BSRR
$25.68
Sierra Bancorp
($1.38)
(5.10%)
Earnings Details
3rd Quarter September 2021
Monday, October 25, 2021 8:01:00 AM
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Summary

Sierra Bancorp (BSRR) Recent Earnings

Sierra Bancorp (BSRR) reported 3rd Quarter September 2021 earnings of $0.69 per share on revenue of $35.2 million. The consensus earnings estimate was $0.64 per share on revenue of $33.8 million. Revenue fell 2.7% compared to the same quarter a year ago.

Sierra Bancorp is a bank holding company, which through Bank of the Sierra, its bank, offers retail and commercial banking services in the central and southern sections of California' San Joaquin Valley.

Results
Reported Earnings
$0.69
Earnings Whisper
-
Consensus Estimate
$0.64
Reported Revenue
$35.2 Mil
Revenue Estimate
$33.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Sierra Bancorp Announces Quarterly and Year to Date Earnings

  • Completed $50.0 million issuance of ten-year fixed-to-floating subordinated debentures at 3.25% during the quarter.
  • Net income for the first nine months of 2021 increased $6.9 million, or 26%, as compared to the same period in 2020.
  • Return on average assets for the first nine months of 2021 improved to 1.36%, as compared to 1.26% for the same period in 2020.
  • Deposit growth of $44.7 million, or 2%, during the third quarter of 2021 and $196.0 million, or 7%, for the first nine months of 2021.

PORTERVILLE, Calif.--(BUSINESS WIRE)--Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the three- and nine-month periods ended September 30, 2021. Sierra Bancorp reported consolidated net income of $10.6 million, or $0.69 per diluted share, for the third quarter of 2021, compared to $10.4 million, or $0.67 per diluted share in the third quarter of 2020.

For the first nine months of 2021, the Company recognized net income of $33.4 million, or $2.17 per diluted share, as compared to $26.5 million, or $1.73 per diluted share, for the same period in 2020. The Company’s financial performance metrics for the first nine months of 2021 include an annualized return on average assets and a return on average equity of 1.36% and 12.60%, respectively, compared to 1.26% and 10.90%, respectively, for the same period in 2020.

“The most effective way to do it, is to do it.” Amelia Earhart

“We are proud of our robust earnings in the third quarter, which helped the Bank achieve its strongest net income for a nine-month period in its history,” stated Kevin McPhaill, President and CEO. “Our continued efforts in both core deposit and diversified earning asset generation during 2021 have led to overall balance sheet growth. This success is a result of our banking team’s determination and perseverance. We are excited and ready for opportunities in the fourth quarter and next year!” McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the third quarter of 2020)

  • Net income increased $0.3 million to $10.6 million, primarily due to a $0.6 million negative provision for loan and lease losses in the third quarter of 2021 as compared to a provision for loan and lease losses of $2.35 million for the same period in 2020. Compared to 2020, this decrease in provision is attributable to the impact of continued improvements in the overall economy and lower uncertainty, a reduction in historical loss rates, a decline in specific reserves on impaired loans, net loan recoveries in 2021, a change in the mix of loans, and lower outstanding balances of net loans and leases.
  • Net interest income decreased by $1.4 million mostly due to a 54 bps decline in the yield on earning assets and a shift in mix due to higher levels of cash invested overnight with the Federal Reserve Bank.
  • Noninterest income increased $0.4 million or 6% primarily due to increases in checkcard interchange fees from increased usage.
  • Noninterest expense increased by $1.6 million, due mostly to a $0.9 million increase in salaries, a $0.4 million increase in checkcard processing costs, and a $0.5 million increase in legal expenses.

Year to-Date Changes (comparisons to the first nine-months of 2020)

  • Net income increased $6.9 million, or 26%. The most significant line-item changes were a $8.8 million decrease in the provision for loan and lease losses, and an increase of $6.5 million or 8% in net interest income, due mostly to higher average loan balances and a continued favorable deposit mix.
  • Noninterest income increased by $0.9 million, or 4%, due to checkcard interchange fees, increases in BOLI income, and increases in the fair market value of equity securities partially offset by the fact that the third quarter of 2020 had certain nonrecurring gains on the sales of investments, and other assets that did not reoccur in the third quarter of 2021.
  • Noninterest expense increased $6.2 million, or 11% due mostly to the increases in salary expense, data processing, checkcard processing costs and professional services expense.

Balance Sheet Changes (comparisons to December 31, 2020)

  • Total assets increased by $222.0 million, or 7%, to $3.4 billion, during the first nine months of the year.
  • Cash and due from banks increased $350.9 million, to $422.4 million during the first nine months of the year due mostly to higher deposit balances coupled with lower loan balances.
  • Investment securities increased 35% to $732.3 million primarily due to bond purchases.
  • Gross loans declined $323.3 million due predominantly to a $181.2 million decline in mortgage warehouse line utilization, a $63 million decline in real estate loans mostly due to lower commercial real estate and construction loan balances, and a $76.8 million decrease in commercial and industrial loans, which was mostly Small Business Administration Paycheck Protection Program (“SBA PPP”) loan forgiveness.
  • Deposits totaled $2.8 billion at September 30, 2021, representing a year-to-date increase of $196.0 million, or 7%. The growth in deposits came primarily from core transaction and savings accounts, while higher-cost time and wholesale brokered deposits decreased.
  • Long-term debt increased to $49.2 million from the issuance of $50 million in ten year 3.25% fixed to floating subordinated notes.

Other financial highlights are reflected in the following table.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL HIGHLIGHTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Except Per Share Data, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of or for the

 

 

As of or for the

 

 

 

three months ended

 

 

nine months ended

 

 

 

9/30/2021

 

 

6/30/2021

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

Net income

 

$

10,605

 

 

$

11,708

 

 

$

10,356

 

 

$

33,391

 

 

$

26,465

 

Diluted earnings per share

 

$

0.69

 

 

$

0.76

 

 

$

0.68

 

 

$

2.17

 

 

$

1.73

 

Return on average assets

 

 

1.26

%

 

 

1.42

%

 

 

1.34

%

 

 

1.36

%

 

 

1.26

%

Return on average equity

 

 

11.62

%

 

 

13.29

%

 

 

12.34

%

 

 

12.60

%

 

 

10.90

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (tax-equivalent)

 

 

3.46

%

 

 

3.60

%

 

 

3.98

%

 

 

3.66

%

 

 

3.97

%

Yield on average loans and leases

 

 

4.61

%

 

 

4.57

%

 

 

4.56

%

 

 

4.57

%

 

 

4.75

%

Cost of average total deposits

 

 

0.08

%

 

 

0.09

%

 

 

0.10

%

 

 

0.09

%

 

 

0.19

%

Efficiency ratio (tax-equivalent) (1)

 

 

59.75

%

 

 

58.79

%

 

 

