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Sierra Bancorp Reports Financial Results for Third Quarter and First Nine Months of 2022

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, 2022. Sierra Bancorp reported consolidated net income of $9.9 million, or $0.66 per diluted share, for the third quarter of 2022, compared to $10.6 million, or $0.69 per diluted share in the third quarter of 2021. On a linked-quarter basis, the Company increased net income by $0.7 million, or 8%.

For the first nine months of 2022, the Company recognized net income of $26.5 million, or $1.76 per diluted share, as compared to $33.4 million, or $2.17 per diluted share, for the same period in 2021. The year-over-year change is due primarily to a $4.4 million provision for credit losses in 2022 as compared to a net release of allowance in 2021. The Company’s financial performance metrics for the first nine months of 2022 include an annualized return on average assets and a return on average equity of 1.03% and 10.98%, respectively, compared to 1.36% and 12.60%, respectively, for the same period in 2021.

“If people like you, they’ll listen to you, but if they trust you, they’ll do business with you.” – Zig Ziglar

“Banking is a critical part of our economy, locally and globally,” stated Kevin McPhaill, President and CEO. “At Bank of the Sierra, we understand this importance and are committed to providing financial services and solutions to individuals, businesses and other organizations in our communities throughout the entire economic cycle. With the dedication and drive from our legacy market and new lending teams, we are seeing great traction in obtaining new lending relationships throughout our markets. We are also experiencing solid deposit growth – a hallmark of our bank’s success – while maintaining nearly 39% of our deposit base in non-interest bearing accounts. The bank remains focused on this important part of community banking as our treasury management services and team expand. Looking to the fourth quarter and beyond, we have worked to position the bank for additional growth opportunities – it is an exciting time indeed!” McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the third quarter of 2021)

  • Net income decreased $0.7 million to $9.9 million. Net interest income was $2.2 million higher due to an increase in margin and growth in earning assets. This positive net interest income variance was offset by the net negative impact of the Company’s deferred compensation plan and related on-balance sheet funding through bank-owned life insurance of $0.6 million, as well as an unfavorable change in provision for credit losses on loans of $1.8 million.
  • Net interest income increased $2.2 million. We had a 17 basis point increase in net interest margin coupled with a $120 million increase in average earning assets.
  • Noninterest income decreased $0.9 million or 12% primarily due to a $1.1 million decrease in bank-owned life insurance as previously mentioned.
  • The provision for credit losses on loans and leases was $1.2 million under the new current expected credit losses (“CECL”) methodology, as compared to a benefit of $0.6 million under the incurred loss model in the same quarter of 2021.
  • All capital ratios remain well above the regulatory requirements for a well-capitalized institution. The Community Bank Leverage ratio was 11.54% for Bank of the Sierra. The Sierra Bancorp Tier I leverage ratio was 10.45%.

Linked Quarter Changes (comparisons to the three months ended June 30, 2022)

  • Net income improved by $0.7 million, or 8%. Factors impacting this improvement include a $1.1 million decrease in noninterest expense, and a $3.4 million increase in net interest income after the provision for credit losses, offset by a $3.8 million decrease in noninterest income as further described below. The increase in net interest income was driven by higher average earning assets and a 40 basis point increase in the yield on earning assets, partially offset by a 27 basis point increase in the cost of interest-bearing liabilities.
  • Noninterest income decreased by $3.8 million, or 37%, due primarily to the sale of other assets in the second quarter of 2022 with no like sales in the third quarter of 2022.
  • The provision for credit losses on loans and leases decreased $1.3 million to $1.2 million due mostly to charge-offs in the second quarter as the overall quantitative and qualitative components of the allowance for credit losses remained relatively consistent with the prior quarter, although there were mostly offsetting adjustments within the qualitative components of the calculation.
  • Noninterest expense decreased $1.1 million, or 5%, mostly in other operating expense, due to a $0.7 million increase in other expense due to a proactive approach taken in the second quarter of 2022, due to FDIC supervisory guidance addressing certain consumer compliance risks associated with the treatment of non-sufficient fund charges on representments.

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

  • Net income decreased $6.8 million, or 20%. The most significant line-item change was a $6.6 million increase in the provision for credit losses, under the “CECL” methodology. There was also a decrease of $2.2 million or 3% in net interest income, due mostly to an overall 25 basis point decline in net interest margin. The decline in margin was due primarily to lower yields and balances on loans, as well as higher overall funding costs partially offset by higher investment yields and balances.
  • Noninterest income increased by $2.1 million, or 10%, due to a $1.0 million recovery of prior year legal expenses, a $1.0 million gain on the sale of investment securities, a $3.2 million gain on the sale of other assets, partially offset by negative variances in BOLI income, and the fair market value adjustment of equity securities.
  • Noninterest expense increased $1.9 million, or 3%, due mostly to the increases in salary expense for new loan production teams and restitution payments to customers charged nonsufficient fund fees on representments in the past five years, partially offset by lower legal costs and a positive variance in director’s deferred compensation expense which is linked to the unfavorable changes in bank-owned life insurance income described above.

Statement of Condition Changes (comparisons to December 31, 2021)

  • Total assets increased by $161.3 million, or 5%, to $3.5 billion, during the first nine months of the year due mostly to an increase in deposits and borrowed funds which facilitated the purchase of investment securities in 2022.
  • Cash and due from banks decreased $170.8 million to $86.7 million during the first nine months of the year due mostly to an increase in earning assets.
  • Investment securities increased by $252.3 million, or 26%, to $1.2 billion primarily due to strategic purchases of $181 million of collateralized loan obligations, as well as other investment securities.
  • Gross loans increased $30.6 million due predominantly to the purchase of $173.1 million in high quality jumbo single family mortgage loan pools earlier in the year. These mortgage loan pool purchases were offset by $267.7 million in loan maturities, charge-offs and payoffs. Organic loan production for the first nine months of 2022 was $225.1 million, as compared to $93.0 million for the comparative period in 2021. Negatively impacting loan growth was a $45.2 million decline in credit line utilization and a $54.6 million decline in mortgage warehouse line utilization. PPP loan forgiveness during the first nine months was $27.6 million.
  • Deposits totaled $2.9 billion at September 30, 2022, representing a year-to-date increase of $103.9 million, or 4%. The growth in deposits came from a $45.5 million increase in core transaction and savings accounts, coupled with a $58.4 million increase in time and wholesale brokered deposits.
  • Short-term debt totaled $215.1 million due to increases of $103.1 million in overnight FHLB borrowings and $5.1 million in customer repurchase agreements.

