Richard
               O'Sullivan, Thomas Reddish, and Ray Rios filed as Exhibit 10.2 to
               TriCo's  Quarterly  Report  on Form  10-Q for the  quarter  ended
               September 30, 2005.

    10.3*      TriCo's 1995 Incentive  Stock Option Plan filed as Exhibit 4.1 to
               TriCo's  Form S-8  Registration  Statement  dated August 23, 1995
               (No. 33-62063).

    10.4*      TriCo's 2001 Stock  Option Plan as amended  filed as Exhibit 10.7
               to TriCo's  Quarterly  Report on Form 10-Q for the quarter  ended
               June 30, 2005.

    10.5*      Amended  Employment  Agreement  between  TriCo and Richard  Smith
               dated as of August  23,  2005  filed as  Exhibit  10.8 to TriCo's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2005.

    10.6*      Tri Counties Bank Executive  Deferred  Compensation Plan restated
               April 1,  1992 and  January  1,  2005  filed as  Exhibit  10.9 to
               TriCo's  Quarterly  Report  on Form  10-Q for the  quarter  ended
               September 30, 2005.

    10.7*      Tri  Counties  Bank  Deferred  Compensation  Plan  for  Directors
               effective  January  1, 2005  filed as  Exhibit  10.10 to  TriCo's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2005.

    10.8*      2005 Tri Counties Bank Deferred Compensation Plan effective as of
               January  1, 2005  filed as  Exhibit  10.11 to  TriCo's  Quarterly
               Report on Form 10-Q for the quarter ended September 30,2005.

    10.9*      Tri Counties  Bank  Supplemental  Retirement  Plan for  Directors
               dated September 1, 1987, as restated January 1, 2001, and amended
               and  restated  January 1, 2004 filed as Exhibit  10.12 to TriCo's
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               2004.

    10.10*     2004 TriCo Bancshares  Supplemental Retirement Plan for Directors
               effective  January  1, 2004  filed as  Exhibit  10.13 to  TriCo's
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               2004.

    10.11*     Tri  Counties  Bank   Supplemental   Executive   Retirement  Plan
               effective  September 1, 1987, as amended and restated  January 1,
               2004 filed as Exhibit 10.14 to TriCo's  Quarterly  Report on Form
               10-Q for the quarter ended June 30, 2004.

                                      33
10.12*     2004 TriCo  Bancshares  Supplemental  Executive  Retirement  Plan
               effective  January  1, 2004  filed as  Exhibit  10.15 to  TriCo's
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               2004.

    10.13*     Form of Joint  Beneficiary  Agreement  effective  March 31,  2003
               between  Tri  Counties  Bank and each of  Craig  Carney,  Richard
               Miller,  Andrew Mastorakis,  Richard O'Sullivan,  Thomas Reddish,
               and Richard  Smith,  filed as Exhibit 10.14 to TriCo's  Quarterly
               Report on Form 10-Q for the quarter ended September 30, 2003.

    10.14*     Form of Joint  Beneficiary  Agreement  effective  March 31,  2003
               between Tri Counties Bank and each of Don Amaral,  William Casey,
               Craig Compton,  John Hasbrook,  Michael  Koehnen,  Donald Murphy,
               Carroll Taresh,  and Alex  Vereshagin,  filed as Exhibit 10.15 to
               TriCo's  Quarterly  Report  on Form  10-Q for the  quarter  ended
               September 30, 2003.

    10.15*     Form of  Tri-Counties  Bank  Executive  Long Term Care  Agreement
               effective  June 10, 2003  between Tri  Counties  Bank and each of
               Craig  Carney,   Andrew  Mastorakis,   Richard  Miller,   Richard
               O'Sullivan, and Thomas Reddish, filed as Exhibit 10.16 to TriCo's
               Quarterly Report on Form 10-Q for the quarter ended September 30,
               2003.

    10.16*     Form of  Tri-Counties  Bank  Director  Long Term  Care  Agreement
               effective June 10, 2003 between Tri Counties Bank and each of Don
               Amaral,  William  Casey,  Craig Compton,  John Hasbrook,  Michael
               Koehnen,  Donald Murphy,  Carroll Taresh,  and Alex  Verischagin,
               filed as Exhibit 10.17 to TriCo's  Quarterly  Report on Form 10-Q
               for the quarter ended September 30, 2003.

    10.17*     Form of  Indemnification  Agreement between TriCo  Bancshares/Tri
               Counties Bank and each of the  directors of TriCo  Bancshares/Tri
               Counties  Bank  effective on the date that each director is first
               elected,  filed as Exhibit 10.18 to TriCo'S Annual Report on Form
               10-K for the year ended December 31, 2003.

    10.18*     Form of  Indemnification  Agreement between TriCo  Bancshares/Tri
               Counties Bank and each of Craig  Carney,  W.R.  Hagstrom,  Andrew
               Mastorakis, Rick Miller, Richard O'Sullivan,  Thomas Reddish, Ray
               Rios,  and  Richard  Smith  filed as  Exhibit  10.21  to  TriCo's
               Quarterly  Report on Form  10-Q for the  quarter  ended  June 30,
               2004.