53.74

%

 

 

58.29

%

 

 

56.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,442,739

 

 

$

3,272,048

 

 

$

3,199,618

 

 

$

3,442,739

 

 

$

3,199,618

 

Loans & leases net of deferred fees

 

$

2,137,214

 

 

$

2,140,961

 

 

$

2,377,222

 

 

$

2,137,214

 

 

$

2,377,222

 

Noninterest demand deposits

 

$

1,111,411

 

 

$

1,073,833

 

 

$

975,750

 

 

$

1,111,411

 

 

$

975,750

 

Total deposits

 

$

2,820,646

 

 

$

2,775,914

 

 

$

2,591,713

 

 

$

2,820,646

 

 

$

2,591,713

 

Noninterest-bearing deposits over total deposits

 

 

39.4

%

 

 

38.7

%

 

 

37.6

%

 

 

39.4

%

 

 

37.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders equity / total assets

 

 

10.6

%

 

 

10.9

%

 

 

10.5

%

 

 

10.6

%

 

 

10.5

%

Tangible common equity ratio (2)

 

 

9.8

%

 

 

10.1

%

 

 

9.6

%

 

 

9.8

%

 

 

9.6

%

Book value per share

 

$

23.70

 

 

$

23.21

 

 

$

21.92

 

 

$

23.70

 

 

$

21.92

 

Tangible book value per share (2)

 

$

21.69

 

 

$

21.19

 

 

$

19.84

 

 

$

21.69

 

 

$

19.84

 


(1)

Noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and bank owned life insurance income

(2)

See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures" later in this document

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income was $26.7 million, for the third quarter of 2021, a $1.4 million decrease, or 5% over the third quarter of 2020, and increased $6.4 million, or 8% to $82.5 million for the first nine months of 2021 relative to the same period in 2020.

For the third quarter of 2021, growth in average interest-earning assets totaled $267.0 million, or 9%, as compared to the third quarter of 2020. The yield on these balances was 54 basis points lower for the same period due mostly to a shift in the mix of earning assets to lower yielding investment securities, including cash held overnight at the Federal Reserve Bank. This decrease in yield was slightly offset by an 2 basis point drop in the cost of our interest-bearing liabilities for the same period.

Net interest income for the comparative year-to-date periods increased due to a $465.0 million, or 18% growth in average interest-earning assets. The yield on these average balances was 43 basis points lower for the same period, but was partially offset by a 17 basis point drop in interest paid on liabilities. The net impact of this lower rate was a 31 basis point decrease in our net interest margin for the nine-months ending September 30, 2021 as compared to the same period in 2020.

Loan income during the third quarter 2021 included $0.8 million related to fee income, net of origination costs, recognized on SBA PPP loans. Similarly, SBA PPP loan fees, net of origination costs of $3.3 million were recognized for the nine months ended September 30, 2021. At September 30, 2021, approximately $1.6 million of unearned fees, net of origination costs related to SBA PPP loans remains on the balance sheet.

Interest expense was $0.9 million for the third quarter of 2021, a decline of $0.1 million, or 6%, relative to the third quarter of 2020. For the first nine months of 2021, compared to the first nine months of 2020, interest expense declined $1.8 million, or 39%, to $2.7 million. The significant decline in interest expense is attributable to a favorable shift in deposit mix as the average balance of higher cost time deposits declined by $134.8 million or 31% in the third quarter of 2021 as compared to the third quarter of 2020, and fell by $38.5 million or 9% for the first nine months of 2021 as compared to the same period in 2020, while lower or no cost transaction and savings accounts increased $198.2 million, or 17%, for the third quarter of 2021 compared to the same period in 2020 and increased by $241.1 million, or 23%, for the first nine months of 2021 over the same nine months in 2020.

Our net interest margin was significantly impacted by the additional overnight cash balances resulting from increased liquidity from deposit growth in 2021 coupled with lower loan balances. This additional liquidity was mostly deployed in overnight funding resulting in $380.0 million in average overnight cash during the third quarter 2021 and $256.0 million in average balances for the year-to-date period ending September 30, 2021. This overnight funding earned an average rate of 15 and 13 basis points, respectively, for the third quarter and nine-months ending September 30, 2021.

In addition, investment yields have continued to decline given the overall rate environment in 2021. The overall impact of a lower net interest margin was more than offset by higher earning assets in 2021 as compared to 2020 for the year-to-date comparisons. However, for the third quarter of 2021 as compared to the same quarter in 2020, the $267.0 million increase in average interest earning balances did not fully offset the impact of the 54 bps decline in yield.

Provision for Loan and Lease Losses

The Company recorded a net benefit related to loan and lease loss provision of $0.6 million in the third quarter of 2021 relative to a provision of $2.4 million in the third quarter of 2020, and a year-to-date net benefit for loan and lease loss provision of $2.5 million in 2021 as compared to $6.4 million loan and lease loss provision expense for the same period in 2020. The Company's $3.0 million, or 126%, favorable decline in provision for loan and lease losses in the third quarter of 2021 as compared to the third quarter of 2020, and the $8.8 million favorable decrease, or 139%, in the first nine months of 2021 compared to the same period in 2020 is due mostly to lower historical loan loss rates, a decline in outstanding balances on loans, a change in the mix of loans, and net year-to-date 2021 recoveries of previously charged-off loan balances. During 2021, management adjusted its qualitative risk factors under our current incurred loss model for improved economic conditions, improvements in the severity and volume of past due loans, and a reduction in the level of concentrations of credit in non-owner occupied real estate loans.

The Company was subject to the adoption in the first quarter of 2020 of the Current Expected Credit Loss ("CECL") accounting method under Financial Accounting Standards Board (FASB) Accounting Standards Update 2016-03 and related amendments, Financial Instruments – Credit Losses (Topic 326). Prior to the close of the first quarter of 2020, the Company elected under Section 4014 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to defer the implementation of CECL until the earlier of when the national emergency related to the outbreak of COVID-19 ends or December 31, 2020. Later in 2020, the Consolidated Appropriations Act, 2021 extended the deferral of implementation of CECL to the earlier of the first day of the fiscal year, beginning after the national emergency terminates or January 1, 2022. The Company’s decision to defer the adoption of CECL was done primarily to provide additional time to better assess the impact of the COVID-19 pandemic on the expected lifetime credit losses. At the time the decision was made, there was a significant change in economic uncertainty on the local, regional, and national levels as a result of local and state stay-at-home orders, as well as relief measures provided at a national, state, and local level. Further, the Company has taken actions to serve our communities during the pandemic, including permitting short-term payment deferrals to current customers, as well as originating bridge loans and SBA PPP loans. Upon the adoption of CECL on January 1, 2022, the Company is expected to record the anticipated increase in the allowance for credit losses as an adjustment to equity, net of deferred taxes.