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

 

 

 

9/30/2022

 

 

6/30/2022

 

 

9/30/2021

 

 

9/30/2022

 

 

9/30/2021

Net income

 

$

9,935

 

$

9,204

 

$

10,605

 

$

26,546

 

$

33,391

Diluted earnings per share

 

$

0.66

 

$

0.61

 

$

0.69

 

$

1.76

 

$

2.17

Return on average assets

 

 

1.13%

 

 

1.07%

 

 

1.26%

 

 

1.03%

 

 

1.36%

Return on average equity

 

 

12.84%

 

 

11.68%

 

 

11.62%

 

 

10.98%

 

 

12.60%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (tax-equivalent)

 

 

3.63%

 

 

3.40%

 

 

3.46%

 

 

3.41%

 

 

3.66%

Yield on average loans and leases

 

 

4.28%

 

 

4.31%

 

 

4.61%

 

 

4.30%

 

 

4.57%

Yield on investments

 

 

3.51%

 

 

2.40%

 

 

1.47%

 

 

2.61%

 

 

1.71%

Cost of average total deposits

 

 

0.24%

 

 

0.11%

 

 

0.08%

 

 

0.15%

 

 

0.09%

Efficiency ratio (tax-equivalent) (1)

 

 

58.10%

 

 

59.19%

 

 

59.75%

 

 

61.10%

 

 

58.29%

 

 

 

 

 

Total assets

 

$

3,532,289

 

$

3,396,635

 

$

3,442,739

 

$

3,532,289

 

$

3,442,739

Loans & leases net of deferred fees

 

$

2,020,016

 

$

2,021,581

 

$

2,137,214

 

$

2,020,016

 

$

2,137,214

Noninterest demand deposits

 

$

1,118,245

 

$

1,120,413

 

$

1,111,411

 

$

1,118,245

 

$

1,111,411

Total deposits

 

$

2,885,468

 

$

2,850,999

 

$

2,820,646

 

$

2,885,468

 

$

2,820,646

Noninterest-bearing deposits over total deposits

 

 

38.8%

 

 

39.3%

 

 

39.4%

 

 

38.8%

 

 

39.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity / total assets

 

 

8.4%

 

 

8.8%

 

 

10.6%

 

 

8.4%

 

 

10.6%

Tangible common equity ratio (2)

 

 

7.6%

 

 

8.0%

 

 

9.8%

 

 

7.6%

 

 

9.8%

Book value per share

 

$

19.56

 

$

19.82

 

$

23.70

 

$

19.56

 

$

23.70

Tangible book value per share (2)

 

$

17.58

 

$

17.82

 

$

21.69

 

$

17.58

 

$

21.69

(1)

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

(2)

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

 

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income was $28.9 million, for the third quarter of 2022, a $2.2 million increase, or 8% over the third quarter of 2021, but decreased $2.2 million, or 3%, to $80.3 million for the first nine months of 2022 relative to the same period in 2021.

For the third quarter of 2022, growth in average interest-earning assets totaled $119.1 million, or 4%, as compared to the third quarter of 2021. The yield on these balances was 42 basis points higher for the same period due mostly to a shift in the mix of earning assets and the result of recent interest rate increases by the Federal Open Market Committee. This increase in yield was offset by a 40 basis point increase in the cost of our interest-bearing liabilities for the same period. Although transaction and savings deposit rates have not changed, higher costs of time deposits and borrowed funds including overnight purchases are the primary reasons for the increase in interest expense.

Net interest income for the comparative year-to-date periods decreased $2.2 million, or 3%, due to a change in mix of average interest-earning assets. Investment balances, including overnight funds, with an average yield of 2.61% increased $360.0 million, while gross average loan balances yielding 4.30% decreased $215.4 million. The overall yield on the average balances of earning assets was 11 basis points lower for the comparative periods, exacerbated by a 21 basis point increase in interest paid on liabilities. The net impact was a 25 basis point decrease in our net interest margin for the nine-months ending September 30, 2022, as compared to the same period in 2021.

The increase in investments includes a net increase of $181.9 million of exclusively AAA and AA tranches of collateralized loan obligations, for a total cost basis of $514.7 million at September 30, 2022. The average yield on such CLOs for September 2022 was 4.6% as compared to an average yield in December 2021 of 1.5%.

Interest expense was $3.0 million for the third quarter of 2022, an increase of $2.1 million, relative to the third quarter of 2021. For the first nine months of 2022, compared to the same period in 2021, interest expense increased $3.2 million to $6.0 million. The significant increase in interest expense is attributable to an unfavorable shift in deposit mix and the impact of recent interest rate increases, as the average balance of higher cost time deposits, including variable rate time deposits and borrowed funds increased by $20.4 million and $125.9 million respectively in the third quarter of 2022 as compared to the third quarter of 2021. For the year-to-date comparisons the increase is attributable to a $106.1 million increase in borrowed funds combined with the impact of recent interest rate increases.

The Company had $1.3 billion in adjustable and variable rate loans and $499.4 million in floating rate collateralized loan obligations, as compared to $279.5 million in floating rate CDs and $35.4 million in floating rate trust preferred securities at September 30, 2022. $236.0 million of the Company’s adjustable and variable rate loans have the ability to reprice in the next twelve months.

The Company continues to offer floating rate CDs which are indexed to prime. These floating rate CDs increased $40.6 million, or 17%, to $279.5 million at September 30, 2022, as compared to $238.9 million at December 31, 2021. Due to the increase in the prime rate during 2022, interest expense on floating rate CDs has increased $1.1 million for the third quarter of 2022 over the third quarter of 2021, and increased $1.3 million for the first nine months of 2022 as compared to the same period in 2021. These CDs require a minimum balance and pay a rate that is 325 – 400 basis points below the Wall Street Journal Prime rate, with a 20 basis point minimum rate.

Our net interest margin was 3.63% for the third quarter of 2022, as compared to 3.40% for the linked quarter and 3.46% for the third quarter of 2021.

