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Sierra Bancorp Reports Improved Financial Results for Third Quarter and First Nine Months of 2024

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, 2024. Sierra Bancorp reported consolidated net income of $10.6 million, or $0.74 per diluted share, for the third quarter of 2024, an increase of $0.3 million, or 3%, as compared to the second quarter of 2024. In addition, the Company reported consolidated net income of $30.2 million for the first nine months of 2024, an increase of $1.6 million, or 6%, as compared to the same period in 2023. Diluted earnings per share for the nine-month period ended September 30, 2024, increased to $2.09, or 8%, from $1.93 diluted earnings per share for the same period in 2023.

Highlights for the third quarter of 2024:

  • Improved Earnings and Consistently Strong Earnings Metrics
    • Diluted Earnings Per Share increased 4%, or $0.03, from the prior linked quarter.
    • Improved net interest income by $0.6 million, or 2%, as compared to the prior linked quarter.
    • Maintained strong net interest margin of 3.66%, as compared to 3.69% in the prior linked quarter.
    • Return on Average Assets of 1.14%, which is unchanged from the prior linked quarter.
    • Return on Average Equity of 11.95%, which is unchanged from the prior linked quarter.
  • Solid Asset Quality
    • Total nonperforming loans to total gross loans ratio of 0.45%, with total classified loans down $6.4 million, year-to-date, to $29.1 million.
    • No foreclosed assets at September 30, 2024.
    • Net charge-offs to total loans during the quarter of 0.01%.
    • Regulatory Commercial Real Estate Concentration Ratio declined to 236.43%, from 241.05%, during the quarter.
  • Growth of Loans and Deposits
    • Loan growth of $86.1 million, or 15% annualized, during the quarter, to $2.3 billion.
    • Total deposits increased by $19.7 million, or 3% annualized, during the quarter, to $3.0 billion.
    • Noninterest-bearing deposits of $1.0 billion at September 30, 2024, represent 34% of total deposits.
  • Solid Capital and Liquidity
    • Increased Tangible Book Value (non-GAAP) per share by 3%, during the quarter, to $22.93 per share.
    • Repurchased 48,904 shares of common stock during the quarter.
    • Declared dividend of $0.24 per share, payable on November 12, 2024, our 103rd consecutive quarterly dividend.
    • Strong regulatory Community Bank Leverage Ratio increased to 11.70%, at September 30, 2024, for our subsidiary Bank.
    • Consolidated Tangible Common Equity Ratio (non-GAAP) increased to 9.01%, at September 30, 2024.
    • Overall primary and secondary liquidity sources of $2.4 billion, at September 30, 2024.

“If opportunity doesn’t knock, make a door.” Milton Berle

“We are happy to share our third quarter results, which demonstrate our entire team’s commitment to providing fantastic service to our customers and communities,” stated Kevin McPhaill, CEO and President. “While the current interest rate environment still presents the banking industry with unique challenges, our teams continue to improve profitability and grow loans and deposits. They are consistently finding opportunities to both bring new customers on board and strengthen our existing relationships. I speak for our entire team of dedicated bankers when I say we are proud of our results, we remain committed to excellent service, and we are incredibly excited about our future!” concluded Mr. McPhaill.

For the first nine months of 2024, the Company increased net income to $30.2 million, or $2.09 per diluted share, as compared to $28.6 million, or $1.93 per diluted share, for the same period in 2023. The year-over-year improvement is due primarily to higher net interest income of $5.1 million, despite a $1.8 million increase in the provision for credit losses in 2024. Increases of $1.7 million in noninterest income, were mostly offset by a $1.5 million increase in noninterest expense. The Company’s financial performance metrics for the first nine months of 2024 include an annualized return on average assets and a return on average equity of 1.11% and 11.67%, respectively, compared to 1.03% and 12.41%, respectively, for the same period in 2023.

Financial Highlights

Quarterly Changes (comparisons to the third quarter of 2023)

  • Net income increased 7%, or $0.7 million, to $10.6 million due to higher net interest income, partially offset by an increase in the provision for credit losses.
  • The $2.7 million increase in net interest income was driven by a 27 basis point increase in net interest margin. This is primarily a result of a balance sheet restructuring, including a bond sale, in the first quarter of 2024, along with higher loan yields.
  • Noninterest income was mostly flat for the quarter, with increases in service charge income offset by decreases in other noninterest income, primarily from life insurance proceeds received in 2023 that did not reoccur in 2024.
  • Noninterest expense was $0.2 million higher in the third quarter over the same quarter last year. While salary and benefit costs decreased due to a strategic internal reorganization in the fourth quarter of 2023, this was offset by an increase in occupancy costs, due to the sale/leaseback of certain branches in the fourth quarter of 2023.

Linked Quarter Income Changes (comparisons to the three months ended June 30, 2024)

  • Net income improved by $0.3 million, or 3%, driven mostly by a $0.6 million increase in net interest income, offset by a $0.5 million increase in the provision for credit losses.
  • Net interest income increased by $0.6 million, due to an increase in average earning assets, partially offset by an increase in interest-bearing liabilities, at a higher cost of funds.

Year to-Date Income Changes (comparisons to the first nine months of 2023)

  • Net income increased $1.6 million, or 6%. This was primarily driven by an increase of $5.1 million or 6% in net interest income, due mostly to an overall increase in interest rates on earning assets. While we experienced higher yields and balances on loans, this was complemented by a decrease in borrowed funds and a decrease in the rate paid on the remaining balance of borrowed funds. Partially offsetting these positive variances was an increase in the provision for credit losses, and an increase in occupancy expenses from the sale/leaseback of branch buildings in late 2023.
  • The provision for credit losses was $2.4 million, an increase of $2.2 million, primarily due to an increase in net charge-offs in the second quarter of 2024, due to a foreclosure of a single property.
  • Noninterest income increased by $1.7 million, or 7%. Service charges on deposit accounts were $1.0 million higher, due mostly to higher interchange income, an increase in analysis fees, and other transaction-based fees, combined with a net $0.6 million gain, from the balance sheet restructuring earlier in the year.
  • Noninterest expense increased $1.5 million, or 2%, due mostly to increases in rent expense from the sale/ leaseback of branch buildings at the end of 2023.

Statement of Condition Changes (comparisons to December 31, 2023)

  • Total assets decreased by $33.6 million, or 1%, to $3.7 billion, during the first nine months of the year due primarily to the strategic restructuring of our lower-yielding bond portfolio in the first quarter of 2024, partially offset by increases in loan balances.
  • Gross loans increased $230.6 million, due to a $219.8 million increase in mortgage warehouse line utilization, a $10.6 million increase in commercial real estate loans, a $13.3 million increase in farmland loans, and a $12.0 million increase in commercial loans. This favorable growth was partially offset by a $23.9 million decrease in residential real estate loans, and smaller declines in construction and consumer loans.
  • Deposits totaled $3.0 billion at September 30, 2024, representing a year-to-date increase of $200.9 million, or 7%. The growth in deposits came mostly from a $175.0 million increase in brokered deposits to fund mortgage warehouse lines, and a $40.6 million increase in transaction accounts offset by smaller declines in customer non-transaction accounts.
  • Other interest-bearing liabilities decreased $262.1 million, from a decrease in overnight borrowings facilitated by the strategic balance sheet restructuring in the first quarter of 2024, and a decrease in FHLB advances, as we utilized brokered deposits not only to fund mortgage lines, but to pay down more costly FHLB lines of credit.

