Sierra Bancorp Reports Financial Results for Second Quarter and First Six Months of 2022

Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the three-and six-month periods ended June 30, 2022. Sierra Bancorp reported consolidated net income of $9.2 million, or $0.61 per diluted share, for the second quarter of 2022, compared to $11.7 million, or $0.76 per diluted share, in the second quarter of 2021. On a linked-quarter basis, the Company increased net income by $1.8 million, or 24%.

For the first six months of 2022, the Company recognized net income of $16.6 million as compared to $22.8 million for the same period in 2021. The Company's financial performance metrics for the first half of 2022 include an annualized return on average equity of 10.10%, a return on average assets of 0.98%, and diluted earnings per share of $1.10.

“In this uncertain time of volatile interest rates and higher inflation, the strength of our loyal customer base provides us with a foundation of core deposits that position us to prudently increase loan production. I believe that these fundamentals remain a critical part of our success,” stated Kevin McPhaill, President and CEO. “It is through our entire banking team’s efforts that we continue to post solid financial results, and this last quarter is no exception with a 24% increase in net income on a linked quarter basis. Thanks to our strong capital position, recently expanded lending teams, and our low-cost core deposit base, we are excited about our prospects in the second half of 2022!” McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the second quarter of 2021)

  • Net interest income decreased $0.6 million, or 2%, due primarily to a $0.4 million increase in interest expense from the issuance of subordinated debt during the third quarter of 2021 and higher cost of funds on interest-bearing liabilities due to the recent increases in the prime interest rate.
  • Noninterest income increased $3.8 million, primarily due to a $3.2 million gain on sale of other assets, $0.4 million in life insurance proceeds, a $0.2 million recovery on an acquired loan, and a $1.0 million recovery of prior year legal expenses, partially offset by a $1.4 million negative variance in corporate owned life insurance with income linked to the Company’s nonqualified deferred compensation plan.
  • The provision for credit losses on loans and leases was $2.5 million under the new current expected credit losses (“CECL”) methodology, as compared to a $2.1 million benefit under the incurred loss model in the same quarter of 2021, for a net increase of $4.6 million. This is driven primarily from the replacement of allowance due to $2.3 million in net loan charge offs during the second quarter of 2022.
  • All capital ratios remain well above the regulatory requirements for a well-capitalized institution. The Community Bank Leverage ratio was 11.72% for Bank of the Sierra. The Sierra Bancorp leverage ratio was 10.45%.
  • Our Board of Directors declared a cash dividend of $0.23 per share on July 21, 2022. This is the 94th consecutive quarterly dividend paid by Sierra Bancorp. The cash dividend is payable on August 15, 2022 to shareholders of record at the close of business on August 1, 2022.

Linked Quarter Changes (comparisons to the three months ended March 31, 2022)

  • Net income improved by $1.8 million, or 24%, driven mostly by a $1.8 million increase in net interest income, and higher noninterest income, offset by unfavorable changes in the provision for credit losses and noninterest expense. The increase in net interest income was driven by higher average earning assets and a 22 basis point increase in the yield on earning assets, partially offset by a 5 basis point increase in the cost of interest-bearing liabilities.
  • Noninterest income increased by $4.4 million, or 72%, for same reasons as outlined in the quarterly comparison above.
  • The provision for credit losses on loans and leases increased $1.9 million to $2.5 million due mostly to charge-offs in the second quarter as the quantitative and qualitative components of the allowance for credit losses remained consistent with the prior quarter.
  • Noninterest expense increased $1.9 million, or 10%, mostly in other operating expense, due to a $0.7 million increase in other expense due to a proactive approach to a regulatory change in the treatment of non-sufficient fund charges on representments, a $0.4 million increase in recruitment costs for our new lending teams, and a $0.3 million increase in postage and supplies due to mailing of new account agreements to customers.

Year to-Date Changes (comparisons to the first six-months of 2021)

  • Net income decreased by $6.2 million due mostly to a $5.0 million increase in the provision for credit losses, as well as lower net interest income on a change in mix of average earning assets, partially offset by higher noninterest income.
  • The provision for credit losses on loans and leases was $3.1 million, an increase of $5.0 million, due to a change from the incurred loss method to the current expected credit loss method, coupled with higher charge-offs in 2022 on two loan relationships.
  • Net interest income decreased by $4.4 million, or 8%, due mostly to the change in mix of interest earning assets with average loan balances increasing and investments increasing. In addition, the cost of interest-bearing liabilities was higher due to increases in index rates on certain floating rate liabilities.
  • Noninterest income increased $3.1 million, or 23%, for the same reasons as noted above in the quarterly comparison, combined with a $1.0 million gain on the sale of investment securities, and a $2.6 million negative variance in BOLI income tied to our nonqualified deferred compensation plan.

Balance Sheet Changes (comparisons to December 31, 2021)

  • Total assets were relatively unchanged at $3.4 billion with increases in loans and investments partially offset by lower cash balances.
  • Deposits increased by $69.4 million, or 2%. The growth in deposits came primarily from noninterest-bearing or low-cost transaction and savings accounts, while higher-cost time deposits increased $5.9 million.
  • Gross loans increased $32.9 million due predominantly to the purchase of $173.1 million in high quality jumbo single family mortgage loan pool purchases. These mortgage loan pool purchases were offset by $201.8 million in loan maturities, charge-offs and payoffs. Organic loan production for the first half of 2022 was $142.1 million, a 61% increase, as compared to $88.3 million for the comparative period in 2021, as the new lending teams hired earlier in the year have been gaining traction in our market.
  • Investment securities increased $52.3 million, or 5%. On April 1, 2022, the Company transferred $162.1 million of “available-for-sale” investment securities to “held-to-maturity”. The securities were transferred at fair market value on the date of transfer. The transfer was initiated to partially insulate other comprehensive income and equity from changes in interest rates. This transfer had no impact on net income, and future price changes on these securities due to changes in interest rates will not affect capital.