Provision for Loan and Lease Losses

The Company recorded a provision for credit losses on loans and leases of $1.2 million in the third quarter of 2022 relative to a benefit of $0.6 million in the third quarter of 2021, and a year-to-date provision for credit losses on loans and leases of $4.4 million in 2022 as compared to a benefit of $2.5 million for the same period in 2021. The Company's $1.8 million increase in the provision for credit losses on loans and leases in the third quarter of 2022 as compared to the third quarter of 2021, and the $6.8 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 $4.3 million in net charge-offs in the first nine months of 2022. The increase in the provision for credit losses on loans and leases for the third quarter of 2022 was principally from an $1.2 million increase to the specific reserve on a single dairy relationship while the increase in the provision for credit losses on loans and leases year-to-date also included a charge off on the same loan relationship combined with 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.

Noninterest Income

Total noninterest income decreased $0.9 million, or 12%, for the quarter ended September 30, 2022, as compared to the same quarter in 2021, and increased $2.1 million, or 10% for the year-to-date period ended September 30, 2022 as compared to the same period in 2021. The quarterly and year-to-date comparisons were primarily impacted by unfavorable fluctuations in income on bank-owned life insurance (BOLI) with underlying investments mapped directly to the Company’s deferred compensation plan. The year-to-date increases were favorably impacted by a $1.0 million gain on the sale of debt securities and $3.6 million from gains on the sale of other assets.

Service charges on customer deposit account income were relatively unchanged in the third quarter of 2022 as compared to the third quarter of 2021, however for the year-to-date comparison there was a $0.8 million increase primarily due to increases in overdraft and analysis fee income.

Noninterest Expense

Total noninterest expense increased by $0.1 million, or 1%, in the third quarter of 2022 relative to the third quarter of 2021, and by $1.9 million, or 3%, in the first nine months of 2022 as compared to the same period in 2021.

Salaries and Benefits were $0.9 million, or 9%, higher in the third quarter of 2022 as compared to the third quarter of 2021 and $2.9 million, or 9%, higher for the first nine 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. There were 500 full-time equivalent employees at September 30, 2022 as compared to 482 at September 30, 2021.

Occupancy expenses were $0.1 million higher for the third quarter of 2022 as compared to the same quarter in 2021 and $0.3 million lower for the first nine months of 2022 as compared to the same period in 2021. The primary reason for increase in the quarterly comparisons was from increases in utility rate and usage. For the year-to-date comparison the decreases came from the closure of five branch facilities in 2021.

Other noninterest expense decreased $0.9 million, or 11%, for the third quarter 2022 as compared to the third quarter in 2021, and decreased $0.7 million, or 3% for the first nine months of 2022 as compared to the same period in 2021. The variances for the third quarter of 2022 compared to the same period in 2021 was primarily driven by a decrease of $0.5 million in legal costs, a $0.7 million favorable variance in directors deferred compensation expense, linked to the changes in BOLI income, and lower telecommunications costs. For the year-over-year comparison, the categories of increase were the same as with the quarterly comparison, along with a $0.3 million decrease in consultant expenses partially offset by increases in hiring and recruiting costs, and a $0.7 million restitution payment to customers charged nonsufficient fund fees in the past five years for representments.

The Company's provision for income taxes was 25.1% of pre-tax income in the third quarter of 2022 relative to 24.1% in the third quarter of 2021, and 26.1% of pre-tax income for the first nine months of 2022 relative to 25.0% for the same period in 2021. The increase in effective tax rate in the third quarter of 2022 and year-to-date comparisons is due to tax credits and tax-exempt income representing a smaller percentage of total taxable income. The decline in tax-exempt income is due mostly to unfavorable changes in bank-owned life insurance with investments linked to the Company’s deferred compensation plan.

Balance Sheet Summary

Balance sheet changes during the first nine months of 2022 include an increase in total assets of $161.3 million, or 5%, primarily a result of a $252.3 million increase in investments securities, partially offset by a $170.8 million decrease in cash and due from banks.

The increase in investment securities of $252.3 million for the year-to-date period consisted primarily of increases in municipal bonds of $65.8 million, corporate securities of $25.8 million, and AAA and AA tranches of collateralized loan obligations of $167.2 million, partially offset by decreases in government and agency securities, including mortgage-backed securities and collateralized mortgage obligations of $6.4 million.

Gross loan balances increased $30.6 million during the first nine months of 2022, as compared to December 31, 2021. The increase 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. Other positive variances from organic growth included a $10.7 million increase in ag real estate, a $16.2 million increase in multi-family real estate, and an increase of $4.3 million in commercial real estate. Negatively impacting these positive variances were loan paydowns and maturities resulting in net declines in many categories even with solid loan production. In particular there was a $28.4 million net decrease in construction loans, a $40.5 million decrease in commercial and industrial loans, and a $54.6 million unfavorable variance in mortgage warehouse loans. Further, SBA PPP loan forgiveness resulted in a $27.6 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 third quarter of 2022 increased $78.3 million over the same period in 2021, and increased $132.1 million for the year-to-date comparisons. 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 during the first nine months of 2022 totaled $173.1 million, however we had $267.7 million in loan paydowns and maturities, along with a $54.6 million decrease in mortgage warehouse line utilization and a $45.2 million decrease in line of credit utilization.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOAN ROLLFORWARD

(Dollars in Thousands, Unaudited)

 

 

For the three months ended:

 

For the nine months ended:

 

 

 

September

30, 2022

 

 

June

30, 2022

 

 

September

30, 2021

 

 

September

30, 2022

 

 

September

30, 2021

Gross loans beginning balance

 

$

2,022,662

 

 

$

1,983,331

 

 

$

2,144,796

 

 

$

1,989,726

 

 

$

2,463,111

 

New credit extended

 

 

82,958

 

 

 

119,553

 

 

 

4,656

 

 

 

225,054

 

 

 

92,950

 

Loan purchases

 

 

 

 

 

46,364

 

 

 

122,291

 

 

 

173,082

 

 

 

122,291

 

Changes in line of credit utilization

 

 

(7,811

)

 

 

(17,837

)

 

 

(15,852

)

 

 

(45,201

)

 

 

(55,509

)

Change in mortgage warehouse

 

 

(11,581

)

 

 

956

 

 

 

(23,865

)