Noninterest Income

Total noninterest income reflects increases of $0.4 million, or 6%, for the quarter ended September 30, 2021 as compared to the same quarter in 2020, and $0.9 million, or 4%, for the year-to-date period ended September 30, 2021 as compared to the same period in 2020. The quarterly and year-to-date comparisons were primarily impacted by higher interchange income, however, the comparable year-to-date periods also included an increase of $0.4 million in the valuation gain of restricted equity investments owned by the Company, a $0.4 million favorable fluctuation in income on Bank-Owned Life Insurance (BOLI) associated with deferred compensation plans, and a $0.6 million favorable change in low-income housing tax credit fund expenses. The year-to-date increases were offset by a $0.4 million gain on the sale of debt securities from the restructuring of the portfolio in 2020 and a $1.5 million nonrecurring gain on the wrap up of low-income housing tax credit funds also in 2020.

Service charges on customer deposit account income increased $0.2 million, or 8%, to $3.2 million in the third quarter of 2021 as compared to the third quarter of 2020. This increase is primarily due to increases in analysis fee income during the comparable periods. This service charge income was $0.1 million lower, or 1%, in the first nine months of 2021, as compared to the same period in 2020. The slight decline for the year-to-date comparison is primarily a result of decreases in overdraft income, mostly offset by increases in analysis fee income.

Noninterest Expense

Total noninterest expense increased by $1.6 million, or 8%, in the third quarter of 2021 relative to the third quarter of 2020, and by $6.2 million, or 11%, in the first nine months of 2021 as compared to the same period in 2020.

Salaries and Benefits were $0.9 million, or 9%, higher in the third quarter of 2021 as compared to the third quarter of 2020 and $3.1 million, or 10%, higher for the first nine months of 2021 compared to the same period in 2020. Salary expense deferrals related to the decrease in loan originations were primarily responsible for the negative variance; there was a decrease in salary deferrals of $0.5 million for the quarterly comparison and $2.2 million for the year-to-date comparison. There were 482 full-time equivalent employees at September 30, 2021 as compared to 491 at September 30, 2020.

Occupancy expenses were $0.2 million lower for the third quarter of 2021 as compared to the same quarter in 2020 and $0.1 million higher for the first nine months of 2021 as compared to the same period in 2020. The primary reason for decrease in the quarterly comparison was the closure of five branch facilities earlier in the year, which included the early termination of two leases immediately. The acceleration of leasehold improvements was responsible for the slight increase in the year-to-date comparison.

Other noninterest expense increased $0.9 million, or 12%, for the third quarter 2021 as compared to the third quarter in 2020, and increased $3.1 million, or 17%, for the first nine months of 2021 as compared to the same period in 2020. The variance for the third quarter of 2021 compared to the same period in 2020 was primarily driven by an increase of $0.6 million in legal and accounting costs due mostly to an increase in litigation costs. Additionally, there were increases of $0.3 million in data processing costs resulting from increases in core banking system expenses, and $0.4 million in increase in checkcard processing costs due to higher debit card usage. These higher costs were partially offset by a $0.4 million decrease in foreclosed assets costs, due to the sale of all but two bank owned properties. For the year-over-year comparison the categories of increase were the same as with the quarterly comparison, along with a $0.3 million increase in FDIC assessments and a $0.3 million increase in deferred compensation expense for directors, which is linked to the changes in BOLI income.

The Company's provision for income taxes was 24.1% of pre-tax income in the third quarter of 2021 relative to 23.4% in the third quarter of 2020, and 25.0% of pre-tax income for the first nine months of 2021 relative to 23.5% for the same period in 2020. The increase in effective tax rate in the third quarter of 2021 is due to tax credits and tax-exempt income representing a smaller percentage of total taxable income.

Balance Sheet Summary

Balance sheet changes during the first nine months of 2021 include an increase in total assets of $222.0 million, or 7%, primarily a result of increases in cash and due from banks and investments securities of $350.9 million and $188.3 million, respectively, net of a $320.6 million decrease in net loan balances.

The increase in investment securities of $188.3 million for the year-to-date period consisted primarily of increases in government and agency securities, including mortgage backed securities and collateralized mortgage obligations, of $13.2 million; municipal bonds of $64.3 million; corporate securities of $16.3 million; and AAA and AA tranches of collateralized loan obligations of $94.6 million. The purchases of AAA and AA tranches of collateralized loan obligations (“CLOs”) in the third quarter of 2021 is primarily a balance sheet diversification strategy as management continues to utilize available liquidity. In addition to providing asset class diversification given the high level of real estate backed earning assets on the balance sheet, these floating rate CLOs are more asset sensitive which complements the longer-term fixed-rate earning assets.

Loan balances increased $14.4 million, excluding the impact of the change in SBA PPP loans. SBA PPP loan forgiveness totalled $17.9 million during the third quarter of 2021 as compared to the end of the previous quarter. However, as mentioned above, loan balances declined by $320.6 million as compared to December 31, 2020 primarily as a result of a $181.2 million decline in mortgage warehouse line utilization, a $76.8 million decline in SBA PPP loans due mostly to forgiveness of such loans, and a net decrease of $63.0 million in real estate secured loans, primarily from construction and other commercial real estate loans.

During 2021, the Company strategically lowered its regulatory commercial real estate concentration ratio from 378% at December 31, 2020 to 308% at September 30, 2021, although it is expected to moderately increase this concentration ratio during the fourth quarter of 2021 and into 2022. The overall decline in real estate secured loans during 2021 was partially offset by an increase of $80.4 million in 1-4 family residential real estate loans due to the $121.6 million purchase of mortgage loans during the third quarter of 2021. These loan purchases were designed as a bridge to organic loan growth as the Bank’s core loan pipeline continues to improve and the hiring of one or more loan teams that is expected to occur during the fourth quarter of 2021. If successfully hired, the loan teams are anticipated to further diversify the loan portfolio by specializing in various types of commercial and industrial loans.

Unused commitments, excluding mortgage warehouse and consumer overdraft lines, were $224.3 million at September 30, 2021, compared to $260.0 million at December 31, 2020. Total line utilization, excluding mortgage warehouse and consumer overdraft lines, was 54% at September 30, 2021 and 57% at December 31, 2020. Mortgage warehouse utilization declined significantly to 33% at September 30, 2021, as compared to 71% at December 31, 2020.

The Company participated in the SBA PPP as authorized by the CARES Act. We began accepting and funding loans under this program in April 2020. There were 642 loans for $50.7 million outstanding at September 30, 2021, compared to 1,274 loans for $117.2 million at December 31, 2020. During the third quarter of 2021 the SBA forgave $17.9 million of SBA PPP loans.