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

 

 

six months ended

 

 

 

6/30/2022

 

 

3/31/2022

 

 

6/30/2021

 

 

6/30/2022

 

 

6/30/2021

Net income

 

$

9,204

 

 

$

7,407

 

 

$

11,708

 

 

$

16,611

 

 

$

22,786

 

Diluted earnings per share

 

$

0.61

 

 

$

0.49

 

 

$

0.76

 

 

$

1.10

 

 

$

1.48

 

Return on average assets

 

 

1.07

%

 

 

0.88

%

 

 

1.42

%

 

 

0.98

%

 

 

1.41

%

Return on average equity

 

 

11.68

%

 

 

8.64

%

 

 

13.29

%

 

 

10.10

%

 

 

13.11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (tax-equivalent)

 

 

3.40

%

 

 

3.21

%

 

 

3.60

%

 

 

3.31

%

 

 

3.76

%

Yield on average loans and leases

 

 

4.31

%

 

 

4.32

%

 

 

4.57

%

 

 

4.31

%

 

 

4.55

%

Cost of average total deposits

 

 

0.11

%

 

 

0.08

%

 

 

0.09

%

 

 

0.10

%

 

 

0.09

%

Efficiency ratio (tax-equivalent) (1)

 

 

59.19

%

 

 

67.08

%

 

 

58.79

%

 

 

62.70

%

 

 

57.57

%

 

 

 

 

 

Total assets

 

$

3,396,635

 

 

$

3,418,854

 

 

$

3,272,048

 

 

$

3,396,635

 

 

$

3,272,048

 

Loans & leases net of deferred fees

 

$

2,021,581

 

 

$

1,982,131

 

 

$

2,140,961

 

 

$

2,021,581

 

 

$

2,140,961

 

Noninterest demand deposits

 

$

1,120,413

 

 

$

1,104,691

 

 

$

1,073,833

 

 

$

1,120,413

 

 

$

1,073,833

 

Total deposits

 

$

2,850,999

 

 

$

2,864,943

 

 

$

2,775,914

 

 

$

2,850,999

 

 

$

2,775,914

 

Noninterest-bearing deposits over total deposits

 

 

39.3

%

 

 

38.6

%

 

 

38.7

%

 

 

39.3

%

 

 

38.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity / total assets

 

 

8.8

%

 

 

9.5

%

 

 

10.9

%

 

 

8.8

%

 

 

10.9

%

Tangible common equity ratio (2)

 

 

8.0

%

 

 

8.7

%

 

 

10.1

%

 

 

8.0

%

 

 

10.1

%

Book value per share

 

$

19.82

 

 

$

21.59

 

 

$

23.21

 

 

$

19.82

 

 

$

23.21

 

Tangible book value per share (2)

 

$

17.82

 

 

$

19.58

 

 

$

21.19

 

 

$

17.82

 

 

$

21.19

 

(1)

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

(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 $26.6 million, for the second quarter of 2022, a $0.6 million decrease, or 2% under the second quarter of 2021, and decreased $4.4 million, or 8% to $51.3 million for the first six months of 2022 relative to the same period in 2021.

For the second quarter of 2022, growth in average interest-earning assets totaled $117.5 million, or 4%, as compared to the second quarter of 2021. The yield on these balances was 11 basis points lower for the same period. Average loan balances decreased $173.0 million with a 26 basis point decrease in yield, while average investment balances increased $290.6 million with a 79 basis point increase in yield, mostly due to a $388.9 million increase in average collateralized loan obligation balances which have variable rates. There was a 13 basis point increase in the cost of our interest-bearing liabilities for the same period.

Net interest income for the comparative year-to-date periods decreased due to the change in mix on interest earning assets, compounded by an increase in interest rates paid on interest-bearing liabilities. There was a $293.5 million, or 13% decline in average loan and lease balances yielding 24 basis points less for the same period, while average investment balances increased $451.0 million yielding 28 basis points higher for the same period. Average interest-bearing liabilities increased $86.8 million, of which $49.2 million is attributed to the issuance of subordinated debt in the third quarter of 2021, with an 11 basis point overall increase in yield. The net impact of the mix and rate change was a 45 basis point decrease in our net interest margin for the six-months ending June 30, 2022 as compared to the same period in 2021.

Interest expense was $1.6 million for the second quarter of 2022, an increase of $0.7 million, or 80%, relative to the second quarter of 2021. For the first six months of 2022, compared to the first six months of 2021, interest expense increased $1.1 million, or 63%, to $2.9 million. The increase in interest expense is attributable to the issuance of subordinated debt combined with an increase in interest rates paid on certain deposits. Some of the increase in interest expense was mitigated by a favorable shift in deposit mix as the average balance on higher cost time deposits declined by $73.8 million or 17% in the second quarter of 2022 as compared to the second quarter of 2021, and by $116.1 million or 25% for the six months ending 2022 as compared to the same period in 2021, while lower or no cost average transaction and savings accounts increased $153.5 million or 6% for the second quarter of 2022 compared to the same period in 2021 and increased by $205.2 million or 9% over the comparable year to date periods.

Our net interest margin was 3.40% for the second quarter of 2022, as compared to 3.21% for the linked quarter and 3.60% for the second quarter of 2021.

Provision for Credit Losses

The Company recorded a provision for credit losses on loans and leases of $2.5 million in the second quarter of 2022 relative to a benefit of $2.1 million in the second quarter of 2021, and a year-to-date provision for credit losses on loans and leases of $3.1 million in 2022 as compared to a benefit of $1.9 million for the same period in 2021. The Company's $4.6 million, increase in the provision for credit losses on loans and leases in the second quarter of 2022 as compared to the second quarter of 2021, and the $5.0 million year to date increase in the provision for credit losses on loans and leases, compared to the same period in 2021 was primarily due to the impact of $4.1 million in net charge-offs in the first six months of 2022. The increase in net charge-offs in the second quarter of 2022 was primarily related to a single office building loan relationship that was sold at a discount due to an increased risk of default that would have likely led to a prolonged collection period. For the first six months, the increase in net charge-offs also included a single dairy loan relationship that defaulted in late March 2022.

Noninterest Income

Total noninterest income increased by $3.8 million, or 58%, for the quarter ended June 30, 2022 as compared to the same quarter in 2021 and increased $3.1 million, or 23% for the comparable year-to-date periods. The quarterly comparison includes $3.2 million in non-recurring gains resulting from the sale of Visa B stock of $2.6 million and a small business investment company fund investment of $0.6 million, as well as $0.4 million in life insurance proceeds, a $1.0 million recovery of prior year legal expenses, and a $0.2 million gain from a recovery on an acquired loan. In addition, the year-to-date comparison reflects a $1.0 million gain on the sale of investment securities. These favorable adjustments to the quarter and year-to-date comparisons were partially offset by unfavorable declines of $1.4 million and $2.6 million respectively, in the value of separate account corporate-owned life insurance assets tied to non-qualified deferred compensation plans. Investments in the separate account variable life insurance policies are invested in a similar proportionate mix of asset classes that our deferred compensation participants have elected, with the exception of participant elections in a fixed income account. Such election by plan participants in the fixed income account is ignored which creates greater volatility of the corporate owned life insurance asset value as compared to the related liability balance for deferred compensation.