 

 

(54,630

)

 

 

(181,192

)

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

 

 

(65,864

)

 

 

(109,705

)

 

 

(92,200

)

 

 

(267,667

)

 

 

(301,825

)

Gross loans ending balance

 

 

2,020,364

 

 

 

2,022,662

 

 

 

2,139,826

 

 

 

2,020,364

 

 

 

2,139,826

 

Deferred costs and (fees), net

 

 

(348

)

 

 

(1,081

)

 

 

(2,612

)

 

 

(348

)

 

 

(2,612

)

Loans, net of deferred costs and (fees)

 

$

2,020,016

 

 

$

2,021,581

 

 

$

2,137,214

 

 

$

2,020,016

 

 

$

2,137,214

 

(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 $228.4 million at September 30, 2022, compared to $219.6 million at December 31, 2021. Total line utilization, excluding mortgage warehouse and overdraft lines, was 58% at September 30, 2022 and 61% at December 31, 2021 and was 33% at September 30, 2022 and 52% at December 31, 2021, including mortgage warehouse lines. Mortgage warehouse utilization declined significantly to 9% at September 30, 2022, as compared to 28% at December 31, 2021.

PPP loans continue to decline as borrowers receive forgiveness on these loans. There were 43 loans for $3.6 million outstanding at September 30, 2022, compared to 440 loans for $31.8 million at December 31, 2021.

Deposit balances reflect growth of $103.9 million, or 4%, during the first nine months of 2022. Core non-maturity deposits increased by $45.5 million, or 2%, while customer time deposits increased by $38.4 million, or 13%. Wholesale brokered deposits increased by $20.0 million, or 33%. Overall noninterest-bearing deposits as a percent of total deposits at September 30, 2022, were 38.8%, as compared to 39.0% at December 31, 2021.

Other interest-bearing liabilities of $215.1 million on September 30, 2022, consists of $112.0 million in customer repurchase agreements and $103.1 million of overnight FHLB borrowings. Other interest-bearing liabilities at December 31, 2021 consisted exclusively of $106.9 million in customer repurchase agreements.

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

 

 

 

 

 

 

 

Primary and secondary liquidity sources

 

 

September 30, 2022

 

December 31, 2021

Cash and cash equivalents

 

$

86,683

 

$

257,528

Unpledged investment securities

 

 

1,041,115

 

 

806,132

Excess pledged securities

 

 

34,606

 

 

47,024

FHLB borrowing availability

 

 

724,047

 

 

787,519

Unsecured lines of credit

 

 

305,000

 

 

305,000

Funds available through fed discount window

 

 

34,235

 

 

50,608

Totals

 

$

2,225,686

 

$

2,253,811

Total capital of $295.1 million at September 30, 2022 reflects a decrease of $67.4 million, or 19%, relative to year-end 2021. The decrease in equity during the first nine months of 2022 was due to the addition of $26.5 million in net income, offset by a $72.2 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, net of $10.4 million in dividends paid. The remaining difference is related to stock options exercised and restricted stock granted during the first nine months.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, increased by $22.2 million to $26.8 million for the first nine months of 2022. The Company's ratio of nonperforming loans to gross loans increased to 1.33% at September 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 of 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 based primarily on recent independent appraisals.

The Company's allowance for credit losses on loans and leases was $23.8 million at September 30, 2022, as compared to $14.3 million at December 31, 2021. The $9.5 million increase in the allowance for credit losses on loans and leases during the first nine months of 2022 is due to a $9.5 million one-time adjustment from the implementation of CECL on January 1, 2022, a $4.4 million provision for credit losses on loans and leases, and net loan charge-offs of $4.3 million.

The allowance for credit losses on loans and leases was 1.18% of gross loans at September 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 September 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

 

 

9/30/2022

6/30/2022

 

3/31/2022

12/31/2021

 

9/30/2021

Cash and due from banks

 

$

86,683

 

 

$

161,875

 

 

$

253,534

 

 

$

257,528

 

 

$

422,350

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale, at fair value

 

 

1,069,434

 

 

 

864,178

 

 

 

1,025,032

 

 

 

973,314

 

 

 

732,312

 

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

 

 

156,211

 

 

 

161,399

 

 

 

-

 

 

 

-

 

 

 

-

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-4 family residential construction

 

 

-

 

 

 

5,542

 

 

 

8,800

 

 

 

21,369

 

 

 

34,720

 

Other construction/land

 

 

18,315

 

 

 

20,816

 

 

 

24,633

 

 

 

25,299

 

 

 

25,512

 

1-4 family - closed-end

 

 

420,136

 

 

 

429,109

 

 

 

398,871

 

 

 

289,457

 

 

 

220,240

 

Equity lines

 

 

21,126

 

 

 

25,260

 

 

 

23,389

 

 

 

26,588

 

 

 

31,341

 

Multi-family residential

 

 

69,665

 

 

 

66,367

 

 

 

59,711

 

 

 

53,458

 

 

 

55,628

 

Commercial real estate - owner occupied

 

 

324,696

 

 

 

312,060

 

 

 

331,764

 

 

 

334,446

 

 

 

345,116

 

Commercial real estate - non-owner occupied

 

 

896,954

 

 

 

898,159

 

 

 

857,051

 

 

 

882,888

 

 

 

995,921

 

Farmland

 

 

117,385

 

 

 

101,675

 

 

 

98,865

 

 

 

106,706

 

 

 

124,446

 

Total real estate loans

 

 

1,868,277

 

 

 

1,858,988

 

 

 

1,803,084

 

 

 

1,740,211

 

 

 

1,832,924

 

Agricultural production loans

 

 

31,290

 

 

 

28,660

 

 

 

31,663

 

 

 

33,990

 

 

 

43,296

 

Commercial and industrial

 

 

70,147

 

 

 

72,616

 

 

 

87,173

 

 

 

109,791

 

 

 

132,292

 

Mortgage warehouse lines

 

 

46,553

 

 

 

58,134

 

 

 

57,178

 

 

 

101,184

 

 

 

126,486

 

Consumer loans

 

 

4,097

 

 

4,264

 

 

4,233

 

 

4,550

 

 

4,828

 

Gross loans and leases

 

 

2,020,364

 

 

 

2,022,662

 

 

 

1,983,331

 

 