Deposit balances reflect growth of $196.0 million, or 7%, during the first nine months of 2021. Core non-maturity deposits increased by $358.2 million, or 17%, while customer time deposits decreased by $122.1 million, or 30%. Wholesale brokered deposits decreased by $40.0 million to $60.0 million. Overall noninterest-bearing deposits as a percent of total deposits at September 30, 2021, increased to 39.4%, as compared to 36.0% at December 31, 2020.

Other interest-bearing liabilities of $92.6 million on September 30, 2021 consists exclusively of customer repurchase agreements. Other interest-bearing liabilities at December 31, 2020 of $182.0 million consisted of $100.0 million of fed funds purchased, $39.1 million of customer repurchase agreements, $37.9 million of FHLB overnight borrowings and $5.0 million of FHLB short term borrowings.

Long term debt increased to $49.2 million from the issuance of $50 million in 3.25% fixed – floating subordinated debt with a ten-year maturity in the third quarter of 2021. The Company plans on contributing $25 million of additional capital to the Bank in the fourth quarter of 2021, and utilizing the remainder of the funds for general corporate purposes, which may include repurchasing shares, among other things.

Subordinated debentures totaled $35.3 million and $35.1 million at September 30, 2021 and December 31, 2020, respectively, in the form of long-term borrowings from trust subsidiaries formed specifically to issue trust preferred securities.

The Company continues to have substantial liquidity. At September 30, 2021, and December 31, 2020, the Company had the following sources of primary and secondary liquidity ($ in thousands):

 

 

 

 

 

 

 

Primary and secondary liquidity sources

 

 

September 30, 2021

 

 

December 31, 2020

Cash and cash equivalents

 

$

422,350

 

$

71,417

Unpledged investment securities

 

 

584,066

 

 

311,983

Excess pledged securities

 

 

43,246

 

 

52,892

FHLB borrowing availability

 

 

773,125

 

 

535,404

Unsecured lines of credit

 

 

305,000

 

 

230,000

Funds available through fed discount window

 

 

61,867

 

 

58,127

Totals

 

$

2,189,654

 

$

1,259,823

Total capital of $364.5 million at September 30, 2021 reflects an increase of $20.6 million, or 6%, relative to year-end 2020. The increase in equity during the first nine months of 2021 was due to the addition of $33.4 million in net income, offset by an $3.4 million unfavorable swing in accumulated other comprehensive income/loss, and $9.8 million in dividends paid. The remaining difference is related to stock options exercised and restricted stock granted during the first nine months. The Company executed no share repurchases under a share repurchase plan during the first nine months of 2021. In conjunction with an equity compensation plan, 12,122 shares were repurchased by the company for tax withholding on restricted stock issued to certain officers of the Company in the first nine months of 2021.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, decreased by $1.7 million to $6.9 million for the first nine months of 2021. The Company's ratio of nonperforming loans to gross loans increased to 0.32% at September 30, 2021 from 0.31% at December 31, 2020; this was due to the decrease in gross loan balances since nonperforming loans decreased $0.8 million during the same period. All of the Company's impaired assets are periodically reviewed and are either well-reserved based on current loss expectations or are carried at the fair value of the underlying collateral, net of expected disposition costs.

The Company's allowance for loan and lease losses was $15.6 million at September 30, 2021, as compared to a balance of $17.7 million at December 31, 2020, and $15.6 million at September 30, 2020. The allowance was 0.73% of total loans at September 30, 2021, 0.72% at December 31, 2020 and 0.65% at September 30, 2020.

The $2.1 million decrease in the allowance for loan and lease losses during the first nine months of the year resulted from the $2.5 million benefit associated with loan and lease loss provision combined with net loan recoveries of previously charged off loan balances for $0.3 million. For further information regarding the Company's decision to defer the implementation of CECL under Section 4014 of the CARES Act, as well as further detail on the decrease loan and lease loss provision during the third quarter and first nine months of 2021, please see the discussion above under Provision for Loan and Lease Losses.

Management's detailed analysis indicates that the Company's allowance for loan and lease losses should be sufficient to cover credit losses inherent in loan and lease balances outstanding as of September 30, 2021, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the loan and lease loss allowance.

The Company provided loan modification deferrals to customers under Section 4013 of the CARES Act, which are not treated as troubled debt restructured loans. As of September 30, 2021, we had three remaining loans for one customer relationship totaling $10.4 million. All of these loans are fully secured by real estate collateral.

About Sierra Bancorp

Sierra Bancorp is the holding company for Bank of the Sierra (www.bankofthesierra.com), which is in its 44th year of operations and is the largest independent bank headquartered in the South San Joaquin Valley. Bank of the Sierra is a community-centric regional bank, which offers a broad range of retail and commercial banking services through full-service branches located within the counties of Tulare, Kern, Kings, Fresno, Ventura, San Luis Obispo and Santa Barbara. The Bank also maintains an online branch and provides specialized lending services through an agricultural credit center, an SBA center and a dedicated loan production office in Roseville, California. In 2021, Bank of the Sierra was recognized as one of the strongest community banks in the country, with a 5-star rating from Bauer Financial.

Forward-Looking Statements

The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward-looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties including but not limited to our borrowers’ actual payment performance as loan deferrals related to the COVID-19 pandemic expire, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance, the health of the national and local economies, the Company's ability to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully deploy new technology, the success of acquisitions and branch expansion, changes in interest rates, loan portfolio performance, and other factors detailed in the Company's SEC filings, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Form 10-K and Form 10-Q.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENT OF CONDITION

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

Cash and due from banks

 

$

422,350

 

 

$

373,902

 

 

$

346,211

 

 

$

71,417

 

 

$

88,933

 

Investment securities

 

 

732,312

 

 

 

607,474

 

 

 

552,931

 

 

 

543,974

 

 

 

577,278

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-4 family residential construction

 

 

34,720

 

 

 

37,165

 

 

 

36,818

 

 

 

48,565

 

 

 

75,532

 

Other construction/land

 

 

25,512

 

 

 

27,682

 

 

 

50,433

 

 

 

71,980

 

 

 

83,797

 

1-4 family - closed-end

 

 

220,240

 

 

 

106,599

 

 

 

126,949

 

 

 

139,836

 

 

 

162,022

 

Equity lines

 

 

31,341

 

 

 

33,334

 

 

 

36,276

 

 

 

38,075

 

 

 

38,620

 

Multi-family residential

 

 

55,628

 

 

 

58,230

 

 

 

58,324

 

 

 

61,865

 

 

 

61,740

 

Commercial real estate - owner occupied

 

 

345,116

 

 

 

359,021

 

 

 

359,777

 

 

 

343,199

 

 

 

328,832

 

Commercial real estate - non-owner occupied

 

 

995,921

 

 

 

1,048,153

 

 

 

1,071,532

 

 

 

1,062,498

 

 

 

945,374

 

Farmland

 

 

124,446

 

 

 

125,783

 

 

 

126,157

 

 

 

129,905

 

 

 

127,964

 