Service charges on customer deposit account income increased by $0.5 million, or 18%, to $3.2 million in the second quarter of 2022 as compared to the second quarter of 2021. This service charge income was $0.8 million higher, or 14% in the first six months of 2022, as compared to the same period in 2021. These increases in the quarterly and year-to-date comparisons are primarily a result of increased analysis fees and overdraft income. Overdraft fees and returned check charges increased $0.2 million to $1.4 million for the second quarter of 2022 and increased $0.4 million to $2.7 million for the first six months of 2022.

Noninterest Expense

Total noninterest expense increased by $1.9 million, or 9%, in the second quarter of 2022 relative to the second quarter of 2021, and by $1.8 million, or 4%, in the first six months of 2022 as compared to the first six months of 2021.

Salaries and Benefits were $1.3 million, or 13%, higher in the second quarter of 2022 as compared to the second quarter of 2021 and $2.0 million, or 9% higher for the first six months of 2022 compared to the same period in 2021. The reason for this increase is primarily due to increased salary expense due to the strategic hiring of lending and management staff for both the quarterly and year-to-date comparisons.

Occupancy expenses were $0.2 million lower for the second quarter of 2022 as compared to the same quarter in 2021 and $0.4 million lower for the first half of 2022 as compared to the first half of 2021. The primary reason for this decrease was from a decrease in premises depreciation due to the sale of a branch building which was closed in the third quarter of 2021.

Other noninterest expense increased $0.8 million, or 11% for the second quarter 2022 as compared to the second quarter in 2021, and increased $0.2 million, or 2% for the first half of 2022 as compared to the same period in 2021. The variance for the second quarter of 2022 compared to the same period in 2021 was driven by a $0.7 million accrual for restitution payments to customers charged nonsufficient fund fees in the past five years for representments. This accrual was established after the FDIC published its position in how such representments are characterized for regulatory purposes. The Company also incurred higher costs of $0.3 million associated with postage and mailing of new account agreements to customers. Beginning in the third quarter of 2022, the Company will no longer charge customers for returned item fees, commonly referred to as nonsufficient fund fees. In addition, the Company increased overdraft privilege for both commercial and consumer customers but will limit the number of daily overdraft fees to four per day (previously five per day) and will no longer charge a fee for continuous overdrafts (previously a $35 charge after the 10th consecutive day an account is in an overdraft position). These changes to our nonsufficient fund fees, overdraft fees and overdraft privilege program are not expected to have a material impact on deposit fee income.

In addition, there was a $0.4 million increase in recruitment costs associated with new lending teams and management staff. For the quarterly and year-to-date comparisons, decreases in deferred compensation expense for directors, which is linked to the changes in life insurance income, partially offset the increases.

The Company's provision for income taxes was 26.3% of pre-tax income in the second quarter of 2022 relative to 25.3% in the second quarter of 2021, and 26.6% of pre-tax income for the first half of 2022 relative to 25.4% for the same period in 2021. The increase in effective tax rate for both the quarterly and year-to-date comparisons is due to the volatility in the Corporate Owned Life Insurance asset value associated with our non-qualified deferred compensation plans. In the second quarter and first half of 2022, the investments associated with the non-qualified deferred compensation plans declined in value, resulting in a non-deductible expense as compared to an increase in value generating non-taxable income for the second quarter, and first half of 2021.

Balance Sheet Summary

Balance sheet changes during the first half of 2022 include an increase in total assets of $25.6 million, or 1%, primarily a result of a $32.9 million increase gross loan balances, a $52.3 million increase in investment securities, a $14.6 million increase in other equity investments, including Low Income Housing Tax Credit Funds, SBA loan funds and limited partnerships, a $28.3 million increase in deferred tax assets, and a $18.9 million increase in cash and due from banks. These changes were partially offset by a $114.6 million decrease in short term investments, primarily overnight investments.

The increase in gross loan balances as compared to December 31, 2021 was primarily a result of an increase in 1-4 family residential real estate loans, mostly from the purchase of $173.1 million in high quality jumbo mortgage loans and a $12.8 million organic increase in multi-family residential loans. Counterbalancing these positive variances were loan paydowns and maturities resulting in net declines in many categories even with higher loan production. In particular, there was a $20.4 million net decrease in construction loans, a $9.9 million net decline in commercial real estate loans, a $37.0 million net reduction in commercial and industrial loans, a $43.0 million unfavorable change in mortgage warehouse line utilization, and a $10.2 net decline in agricultural loans. Further, SBA PPP loan forgiveness resulted in a $23.6 million decline in loan balances, included in the commercial and industrial variance noted above.

As indicated in the loan roll forward below, new credit extended for the second quarter of 2022, increased $97.0 million over the linked quarter to $119.6 million and increased $97.9 million over the same period in 2021. This organic loan growth is attributable to the new agricultural and commercial real estate lending teams added earlier this year. Contributing to our organic growth, loans purchased totaled $173.1 million, however we had $201.8 million in loan paydowns and maturities, along with a $43.0 million decrease in mortgage warehouse line utilization and a $37.4 million decrease in line of credit utilization.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOAN ROLLFORWARD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended:

 

For the six months ended:

 

 

 

June 30, 2022

 

 

March 31, 2022

 

 

June 30, 2021

 

 

June 30, 2022

 

 

June 30, 2021

Gross loans beginning balance

 

$

1,983,331

 

 

$

1,989,726

 

 

$

2,288,468

 

 

$

1,989,726

 

 

$

2,463,111

 

New credit extended

 

 

119,553

 

 

 

22,543

 

 

 

21,698

 

 

 

142,096

 

 

 

88,294

 

Loan purchases

 

 

46,364

 

 

 

126,718

 

 

 

 

 

 

173,082

 

 

 

 

Changes in line of credit utilization

 

 

(17,837

)

 

 

(19,553

)

 

 

(17,071

)

 

 

(37,390

)

 

 

(39,657

)

Change in mortgage warehouse

 

 

956

 

 

 

(44,005

)

 

 

(37,588

)

 

 

(43,049

)

 

 

(157,327

)

Pay-downs, maturities, charge-offs and amortization(1)

 

 

(109,705

)

 

 

(92,098

)

 

 

(110,711

)

 

 

(201,803

)

 

 

(209,625

)

Gross loans ending balance

 

 

2,022,662

 

 

 

1,983,331

 

 

 

2,144,796

 

 

 

2,022,662

 

 

 

2,144,796

 

Deferred costs and (fees), net

 

 

(1,081

)

 

 

(1,200

)

 

 

(3,835

)

 

 

(1,081

)

 

 

(3,835

)

Loans, net of deferred costs and (fees)

 

$

2,021,581

 

 

$

1,982,131

 

 

$

2,140,961

 

 

$

2,021,581

 

 

$

2,140,961

 

(1)

Includes $1.6 million from the sale of a performing loan during the second quarter of 2022.