 

1,989,726

 

 

 

2,139,826

 

Deferred loan and lease fees

 

 

(348

)

 

 

(1,081

)

 

 

(1,200

)

 

 

(1,865

)

 

 

(2,612

)

Allowance for credit losses on loans and leases

 

 

(23,790

)

 

(22,802

)

 

(22,530

)

 

(14,256

)

 

(15,617

)

Net loans and leases

 

 

1,996,226

 

 

 

1,998,779

 

 

 

1,959,601

 

 

 

1,973,605

 

 

 

2,121,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank premises and equipment

 

 

22,688

 

 

 

22,937

 

 

 

23,239

 

 

 

23,571

 

 

 

24,490

 

Other assets

 

 

201,047

 

 

187,467

 

 

157,448

 

 

142,996

 

 

141,990

 

Total assets

 

$

3,532,289

 

$

3,396,635

 

$

3,418,854

 

$

3,371,014

 

$

3,442,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest demand deposits

 

$

1,118,245

 

 

$

1,120,413

 

 

$

1,104,691

 

 

$

1,084,544

 

 

$

1,111,411

 

Interest-bearing transaction accounts

 

 

732,468

 

 

 

736,034

 

 

 

776,457

 

 

 

744,553

 

 

 

765,823

 

Savings deposits

 

 

481,882

 

 

 

482,140

 

 

 

480,178

 

 

 

450,785

 

 

 

451,248

 

Money market deposits

 

 

140,620

 

 

 

152,596

 

 

 

149,918

 

 

 

147,793

 

 

 

141,348

 

Customer time deposits

 

 

332,253

 

 

 

299,816

 

 

 

293,699

 

 

 

293,897

 

 

 

290,816

 

Wholesale brokered deposits

 

 

80,000

 

 

60,000

 

 

60,000

 

 

60,000

 

 

60,000

 

Total deposits

 

 

2,885,468

 

 

 

2,850,999

 

 

 

2,864,943

 

 

 

2,781,572

 

 

 

2,820,646

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

49,196

 

 

 

49,173

 

 

 

49,151

 

 

 

49,141

 

 

 

49,221

 

Subordinated debentures

 

 

35,436

 

 

 

35,392

 

 

 

35,347

 

 

 

35,302

 

 

 

35,258

 

Other interest-bearing liabilities

 

 

215,112

 

 

118,014

 

 

107,760

 

 

106,937

 

 

92,553

 

Total deposits and interest-bearing liabilities

 

 

3,185,212

 

 

 

3,053,578

 

 

 

3,057,201

 

 

 

2,972,952

 

 

 

2,997,678

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on unfunded loan commitments

 

 

940

 

 

 

893

 

 

 

1,040

 

 

 

203

 

 

 

203

 

Other liabilities

 

 

51,065

 

 

 

43,117

 

 

 

34,922

 

 

 

35,365

 

 

 

80,351

 

Total capital

 

 

295,072

 

 

299,047

 

 

325,691

 

 

362,494

 

 

364,507

 

Total liabilities and capital

 

$

3,532,289

 

$

3,396,635

 

$

3,418,854

 

$

3,371,014

 

$

3,442,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOODWILL AND INTANGIBLE ASSETS

(Dollars in Thousands, Unaudited)

 

 

 

9/30/2022

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

Goodwill

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

Core deposit intangible

 

 

2,517

 

 

2,769

 

 

3,022

 

 

3,275

 

 

3,527

 

Total intangible assets

 

$

29,874

 

$

30,126

 

$

30,379

 

$

30,632

 

$

30,884

 

 

 

 

 

 

 

 

CREDIT QUALITY

(Dollars in Thousands, Unaudited)

 

 

 

9/30/2022

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

Non-accruing loans

 

$

26,772

 

 

$

29,745

 

 

$

30,446

 

 

$

4,522

 

 

$

6,788

 

Foreclosed assets

 

 

-

 

 

2

 

 

93

 

 

93

 

 

93

 

Total nonperforming assets

 

$

26,772

 

$

29,747

 

$

30,539

 

$

4,615

 

$

6,881

 

 

 

 

 

 

 

 

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

 

$

4,639

 

 

$

4,714

 

 

$

4,568

 

 

$

4,910

 

 

$

5,509

 

Net (recoveries) / charge offs

 

$

4,280

 

 

$

4,056

 

 

$

1,778

 

 

$

(168

)

 

$

(329

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due & still accruing (30-89)

 

$

1,242

 

 

$

1,037

 

 

$

2,809

 

 

$

2,013

 

 

$

380

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans to gross loans

 

 

1.33

%

 

 

1.47

%

 

 

1.54

%

 

 

0.23

%

 

 

0.32

%

NPA's to loans plus foreclosed assets

 

 

1.33

%

 

 

1.47

%

 

 

1.54

%

 

 

0.23

%

 

 

0.32

%

Allowance for credit losses on loans and leases to loans

 

 

1.18

%

 

 

1.13

%

 

 

1.14

%

 

 

0.72

%

 

 

0.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECT PERIOD-END STATISTICS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2022

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

Shareholders' equity / total assets

 

 

8.4

%

 

 

8.8

%

 

 

9.5

%

 

 

10.8

%

 

 

10.6

%

Gross loans / deposits

 

 

70.0

%

 

 

70.9

%

 

 

69.2

%

 

 

71.5

%

 

 

75.9

%

Non-interest bearing deposits / total deposits

 

 

38.8

%

 

 

39.3

%

 

 

38.6

%

 

 

39.0

%

 

 

39.4

%

 

 

CONSOLIDATED INCOME STATEMENT

(Dollars in Thousands, Unaudited)

 

 

For the three months ended:

 

 

For the nine months ended:

 

 

 

9/30/2022

 

 

 

6/30/2022

 

 

 

9/30/2021

 

 

 

9/30/2022

 

 

 

9/30/2021

Interest income

 

$

31,928

 

 

$

28,206

 

 

$

27,629

 

 

$

86,216

 

 

$

85,179

 

Interest expense

 

 

3,017

 

 

 

1,621

 

 

 

913

 

 

 

5,963

 

 

 

2,719

 

Net interest income

 

 

28,911

 

 

 

26,585

 

 

 

26,716

 

 

 

80,253

 

 

 