Total real estate loans

 

 

1,832,924

 

 

 

1,795,967

 

 

 

1,866,266

 

 

 

1,895,923

 

 

 

1,823,881

 

Agricultural production loans

 

 

43,296

 

 

 

42,952

 

 

 

45,476

 

 

 

44,872

 

 

 

45,782

 

Commercial and industrial

 

 

132,292

 

 

 

150,632

 

 

 

183,762

 

 

 

209,048

 

 

 

217,224

 

Mortgage warehouse lines

 

 

126,486

 

 

 

150,351

 

 

 

187,940

 

 

 

307,679

 

 

 

287,516

 

Consumer loans

 

 

4,828

 

 

 

4,894

 

 

 

5,024

 

 

 

5,589

 

 

 

5,897

 

Gross loans and leases

 

 

2,139,826

 

 

 

2,144,796

 

 

 

2,288,468

 

 

 

2,463,111

 

 

 

2,380,300

 

Deferred loan and lease fees

 

 

(2,612

)

 

 

(3,835

)

 

 

(3,717

)

 

 

(3,147

)

 

 

(3,078

)

Allowance for loan and lease losses

 

 

(15,617

)

 

 

(16,421

)

 

 

(18,319

)

 

 

(17,738

)

 

 

(15,586

)

Net loans and leases

 

 

2,121,597

 

 

 

2,124,540

 

 

 

2,266,432

 

 

 

2,442,226

 

 

 

2,361,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank premises and equipment

 

 

24,490

 

 

 

25,949

 

 

 

26,795

 

 

 

27,505

 

 

 

27,216

 

Other assets

 

 

141,990

 

 

 

140,183

 

 

 

133,668

 

 

 

135,620

 

 

 

144,555

 

Total assets

 

$

3,442,739

 

 

$

3,272,048

 

 

$

3,326,037

 

 

$

3,220,742

 

 

$

3,199,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest demand deposits

 

$

1,111,411

 

 

$

1,073,833

 

 

$

1,020,350

 

 

$

943,664

 

 

$

975,750

 

Interest-bearing transaction accounts

 

 

765,823

 

 

 

752,137

 

 

 

770,271

 

 

 

668,346

 

 

 

656,922

 

Savings deposits

 

 

451,248

 

 

 

435,076

 

 

 

415,230

 

 

 

368,420

 

 

 

361,857

 

Money market deposits

 

 

141,348

 

 

 

133,977

 

 

 

136,653

 

 

 

131,232

 

 

 

126,918

 

Customer time deposits

 

 

290,816

 

 

 

295,891

 

 

 

411,388

 

 

 

412,944

 

 

 

420,266

 

Wholesale brokered deposits

 

 

60,000

 

 

 

85,000

 

 

 

100,000

 

 

 

100,000

 

 

 

50,000

 

Total deposits

 

 

2,820,646

 

 

 

2,775,914

 

 

 

2,853,892

 

 

 

2,624,606

 

 

 

2,591,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

49,221

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Subordinated debentures

 

 

35,258

 

 

 

35,213

 

 

 

35,169

 

 

 

35,124

 

 

 

35,079

 

Other interest-bearing liabilities

 

 

92,553

 

 

 

70,535

 

 

 

56,527

 

 

 

182,038

 

 

 

194,657

 

Total deposits and interest-bearing liabilities

 

 

2,997,678

 

 

 

2,881,662

 

 

 

2,945,588

 

 

 

2,841,768

 

 

 

2,821,449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

80,554

 

 

 

32,657

 

 

 

32,468

 

 

 

35,078

 

 

 

41,922

 

Total capital

 

 

364,507

 

 

 

357,729

 

 

 

347,981

 

 

 

343,896

 

 

 

336,247

 

Total liabilities and capital

 

$

3,442,739

 

 

$

3,272,048

 

 

$

3,326,037

 

 

$

3,220,742

 

 

$

3,199,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOODWILL AND INTANGIBLE ASSETS

(Dollars in Thousands, Unaudited)

 

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

Goodwill

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

Core deposit intangible

 

 

3,527

 

 

 

3,780

 

 

 

4,038

 

 

 

4,307

 

 

 

4,575

 

Total intangible assets

 

$

30,884

 

 

$

31,137

 

 

$

31,395

 

 

$

31,664

 

 

$

31,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

Non-accruing loans

 

$

6,788

 

 

$

7,276

 

 

$

8,599

 

 

$

7,598

 

 

$

7,186

 

Foreclosed assets

 

 

93

 

 

 

774

 

 

 

945

 

 

 

971

 

 

 

2,970

 

Total nonperforming assets

 

$

6,881

 

 

$

8,050

 

 

$

9,544

 

 

$

8,569

 

 

$

10,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing TDR's (not included in NPA's)

 

$

5,509

 

 

$

10,774

 

 

$

10,596

 

 

$

11,382

 

 

$

7,708

 

Net (recoveries) / charge offs

 

$

(329

)

 

$

(533

)

 

$

(331

)

 

$

735

 

 

$

687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due & still accruing (30-89)

 

$

380

 

 

$

3,197

 

 

$

2,991

 

 

$

1,656

 

 

$

7,201

 

Loans deferred under CARES Act

 

$

10,411

 

 

$

10,411

 

 

$

22,437

 

 

$

29,500

 

 

$

405,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans to gross loans

 

 

0.32

%

 

 

0.34

%

 

 

0.38

%

 

 

0.31

%

 

 

0.30

%

NPA's to loans plus foreclosed assets

 

 

0.32

%

 

 

0.38

%

 

 

0.42

%

 

 

0.35

%

 

 

0.43

%

Allowance for loan and lease losses to loans

 

 

0.73

%

 

 

0.77

%

 

 

0.80

%

 

 

0.72

%

 

 

0.65

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECT PERIOD-END STATISTICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

 

 

9/30/2020

Shareholders equity / total assets

 

 

10.6

%

 

 

10.9

%

 

 

10.5

%

 

 

10.7

%

 

 

10.5

%

Gross loans / deposits

 

 

75.9

%

 

 

77.3

%

 

 

80.2

%

 

 

93.8

%

 

 

91.8

%

Non-interest bearing deposits / total deposits

 

 

39.4

%

 

 

38.7

%

 

 

35.8

%

 

 

36.0

%

 

 

37.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

(Dollars in Thousands, Unaudited)

 

 

 

For the three months ended:

 

 

For the nine months ended:

 

 

 

9/30/2021

 

 

6/30/2021

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

Interest income

 

$

27,629

 

 

$

28,092

 

 

$

29,043

 

$

85,179

 

 

$

80,481

Interest expense

 

 

913

 

 

 

903

 

 

 

969

 

 

2,719

 

 

 

4,478

Net interest income

 

 

26,716

 

 

 

27,189

 

 

 

28,074

 

 

82,460

 