Unused commitments, excluding mortgage warehouse and overdraft lines, were $199.4 million at June 30, 2022, compared to $242.3 million at December 31, 2021. Total line utilization, excluding mortgage warehouse and consumer overdraft lines, was 61.2% at June 30, 2022 and 61.0% at December 31, 2021. Mortgage warehouse utilization declined significantly to 12% at June 30, 2022, as compared to 28% at December 31, 2021. It should be noted that approximately $278.0 million of the mortgage warehouse lines were moved to repurchase agreement lines that provide stronger credit protection to the Company, as well as more favorable regulatory capital treatment as these repurchase lines are not considered off-balance sheet commitments.

PPP loans continue to decline as borrowers receive forgiveness on these loans. There were 107 loans for $8.2 million outstanding at June 30, 2022, compared to 440 loans for $31.8 million at December 31, 2021.

Deposit balances reflect growth of $69.4 million, or 2%, during the first six months of 2022. Core non-maturity deposits increased by $63.5 million, or 3%, while customer time deposits increased by $5.9 million, or 2%. Wholesale brokered deposits were unchanged at $60.0 million. Overall noninterest-bearing deposits as a percent of total deposits at June 30, 2022, increased to 39.3%, as compared to 39.0% at December 31, 2021. Other interest-bearing liabilities of $202.6 million on June 30, 2022 consisted of $118.0 million in customer repurchase agreements, $35.4 million in trust preferred securities and $49.2 million in subordinated debentures.

The Company continues to have substantial liquidity. At June 30, 2022, and December 31, 2021, the Company had the following sources of primary and secondary liquidity (Dollars in Thousands):

 

 

 

 

 

 

 

Primary and secondary liquidity sources

 

 

June 30, 2022

 

December 31, 2021

Cash and cash equivalents

 

$

161,875

 

$

257,528

Unpledged investment securities

 

 

839,833

 

 

806,132

Excess pledged securities

 

 

38,245

 

 

47,024

FHLB borrowing availability

 

 

830,615

 

 

787,519

Unsecured lines of credit

 

 

305,000

 

 

305,000

Funds available through fed discount window

 

 

32,762

 

 

50,608

Totals

 

$

2,208,330

 

$

2,253,811

Total capital of $299.0 million at June 30, 2022 reflects a decrease of $63.4 million, or 18%, relative to year-end 2021. The decrease in equity during the first half of 2022 was due to the addition of $16.6 million in net income, offset by a $61.6 million unfavorable swing in accumulated other comprehensive income/loss due principally to changes in investment securities’ fair value, a one-time adjustment from the implementation of CECL on January 1, 2022 for $7.3 million, $4.9 million in share repurchases and net of $7.0 million in dividends paid. The remaining difference is related to stock options exercised and restricted stock compensation recognized during the quarter.

The Company’s strong liquidity position enabled the transfer of $162.1 million of “available-for-sale” investment securities to “held-to-maturity” classification effective April 1, 2022. The transfer was initiated to reduce the effect of future rate increases on the available-for-sale portfolio, mark-to-market adjustments, comprehensive income and equity.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, increased by $25.1 million to $29.7 million for the first half of 2022. The Company's ratio of nonperforming loans to gross loans increased to 1.47% at June 30, 2022 from 0.23% at December 31, 2021. The increase resulted from an increase in non-accrual loan balances, primarily as a result of a downgrade in the first quarter of 2022 of one loan relationship in the dairy industry consisting of four separate loans. All the Company's nonperforming assets are individually evaluated for credit loss quarterly and management believes the established allowance for credit loss on such loans is appropriate.

The Company's allowance for credit losses on loans and leases was $22.8 million at June 30, 2022, as compared to $14.3 million at December 31, 2021. The $8.5 million increase in the allowance for credit losses on loans and leases during the first half of 2022 is due to a $9.5 million one-time adjustment from the implementation of CECL on January 1, 2022, a $3.1 million provision for credit losses on loans and leases, and net loan charge-offs of $4.1 million. In the second quarter of 2022, net loan charge-offs were $2.3 million, including $1.6 million from the sale of a performing loan during the quarter. Such loan was an office building that had previously had interest deferred under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Included in the charge-off was $0.7 million of deferred interest that was not contractually due at the time of sale. Given the potential of a prolonged work-out process with the customer, management determined that the best long-term course of action would be sell this loan rather than waiting for it to become noncurrent and begin a foreclosure process.

The allowance was 1.13% of gross loans at June 30, 2022, and 0.72% of gross loans at December 31, 2021. Management's detailed analysis indicates that the Company's allowance for credit losses on loans and leases should be sufficient to cover credit losses for the life of the loans and leases outstanding as of June 30, 2022, 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.

About Sierra Bancorp

Sierra Bancorp is the holding Company for Bank of the Sierra (www.bankofthesierra.com), which is in its 45th 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 in Templeton, California, an SBA center, and a dedicated loan production office in Roseville, California. In 2022, Bank of the Sierra was recognized as one of the strongest and top-performing 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 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

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

Cash and due from banks

 

$

161,875

 

 

$

253,534

 

 

$

257,528

 

 

$

422,350

 

 

$

373,902

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale, at fair value

 

 

864,178

 

 

 

1,025,032

 

 

 

973,314

 

 

 

732,312

 

 

 

607,474

 

Held-to-maturity, at amortized cost, net of allowance for credit losses

 

 

161,399

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-4 family residential construction

 

 

5,542

 

 

 

8,800

 

 

 

21,369

 

 

 

34,720

 

 

 

37,165

 

Other construction/land

 

 

20,816

 

 

 

24,633

 

 

 

25,299

 

 

 

25,512

 

 

 

27,682

 

1-4 family - closed-end

 

 

429,109

 

 

 

398,871

 

 

 

289,457

 

 

 

220,240

 

 

 

106,599

 

Equity lines

 

 

25,260

 

 

 

23,389

 

 

 

26,588

 

 

 

31,341

 

 

 

33,334

 

Multi-family residential

 

 

66,367

 

 

 

59,711

 

 

 

53,458

 

 

 

55,628

 

 

 

58,230

 

Commercial real estate - owner occupied

 

 

312,060

 

 

 

331,764

 

 

 

334,446

 

 

 

345,116

 

 

 

359,021

 

Commercial real estate - non-owner occupied

 

 

898,159

 

 

 

857,051

 

 

 

882,888

 

 

 

995,921

 

 

 

1,048,153

 

Farmland

 

 

101,675

 

 

 

98,865

 