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

 

 

 

9/30/2024

 

 

6/30/2024

 

 

9/30/2023

 

 

9/30/2024

 

 

9/30/2023

Net income

 

$

10,603

 

$

10,263

 

$

9,885

 

$

30,196

 

$

28,555

Diluted earnings per share

 

$

0.74

 

$

0.71

 

$

0.68

 

$

2.09

 

$

1.93

Return on average assets

 

 

1.14%

 

 

1.14%

 

 

1.04%

 

 

1.11%

 

 

1.03%

Return on average equity

 

 

11.95%

 

 

11.95%

 

 

12.62%

 

 

11.67%

 

 

12.41%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (tax-equivalent) (1)

 

 

3.66%

 

 

3.69%

 

 

3.30%

 

 

3.66%

 

 

3.39%

Yield on average loans

 

 

5.25%

 

 

5.16%

 

 

4.73%

 

 

5.11%

 

 

4.66%

Yield on average investments

 

 

5.42%

 

 

5.58%

 

 

5.25%

 

 

5.52%

 

 

5.00%

Cost of average total deposits

 

 

1.62%

 

 

1.53%

 

 

1.20%

 

 

1.51%

 

 

1.04%

Cost of funds

 

 

1.72%

 

 

1.67%

 

 

1.67%

 

 

1.66%

 

 

1.44%

Efficiency ratio (tax-equivalent) (1) (2)

 

 

58.38%

 

 

59.15%

 

 

61.46%

 

 

61.07%

 

 

62.83%

 

 

 

 

 

Total assets

 

$

3,696,154

 

$

3,681,202

 

$

3,738,880

 

$

3,696,154

 

$

3,738,880

Loans net of deferred fees

 

$

2,321,025

 

$

2,234,816

 

$

2,100,973

 

$

2,321,025

 

$

2,100,973

Noninterest demand deposits

 

$

1,013,743

 

$

986,927

 

$

1,059,878

 

$

1,013,743

 

$

1,059,878

Total deposits

 

$

2,962,159

 

$

2,942,410

 

$

2,869,720

 

$

2,962,159

 

$

2,869,720

Noninterest-bearing deposits over total deposits

 

 

34.22%

 

 

33.54%

 

 

36.93%

 

 

34.22%

 

 

36.93%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity / total assets

 

 

9.70%

 

 

9.51%

 

 

8.26%

 

 

9.70%

 

 

8.26%

Tangible common equity ratio (2)

 

 

9.01%

 

 

8.81%

 

 

7.54%

 

 

9.01%

 

 

7.54%

Book value per share

 

$

24.88

 

$

24.19

 

$

21.01

 

$

24.88

 

$

21.01

Tangible book value per share (2)

 

$

22.93

 

$

22.24

 

$

19.04

 

$

22.93

 

$

19.04

Community bank leverage ratio (subsidiary bank)

 

 

11.70%

 

 

11.60%

 

 

11.05%

 

 

11.70%

 

 

11.05%

Tangible common equity ratio (subsidiary bank) (2)

 

 

10.90%

 

 

10.60%

 

 

9.44%

 

 

10.90%

 

 

9.44%

(1)

Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.

(2)

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

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income was $30.8 million for the third quarter of 2024, a $2.7 million increase, or 10% over the third quarter of 2023, and increased $5.1 million, or 6%, to $89.7 million for the first nine months of 2024 relative to the same period in 2023.

For the third quarter of 2024, although the balance of average interest-earning assets was $74.0 million lower, the yield was 37 basis points higher as compared to the same period in 2023. There was a four basis point increase in the cost of our interest-bearing liabilities for the same period, which partially offset some of the higher yields on the asset side. Net interest income for the comparative year-to-date periods increased $5.1 million, or 6%, due to a strategic change in mix of average interest-earning assets in the fourth quarter of 2023 and the first quarter of 2024. This change was moderated by an increase in rates paid on interest-bearing liabilities. There was a $136.1 million, or 7%, increase in average loan and lease balances yielding 45 basis points higher for the same period, while average investment balances decreased $238.5 million, yielding 52 basis points higher for the same period. Average interest-bearing liabilities decreased $82.2 million, mostly in borrowed funds. The cost of interest-bearing liabilities was 28 basis points higher for the comparative periods. The favorable net impact of the mix and rate change was a 27 basis point increase in our net interest margin for the nine months ending September 30, 2024, as compared to the same period in 2023.

Interest expense was $14.0 million for the third quarter of 2024, a decrease of $0.3 million, relative to the third quarter of 2023. For the first nine months of 2024, compared to the same period in 2023, interest expense increased $3.4 million to $39.6 million. The increase in interest expense for the first nine months of 2024, as compared to the same period in 2023, was attributable to an increase in higher cost brokered deposits to fund mortgage warehouse lines, along with a net overall interest rate increase in customer deposit account balances. Compounding the interest rate increases, there was a shift in the mix of average deposits with an increase in higher-yielding money market and time deposit account types. These increases were partially offset by decreases in other borrowed funds. For the first nine months of 2024, compared to the same period in 2023, the average balance of higher cost customer time deposits, interest-bearing demand and money market deposits increased $51.4 million, while wholesale brokered deposits increased $112.5 million. Borrowed funds decreased $126.1 million, and lower cost or no cost deposits decreased $194.0 million.

Our net interest margin was 3.66% for the third quarter of 2024, as compared to 3.69% for the linked quarter, and 3.30% for the third quarter of 2023. While the yield of interest-earning assets increased one basis point for the third quarter of 2024 as compared to the linked quarter, the cost of interest-bearing liabilities increased seven basis points for the same period in 2023. The average balance of interest-earning assets increased $56.9 million for the linked quarter, while the increase in interest-bearing liabilities was $15.9 million for the same period. Even though the volume increase of interest-earning assets was more than the increase in interest-bearing liabilities, the larger rate increase on liabilities caused a slight compression in net interest margin for the linked quarter.

Provision for Credit Losses

The provision for credit losses on loans was $1.2 million for the third quarter of 2024, as compared to a $0.1 million in the third quarter of 2023. There was a year-to-date provision for credit losses on loans of $2.3 million in 2024, as compared to $0.4 million for the same period in 2023. The Company's $1.1 million increase in the provision for credit losses on loans in the third quarter of 2024, as compared to the third quarter of 2023, and the $1.8 million year-to-date increase in the provision for credit losses on loans, compared to the same period in 2023, was primarily due to the impact of $3.0 million in net charge-offs in the first nine months of 2024, with only $0.4 million in net charge-offs for the first nine months of 2023. The increase in net charge-offs was primarily related to a single office building, which was subsequently foreclosed upon and sold.