 

 

76,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Benefit) / provision for loan and lease losses

 

 

(600

)

 

 

(2,100

)

 

 

2,350

 

 

(2,450

)

 

 

6,350

Net interest income after provision

 

 

27,316

 

 

 

29,289

 

 

 

25,724

 

 

84,910

 

 

 

69,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges

 

 

3,186

 

 

 

2,725

 

 

 

2,950

 

 

8,677

 

 

 

8,752

BOLI income

 

 

1,048

 

 

 

814

 

 

 

1,310

 

 

2,445

 

 

 

1,997

Gain on investments

 

 

11

 

 

 

-

 

 

 

-

 

 

11

 

 

 

390

Other noninterest income

 

 

3,290

 

 

 

3,073

 

 

 

2,845

 

 

9,844

 

 

 

8,973

Total noninterest income

 

 

7,535

 

 

 

6,612

 

 

 

7,105

 

 

20,977

 

 

 

20,112

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

10,618

 

 

 

10,425

 

 

 

9,698

 

 

32,194

 

 

 

29,136

Occupancy expense

 

 

2,359

 

 

 

2,626

 

 

 

2,559

 

 

7,472

 

 

 

7,390

Other noninterest expenses

 

 

7,898

 

 

 

7,184

 

 

 

7,046

 

 

21,715

 

 

 

18,630

Total noninterest expense

 

 

20,875

 

 

 

20,235

 

 

 

19,303

 

 

61,381

 

 

 

55,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

13,976

 

 

 

15,666

 

 

 

13,526

 

 

44,506

 

 

 

34,609

Provision for income taxes

 

 

3,371

 

 

 

3,958

 

 

 

3,170

 

 

11,115

 

 

 

8,144

Net income

 

$

10,605

 

 

$

11,078

 

 

$

10,356

 

$

33,391

 

 

$

26,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TAX DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt muni income

 

$

1,578

 

 

$

1,517

 

 

$

1,467

 

$

4,539

 

 

$

4,246

Interest income - fully tax equivalent

 

$

28,048

 

 

$

28,495

 

 

$

29,433

 

$

86,386

 

 

$

81,610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

(Unaudited)

 

 

 

For the three months ended:

 

 

For the nine months ended:

 

 

 

9/30/2021

 

 

6/30/2021

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

Basic earnings per share

 

$

0.70

 

 

$

0.77

 

 

$

0.68

 

 

$

2.19

 

 

$

1.74

 

Diluted earnings per share

 

$

0.69

 

 

$

0.76

 

 

$

0.68

 

 

$

2.17

 

 

$

1.73

 

Common dividends

 

$

0.22

 

 

$

0.21

 

 

$

0.20

 

 

$

0.65

 

 

$

0.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

15,257,367

 

 

 

15,243,698

 

 

 

15,192,838

 

 

 

15,247,477

 

 

 

15,215,167

 

Weighted average diluted shares

 

 

15,343,543

 

 

 

15,375,825

 

 

 

15,387,309

 

 

 

15,369,249

 

 

 

15,422,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per basic share (EOP)

 

$

23.70

 

 

$

23.21

 

 

$

21.92

 

 

$

23.70

 

 

$

21.92

 

Tangible book value per share (EOP)

 

$

21.69

 

 

$

21.19

 

 

$

19.84

 

 

$

21.69

 

 

$

19.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (EOP)

 

 

15,382,518

 

 

 

15,410,763

 

 

 

15,341,723

 

 

 

15,382,518

 

 

 

15,341,723

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY FINANCIAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

For the nine months ended:

 

 

 

9/30/2021

 

 

6/30/2021

 

 

9/30/2020

 

 

9/30/2021

 

 

9/30/2020

Return on average equity

 

 

11.62

%

 

 

13.29

%

 

 

12.34

%

 

 

12.60

%

 

 

10.90

%

Return on average assets

 

 

1.26

%

 

 

1.42

%

 

 

1.34

%

 

 

1.36

%

 

 

1.26

%

Net interest margin (tax-equivalent)

 

 

3.46

%

 

 

3.60

%

 

 

3.98

%

 

 

3.66

%

 

 

3.97

%

Efficiency ratio (tax-equivalent)¹

 

 

59.78

%

 

 

58.79

%

 

 

53.74

%

 

 

58.29

%

 

 

56.64

%

Net (recoveries) charge offs to avg loans (not annualized)

 

 

0.01

%

 

 

(0.01

)%

 

 

0.01

%

 

 

(0.01

)%

 

 

0.04

%


(1)

Noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and bank owned life insurance income.

The following non-GAAP schedule reconciles the book value per share to the tangible book value per share and the GAAP equity ratio to the tangible equity ratio as of the dates indicated:

 

 

 

 

 

 

 

 

 

 

NON-GAAP FINANCIAL MEASURES

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2021

 

 

6/30/2021

 

 

9/30/2020

Total stockholders' equity

 

$

364,507

 

 

$

357,729

 

 

$

336,247

 

Less: goodwill and other intangible assets

 

 

(30,884

)

 

 

(31,137

)

 

 

(31,932

)

Tangible common equity

 

$

333,623

 

 

$

326,592

 

 

$

304,315

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,442,739

 

 

$

3,272,048

 

 

$

3,199,618

 

Less: goodwill and other intangible assets

 

 

(30,884

)

 

 

(31,137

)

 

 

(31,932

)

Tangible assets

 

$

3,411,855

 

 

$

3,240,911

 

 

$

3,167,686

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

15,382,518

 

 

 

15,410,763

 

 

 

15,341,723

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

 

23.70

 

 

 

23.21

 

 

 

21.92

 

Tangible book value per common share

 

 

21.69

 

 

 

21.19

 

 

 

19.84

 

Equity ratio - GAAP (total stockholders' equity / total assets

 

 

10.59

%

 

 

10.93

%

 

 

10.51

%

Tangible common equity ratio (tangible common equity / tangible assets)

 

 

9.78

%

 

 

10.08

%

 

 

9.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME/EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

For the three months ended:

 

 

For the nine months ended:

Noninterest income:

 

 

9/30/2021

 

 

6/30/2021

 

 

9/30/2020

 

 

9/30/2021

 

9/30/2020

Service charges on deposit accounts

 

$

3,186

 

 

$

2,725

 

 

$

2,950

 

 

$

8,677

 

 

$

8,752

 

Other service charges and fees

 

 

2,900

 

 

 

3,050

 

 

 

2,511

 

 

 

8,511

 

 

 

7,418

 

Net gains on sale of securities available-for-sale

 

 

11

 

 

 

 

 

 

 

 

 

11

 

 

 

390

 

Bank-owned life insurance

 

 

1,048

 

 

 

814

 

 

 

1,310

 

 

 

2,445

 

 

 

1,997

 

Other

 

 

390

 

 

 

23

 