 

 

106,706

 

 

 

124,446

 

 

 

125,783

 

Total real estate loans

 

 

1,858,988

 

 

 

1,803,084

 

 

 

1,740,211

 

 

 

1,832,924

 

 

 

1,795,967

 

Agricultural production loans

 

 

28,660

 

 

 

31,663

 

 

 

33,990

 

 

 

43,296

 

 

 

42,952

 

Commercial and industrial

 

 

72,616

 

 

 

87,173

 

 

 

109,791

 

 

 

132,292

 

 

 

150,632

 

Mortgage warehouse lines

 

 

58,134

 

 

 

57,178

 

 

 

101,184

 

 

 

126,486

 

 

 

150,351

 

Consumer loans

 

 

4,264

 

 

4,233

 

 

4,550

 

 

4,828

 

 

4,894

 

Gross loans and leases

 

 

2,022,662

 

 

 

1,983,331

 

 

 

1,989,726

 

 

 

2,139,826

 

 

 

2,144,796

 

Deferred loan and lease fees

 

 

(1,081

)

 

 

(1,200

)

 

 

(1,865

)

 

 

(2,612

)

 

 

(3,835

)

Allowance for credit losses on loans and leases

 

 

(22,802

)

 

(22,530

)

 

(14,256

)

 

(15,617

)

 

(16,421

)

Net loans and leases

 

 

1,998,779

 

 

 

1,959,601

 

 

 

1,973,605

 

 

 

2,121,597

 

 

 

2,124,540

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank premises and equipment

 

 

22,937

 

 

 

23,239

 

 

 

23,571

 

 

 

24,490

 

 

 

25,949

 

Other assets

 

 

187,467

 

 

157,448

 

 

142,996

 

 

141,990

 

 

140,183

 

Total assets

 

$

3,396,635

 

$

3,418,854

 

$

3,371,014

 

$

3,442,739

 

$

3,272,048

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest demand deposits

 

$

1,120,413

 

 

$

1,104,691

 

 

$

1,084,544

 

 

$

1,111,411

 

 

$

1,073,833

 

Interest-bearing transaction accounts

 

 

736,034

 

 

 

776,457

 

 

 

744,553

 

 

 

765,823

 

 

 

752,137

 

Savings deposits

 

 

482,140

 

 

 

480,178

 

 

 

450,785

 

 

 

451,248

 

 

 

435,076

 

Money market deposits

 

 

152,596

 

 

 

149,918

 

 

 

147,793

 

 

 

141,348

 

 

 

133,977

 

Customer time deposits

 

 

299,816

 

 

 

293,699

 

 

 

293,897

 

 

 

290,816

 

 

 

295,891

 

Wholesale brokered deposits

 

 

60,000

 

 

60,000

 

 

60,000

 

 

60,000

 

 

85,000

 

Total deposits

 

 

2,850,999

 

 

 

2,864,943

 

 

 

2,781,572

 

 

 

2,820,646

 

 

 

2,775,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

49,173

 

 

 

49,151

 

 

 

49,141

 

 

 

49,221

 

 

 

-

 

Subordinated debentures

 

 

35,392

 

 

 

35,347

 

 

 

35,302

 

 

 

35,258

 

 

 

35,213

 

Other interest-bearing liabilities

 

 

118,014

 

 

107,760

 

 

106,937

 

 

92,553

 

 

70,535

 

Total deposits and interest-bearing liabilities

 

 

3,053,578

 

 

 

3,057,201

 

 

 

2,972,952

 

 

 

2,997,678

 

 

 

2,881,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on unfunded loan commitments

 

 

893

 

 

 

1,040

 

 

 

203

 

 

 

203

 

 

 

193

 

Other liabilities

 

 

43,117

 

 

 

34,922

 

 

 

35,365

 

 

 

80,351

 

 

 

32,464

 

Total capital

 

 

299,047

 

 

325,691

 

 

362,494

 

 

364,507

 

 

357,729

 

Total liabilities and capital

 

$

3,396,635

 

$

3,418,854

 

$

3,371,014

 

$

3,442,739

 

$

3,272,048

 

GOODWILL AND INTANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

Goodwill

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

Core deposit intangible

 

 

2,769

 

 

3,022

 

 

3,275

 

 

3,527

 

 

3,780

 

Total intangible assets

 

$

30,126

 

$

30,379

 

$

30,632

 

$

30,884

 

$

31,137

 

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

Non-accruing loans

 

$

29,745

 

 

$

30,446

 

 

$

4,522

 

 

$

6,788

 

 

$

7,276

 

Foreclosed assets

 

 

2

 

 

93

 

 

93

 

 

93

 

 

774

 

Total nonperforming assets

 

$

29,747

 

$

30,539

 

$

4,615

 

$

6,881

 

$

8,050

 

 

 

 

 

 

 

 

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

 

$

4,714

 

 

$

4,568

 

 

$

4,910

 

 

$

5,509

 

 

$

10,774

 

Net (recoveries) / charge offs

 

$

4,056

 

 

$

1,778

 

 

$

(168

)

 

$

(329

)

 

$

(533

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due & still accruing (30-89)

 

$

1,037

 

 

$

2,809

 

 

$

2,013

 

 

$

380

 

 

$

3,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans to gross loans

 

 

1.47

%

 

 

1.54

%

 

 

0.23

%

 

 

0.32

%

 

 

0.34

%

NPA's to loans plus foreclosed assets

 

 

1.47

%

 

 

1.54

%

 

 

0.23

%

 

 

0.32

%

 

 

0.38

%

Allowance for credit losses on loans and leases to loans

 

 

1.13

%

 

 

1.14

%

 

 

0.72

%

 

 

0.73

%

 

 

0.77

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECT PERIOD-END STATISTICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

Shareholders' equity / total assets

 

 

8.8

%

 

 

9.5

%

 

 

10.8

%

 

 

10.6

%

 

 

10.9

%

Gross loans / deposits

 

 

70.9

%

 

 

69.2

%

 

 

71.5

%

 

 

75.9

%

 

 

77.3

%

Noninterest-bearing deposits / total deposits

 

 

39.3

%

 

 

38.6

%

 

 

39.0

%

 

 

39.4

%

 

 

38.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

For the three months ended:

 

 

For the six months ended:

 

 

 

6/30/2022

 

 

3/31/2022

 

 

6/30/2021

 

 

6/30/2022

 

 

6/30/2021

Interest income

 

$

28,206

 

 

$

26,081

 

 

$

28,092

 

 

$

54,287

 

 

$

57,550

 

Interest expense

 

 

1,621

 

 

 

1,325

 

 

 

903

 

 

 