There was a provision for credit losses on unfunded commitments for $0.1 million in the third quarter of 2024, and $0.1 million for the first nine months of 2024, as compared to a $0.2 million benefit for credit losses in the third quarter of 2023 and a $0.2 million benefit for credit losses in the first nine months of 2023. The reason for the increase in both the quarterly and year-to-date comparisons is due to an increase in the balance of unfunded commitments combined with an increase in the reserve rate utilized in the calculation of the reserves.

The Company recorded a small benefit for credit losses on available-for-sale debt securities for the three months and nine months ending 2024. The benefit was a result of a change in the reserve rates utilized in the calculation of the reserves, due to updated municipal bond default rates across all credit ratings, combined with an aging municipal bond portfolio. Although there were debt securities in an unrealized loss position, the declines in market values were primarily attributable to changes in interest rates and volatility in the financial markets and not a result of an expected credit loss.

Noninterest Income

Total noninterest income was unchanged for the quarter ended September 30, 2024, as compared to the same quarter in 2023, and increased $1.7 million, or 7%, for the year-to-date period ended September 30, 2024, as compared to the same period in 2023. The year-to-date comparison was impacted by an increase in service charge income on deposit accounts, favorable fluctuations in income on Bank Owned Life Insurance (BOLI) with underlying investments mapped directly to the Company’s deferred compensation plan and a net gain on the balance sheet restructure earlier in the year. Offsetting these positive variances was a decrease in other income which is related to life insurance proceeds received in 2023 with no like proceeds in 2024.

The Company maintains a non-qualified deferred compensation plan for officers and directors, which allows the participant to defer a portion of their earnings tax-free. Participants are allowed to choose different hypothetical investment alternatives to determine their individualized return on their deferred compensation. The Company has chosen to offset the cost of this liability with a BOLI Policy, which is funded based on deferral elections from the participants. Although the BOLI is not directly tied to the deferred compensation plan, the BOLI is invested in similar fund types as those selected by the participants. There is some inefficiency in net earnings of the BOLI asset as compared to the deferred compensation liability created by the cost of insurance, differences in balances, and differences in individual fund performance. During the third quarter, and first nine months of 2024, earnings from the BOLI were $0.3 million, and $1.5 million, respectively, while additional expense from the related deferred compensation liability was $0.3 million, and $1.7 million, respectively. Most of such expense is reported as professional fees under directors’ fees as such expense is related to deferral of past directors’ fees. Specifically, $0.3 million for the quarterly comparison, and $1.4 million for the year-to-date comparison, respectively, is reflected as directors’ fees as part of the overall professional fees expense line item. The tax benefit of having tax-free earnings with tax-deductible expense was $0.2 million during the third quarter of 2024, and $1.0 million for the first nine months of 2024.

Noninterest Expense

Total noninterest expense increased by $0.2 million, or 1%, in the third quarter of 2024, relative to the third quarter of 2023, and by $1.5 million, or 2%, for the first nine months of 2024, as compared to the same period in 2023.

Salaries and Benefits were $0.3 million, or 2%, lower in the third quarter of 2024 as compared to the third quarter of 2023, and unchanged for the first nine months of 2024, compared to the same period in 2023. The Company made strategic decisions in 2023 that created operational efficiencies and reduced costs. While the number of full-time equivalent employees did not change for the first nine months of 2024, compared to the year ending December 31, 2024, the composition of the workforce changed resulting in reduced salaries and benefits costs, during the third quarter of 2024. There were 489 full-time equivalent employees at September 30, 2024, as compared to 489 at December 31, 2023, and 487 at September 30, 2023.

Occupancy expenses increased by $0.5 million, and $1.9 million for the third quarter, and the first nine months of 2024 as compared to the same periods in 2023. The reason for the increases in both comparisons is due to increased rent expense from the sale/leaseback transactions in the fourth quarter of 2023, and first quarter of 2024.

Other noninterest expense was unchanged for the third quarter 2024, as compared to the third quarter in 2023, and decreased $0.4 million, or 2%, for the first nine months of 2024, as compared to the same period in 2023. While the variances for the third quarter of 2024, compared to the same period in 2023 offset each other, the primary differences were decreases in marketing costs, which is timing related, and a favorable variance in directors deferred compensation expense, linked to the changes in BOLI income. These favorable variances were offset by higher communications costs, audit and review costs, and loan management software costs. The Company implemented new loan origination and management software to better serve our customers and create operational efficiencies. For the year-over-year comparison, the categories of variance were the same as with the quarterly comparison, except for an unfavorable variance in directors’ deferred compensation expense, offset by favorable variances in debit card processing and ATM network costs, from a branding change to VISA from Mastercard last year, and the subsequent costs in 2023 related to that change. Additionally, there was a decrease in foreclosed asset costs, due to a foreclosure and subsequent sale of one large credit relationship in early 2023.

The Company's provision for income taxes was 26.4% of pre-tax income in the third quarter of 2024, relative to 25.8% in the third quarter of 2023, and 26.8% of pre-tax income for the first nine months of 2024, relative to 25.3% for the same period in 2023. The increase in effective tax rate for both the quarterly and year-to-date comparisons is due to the tax credits, and tax-exempt income representing a smaller percentage of total taxable income.

Balance Sheet Summary

The $33.6 million, or 1%, decrease in total assets during the first nine months of 2024, is primarily a result of a $323.9 million decrease in investment securities, from the sale of bonds from the strategic securities transaction, partially offset by a $230.6 million increase in gross loans, and a $54.2 million increase in cash on hand.

The increase in gross loan balances, as compared to December 31, 2023, was mostly a result of organic growth; a $13.3 million increase in farmland loans, a $10.6 million increase in commercial real estate loans, a $112.0 million increase in other commercial loans, and a favorable change of $219.8 million in mortgage warehouse balances. Counterbalancing these positive loan variances were loan paydowns and maturities resulting in net declines in residential real estate loans.

As indicated in the loan roll forward table below, new credit extended for the third quarter of 2024, increased on a linked-quarter basis, but decreased $7.7 million over the same period in 2023, and decreased $22.1 million for the year-to-date comparisons. The year-to-date decline in organic loan growth is attributable to competitive pressures in our market for strong credit relationships, combined with a lower loan demand overall due to the current high interest rate environment. We also had $48.4 million in loan paydowns and maturities; however, increases in mortgage warehouse and credit line utilization of $98.8 million had a positive impact in the third quarter.

LOAN ROLL FORWARD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended:

 

For the nine months ended:

 

 

 

September

30, 2024

 

 

June 30,

2024

 

 

September

30, 2023

 

 

September

30, 2024

 

 

September

30, 2023

Gross loans beginning balance

 

$

2,234,528

 

 

$

2,156,864

 

 

$

2,094,391

 

 

$

2,090,075

 

 

$

2,052,940

 

New credit extended

 

 

61,239

 

 

 

40,313

 

 

 

68,980

 

 

 

136,518

 

 

 

158,619

 

Changes in line of credit utilization (1)

 

 

11,572

 

 

 

(10,412

)

 

 

(22,517

)

 

 

(23,768

)

 

 

(41,685

)

Change in mortgage warehouse

 

 

61,718

 

 

 

70,498

 

 

 

(3,032

)

 

 

219,778

 

 

 

42,146

 

Pay-downs, maturities, charge-offs and amortization

 

 

(48,428

)

 

 

(22,735

)

 

 

(37,012

)

 

 

(101,974

)

 

 

(111,210

)

Gross loans ending balance

 

$

2,320,629

 

 

$

2,234,528

 

 

$

2,100,810

 

 

 

2,320,629

 

 

 

2,100,810

 

(1)

Change does not include new balances on lines of credit extended during the respective periods as such balances are included as part of “New credit extended” line above.