82,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

1,212

 

 

 

2,548

 

 

 

(600

)

 

 

4,360

 

 

 

(2,450

)

Provision / (benefit) for credit losses on unfunded loan commitments

 

 

47

 

 

 

(147

)

 

 

-

 

 

 

(194

)

 

 

-

 

Provision for credit losses on held-to-maturity securities

 

 

-

 

 

 

18

 

 

 

-

 

 

 

18

 

 

 

-

 

Net interest income after provision

 

 

27,652

 

 

 

24,166

 

 

 

27,316

 

 

 

76,069

 

 

 

84,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges

 

 

3,216

 

 

 

3,204

 

 

 

3,186

 

 

 

9,460

 

 

 

8,677

 

BOLI (expense) income

 

 

(23

)

 

 

(582

)

 

 

1,048

 

 

 

(1,251

)

 

 

2,445

 

Gain on sale of investments

 

 

-

 

 

 

-

 

 

 

11

 

 

 

1,032

 

 

 

11

 

Other noninterest income

 

 

3,419

 

 

 

7,817

 

 

 

3,290

 

 

 

13,873

 

 

 

9,844

 

Total noninterest income

 

 

6,612

 

 

 

10,439

 

 

 

7,535

 

 

 

23,114

 

 

 

20,977

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

11,521

 

 

 

11,745

 

 

 

10,618

 

 

 

35,070

 

 

 

32,194

 

Occupancy expense

 

 

2,470

 

 

 

2,406

 

 

 

2,359

 

 

 

7,170

 

 

 

7,472

 

Other noninterest expenses

 

 

7,005

 

 

 

7,962

 

 

 

7,898

 

 

 

21,042

 

 

 

21,715

 

Total noninterest expense

 

 

20,996

 

 

 

22,113

 

 

 

20,875

 

 

 

63,282

 

 

 

61,381

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

13,268

 

 

 

12,492

 

 

 

13,976

 

 

 

35,901

 

 

 

44,506

 

Provision for income taxes

 

 

3,333

 

 

 

3,288

 

 

 

3,371

 

 

 

9,355

 

 

 

11,115

 

Net income

 

$

9,935

 

 

$

9,204

 

 

$

10,605

 

 

$

26,546

 

 

$

33,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TAX DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt muni income

 

$

2,346

 

 

$

1,854

 

 

$

1,578

 

 

$

5,926

 

 

$

4,539

 

Interest income - fully tax equivalent

 

$

32,552

 

 

$

28,699

 

 

$

28,048

 

 

$

87,791

 

 

$

86,386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

(Unaudited)

 

 

For the three months ended:

 

 

For the nine months ended:

 

 

 

9/30/2022

 

 

6/30/2022

 

 

9/30/2021

 

 

9/30/2022

 

 

9/30/2021

Basic earnings per share

 

$

0.66

 

$

0.62

 

$

0.70

 

$

1.77

 

$

2.19

Diluted earnings per share

 

$

0.66

 

$

0.61

 

$

0.69

 

$

1.76

 

$

2.17

Common dividends

 

$

0.23

 

$

0.23

 

$

0.22

 

$

0.69

 

$

0.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

14,954,503

 

 

14,931,701

 

 

15,257,367

 

 

14,968,242

 

 

15,247,477

Weighted average diluted shares

 

 

15,014,048

 

 

15,004,017

 

 

15,343,543

 

 

15,046,883

 

 

15,369,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per basic share (EOP)

 

$

19.56

 

$

19.82

 

$

23.70

 

$

19.56

 

$

23.70

Tangible book value per share (EOP)

 

$

17.58

 

$

17.82

 

$

21.69

 

$

17.58

 

$

21.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (EOP)

 

 

15,085,675

 

 

15,090,792

 

 

15,382,518

 

 

15,085,675

 

 

15,382,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY FINANCIAL RATIOS

(Unaudited)

 

 

For the three months ended:

 

 

For the nine months ended:

 

 

 

9/30/2022

 

 

6/30/2022

 

 

9/30/2021

 

 

9/30/2022

 

 

9/30/2021

Return on average equity

 

 

12.84%

 

 

11.68%

 

 

11.62%

 

 

10.98%

 

 

12.60%

Return on average assets

 

 

1.13%

 

 

1.07%

 

 

1.26%

 

 

1.03%

 

 

1.36%

Net interest margin (tax-equivalent)

 

 

3.63%

 

 

3.40%

 

 

3.46%

 

 

3.41%

 

 

3.66%

Efficiency ratio (tax-equivalent)¹

 

 

58.10%

 

 

59.19%

 

 

59.78%

 

 

61.10%

 

 

58.29%

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

 

 

0.01%

 

 

0.11%

 

 

0.01%

 

 

0.21%

 

 

(0.01)%

(1)

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

 

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

NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

 

 

9/30/2022

 

 

6/30/2022

 

 

9/30/2021

Total stockholders' equity

 

$

295,072

 

$

299,047

 

$

364,507

Less: goodwill and other intangible assets

 

 

29,874

 

 

30,126

 

 

30,884

Tangible common equity

 

$

265,198

 

$

268,921

 

$

333,623

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,532,289

 

$

3,396,635

 

$

3,442,739

Less: goodwill and other intangible assets

 

 

29,874

 

 

30,126

 

 

30,884

Tangible assets

 

$

3,502,415

 

$

3,366,509

 

$

3,411,855

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

15,085,675

 

 

15,090,792

 

 

15,382,518

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

19.56

 

$

19.82

 

$

23.70

Tangible book value per common share

 

$

17.58

 

$

17.82

 

$

21.69

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

 

 

8.35%

 

 

8.80%

 

 

10.59%

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

 

 

7.57%

 

 

7.99%

 

 

9.78%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME/EXPENSE

(Dollars in Thousands, Unaudited)

 

 

 

For the three months ended:

 

 

For the nine months ended:

Noninterest income:

 

 

9/30/2022

 

 

 

6/30/2022

 

 

 

9/30/2021

 

 

 

9/30/2022

 

 

9/30/2021

Service charges on deposit accounts

 

$

3,216

 

 

$

3,204

 

 

$

3,186

 

 

$

9,460

 

 

$

8,677

 

Debit card fees

 

 

2,241

 

 

 

2,161

 

 

 