2,945

 

 

 

1,806

 

Net interest income

 

 

26,585

 

 

 

24,756

 

 

 

27,189

 

 

 

51,342

 

 

 

55,744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision / (benefit) for credit losses on loans and leases

 

 

2,548

 

 

 

600

 

 

 

(2,100

)

 

 

3,148

 

 

 

(1,850

)

Benefit for credit losses on unfunded loan commitments

 

 

(147

)

 

 

(94

)

 

 

-

 

 

 

(241

)

 

 

-

 

Provision for credit losses on held-to-maturity securities

 

 

18

 

 

 

-

 

 

 

-

 

 

 

18

 

 

 

-

 

Net interest income after provision

 

 

24,166

 

 

 

24,250

 

 

 

29,289

 

 

 

48,417

 

 

 

57,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges

 

 

3,204

 

 

 

3,040

 

 

 

2,725

 

 

 

6,245

 

 

 

5,491

 

BOLI (expense) income

 

 

(582

)

 

 

(645

)

 

 

814

 

 

 

(1,228

)

 

 

1,397

 

Gain on sale of investments

 

 

-

 

 

 

1,032

 

 

 

-

 

 

 

1,032

 

 

 

-

 

Other noninterest income

 

 

7,817

 

 

 

2,636

 

 

 

3,073

 

 

 

10,453

 

 

 

6,554

 

Total noninterest income

 

 

10,439

 

 

 

6,063

 

 

 

6,612

 

 

 

16,502

 

 

 

13,442

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

11,745

 

 

 

11,805

 

 

 

10,425

 

 

 

23,550

 

 

 

21,576

 

Occupancy expense

 

 

2,406

 

 

 

2,294

 

 

 

2,626

 

 

 

4,699

 

 

 

5,112

 

Other noninterest expenses

 

 

7,962

 

 

 

6,074

 

 

 

7,184

 

 

 

14,037

 

 

 

13,818

 

Total noninterest expense

 

 

22,113

 

 

 

20,173

 

 

 

20,235

 

 

 

42,286

 

 

 

40,506

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

12,492

 

 

 

10,140

 

 

 

15,666

 

 

 

22,633

 

 

 

30,530

 

Provision for income taxes

 

 

3,288

 

 

 

2,733

 

 

 

3,958

 

 

 

6,022

 

 

 

7,744

 

Net income

 

$

9,204

 

 

$

7,407

 

 

$

11,708

 

 

$

16,611

 

 

$

22,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TAX DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt muni income

 

$

1,854

 

 

$

1,726

 

 

$

1,517

 

 

$

3,581

 

 

$

2,967

 

Interest income - fully tax equivalent

 

$

28,699

 

 

$

26,540

 

 

$

28,495

 

 

$

55,239

 

 

$

58,339

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

For the six months ended:

 

 

 

6/30/2022

 

 

3/31/2022

 

 

6/30/2021

 

 

6/30/2022

 

 

6/30/2021

Basic earnings per share

 

$

0.62

 

 

$

0.49

 

 

$

0.77

 

 

$

1.11

 

 

$

1.49

 

Diluted earnings per share

 

$

0.61

 

 

$

0.49

 

 

$

0.76

 

 

$

1.10

 

 

$

1.48

 

Common dividends

 

$

0.23

 

 

$

0.23

 

 

$

0.21

 

 

$

0.46

 

 

$

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

14,931,701

 

 

 

15,021,138

 

 

 

15,243,698

 

 

 

14,976,774

 

 

 

15,242,451

 

Weighted average diluted shares

 

 

15,004,017

 

 

 

15,120,990

 

 

 

15,375,825

 

 

 

15,063,804

 

 

 

15,365,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per basic share (EOP)

 

$

19.82

 

 

$

21.59

 

 

$

23.21

 

 

$

19.82

 

 

$

23.21

 

Tangible book value per share (EOP)

 

$

17.82

 

 

$

19.58

 

 

$

21.19

 

 

$

17.82

 

 

$

21.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (EOP)

 

 

15,090,792

 

 

 

15,086,032

 

 

 

15,410,763

 

 

 

15,090,792

 

 

 

15,410,763

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY FINANCIAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

For the six months ended:

 

 

 

6/30/2022

 

 

3/31/2022

 

 

6/30/2021

 

 

6/30/2022

 

 

6/30/2021

Return on average equity

 

 

11.68

%

 

 

8.64

%

 

 

13.29

%

 

 

10.10

%

 

 

13.11

%

Return on average assets

 

 

1.07

%

 

 

0.88

%

 

 

1.42

%

 

 

0.98

%

 

 

1.41

%

Net interest margin (tax-equivalent)

 

 

3.40

%

 

 

3.21

%

 

 

3.60

%

 

 

3.31

%

 

 

3.76

%

Efficiency ratio (tax-equivalent)(1)

 

 

59.19

%

 

 

67.08

%

 

 

58.79

%

 

 

62.70

%

 

 

57.57

%

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

 

 

0.11

%

 

 

0.09

%

 

 

(0.01

)%

 

 

0.20

%

 

 

(0.02

)%

(1)

 

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

NON-GAAP FINANCIAL MEASURES

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2022

 

 

3/31/2022

 

 

6/30/2021

Total stockholders' equity

 

$

299,047

 

 

$

325,691

 

 

$

357,729

 

Less: goodwill and other intangible assets

 

 

30,126

 

 

 

30,379

 

 

 

31,137

 

Tangible common equity

 

$

268,921

 

 

$

295,312

 

 

$

326,592

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,396,635

 

 

$

3,418,854

 

 

$

3,272,048

 

Less: goodwill and other intangible assets

 

 

30,126

 

 

 

30,379

 

 

 

31,137

 

Tangible assets

 

$

3,366,509

 

 

$

3,388,475

 

 

$

3,240,911

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

15,090,792

 

 

 

15,086,032

 

 

 

15,410,763

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

19.82

 

 

$

21.59

 

 

$

23.21

 

Tangible book value per common share

 

$

17.82

 

 

$

19.58

 

 

$

21.19

 

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

 

 

8.80

%

 

 

9.53

%

 

 

10.93

%

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

 

 

7.99

%

 

 

8.72

%

 

 

10.08

%

NONINTEREST INCOME/EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

For the three months ended:

 

 

For the six months ended:

Noninterest income:

 

 

6/30/2022

 

 

3/31/2022

 

 

6/30/2021

 

 

6/30/2022

 

6/30/2021

Service charges on deposit accounts

 

$

3,204

 

 

$

3,040

 

 

$

2,725

 

 

$

6,245

 

 

$

5,491

 

Debit card fees

 

 

2,161

 