Unused commitments, excluding mortgage warehouse and overdraft lines, were $237.7 million at September 30, 2024, compared to $203.6 million at December 31, 2023. Total line utilization, excluding mortgage warehouse and overdraft lines, was 59.2% at September 30, 2024, and 62.3% at December 31, 2023. Mortgage warehouse utilization increased to 54.6% at September 30, 2024, as compared to 36.2% at December 31, 2023.

Deposit balances reflect growth of $200.9 million, or 7%, during the first nine months of 2024. Core non-maturity deposits increased by $31.0 million, or 6%, while customer time deposits decreased by $5.0 million, or 1%. Wholesale brokered deposits increased by $175.0 million, or 130%. As stated previously, the increase in brokered deposits was utilized to fund increases in mortgage warehouse lines. Overall noninterest-bearing deposits as a percent of total deposits at September 30, 2024, decreased to 34.2%, as compared to 37.0% at December 31, 2023.

Other interest-bearing liabilities of $205.5 million on September 30, 2024, consist of $125.5 million in customer repurchase agreements, and $80.0 million of FHLB borrowings.

Overall uninsured deposits are estimated to be approximately $816.2 million, or 28% of total deposit balances, excluding public agency deposits that are subject to collateralization through a letter of credit issued by the FHLB. In addition, uninsured deposits of the Bank’s customers are eligible for FDIC pass-through insurance if the customer opens an IntraFi Insured Cash Sweep (ICS) account or a reciprocal time deposit through the Certificate of Deposit Account Registry System (CDARS). IntraFi allows for up to $265 million per customer of pass-through FDIC insurance, which would more than cover each of the Bank’s deposit customers if such customer desired to have such pass-through insurance. The Bank maintains a diversified deposit base with no significant customer concentrations and does not bank any cryptocurrency companies. At September 30, 2024, the Company had approximately 120,000 accounts, and the 25 largest deposit balance customers had balances of approximately 15% of overall deposits. During the third quarter of 2024, except for seasonality fluctuations in the normal course of business, there has been no material change in the composition of our 25 largest deposit balance customers.

The Company continues to have substantial liquidity. At September 30, 2024, and December 31, 2023, the Company had the following sources of primary and secondary liquidity (Dollars in Thousands, Unaudited):

Primary and secondary liquidity sources

 

 

September 30, 2024

 

December 31, 2023

Cash and cash equivalents

 

$

132,797

 

$

78,602

Unpledged investment securities

 

 

556,231

 

 

792,965

Excess pledged securities

 

 

286,355

 

 

382,965

FHLB borrowing availability

 

 

618,142

 

 

586,726

Unsecured lines of credit

 

 

504,785

 

 

374,785

Funds available through fed discount window

 

 

342,711

 

 

392,034

Totals

 

$

2,441,021

 

$

2,608,077

Total capital of $358.7 million at September 30, 2024, reflects an increase of $20.6 million, or 6%, relative to year-end 2023. The increase in equity during the first nine months of 2024 was due to the addition of $30.2 million in net income, a $7.4 million favorable swing in accumulated other comprehensive income, due principally to changes in investment securities’ fair value, offset by $8.3 million in share repurchases, and $10.2 million in dividends paid. The remaining difference is related to the impact of equity compensation.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans, increased by $2.4 million to $10.3 million for the first nine months of 2024. The Company's ratio of nonperforming loans to gross loans increased to 0.45% at September 30, 2024, from 0.38% at December 31, 2023. The increase resulted from an increase in non-accrual loan balances, primarily as a result of one non-owner occupied commercial real estate loan on an office building. 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 $22.7 million at September 30, 2024, as compared to $23.5 million December 31, 2023. The decrease resulted from a reduction in specific individual reserves on impaired loans due to the charge-off associated with one commercial real estate loan.

The allowance for credit losses on loans and leases was 0.98% of gross loans at September 30, 2024, and 1.12% of gross loans at December 31, 2023. 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 September 30, 2024, 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 calculates the allowance for credit losses using a combination of quantitative and qualitative factors applied to loans segmented by call report category. The largest increase in loan balances was from mortgage warehouse lines, which has the lowest reserve rate in the allowance for credit losses at 0.14%. Therefore, at September 30, 2024, approximately $0.5 million of the allowance for credit losses is attributable to mortgage warehouse lines.

About Sierra Bancorp

Sierra Bancorp is the holding Company for Bank of the Sierra (www.bankofthesierra.com), which is in its 47th year of operations.

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. In 2024, 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, including the impact to the Company and its customers resulting from changes to, and the level of, inflation and interest rates; changes in laws, rules, regulations, or interpretations to which the Company is subject; the Company’s ability to maintain and grow its deposit base; loan demand and continued portfolio performance; the Company's ability to attract and retain skilled employees; customers' service expectations; cyber security risks; the Company's ability to successfully de­ploy new technology; the success of acquisitions and branch expansion; operational risks including the ability to detect and prevent errors and fraud; the effectiveness of the Company’s enterprise risk management framework; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks that could affect stock price; changes to valuations of the Company’s assets and liabilities, including the allowance for credit losses, earning assets, and intangible assets; changes to the availability of liquidity sources including borrowing lines and the ability to pledge or sell certain assets; costs related to litigation; the effects of severe weather events, pandemics, other public health crises, acts of war or terrorism, and other external events on our business; 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

 

 

9/30/2024

6/30/2024

 

3/31/2024

12/31/2023

 

9/30/2023

Cash and due from banks

 

$

132,797

 

 

$

183,990

 

 

$

119,244

 

 

$

78,602

 

 

$

88,542

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale, at fair value

 

 

706,310

 

 

 

716,787

 

 

 

741,789

 

 

 

1,019,201

 

 

 

1,010,377

 

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

 

 

308,971

 

 

 

312,879

 

 

 

316,406

 

 

 

320,057

 

 

 

323,544

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

388,169

 

 

 

396,819

 

 

 

406,443

 

 

 

412,063

 

 

 

418,782

 

Commercial real estate

 

 

1,338,793

 

 

 

1,316,754

 

 

 

1,327,482

 

 

 

1,328,224

 

 

 

1,334,663

 

Other construction/land

 

 

5,612

 

 

 

5,971

 

 

 

6,115

 

 

 

6,256

 

 

 

7,320

 

Farmland

 

 

80,589

 

 

 

80,807

 

 

 

66,133

 

 

 

67,276

 

 

 

90,993

 

Total real estate loans

 

 

1,813,163

 

 

 

1,800,351

 

 

 

1,806,173

 

 

 

1,813,819

 

 

 

1,851,758

 

Other commercial

 

 