2,192

 

 

 

6,458

 

 

 

6,321

 

Bank-owned life insurance

 

 

(23

)

 

 

(582

)

 

 

1,048

 

 

 

(1,251

)

 

 

2,445

 

Other service charges and fees

 

 

741

 

 

 

732

 

 

 

708

 

 

 

2,205

 

 

 

2,190

 

Gain on sale of securities

 

 

 

 

 

 

 

 

11

 

 

 

1,032

 

 

 

11

 

Loss on tax credit investment

 

 

64

 

 

 

(113

)

 

 

(144

)

 

 

(162

)

 

 

(390

)

Other

 

 

373

 

 

 

5,037

 

 

 

534

 

 

 

5,372

 

 

 

1,723

 

Total noninterest income

 

$

6,612

 

 

$

10,439

 

 

$

7,535

 

 

$

23,114

 

 

$

20,977

 

As a % of average interest earning assets (1)

 

 

0.81

%

 

 

1.31

%

 

 

0.96

%

 

 

0.96

%

 

 

0.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

11,521

 

 

$

11,745

 

 

$

10,618

 

 

$

35,070

 

 

$

32,194

 

Occupancy costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Furniture & equipment

 

 

399

 

 

 

511

 

 

 

406

 

 

 

1,363

 

 

 

1,312

 

Premises

 

 

2,071

 

 

 

1,895

 

 

 

1,953

 

 

 

5,807

 

 

 

6,160

 

Advertising and marketing costs

 

 

466

 

 

 

449

 

 

 

370

 

 

 

1,322

 

 

 

982

 

Data processing costs

 

 

1,564

 

 

 

1,525

 

 

 

1,470

 

 

 

4,574

 

 

 

4,409

 

Deposit services costs

 

 

2,450

 

 

 

2,417

 

 

 

2,402

 

 

 

7,112

 

 

 

6,752

 

Loan services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan processing

 

 

128

 

 

 

186

 

 

 

109

 

 

 

426

 

 

 

343

 

Foreclosed assets

 

 

(3

)

 

 

92

 

 

 

(19

)

 

 

84

 

 

 

78

 

Other operating costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone & data communications

 

 

358

 

 

 

377

 

 

 

534

 

 

 

1,179

 

 

 

1,582

 

Postage & mail

 

 

47

 

 

 

223

 

 

 

60

 

 

 

326

 

 

 

253

 

Other

 

 

507

 

 

 

1,447

 

 

 

470

 

 

 

2,374

 

 

 

1,269

 

Professional services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal & accounting services

 

 

535

 

 

 

673

 

 

 

966

 

 

 

1,753

 

 

 

2,091

 

Director's deferred compensation

 

 

(143

)

 

 

(504

)

 

 

531

 

 

 

(1,192

)

 

 

1,133

 

Other professional service

 

 

855

 

 

 

763

 

 

 

789

 

 

 

2,306

 

 

 

2,086

 

Stationery & supply costs

 

 

114

 

 

 

116

 

 

 

107

 

 

 

315

 

 

 

259

 

Sundry & tellers

 

 

127

 

 

 

198

 

 

 

109

 

 

 

463

 

 

 

478

 

Total noninterest expense

 

$

20,996

 

 

$

22,113

 

 

$

20,875

 

 

$

63,282

 

 

$

61,381

 

As a % of average interest earning assets (1)

 

 

2.58

%

 

 

2.78

%

 

 

2.66

%

 

 

2.64

%

 

 

2.67

%

Efficiency ratio (2)(3)

 

 

58.10

%

 

 

59.19

%

 

 

59.75

%

 

 

61.10

%

 

 

58.30

%

(1)

Annualized

(2)

Tax equivalent

(3)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES AND RATES

(Dollars in Thousands, Unaudited)

 

 

For the quarter ended

 

For the quarter ended

 

For the quarter ended

 

 

September 30, 2022

 

June 30, 2022

 

September 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

 

$ 21,845

$ 103

1.87%

 

$ 146,287

$ 270

0.74%

 

$ 379,597

$ 146

0.15%

Taxable

 

851,683

7,646

3.56%

 

752,693

4,477

2.39%

 

389,524

1,679

1.71%

Non-taxable

 

336,567

2,346

3.50%

 

284,198

1,854

3.31%

 

259,996

1,578

3.05%

Total investments

 

1,210,095

10,095

3.51%

 

1,183,178

6,601

2.40%

 

1,029,117

3,403

1.47%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases: (3)

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

1,862,738

19,808

4.22%

 

1,844,367

19,659

4.28%

 

1,775,611

20,805

4.65%

Agricultural production

 

29,724

274

3.66%

 

30,466

232

3.05%

 

43,243

410

3.76%

Commercial

 

75,482

973

5.11%

 

80,533

980

4.88%

 

140,105

1,796

5.09%

Consumer

 

4,228

132

12.39%

 

4,264

207

19.47%

 

4,862

205

16.73%

Mortgage warehouse lines

 

46,969

623

5.26%

 

49,884

493

3.96%

 

118,036

982

3.30%

Other

 

2,349

23

3.88%

 

2,354

34

5.79%

 

1,463

28

7.59%

Total loans and leases

 

2,021,490

21,833

4.28%

 

2,011,868

21,605

4.31%

 

2,083,320

24,226

4.61%

Total interest earning assets (4)

 

3,231,585

$ 31,928

4.00%

 

3,195,046

$ 28,206

3.60%

 

3,112,437

$ 27,629

3.58%

Other earning assets

 

15,717

 

 

 

15,628

 

 

 

15,713

 

 

Non-earning assets

 

255,529

 

 

 

239,803

 

 

 

212,116

 

 

Total assets

 

$ 3,502,831

 

 

 

$ 3,450,477

 

 

 

$ 3,340,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$ 197,731

$ 131

0.26%

 

$ 221,322

$ 120

0.22%

 

$ 148,175

$ 86

0.23%

NOW

 

531,205

80

0.06%

 

542,915

82

0.06%

 

605,620

115

0.08%

Savings accounts

 

485,167

73

0.06%

 

480,654

70

0.06%

 

443,406

63

0.06%

Money market

 

151,816

25

0.07%

 

155,574

23

0.06%

 

139,433

26

0.07%

Time deposits

 