 

 

334

 

 

 

1,333

 

 

 

1,555

 

Total noninterest income

 

$

7,535

 

 

$

6,612

 

 

$

7,105

 

 

$

20,977

 

 

$

20,112

 

As a % of average interest earning assets (1)

 

 

0.96

%

 

 

0.86

%

 

 

0.99

%

 

 

0.91

%

 

 

1.04

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

10,618

 

 

$

10,425

 

 

$

9,698

 

 

$

32,194

 

 

$

29,136

 

Occupancy costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Furniture & equipment

 

 

406

 

 

 

453

 

 

 

498

 

 

 

1,312

 

 

 

1,581

 

Premises

 

 

1,953

 

 

 

2,173

 

 

 

2,061

 

 

 

6,160

 

 

 

5,809

 

Advertising and marketing costs

 

 

370

 

 

 

292

 

 

 

324

 

 

 

982

 

 

 

1,350

 

Data processing costs

 

 

1,470

 

 

 

1,513

 

 

 

1,177

 

 

 

4,409

 

 

 

3,365

 

Deposit services costs

 

 

2,402

 

 

 

2,282

 

 

 

2,236

 

 

 

6,752

 

 

 

6,261

 

Loan services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan processing

 

 

109

 

 

 

65

 

 

 

289

 

 

 

343

 

 

 

652

 

Foreclosed assets

 

 

(19

)

 

 

(10

)

 

 

355

 

 

 

78

 

 

 

423

 

Other operating costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone & data communications

 

 

534

 

 

 

668

 

 

 

485

 

 

 

1,582

 

 

 

1,319

 

Postage & mail

 

 

60

 

 

 

109

 

 

 

90

 

 

 

253

 

 

 

264

 

Other

 

 

470

 

 

 

337

 

 

 

338

 

 

 

1,269

 

 

 

1,090

 

Professional services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal & accounting

 

 

966

 

 

 

682

 

 

 

317

 

 

 

2,091

 

 

 

1,002

 

Other professional service

 

 

1,320

 

 

 

1,004

 

 

 

1,223

 

 

 

3,219

 

 

 

2,171

 

Stationery & supply costs

 

 

107

 

 

 

73

 

 

 

95

 

 

 

259

 

 

 

341

 

Sundry & tellers

 

 

109

 

 

 

169

 

 

 

117

 

 

 

478

 

 

 

392

 

Total noninterest expense

 

$

20,875

 

 

$

20,235

 

 

$

19,303

 

 

$

61,381

 

 

$

55,156

 

As a % of average interest earning assets (1)

 

 

2.66

%

 

 

2.64

%

 

 

2.70

%

 

 

2.67

%

 

 

2.85

%

Efficiency ratio (2)(3)

 

 

59.75

%

 

 

58.79

%

 

 

53.74

%

 

 

58.30

%

 

 

56.64

%


(1)

Annualized

(2)

Tax equivalent

(3)

Noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and bank owned life insurance income.

AVERAGE BALANCES AND RATES

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

For the quarter ended

 

For the quarter ended

 

For the quarter ended

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

 

Average Balance (1)

Income/ Expense

Yield/ Rate (2)

 

Average Balance (1)

Income/ Expense

Yield/ Rate (2)

 

Average Balance (1)

Income/ Expense

Yield/ Rate (2)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning due from banks

 

$

379,597

$

146

0.15

%

 

$

308,453

$

85

0.11

%

 

$

6,942

$

2

0.11

%

Taxable

 

 

389,524

 

1,679

1.71

%

 

 

340,690

 

1,573

1.85

%

 

 

366,046

 

1,832

1.99

%

Non-taxable

 

 

259,996

 

1,578

3.05

%

 

 

243,461

 

1,517

3.16

%

 

 

227,283

 

1,467

3.25

%

Total investments

 

 

1,029,117

 

3,403

1.47

%

 

 

892,604

 

3,175

1.61

%

 

 

600,271

 

3,301

2.45

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases: (3)

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

1,775,611

 

20,805

4.65

%

 

 

1,825,600

 

21,015

4.62

%

 

 

1,700,241

 

20,467

4.79

%

Agricultural production

 

 

43,243

 

410

3.76

%

 

 

43,959

 

408

3.72

%

 

 

47,733

 

435

3.63

%

Commercial

 

 

140,105

 

1,796

5.09

%

 

 

166,554

 

2,124

5.12

%

 

 

226,511

 

2,485

4.36

%

Consumer

 

 

4,862

 

205

16.73

%

 

 

4,978

 

193

15.55

%

 

 

6,226

 

236

15.08

%

Mortgage warehouse lines

 

 

118,036

 

982

3.30

%

 

 

142,348

 

1,151

3.24

%

 

 

262,593

 

2,087

3.16

%

Other

 

 

1,463

 

28

7.59

%

 

 

1,460

 

26

7.14

%

 

 

1,868

 

32

6.82

%

Total loans and leases

 

 

2,083,320

 

24,226

4.61

%

 

 

2,184,899

 

24,917

4.57

%

 

 

2,245,172

 

25,742

4.56

%

Total interest earning assets (4)

 

 

3,112,437

$

27,629

3.58

%

 

 

3,077,503

$

28,092

3.71

%

 

 

2,845,443

$

29,043

4.12

%

Other earning assets

 

 

15,713

 

 

 

 

15,438

 

 

 

 

13,190

 

 

Non-earning assets

 

 

212,116

 

 

 

 

209,218

 

 

 

 

215,819

 

 

Total assets

 

$

3,340,266

 

 

 

$

3,302,159

 

 

 

$

3,074,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

148,175

$

86

0.23

%

 

$

161,871

$

91

0.23

%

 

$

140,634

$

75

0.21

%

NOW

 

 

605,620

 

115

0.08

%

 

 

601,339

 

116

0.08

%

 

 

516,915

 

89

0.07

%

Savings accounts

 

 

443,406

 

63

0.06

%

 

 

424,512

 

59

0.06

%

 

 

354,331

 

51

0.06

%

Money market

 

 

139,433

 

26

0.07

%

 

 

139,336

 

30

0.09

%

 

 

126,567

 

28

0.09

%

Time deposits

 

 

293,379

 

248

0.31

%

 

 

337,270

 

262

0.30

%

 

 

428,171

 

383

0.35

%

Wholesale brokered deposits

 

 

72,283

 

53

0.29

%

 

 

92,418

 

61

0.26

%

 

 

29,696

 

15

0.20

%

Total interest bearing deposits

 

 

1,702,296

 

591

0.14

%

 

 

1,756,746

 

619

0.14

%

 

 

1,596,314

 

641

0.16

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

Other interest-bearing liabilities

 

 

79,132

 

41

0.21

%

 

 

61,186

 

39

0.26

%

 

 

107,596

 

70

0.26

%

Long-term debt

 