168,236

 

 

 

156,650

 

 

 

143,448

 

 

 

156,272

 

 

 

137,407

 

Mortgage warehouse lines

 

 

335,777

 

 

 

274,059

 

 

 

203,561

 

 

 

116,000

 

 

 

107,584

 

Consumer loans

 

 

3,453

 

 

 

3,468

 

 

 

3,682

 

 

 

3,984

 

 

 

4,061

 

Gross loans

 

 

2,320,629

 

 

 

2,234,528

 

 

 

2,156,864

 

 

 

2,090,075

 

 

 

2,100,810

 

Deferred loan fees

 

 

396

 

 

 

288

 

 

 

214

 

 

 

309

 

 

 

163

 

Allowance for credit losses on loans

 

 

(22,710

)

 

 

(21,640

)

 

 

(23,140

)

 

 

(23,500

)

 

 

(23,060

)

Net loans

 

 

2,298,315

 

 

 

2,213,176

 

 

 

2,133,938

 

 

 

2,066,884

 

 

 

2,077,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank premises and equipment

 

 

15,647

 

 

 

16,007

 

 

 

16,067

 

 

 

16,907

 

 

 

21,926

 

Other assets

 

 

234,114

 

 

 

238,363

 

 

 

225,628

 

 

 

228,148

 

 

 

216,578

 

Total assets

 

$

3,696,154

 

 

$

3,681,202

 

 

$

3,553,072

 

 

$

3,729,799

 

 

$

3,738,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest demand deposits

 

$

1,013,743

 

 

$

986,927

 

 

$

968,996

 

 

$

1,020,772

 

 

$

1,059,878

 

Interest-bearing transaction accounts

 

 

595,672

 

 

 

537,731

 

 

 

532,791

 

 

 

533,947

 

 

 

561,257

 

Savings deposits

 

 

356,725

 

 

 

368,169

 

 

 

378,057

 

 

 

370,806

 

 

 

400,940

 

Money market deposits

 

 

135,948

 

 

 

136,853

 

 

 

134,533

 

 

 

145,591

 

 

 

130,914

 

Customer time deposits

 

 

550,121

 

 

 

566,132

 

 

 

560,979

 

 

 

555,107

 

 

 

551,731

 

Wholesale brokered deposits

 

 

309,950

 

 

 

346,598

 

 

 

271,648

 

 

 

135,000

 

 

 

165,000

 

Total deposits

 

 

2,962,159

 

 

 

2,942,410

 

 

 

2,847,004

 

 

 

2,761,223

 

 

 

2,869,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

49,371

 

 

 

49,348

 

 

 

49,326

 

 

 

49,304

 

 

 

49,281

 

Subordinated debentures

 

 

35,794

 

 

 

35,749

 

 

 

35,704

 

 

 

35,660

 

 

 

35,615

 

Other interest-bearing liabilities

 

 

205,534

 

 

 

228,003

 

 

 

201,851

 

 

 

467,621

 

 

 

411,865

 

Total deposits and interest-bearing liabilities

 

 

3,252,858

 

 

 

3,255,510

 

 

 

3,133,885

 

 

 

3,313,808

 

 

 

3,366,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on unfunded loan commitments

 

 

640

 

 

 

520

 

 

 

540

 

 

 

510

 

 

 

600

 

Other liabilities

 

 

83,958

 

 

 

75,152

 

 

 

73,553

 

 

 

77,384

 

 

 

62,940

 

Total capital

 

 

358,698

 

 

 

350,020

 

 

 

345,094

 

 

 

338,097

 

 

 

308,859

 

Total liabilities and capital

 

$

3,696,154

 

 

$

3,681,202

 

 

$

3,553,072

 

 

$

3,729,799

 

 

$

3,738,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOODWILL AND INTANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2024

 

 

6/30/2024

 

 

3/31/2024

 

 

12/31/2023

 

 

9/30/2023

Goodwill

 

$

27,357

 

$

27,357

 

$

27,357

 

$

27,357

 

$

27,357

Core deposit intangible

 

 

780

 

 

961

 

 

1,180

 

 

1,399

 

 

1,618

Total intangible assets

 

$

28,137

 

$

28,318

 

$

28,537

 

$

28,756

 

$

28,975

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2024

 

 

6/30/2024

 

 

3/31/2024

 

 

12/31/2023

 

 

9/30/2023

Nonperforming loans

 

$

10,348

 

$

6,473

 

$

14,188

 

$

7,985

 

$

781

Foreclosed assets

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$

10,348

 

$

6,473

 

$

14,188

 

$

7,985

 

$

781

 

 

 

 

 

 

 

Quarterly net charge offs

 

$

170

 

$

2,421

 

$

457

 

$

3,618

 

$

67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due and still accruing (30-89)

 

$

211

 

$

3,172

 

$

1,563

 

$

255

 

$

806

Classified loans

 

$

29,148

 

$

28,829

 

$

34,100

 

$

35,577

 

$

39,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans / gross loans

 

 

0.45%

 

 

0.29%

 

 

0.66%

 

 

0.38%

 

 

0.04%

NPA's / loans plus foreclosed assets

 

 

0.45%

 

 

0.29%

 

 

0.66%

 

 

0.38%

 

 

0.04%

Allowance for credit losses on loans / gross loans

 

 

0.98%

 

 

0.97%

 

 

1.07%

 

 

1.12%

 

 

1.10%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECT PERIOD-END STATISTICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2024

 

 

6/30/2024

 

 

3/31/2024

 

 

12/31/2023

 

 

9/30/2023

Shareholders' equity / total assets

 

 

9.70%

 

 

9.51%

 

 

9.71%

 

 

9.06%

 

 

8.26%

Gross loans / deposits

 

 

78.34%

 

 

75.94%

 

 

75.76%

 

 

75.69%

 

 

73.21%

Noninterest-bearing deposits / total deposits

 

 

34.22%

 

 

33.54%

 

 

34.04%

 

 

36.97%

 

 

36.93%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

For the three months ended:

 

 

For the nine months ended:

 

 

 

9/30/2024

 

 

6/30/2024

 

 

9/30/2023

 

 

9/30/2024

 

 

9/30/2023

Interest income

 

$

44,798

 

 

$

43,495

 

 

$

42,384

 

 

$

129,253

 

 

$

120,678

 

Interest expense

 

 

14,008

 

 

 

13,325

 

 

 

14,297

 

 

 

39,577

 

 

 

36,143

 

Net interest income

 

 

30,790

 

 

 

30,170

 

 

 

28,087

 

 

 

89,676

 

 

 

84,535

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit loss expense - loans

 

 

1,240

 

 

 

921

 

 

 

117

 

 

 

2,258

 

 

 

444

 

Credit loss expense (benefit) - unfunded commitments

 

 

120

 

 

 

(20

)

 

 

(150

)

 

 

130

 

 

 

(240

)

Credit loss benefit - debt securities held-to-maturity

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

(47

)

Net interest income after credit loss expense (benefit)

 

 

29,431

 

 

 

29,269

 

 

 

28,120

 

 

 

87,289

 

 

 

84,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees on deposit accounts

 