    21.1       Tri  Counties  Bank,  a  California  banking  corporation,  TriCo
               Capital  Trust I, a Delaware  business  trust,  and TriCo Capital
               Trust II, a Delaware business trust, are the only subsidiaries of
               Registrant

    31.1       Rule 13a-14(a)/15d-14(a) Certification of CEO
    31.2       Rule 13a-14(a)/15d-14(a) Certification of CFO

    32.1       Section 1350 Certification of CEO
    32.2       Section 1350 Certification of CFO

       * Previously filed and incorporated by reference.

                                      34
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 hereunto duly authorized.

                                     TRICO BANCSHARES
                                       (Registrant)

Date:  November 3, 2006              /s/ Thomas J. Reddish
                                     -----------------------------------
                                     Thomas J. Reddish
                                     Executive Vice President and
                                     Chief Financial Officer

                                      35
Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification of CEO

I, Richard P. Smith, certify that;

    1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  TriCo
          Bancshares;
    2.    Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;
    3.    Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;
   4.     The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in  Exchange  Act Rules  13a-15 and  15d-15(e))  and  internal
          control  over  financial  reporting  (as defined in Exchange Act Rules
          13a-15(f) and 15d-15(f)) for the registrant and we have:
          a.   Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               registrant,  including its consolidated subsidiary, is made known
               to us by others within those  entities,  particularly  during the
               period in which this quarterly report is being prepared;
          b.   Designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;
          c.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and procedures  and presented in this  quarterly  report
               our  conclusions   about  the  effectiveness  of  the  disclosure
               controls and  procedures,  as of the end of the period covered by
               this quarterly report based on such evaluation; and
          d.   Disclosed in this report any change in the registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               registrant's  most  recent  fiscal  quarter  that has  materially
               affected,  or is  reasonably  likely to  materially  affect,  the
               registrant's internal control over financial reporting;
    5.    The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation  of  internal  control  over  financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors;
          a.   All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability to record, process,  summarize and report financial data;
               and
          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal control over financial reporting.

Date: November 3, 2006                  /s/ Richard P. Smith
                                        ----------------------------------------
                                        Richard P. Smith
                                        President and Chief Executive Officer
Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification of CFO

I, Thomas J. Reddish, certify that;

    1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  TriCo
          Bancshares;
    2.    Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;
    3.    Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;
    4.    The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in  Exchange  Act Rules  13a-15 and  15d-15(e))  and  internal
          control  over  financial  reporting  (as defined in Exchange Act Rules
          13a-15(f) and 15d-15(f)) for the registrant and we have:
          a.   Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               registrant,  including its consolidated subsidiary, is made known
               to us by others within those  entities,  particularly  during the
               period in which this quarterly report is being prepared;
          b.   Designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;
          c.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and procedures  and presented in this  quarterly  report
               our  conclusions   about  the  effectiveness  of  the  disclosure
               controls and  procedures,  as of the end of the period covered by
               this quarterly report based on such evaluation; and
          d.   Disclosed in this report any change in the registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               registrant's  most  recent  fiscal  quarter  that has  materially
               affected,  or is  reasonably  likely to  materially  affect,  the
               registrant's internal control over financial reporting;
    5.    The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation  of  internal  control  over  financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors;
          a.   All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability to record, process,  summarize and report financial data;
               and
          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal control over financial reporting.

Date: November 3, 2006                  /s/ Thomas J. Reddish
                                        ----------------------------------------
                                        Thomas J. Reddish
                                        Executive Vice President and Chief
                                        Financial Officer
Exhibit 32.1

Section 1350 Certification of CEO

In connection with the Quarterly  Report of TriCo  Bancshares (the "Company") on
Form 10-Q for the period ended  September 30, 2006 as filed with the  Securities
and Exchange Commission on the date hereof (the "Report"),  I, Richard P. Smith,
President and Chief Executive  Officer of the Company,  certify,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

        (1)    The Report fully complies with the  requirements of section 13(a)
               or 15(d) of the Securities Exchange Act of 1934; and
        (2)    The information  contained in the Report fairly presents,  in all
               material  respects,   the  financial  condition  and  results  of
               operations of the Company.

          /s/ Richard P. Smith
          -------------------------------------
          Richard P. Smith
          President and Chief Executive Officer

A signed  original of this  written  statement  required by Section 906 has been
provided  to TriCo  Bancshares  and will be  retained  by TriCo  Bancshares  and
furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

Section 1350 Certification of CFO

In connection with the Quarterly  Report of TriCo  Bancshares (the "Company") on
Form 10-Q for the period ended  September 30, 2006 as filed with the  Securities
and Exchange Commission on the date hereof (the "Report"), I, Thomas J. Reddish,
Executive Vice President and Chief  Financial  Officer of the Company,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

        (1)    The Report fully complies with the  requirements of section 13(a)
               or 15(d) of the Securities Exchange Act of 1934; and
        (2)    The information  contained in the Report fairly presents,  in all
               material  respects,   the  financial  condition  and  results  of
               operations of the Company.

          /s/ Thomas J. Reddish
          -------------------------------------
          Thomas J. Reddish
          Executive Vice President and Chief
          Financial Officer

A signed  original of this  written  statement  required by Section 906 has been
provided  to TriCo  Bancshares  and will be  retained  by TriCo  Bancshares  and
furnished to the Securities and Exchange Commission or its staff upon request.