 

 

2,056

 

 

 

2,235

 

 

 

4,218

 

 

 

 

Bank-owned life insurance

 

 

(582

)

 

 

(645

)

 

 

814

 

 

 

(1,228

)

 

 

1,397

 

Other service charges and fees

 

 

732

 

 

 

696

 

 

 

993

 

 

 

1,462

 

 

 

5,611

 

Gain on sale of securities

 

 

 

 

 

1,032

 

 

 

 

 

 

1,032

 

 

 

 

Loss on tax credit investment

 

 

(113

)

 

 

(113

)

 

 

(114

)

 

 

 

 

 

 

Other

 

 

5,037

 

 

 

(3

)

 

 

(41

)

 

 

4,773

 

 

 

943

 

Total noninterest income

 

$

10,439

 

 

$

6,063

 

 

$

6,612

 

 

$

16,502

 

 

$

13,442

 

As a % of average interest earning assets (1)

 

 

1.31

%

 

 

0.77

%

 

 

0.86

%

 

 

1.04

%

 

 

0.89

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

11,745

 

 

$

11,805

 

 

$

10,425

 

 

$

23,550

 

 

$

21,576

 

Occupancy costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Furniture & equipment

 

 

511

 

 

 

454

 

 

 

453

 

 

 

964

 

 

 

905

 

Premises

 

 

1,895

 

 

 

1,840

 

 

 

2,173

 

 

 

3,735

 

 

 

4,207

 

Advertising and marketing costs

 

 

449

 

 

 

406

 

 

 

292

 

 

 

855

 

 

 

612

 

Data processing costs

 

 

1,525

 

 

 

1,485

 

 

 

1,513

 

 

 

3,010

 

 

 

2,939

 

Deposit services costs

 

 

2,417

 

 

 

2,245

 

 

 

2,282

 

 

 

4,662

 

 

 

4,350

 

Loan services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan processing

 

 

186

 

 

 

111

 

 

 

65

 

 

 

297

 

 

 

234

 

Foreclosed assets

 

 

92

 

 

 

(5

)

 

 

(10

)

 

 

87

 

 

 

98

 

Other operating costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone & data communications

 

 

377

 

 

 

444

 

 

 

668

 

 

 

821

 

 

 

1,048

 

Postage & mail

 

 

223

 

 

 

56

 

 

 

109

 

 

 

279

 

 

 

193

 

Other

 

 

1,447

 

 

 

419

 

 

 

337

 

 

 

1,868

 

 

 

799

 

Professional services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal & accounting services

 

 

673

 

 

 

546

 

 

 

682

 

 

 

1,219

 

 

 

1,125

 

Other professional service

 

 

259

 

 

 

143

 

 

 

1,004

 

 

 

402

 

 

 

1,899

 

Stationery & supply costs

 

 

116

 

 

 

85

 

 

 

73

 

 

 

201

 

 

 

151

 

Sundry & tellers

 

 

198

 

 

 

139

 

 

 

169

 

 

 

336

 

 

 

370

 

Total noninterest expense

 

$

22,113

 

 

$

20,173

 

 

$

20,235

 

 

$

42,286

 

 

$

40,506

 

As a % of average interest earning assets (1)

 

 

2.78

%

 

 

2.57

%

 

 

2.64

%

 

 

2.67

%

 

 

2.68

%

Efficiency ratio (2)(3)

 

 

59.19

%

 

 

67.08

%

 

 

58.79

%

 

 

62.70

%

 

 

57.58

%

(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

 

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold/interest-earning due from's

 

$

146,287

$

270

0.74

%

 

$

194,846

$

93

0.19

%

 

$

308,453

$

85

0.11

%

Taxable

 

 

752,693

 

4,477

2.39

%

 

 

744,599

 

3,490

1.90

%

 

 

340,690

 

1,573

1.85

%

Non-taxable

 

 

284,198

 

1,854

3.31

%

 

 

294,409

 

1,726

3.01

%

 

 

243,461

 

1,517

3.16

%

Total investments

 

 

1,183,178

 

6,601

2.40

%

 

 

1,233,854

 

5,309

1.90

%

 

 

892,604

 

3,175

1.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases: (3)

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

1,844,367

 

19,659

4.28

%

 

 

1,753,394

 

18,326

4.24

%

 

 

1,825,600

 

21,015

4.62

%

Agricultural production

 

 

30,466

 

232

3.05

%

 

 

33,986

 

302

3.60

%

 

 

43,959

 

408

3.72

%

Commercial

 

 

80,533

 

980

4.88

%

 

 

97,127

 

1,398

5.84

%

 

 

166,554

 

2,124

5.12

%

Consumer

 

 

4,264

 

207

19.47

%

 

 

4,448

 

206

18.78

%

 

 

4,978

 

193

15.55

%

Mortgage warehouse lines

 

 

49,884

 

493

3.96

%

 

 

61,255

 

510

3.38

%

 

 

142,348

 

1,151

3.24

%

Other

 

 

2,354

 

34

5.79

%

 

 

1,485

 

30

8.19

%

 

 

1,460

 

26

7.14

%

Total loans and leases

 

 

2,011,868

 

21,605

4.31

%

 

 

1,951,695

 

20,772

4.32

%

 

 

2,184,899

 

24,917

4.57

%

Total interest earning assets (4)

 

 

3,195,046

$

28,206

3.60

%

 

 

3,185,549

$

26,081

3.38

%

 

 

3,077,503

$

28,092

3.71

%

Other earning assets

 

 

15,628

 

 

 

 

15,679

 

 

 

 

15,438

 

 

Non-earning assets

 

 

239,803

 

 

 

 

210,724

 

 

 

 

209,218

 

 

Total assets

 

$

3,450,477

 

 

 

$

3,411,952

 

 

 

$

3,302,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

221,322

$

120

0.22

%

 

$

202,962

$

106

0.21

%

 

$

161,871

$

91

0.23

%

NOW

 

 

542,915

 

82

0.06

%

 

 

546,280

 

82

0.06

%

 

 

601,339

 

116

0.08

%

Savings accounts

 

 

480,654

 

70

0.06

%

 

 

467,700

 

67

0.06

%

 

 

424,512

 

59

0.06

%

Money market

 

 

155,574

 

23

0.06

%

 

 

151,339

 

23

0.06

%

 

 

139,336

 

30

0.09

%

Time deposits

 

 

295,850

 

441

0.60

%

 

 

293,684

 

234

0.32

%

 

 

337,270

 

262

0.30

%

Wholesale brokered deposits

 

 

60,000

 

48

0.32

%

 

 

60,000

 

48

0.32

%

 

 

92,418

 