 

6,205

 

 

 

6,184

 

 

 

6,055

 

 

 

18,114

 

 

 

17,127

 

Gain (loss) on sale of investments

 

 

73

 

 

 

-

 

 

 

-

 

 

 

(2,810

)

 

 

396

 

Gain on sale of fixed assets

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,799

 

 

 

-

 

BOLI income

 

 

540

 

 

 

523

 

 

 

558

 

 

 

2,278

 

 

 

1,388

 

Other noninterest income

 

 

971

 

 

 

923

 

 

 

1,149

 

 

 

2,628

 

 

 

3,444

 

Total noninterest income

 

 

7,789

 

 

 

7,630

 

 

 

7,762

 

 

 

24,009

 

 

 

22,355

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

12,363

 

 

 

12,029

 

 

 

12,623

 

 

 

37,589

 

 

 

37,567

 

Occupancy expense

 

 

2,995

 

 

 

3,152

 

 

 

2,482

 

 

 

9,173

 

 

 

7,251

 

Other noninterest expenses

 

 

7,452

 

 

 

7,511

 

 

 

7,457

 

 

 

23,266

 

 

 

23,704

 

Total noninterest expense

 

 

22,810

 

 

 

22,692

 

 

 

22,562

 

 

 

70,028

 

 

 

68,522

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

14,410

 

 

 

14,207

 

 

 

13,320

 

 

 

41,270

 

 

 

38,211

 

Provision for income taxes

 

 

3,807

 

 

 

3,944

 

 

 

3,435

 

 

 

11,074

 

 

 

9,656

 

Net income

 

$

10,603

 

 

$

10,263

 

 

$

9,885

 

 

$

30,196

 

 

$

28,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TAX DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt muni income

 

$

1,584

 

 

$

1,592

 

 

$

2,679

 

 

$

5,164

 

 

$

8,233

 

Interest income - fully tax equivalent

 

$

45,219

 

 

$

43,918

 

 

$

43,096

 

 

$

130,626

 

 

$

122,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

For the nine months ended:

 

 

 

9/30/2024

 

 

6/30/2024

 

 

9/30/2023

 

 

9/30/2024

 

 

9/30/2023

Basic earnings per share

 

$

0.75

 

$

0.72

 

$

0.68

 

$

2.11

 

$

1.93

Diluted earnings per share

 

$

0.74

 

$

0.71

 

$

0.68

 

$

2.09

 

$

1.93

Common dividends paid during period

 

$

0.24

 

$

0.23

 

$

0.23

 

$

0.70

 

$

0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

14,188,051

 

 

14,300,267

 

 

14,583,132

 

 

14,331,032

 

 

14,762,231

Weighted average diluted shares

 

 

14,335,706

 

 

14,381,426

 

 

14,636,477

 

 

14,437,786

 

 

14,791,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per basic share (EOP)

 

$

24.88

 

$

24.19

 

$

21.01

 

$

24.88

 

$

21.01

Tangible book value per share (EOP) (1)

 

$

22.93

 

$

22.24

 

$

19.04

 

$

22.93

 

$

19.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (EOP)

 

 

14,414,561

 

 

14,466,873

 

 

14,702,079

 

 

14,414,561

 

 

14,702,079

(1)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY FINANCIAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

For the nine months ended:

 

 

 

9/30/2024

 

 

6/30/2024

 

 

9/30/2023

 

 

9/30/2024

 

 

9/30/2023

Return on average equity

 

 

11.95

%

 

 

11.95

%

 

 

12.62

%

 

 

11.67

%

 

 

12.41

%

Return on average assets

 

 

1.14

%

 

 

1.14

%

 

 

1.04

%

 

 

1.11

%

 

 

1.03

%

Net interest margin (tax-equivalent) (1)

 

 

3.66

%

 

 

3.69

%

 

 

3.30

%

 

 

3.66

%

 

 

3.39

%

Efficiency ratio (tax-equivalent) (1) (2)

 

 

58.38

%

 

 

59.15

%

 

 

61.46

%

 

 

61.07

%

 

 

62.83

%

Net charge-offs / average loans (not annualized)

 

 

0.01

%

 

 

0.11

%

 

 

0.00

%

 

 

0.14

%

 

 

0.02

%

(1)

Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.

(2) See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".

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

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

9/30/2024

 

6/30/2024

 

9/30/2023

Total stockholders' equity

 

$

358,698

 

 

$

350,020

 

 

$

308,859

 

Less: goodwill and other intangible assets

 

 

28,137

 

 

 

28,318

 

 

 

28,975

 

Tangible common equity

 

$

330,561

 

 

$

321,702

 

 

$

279,884

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,696,154

 

 

$

3,681,202

 

 

$

3,738,880

 

Less: goodwill and other intangible assets

 

 

28,137

 

 

 

28,318

 

 

 

28,975

 

Tangible assets

 

$

3,668,017

 

 

$

3,652,884

 

 

$

3,709,905

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity (bank only)

 

$

427,762

 

 

$

415,210

 

 

$

379,095

 

Less: goodwill and other intangible assets (bank only)

 

 

28,137

 

 

 

28,318

 

 

 

28,975

 

Tangible common equity (bank only)

 

$

399,625

 

 

$

386,892

 

 

$

350,120

 

 

 

 

 

 

 

 

 

 

 

Total assets (bank only)

 

$

3,693,553

 

 

$

3,678,508

 

 

$

3,736,330

 

Less: goodwill and other intangible assets (bank only)

 

 

28,137

 

 

 

28,318

 

 

 

28,975

 

Tangible assets (bank only)

 

$

3,665,416

 

 

$

3,650,190

 

 

$

3,707,355

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

14,414,561

 

 

 

14,466,873

 

 

 

14,702,079

 

 

 

 

 

 

 

 

 

 

 

Book value per common share (total stockholders' equity / shares outstanding)

 

$

24.88

 

 

$

24.19

 

 

$

21.01

 

Tangible book value per common share (tangible common equity / shares outstanding)

 

$

22.93

 

 

$

22.24

 

 

$

19.04

 

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

 

 

9.70

%

 

 

9.51

%

 

 

8.26

%

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

 

 

9.01

%

 

 

8.81

%

 

 

7.54

%

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

 

 

10.90

%

 

 

10.60

%

 

 

9.44

%

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended:

Efficiency Ratio:

 

 

9/30/2024

 

 

6/30/2024

 

 

9/30/2023

Noninterest expense

 

$

22,810

 

 

$

22,692

 

 

$

22,562

 

Divided by:

 

 

 

 

 

 

 

 

 

Net interest income

 

 

30,790

 

 

 

30,170

 

 

 

28,087

 

Tax-equivalent interest income adjustments

 

 

421

 

 

 

423

 

 

 

712

 

Net interest income, adjusted

 

 

31,211

 

 

 

30,593

 

 

 

28,799

 

Noninterest income

 

 

7,789

 

 

 

7,630

 

 

 

7,762

 

Less (loss) gain on sale of securities

 

 

73

 

 

 

-

 

 

 

-

 

Tax-equivalent noninterest income adjustments

 

 

144

 

 

 

139

 