313,764

1,377

1.74%

 

295,850

441

0.60%

 

293,379

248

0.31%

Wholesale brokered deposits

 

63,529

75

0.47%

 

60,000

48

0.32%

 

72,283

53

0.29%

Total interest bearing deposits

 

1,743,212

1,761

0.40%

 

1,756,315

784

0.18%

 

1,702,296

591

0.14%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

Other interest-bearing liabilities

 

159,530

390

0.98%

 

112,586

77

0.27%

 

79,132

41

0.21%

Long-term debt

 

49,182

427

3.44%

 

49,160

430

3.51%

 

3,812

38

3.95%

Subordinated debentures

 

35,409

439

4.92%

 

35,365

330

3.74%

 

35,229

243

2.74%

Total borrowed funds

 

244,121

1,256

2.04%

 

197,111

837

1.70%

 

118,173

322

1.08%

Total interest bearing liabilities

 

1,987,333

3,017

0.60%

 

1,953,426

1,621

0.33%

 

1,820,469

913

0.20%

Demand deposits - noninterest bearing

 

1,140,840

 

 

 

1,132,601

 

 

 

1,104,506

 

 

Other liabilities

 

67,603

 

 

 

48,458

 

 

 

53,134

 

 

Shareholders' equity

 

307,055

 

 

 

315,992

 

 

 

362,157

 

 

Total liabilities and shareholders' equity

 

$ 3,502,831

 

 

 

$ 3,450,477

 

 

 

$ 3,340,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

4.00%

 

 

 

3.60%

 

 

 

3.58%

Interest expense/interest earning assets

 

 

 

0.37%

 

 

 

0.20%

 

 

 

0.12%

Net interest income and margin (5)

 

 

$ 28,911

3.63%

 

 

$ 26,585

3.40%

 

 

$ 26,716

3.46%

(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 $0.1 million and $1.0 million for the quarters ended September 30, 2022 and 2021, respectively, and $0.4 million for the quarter ended June 30, 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 nine months ended

 

 

For the nine months ended

 

 

September 30, 2022

 

 

September 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

 

$

120,359

 

$

466

 

0.52%

 

$

255,962

 

$

250

 

0.13%

Taxable

 

 

783,384

 

 

15,613

 

2.66%

 

 

351,109

 

 

4,835

 

1.84%

Non-taxable

 

 

305,212

 

 

5,926

 

3.29%

 

 

241,866

 

 

4,539

 

3.18%

Total investments

 

 

1,208,955

 

 

22,005

 

2.61%

 

 

848,937

 

 

9,624

 

1.71%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases:(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

$

1,820,568

 

$

57,792

 

4.24%

 

$

1,826,476

 

$

63,211

 

4.63%

Agricultural

 

 

31,376

 

 

809

 

3.45%

 

 

44,441

 

 

1,237

 

3.72%

Commercial

 

 

84,301

 

 

3,351

 

5.31%

 

 

165,916

 

 

6,371

 

5.13%

Consumer

 

 

4,313

 

 

545

 

16.89%

 

 

5,085

 

 

594

 

15.62%

Mortgage warehouse lines

 

 

52,650

 

 

1,626

 

4.13%

 

 

167,293

 

 

4,061

 

3.25%

Other

 

 

2,066

 

 

88

 

5.69%

 

 

1,503

 

 

81

 

7.21%

Total loans and leases

 

 

1,995,274

 

 

64,211

 

4.30%

 

 

2,210,714

 

 

75,555

 

4.57%

Total interest earning assets (4)

 

 

3,204,229

 

 

86,216

 

3.66%

 

 

3,059,651

 

 

85,179

 

3.77%

Other earning assets

 

 

15,675

 

 

 

 

 

 

 

14,817

 

 

 

 

 

Non-earning assets

 

 

235,516

 

 

 

 

 

 

 

207,523

 

 

 

 

 

Total assets

 

$

3,455,420

 

 

 

 

 

 

$

3,281,991

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

207,319

 

$

357

 

0.23%

 

$

147,000

 

$

251

 

0.23%

NOW

 

 

540,078

 

 

243

 

0.06%

 

 

592,177

 

 

332

 

0.07%

Savings accounts

 

 

477,904

 

 

210

 

0.06%

 

 

419,861

 

 

175

 

0.06%

Money market

 

 

152,912

 

 

71

 

0.06%

 

 

138,408

 

 

86

 

0.08%

Time deposits

 

 

301,173

 

 

2,053

 

0.91%

 

 

347,253

 

 

798

 

0.59%

Brokered deposits

 

 

61,189

 

 

172

 

0.38%

 

 

88,132

 

 

176

 

0.27%

Total interest bearing deposits

 

 

1,740,575

 

 

3,106

 

0.24%

 

 

1,732,831

 

 

1,818

 

0.14%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest-bearing liabilities

 

 

125,985

 

 

549

 

0.58%

 

 

67,981

 

 

127

 

0.39%

Long-term debt

 

 

49,162

 

 

1,284

 

3.49%

 

 

1,285

 

 

38

 

3.95%

Subordinated debentures

 

 

35,365

 

 

1,024

 

3.87%

 

 

35,186

 

 

736

 

2.80%

Total borrowed funds

 

 

210,512

 

 

2,857

 

1.81%

 

 

104,452

 

 

901

 

1.15%

Total interest bearing liabilities

 

 

1,951,087

 

 

5,963

 

0.41%

 

 

1,800,812

 

 

2,719

 

0.20%

Demand deposits - noninterest bearing

 

 

1,122,556

 

 

 

 

 

 

 

1,045,179

 

 

 

 

 

Other liabilities

 

 

58,393

 

 

 

 

 

 

 

45,191

 

 

 

 

 

Shareholders' equity

 

 

323,384

 

 

 

 

 

 

 

354,338

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

3,455,420

 

 

 

 

 

 

$

3,281,991

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

 

 

 

 

3.66%

 

 

 

 

 

 

 

3.77%

Interest expense/interest earning assets

 

 

 

 

 

 

 

0.25%

 

 

 

 

 

 

 

0.11%

Net interest income and margin(5)

 

 

 

 

$

80,253

 

3.41%

 

 

 

 

$

82,460

 

3.66%

(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 $0.9 million and $3.4 million for the nine months ended September 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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