 

3,812

 

38

3.95

%

 

 

 

 

 

 

 

 

Subordinated debentures

 

 

35,229

 

243

2.74

%

 

 

35,185

 

245

2.79

%

 

 

35,052

 

258

2.93

%

Total borrowed funds

 

 

118,173

 

322

1.08

%

 

 

96,371

 

284

1.18

%

 

 

142,648

 

328

0.91

%

Total interest bearing liabilities

 

 

1,820,469

 

913

0.20

%

 

 

1,853,117

$

903

0.20

%

 

 

1,738,962

 

969

0.22

%

Demand deposits - noninterest bearing

 

 

1,104,506

 

 

 

 

1,052,494

 

 

 

 

958,233

 

 

Other liabilities

 

 

53,134

 

 

 

 

43,095

 

 

 

 

43,521

 

 

Shareholders' equity

 

 

362,157

 

 

 

 

353,453

 

 

 

 

333,736

 

 

Total liabilities and shareholders' equity

 

$

3,340,266

 

 

 

$

3,302,159

 

 

 

$

3,074,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

3.58

%

 

 

 

3.71

%

 

 

 

4.12

%

Interest expense/interest earning assets

 

 

 

0.12

%

 

 

 

0.11

%

 

 

 

0.14

%

Net interest income and margin (5)

 

 

$

26,716

3.46

%

 

 

$

27,189

3.60

%

 

 

$

28,074

3.98

%

 


(1)

Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

(2)

Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate.

(3)

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $1.0 million and $1.3 million for the quarters ended September 30, 2021 and 2020, respectively, and $1.0 million for the quarter ended June 30, 2021.

(4)

Non-accrual loans have been included in total loans for purposes of computing total earning assets.

(5)

Net interest margin represents net interest income as a percentage of average interest-earning assets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES AND RATES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

For the nine months ended

 

 

September 30, 2021

 

 

September 30, 2020

 

 

Average
Balance (1)

 

Income/
Expense

 

Yield/ Rate (2)

 

Average
Balance (1)

 

Income/
Expense

 

Yield/ Rate (2)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning due from banks

 

$

255,962

 

$

250

 

0.13

%

 

$

32,332

 

$

155

 

0.64

%

Taxable

 

 

351,109

 

 

4,835

 

1.84

%

 

 

392,617

 

 

6,542

 

2.23

%

Non-taxable

 

 

241,866

 

 

4,539

 

3.18

%

 

 

213,294

 

 

4,246

 

3.36

%

Total investments

 

 

848,937

 

 

9,624

 

1.71

%

 

 

638,243

 

 

10,943

 

2.53

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases:(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

$

1,826,476

 

$

63,211

 

4.63

%

 

$

1,524,821

 

$

57,544

 

5.04

%

Agricultural

 

 

44,441

 

 

1,237

 

3.72

%

 

 

48,022

 

 

1,470

 

4.09

%

Commercial

 

 

165,916

 

 

6,371

 

5.13

%

 

 

168,574

 

 

4,661

 

3.69

%

Consumer

 

 

5,085

 

 

594

 

15.62

%

 

 

6,822

 

 

831

 

16.27

%

Mortgage warehouse lines

 

 

167,293

 

 

4,061

 

3.25

%

 

 

204,839

 

 

4,884

 

3.18

%

Other

 

 

1,503

 

 

81

 

7.21

%

 

 

3,302

 

 

148

 

5.99

%

Total loans and leases

 

 

2,210,714

 

 

75,555

 

4.57

%

 

 

1,956,380

 

 

69,538

 

4.75

%

Total interest earning assets (4)

 

 

3,059,651

 

 

85,179

 

3.77

%

 

 

2,594,623

 

 

80,481

 

4.20

%

Other earning assets

 

 

14,817

 

 

 

 

 

 

 

13,074

 

 

 

 

 

Non-earning assets

 

 

207,523

 

 

 

 

 

 

 

206,816

 

 

 

 

 

Total assets

 

$

3,281,991

 

 

 

 

 

 

$

2,814,513

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

147,000

 

$

251

 

0.23

%

 

$

121,246

 

$

209

 

0.23

%

NOW

 

 

592,177

 

 

332

 

0.07

%

 

 

485,176

 

 

295

 

0.08

%

Savings accounts

 

 

419,861

 

 

175

 

0.06

%

 

 

326,730

 

 

170

 

0.07

%

Money market

 

 

138,408

 

 

86

 

0.08

%

 

 

123,149

 

 

101

 

0.11

%

Time deposits

 

 

347,253

 

 

798

 

0.59

%

 

 

443,771

 

 

2,374

 

1.23

%

Brokered deposits

 

 

88,132

 

 

176

 

0.27

%

 

 

30,135

 

 

219

 

0.97

%

Total interest bearing deposits

 

 

1,732,831

 

 

1,818

 

0.14

%

 

 

1,530,207

 

 

3,368

 

0.29

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest-bearing liabilities

 

 

67,981

 

 

127

 

0.39

%

 

 

62,486

 

 

145

 

0.86

%

Long-term debt

 

 

1,285

 

 

38

 

3.95

%

 

 

 

 

 

 

Subordinated debentures

 

 

35,186

 

 

736

 

2.80

%

 

 

35,008

 

 

965

 

3.68

%

Total borrowed funds

 

 

104,452

 

 

901

 

1.15

%

 

 

97,494

 

 

1,110

 

1.52

%

Total interest bearing liabilities

 

 

1,800,812

 

 

2,719

 

0.20

%

 

 

1,627,701

 

 

4,478

 

0.37

%

Demand deposits - noninterest bearing

 

 

1,045,179

 

 

 

 

 

 

 

822,882

 

 

 

 

 

Other liabilities

 

 

45,191

 

 

 

 

 

 

 

39,646

 

 

 

 

 

Shareholders' equity

 

 

354,338

 

 

 

 

 

 

 

324,284

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

3,281,991

 

 

 

 

 

 

$

2,814,513

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

 

 

 

 

3.77

%

 

 

 

 

 

 

 

4.20

%

Interest expense/interest earning assets

 

 

 

 

 

 

 

0.11

%

 

 

 

 

 

 

 

0.23

%

Net interest income and margin(5)

 

 

 

 

$

82,460

 

3.66

%

 

 

 

 

$

76,003

 

3.97

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


(1)

Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

(2)

Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate.

(3)

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $3.4 million and $0.9 million for the nine months ended September 30, 2021 and 2020, respectively.

(4)

Non-accrual loans have been included in total loans for purposes of computing total earning assets.

(5)

Net interest margin represents net interest income as a percentage of average interest-earning assets.

Category: Financial
Source: Sierra Bancorp

Kevin McPhaill, President/CEO
(559) 782-4900 or (888) 454-BANK
www.sierrabancorp.com

Source: Sierra Bancorp