 

 

148

 

Noninterest income, adjusted

 

 

7,860

 

 

 

7,769

 

 

 

7,910

 

Net interest income plus noninterest income, adjusted

 

$

39,071

 

 

$

38,362

 

 

$

36,709

 

Efficiency Ratio (tax-equivalent)

 

 

58.38

%

 

 

59.15

%

 

 

61.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME/EXPENSE

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

For the three months ended:

 

For the nine months ended:

Noninterest income:

 

9/30/2024

 

6/30/2024

 

9/30/2023

 

9/30/2024

 

9/30/2023

Service charges and fees on deposit accounts

 

$

6,205

 

 

$

6,184

 

 

$

6,055

 

 

$

18,114

 

 

$

17,127

 

Gain (loss) on sale of securities available-for-sale

 

 

73

 

 

 

 

 

 

 

 

 

(2,810

)

 

 

396

 

Gain on sale of fixed assets

 

 

 

 

 

 

 

 

 

 

 

3,799

 

 

 

 

Bank-owned life insurance

 

 

540

 

 

 

523

 

 

 

558

 

 

 

2,278

 

 

 

1,388

 

Other

 

 

971

 

 

 

923

 

 

 

1,149

 

 

 

2,628

 

 

 

3,444

 

Total noninterest income

 

$

7,789

 

 

$

7,630

 

 

$

7,762

 

 

$

24,009

 

 

$

22,355

 

As a % of average interest-earning assets (1)

 

 

0.91

%

 

 

0.92

%

 

 

0.89

%

 

 

0.97

%

 

 

0.87

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

12,363

 

 

$

12,029

 

 

$

12,623

 

 

$

37,589

 

 

$

37,567

 

Occupancy and equipment costs

 

 

2,995

 

 

 

3,152

 

 

 

2,482

 

 

 

9,173

 

 

 

7,251

 

Advertising and marketing costs

 

 

381

 

 

 

338

 

 

 

723

 

 

 

1,061

 

 

 

1,646

 

Data processing costs

 

 

1,555

 

 

 

1,680

 

 

 

1,369

 

 

 

4,744

 

 

 

4,433

 

Deposit services costs

 

 

2,150

 

 

 

2,019

 

 

 

2,048

 

 

 

6,302

 

 

 

6,603

 

Loan services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan processing

 

 

184

 

 

 

89

 

 

 

174

 

 

 

424

 

 

 

452

 

Foreclosed assets

 

 

 

 

 

 

 

 

(60

)

 

 

 

 

 

665

 

Other operating costs

 

 

959

 

 

 

1,094

 

 

 

765

 

 

 

2,980

 

 

 

3,244

 

Professional services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal & accounting services

 

 

547

 

 

 

714

 

 

 

493

 

 

 

1,976

 

 

 

1,623

 

Director's costs

 

 

501

 

 

 

646

 

 

 

732

 

 

 

2,401

 

 

 

1,733

 

Other professional service

 

 

775

 

 

 

582

 

 

 

707

 

 

 

2,167

 

 

 

2,053

 

Stationery & supply costs

 

 

120

 

 

 

115

 

 

 

148

 

 

 

382

 

 

 

414

 

Sundry & tellers

 

 

280

 

 

 

234

 

 

 

358

 

 

 

829

 

 

 

838

 

Total noninterest expense

 

$

22,810

 

 

$

22,692

 

 

$

22,562

 

 

$

70,028

 

 

$

68,522

 

As a % of average interest-earning assets (1)

 

 

2.68

%

 

 

2.74

%

 

 

2.58

%

 

 

2.82

%

 

 

2.67

%

Efficiency ratio (tax-equivalent) (2)(3)

 

 

58.38

%

 

 

59.15

%

 

 

61.46

%

 

 

61.07

%

 

 

62.83

%

(1)

Annualized

(2)

Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.

(3)

See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures.”

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES AND RATES

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the quarter ended

 

For the quarter ended

 

For the quarter ended

 

 

September 30, 2024

 

June 30, 2024

 

September 30, 2023

 

 

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 accounts

 

$

88,509

$

1,225

5.51

%

 

$

43,407

$

598

5.54

%

 

$

23,760

$

415

6.93

%

Taxable

 

 

830,054

 

11,991

5.75

%

 

 

866,270

 

12,787

5.94

%

 

 

1,005,372

 

14,375

5.67

%

Non-taxable

 

 

199,261

 

1,584

4.00

%

 

 

199,942

 

1,592

4.05

%

 

 

345,645

 

2,679

3.89

%

Total investments

 

 

1,117,824

 

14,800

5.42

%

 

 

1,109,619

 

14,977

5.58

%

 

 

1,374,777

 

17,469

5.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans: (3)

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

1,804,099

 

21,054

4.64

%

 

 

1,802,190

 

20,463

4.57

%

 

 

1,854,055

 

20,764

4.44

%

Agricultural production

 

 

81,501

 

1,520

7.42

%

 

 

75,825

 

1,406

7.46

%

 

 

37,096

 

649

6.94

%

Commercial

 

 

76,633

 

1,101

5.72

%

 

 

77,224

 

1,174

6.11

%

 

 

90,348

 

1,392

6.11

%

Consumer

 

 

3,558

 

78

8.72

%

 

 

3,698

 

79

8.59

%

 

 

4,303

 

87

8.02

%

Mortgage warehouse lines

 

 

303,463

 

6,227

8.16

%

 

 

261,768

 

5,382

8.27

%

 

 

100,549

 

2,004

7.91

%

Other

 

 

2,438

 

18

2.94

%

 

 

2,291

 

14

2.46

%

 

 

2,381

 

19

3.17

%

Total loans

 

 

2,271,692

 

29,998

5.25

%

 

 

2,222,996

 

28,518

5.16

%

 

 

2,088,732

 

24,915

4.73

%

Total interest-earning assets (4)

 

 

3,389,516

 

44,798

5.31

%

 

 

3,332,615

 

43,495

5.30

%

 

 

3,463,509

 

42,384

4.94

%

Other earning assets

 

 

17,062

 

 

 

 

17,058

 

 

 

 

17,355

 

 

Non-earning assets

 

 

288,975

 

 

 

 

286,020

 

 

 

 

275,883

 

 

Total assets

 

$

3,695,553

 

 

 

$

3,635,693

 

 

 

$

3,756,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

169,602

$

1,170

2.74

%

 

$

131,510

$

733

2.24

%

 

$

141,745

$

413

1.16

%

NOW

 

 

393,328

 

161

0.16

%

 

 

398,001

 

148

0.15

%

 

 

427,278

 

68

0.06

%

Savings accounts

 

 

359,921

 

93

0.10

%

 

 

371,961

 

80

0.09

%

 

 

408,158

 

69

0.07

%

Money market

 

 

132,804

 

542

1.62

%

 

 

139,507

 

476

1.37

%

 

 

127,649

 

194

0.60

%

Time deposits

 

 

562,251

 

6,010

4.25

%

 

 

563,526

 

6,051

4.32

%

 

 

557,504

 

6,514

4.64

%

Wholesale brokered deposits

 

 

327,141

 