61

0.26

%

Total interest-bearing deposits

 

 

1,756,315

 

784

0.18

%

 

 

1,721,965

 

560

0.13

%

 

 

1,756,746

 

619

0.14

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

Other interest-bearing liabilities

 

 

112,586

 

77

0.27

%

 

 

105,238

 

82

0.31

%

 

 

61,186

 

39

0.26

%

Long-term debt

 

 

49,160

 

430

3.51

%

 

 

49,143

 

428

3.53

%

 

 

 

0.00

%

Subordinated debentures

 

 

35,365

 

330

3.74

%

 

 

35,320

 

255

2.93

%

 

 

35,185

 

245

2.79

%

Total borrowed funds

 

 

197,111

 

837

1.70

%

 

 

189,701

 

765

1.64

%

 

 

96,371

 

284

1.18

%

Total interest-bearing liabilities

 

 

1,953,426

 

1,621

0.33

%

 

 

1,911,666

 

1,325

0.28

%

 

 

1,853,117

 

903

0.20

%

Demand deposits - noninterest-bearing

 

 

1,132,601

 

 

 

 

1,093,709

 

 

 

 

1,052,494

 

 

Other liabilities

 

 

48,458

 

 

 

 

59,026

 

 

 

 

43,095

 

 

Shareholders' equity

 

 

315,992

 

 

 

 

347,551

 

 

 

 

353,453

 

 

Total liabilities and shareholders' equity

 

$

3,450,477

 

 

 

$

3,411,952

 

 

 

$

3,302,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

3.60

%

 

 

 

3.38

%

 

 

 

3.71

%

Interest expense/interest earning assets

 

 

 

0.20

%

 

 

 

0.17

%

 

 

 

0.11

%

Net interest income and margin (5)

 

 

$

26,585

3.40

%

 

 

$

24,756

3.21

%

 

 

$

27,189

3.60

%

 

(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 $0.4 million and $1.0 million for the quarters ended June 30, 2022 and 2021, respectively, and $0.4 million for the quarter ended March 31, 2022.

(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 six months ended

 

 

For the six months ended

 

 

June 30, 2022

 

 

June 30, 2021

 

 

Average

Balance (1)

 

Income/

Expense

 

Yield/ Rate (2)

 

Average

Balance (1)

 

Income/

Expense

 

Yield/ Rate (2)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning due from banks

 

$

170,432

 

$

363

 

0.43

%

 

$

193,120

 

$

104

 

0.11

%

Taxable

 

 

756,061

 

 

7,966

 

2.12

%

 

 

329,029

 

 

3,150

 

1.93

%

Non-taxable

 

 

281,882

 

 

3,581

 

3.24

%

 

 

235,204

 

 

2,967

 

3.22

%

Total investments

 

 

1,208,375

 

 

11,910

 

2.15

%

 

 

757,353

 

 

6,221

 

1.87

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases:(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

$

1,799,132

 

$

37,984

 

4.26

%

 

$

1,852,330

 

$

42,407

 

4.62

%

Agricultural

 

 

32,216

 

 

534

 

3.34

%

 

 

45,050

 

 

827

 

3.70

%

Commercial

 

 

88,784

 

 

2,378

 

5.40

%

 

 

179,036

 

 

4,575

 

5.15

%

Consumer

 

 

4,355

 

 

413

 

19.12

%

 

 

5,199

 

 

389

 

15.09

%

Mortgage warehouse lines

 

 

55,538

 

 

1,003

 

3.64

%

 

 

192,329

 

 

3,078

 

3.23

%

Other

 

 

1,922

 

 

65

 

6.82

%

 

 

1,523

 

 

53

 

7.02

%

Total loans and leases

 

 

1,981,947

 

 

42,377

 

4.31

%

 

 

2,275,467

 

 

51,329

 

4.55

%

Total interest earning assets (4)

 

 

3,190,322

 

 

54,287

 

3.49

%

 

 

3,032,820

 

 

57,550

 

3.88

%

Other earning assets

 

 

15,654

 

 

 

 

 

 

 

14,363

 

 

 

 

 

Non-earning assets

 

 

225,345

 

 

 

 

 

 

 

205,187

 

 

 

 

 

Total assets

 

$

3,431,321

 

 

 

 

 

 

$

3,252,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

212,193

 

$

226

 

0.21

%

 

$

146,403

 

$

164

 

0.23

%

NOW

 

 

544,589

 

 

164

 

0.06

%

 

 

585,344

 

 

217

 

0.07

%

Savings accounts

 

 

474,213

 

 

137

 

0.06

%

 

 

407,894

 

 

112

 

0.06

%

Money market

 

 

153,469

 

 

46

 

0.06

%

 

 

137,887

 

 

60

 

0.09

%

Time deposits

 

 

294,773

 

 

675

 

0.46

%

 

 

374,636

 

 

551

 

0.30

%

Brokered deposits

 

 

60,000

 

 

96

 

0.32

%

 

 

96,188

 

 

123

 

0.26

%

Total interest-bearing deposits

 

 

1,739,237

 

 

1,344

 

0.16

%

 

 

1,748,352

 

 

1,227

 

0.14

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest-bearing liabilities

 

 

108,932

 

 

159

 

0.29

%

 

 

62,312

 

 

86

 

0.28

%

Long-term debt

 

 

49,152

 

 

857

 

3.52

%

 

 

 

 

 

 

Subordinated debentures

 

 

35,342

 

 

585

 

3.34

%

 

 

35,164

 

 

493

 

2.83

%

Total borrowed funds

 

 

193,426

 

 

1,601

 

1.67

%

 

 

97,476

 

 

579

 

1.20

%

Total interest-bearing liabilities

 

 

1,932,663

 

 

2,945

 

0.31

%

 

 

1,845,828

 

 

1,806

 

0.20

%

Demand deposits – noninterest-bearing

 

 

1,113,262

 

 

 

 

 

 

 

1,015,023

 

 

 

 

 

Other liabilities

 

 

53,712

 

 

 

 

 

 

 

41,156

 

 

 

 

 

Shareholders' equity

 

 

331,684

 

 

 

 

 

 

 

350,363

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

3,431,321

 

 

 

 

 

 

$

3,252,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

 

 

 

 

3.49

%

 

 

 

 

 

 

 

3.88

%

Interest expense/interest earning assets

 

 

 

 

 

 

 

0.18

%

 

 

 

 

 

 

 

0.12

%

Net interest income and margin(5)

 

 

 

 

$

51,342

 

3.31

%

 

 

 

 

$

55,744

 

3.76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 $0.8 million and $2.4 million for the six months ended June 30, 2022 and 2021, 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

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