4,004

4.87

%

 

 

307,995

 

3,544

4.63

%

 

 

162,065

 

1,509

3.69

%

Total interest-bearing deposits

 

 

1,945,047

 

11,980

2.45

%

 

 

1,912,500

 

11,032

2.32

%

 

 

1,824,399

 

8,767

1.91

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase agreements

 

 

133,280

 

60

0.18

%

 

 

131,478

 

66

0.20

%

 

 

83,222

 

53

0.25

%

Other borrowings

 

 

80,169

 

788

3.91

%

 

 

98,731

 

1,042

4.24

%

 

 

330,221

 

4,286

5.15

%

Long-term debt

 

 

49,357

 

429

3.46

%

 

 

49,335

 

430

3.51

%

 

 

49,268

 

429

3.45

%

Subordinated debentures

 

 

35,767

 

751

8.35

%

 

 

35,723

 

755

8.50

%

 

 

35,590

 

762

8.49

%

Total borrowed funds

 

 

298,573

 

2,028

2.70

%

 

 

315,267

 

2,293

2.93

%

 

 

498,301

 

5,530

4.40

%

Total interest-bearing liabilities

 

 

2,243,620

 

14,008

2.48

%

 

 

2,227,767

 

13,325

2.41

%

 

 

2,322,700

 

14,297

2.44

%

Demand deposits - noninterest-bearing

 

 

995,326

 

 

 

 

978,602

 

 

 

 

1,064,962

 

 

Other liabilities

 

 

103,571

 

 

 

 

83,886

 

 

 

 

58,340

 

 

Shareholders' equity

 

 

353,036

 

 

 

 

345,438

 

 

 

 

310,745

 

 

Total liabilities and shareholders' equity

 

$

3,695,553

 

 

 

$

3,635,693

 

 

 

$

3,756,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest-earning assets

 

 

 

5.31

%

 

 

 

5.30

%

 

 

 

4.94

%

Interest expense/interest-earning assets

 

 

 

1.65

%

 

 

 

1.61

%

 

 

 

1.64

%

Net interest income and margin (5)

 

 

$

30,790

3.66

%

 

 

$

30,170

3.69

%

 

 

$

28,087

3.30

%

 

(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 credit 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 $(0.3) million for the quarters ended September 30, 2024, and 2023, respectively, and $(0.3) million for the quarter ended June 30, 2024.

(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, 2024

 

 

September 30, 2023

 

 

Average

Balance (1)

 

Income/

Expense

 

Yield/

Rate (2)

 

Average

Balance (1)

 

Income/

Expense

 

Yield/

Rate (2)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning due from banks

 

$

49,779

 

$

2,065

 

5.53

%

 

$

21,504

 

$

861

 

5.35

%

Taxable

 

 

863,044

 

 

38,081

 

5.88

%

 

 

991,302

 

 

39,848

 

5.37

%

Non-taxable

 

 

214,677

 

 

5,164

 

4.06

%

 

 

353,173

 

 

8,233

 

3.95

%

Total investments

 

 

1,127,500

 

 

45,310

 

5.52

%

 

 

1,365,979

 

 

48,942

 

5.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

$

1,804,159

 

$

61,706

 

4.57

%

 

$

1,860,504

 

$

61,491

 

4.42

%

Agricultural

 

 

72,946

 

 

4,064

 

7.44

%

 

 

31,232

 

 

1,578

 

6.76

%

Commercial

 

 

77,684

 

 

3,458

 

5.95

%

 

 

81,397

 

 

3,564

 

5.85

%

Consumer

 

 

3,739

 

 

238

 

8.50

%

 

 

4,260

 

 

263

 

8.25

%

Mortgage warehouse lines

 

 

234,470

 

 

14,431

 

8.22

%

 

 

79,438

 

 

4,779

 

8.04

%

Other

 

 

2,354

 

 

46

 

2.61

%

 

 

2,443

 

 

61

 

3.34

%

Total loans

 

 

2,195,352

 

 

83,943

 

5.11

%

 

 

2,059,274

 

 

71,736

 

4.66

%

Total interest-earning assets (4)

 

 

3,322,852

 

 

129,253

 

5.25

%

 

 

3,425,253

 

 

120,678

 

4.80

%

Other earning assets

 

 

17,155

 

 

 

 

 

 

 

16,680

 

 

 

 

 

Non-earning assets

 

 

281,952

 

 

 

 

 

 

 

271,949

 

 

 

 

 

Total assets

 

$

3,621,959

 

 

 

 

 

 

$

3,713,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

146,443

 

$

2,601

 

2.37

%

 

$

145,316

 

$

731

 

0.67

%

NOW

 

 

396,644

 

 

393

 

0.13

%

 

 

454,900

 

 

214

 

0.06

%

Savings accounts

 

 

369,371

 

 

246

 

0.09

%

 

 

431,143

 

 

196

 

0.06

%

Money market

 

 

136,652

 

 

1,428

 

1.40

%

 

 

128,856

 

 

291

 

0.30

%

Time deposits

 

 

562,571

 

 

18,251

 

4.33

%

 

 

520,105

 

 

17,043

 

4.38

%

Brokered deposits

 

 

280,248

 

 

9,737

 

4.64

%

 

 

167,782

 

 

4,235

 

3.37

%

Total interest-bearing deposits

 

 

1,891,929

 

 

32,656

 

2.31

%

 

 

1,848,102

 

 

22,710

 

1.64

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase agreements

125,742

 

 

166

 

0.18

%

 

88,707

 

 

199

 

0.30

%

Other borrowings

 

 

99,388

 

 

3,203

 

4.30

%

 

 

262,755

 

 

9,828

 

5.00

%

Long-term debt

 

 

49,335

 

 

1,291

 

3.50

%

 

 

49,246

 

 

1,286

 

3.49

%

Subordinated debentures

 

 

35,722

 

 

2,261

 

8.45

%

 

 

35,545

 

 

2,120

 

7.97

%

Total borrowed funds

 

 

310,187

 

 

6,921

 

2.98

%

 

 

436,253

 

 

13,433

 

4.12

%

Total interest-bearing liabilities

 

 

2,202,116

 

 

39,577

 

2.40

%

 

 

2,284,355

 

 

36,143

 

2.12

%

Demand deposits - noninterest-bearing

 

 

988,128

 

 

 

 

 

 

 

1,062,114

 

 

 

 

 

Other liabilities

 

 

86,061

 

 

 

 

 

 

 

59,674

 

 

 

 

 

Shareholders' equity

 

 

345,654

 

 

 

 

 

 

 

307,739

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

3,621,959

 

 

 

 

 

 

$

3,713,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest-earning assets

 

 

 

 

 

 

 

5.25

%

 

 

 

 

 

 

 

4.80

%

Interest expense/interest-earning assets

 

 

 

 

 

 

 

1.59

%

 

 

 

 

 

 

 

1.41

%

Net interest income and margin(5)

 

 

 

 

$

89,676

 

3.66

%

 

 

 

 

$

84,535

 

3.39

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 credit losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(1.1) million and $(0.7) million for the nine months ended September 30, 2024, and 2023, 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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