BSRR
$22.01
Sierra Bancorp
($.60)
(2.65%)
Earnings Details
3rd Quarter September 2020
Monday, October 19, 2020 8:01:00 AM
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Summary

Sierra Bancorp (BSRR) Recent Earnings

Sierra Bancorp (BSRR) reported 3rd Quarter September 2020 earnings of $0.67 per share on revenue of $36.1 million. The consensus earnings estimate was $0.46 per share on revenue of $30.6 million. Revenue grew 7.0% on a year-over-year basis.

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

Results
Reported Earnings
$0.67
Earnings Whisper
-
Consensus Estimate
$0.46
Reported Revenue
$36.1 Mil
Revenue Estimate
$30.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Sierra Bancorp Announces Record Quarterly Earnings

  • Net income of $10.4 million in the third quarter of 2020, an increase of $2.1 million, or 25% as compared to the second quarter of 2020 and 16% higher than the same quarter in 2019
  • Loans & Leases, Net of Fees grew $167.7 million in the third quarter of 2020, or 8% on a linked-quarter basis
  • Deposits increased by $85.0 million in the third quarter of 2020, or 3% on a linked-quarter basis
  • A stable loan yield and lower cost of deposits led to an improvement of net interest margin to 3.98% in the third quarter of 2020 as compared to 3.81% in the second quarter of 2020

PORTERVILLE, Calif.--(BUSINESS WIRE)--Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced third quarter of 2020 net income of $10.4 million, or $0.67 per diluted share, compared to net income of $9.0 million, or $0.58 per diluted share, in the third quarter of 2019. The Company's return on average assets decreased slightly to 1.34% in the third quarter of 2020, as compared to 1.36% in the third quarter of 2019, however return on average equity increased to 12.34% from 11.78%, for the same comparative periods. The increase in net income is driven primarily by higher net interest income on higher loan balances and higher noninterest income, partially offset by a higher provision for loan and lease losses and noninterest expense.

For the first nine months of 2020, the Company recognized net income of $26.5 million, or $1.72 per diluted share, as compared to $26.7 million, or $1.73 per diluted share, for the same period in 2019.

“Our potential is one thing. What we do with it is quite another.” – Dr. Angela Duckworth

“As we continue to navigate these challenging times, we are very proud to serve our communities as demonstrated by our continued strong loan growth,” stated Kevin McPhaill, President and CEO. “This robust loan growth coupled with a continued focus on efficiency resulted in record high earnings. During these unique times, our foundation as a community bank drives our bankers to find new ways to continue to meet our customers’ needs. The coming months will bring further challenges, but we are determined to use them as opportunities to help our communities, customers, and employees succeed.” McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the third quarter of 2019)

  • The $3.7 million increase in net interest income is due to a $1.1 million increase in interest income due mostly to higher loan volumes partially offset by lower rates and lower interest expense, as well as a $2.6 million decrease in interest expense due to an increase in noninterest bearing deposits and lower rates on the remaining deposits.
  • The provision for loan & lease losses was $1.0 million higher due to the increase in core loan volume and relative uncertainty in the economy.
  • The $1.2 million favorable increase in noninterest income is due to a $0.8 million gain from the disposal of a low-income housing tax credit fund investment, and a $0.7 million increase in bank-owned life insurance (BOLI) income. These increases were partially offset by a $0.3 million decline in customer service charges.
  • Noninterest expense increased by $2.2 million, due mostly to a $1.1 million increase in salaries, a $0.4 million increase in foreclosed asset expenses, and a $0.5 million increase in director’s deferred compensation.

Year to-Date Changes (comparisons to the first nine-months of 2019)

  • Net income was relatively flat with a $0.2 million net decline, or less than 1%. The most significant line item changes were a $4.3 million increase in the provision for loan and lease losses, partially offset by a $3.5 million increase in net interest income due to higher loan balances and a favorable deposit mix.
  • Noninterest income increased by $2.5 million, or 14%, due in part to the third quarter changes described above in the quarterly comparison, but also because of a second quarter $0.7 million gain from the disposal of a tax credit fund investment and a second quarter $0.4 million gain from the sale of debt securities.
  • Noninterest expense increased $2.6 million, or 5% due mostly to the increases previously discussed in noninterest expense for the quarterly comparison.

Balance Sheet Changes (comparisons to December 31, 2019)

  • Total assets increased by $605.8 million, or 23%, to $3.2 billion, during the first nine months of the year.
  • Year-to-date 2020 loan growth of $611.8 million, or 35%, was highlighted by a $437.8 million increase in non-agricultural real estate loans, as well as a $98.4 million increase in mortgage warehouse lines, and $123.6 million of Paycheck Protection Program (PPP) loans.
  • Deposits increased by $423.3 million, or 20% during 2020. The growth in deposits came primarily from noninterest bearing or low-cost transaction and savings accounts, while higher-cost time deposits decreased. Other interest bearing liabilities increased $149.1 million as we utilized overnight FHLB borrowings to partially fund loan growth in 2020, including PPP loans and increased utilization of mortgage warehouse lines.

Other financial highlights are reflected in the following table.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL HIGHLIGHTS (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At or For the

 

 

At or For the

 

 

At or For the

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

9/30/2020

 

 

6/30/2020

 

 

9/30/2019

 

 

9/30/2020

 

 

9/30/2019

Net Income

 

$

10,356

 

$

8,303

 

$

8,952

 

$

26,465

 

$

26,676

Diluted Earnings per share

 

$

0.67

 

$

0.54

 

$

0.58

 

$

1.72

 

$

1.73

Return on Average Assets

 

 

1.34%

 

 

1.19%

 

 

1.36%

 

 

1.26%

 

 

1.40%

Return on Average Equity

 

 

12.34%

 

 

10.30%

 

 

11.78%

 

 

10.90%

 

 

12.33%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Margin (Tax-Equivalent)

 

 

3.98%

 

 

3.81%

 

 

4.09%

 

 

3.97%

 

 

4.20%

Yield on Average Loans and Leases

 

 

4.56%

 

 

4.56%

 

 

5.39%

 

 

4.75%

 

 

5.51%

Cost of Average Total Deposits

 

 

0.10%

 

 

0.15%

 

 

0.54%

 

 

0.19%

 

 

0.54%

Efficiency Ratio (Tax-Equivalent)¹

 

 

53.74%

 

 

57.78%

 

 

55.64%

 

 

56.64%

 

 

57.51%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

3,199,618

 

$

3,110,044

 

$

2,635,960

 

$

3,199,618

 

$

2,635,960

Loans & Leases Net of Deferred Fees

 

$

2,377,222

 

$

2,209,480

 

$

1,800,606

 

$

2,377,222

 

$

1,800,606

Noninterest Demand Deposits

 

$

975,750

 

$

949,662

 

$

685,528

 

$

975,750

 

$

685,528

Total Deposits

 

$

2,591,713

 

$

2,506,754

 

$

2,196,207

 

$

2,591,713

 

$

2,196,207

Noninterest-bearing Deposits over Total Deposits

 

 

37.6%

 

 

37.9%

 

 

31.2%

 

 

37.6%

 

 

31.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders Equity / Total Assets

 

 

10.5%

 

 

10.5%

 

 

11.5%

 

 

10.5%

 

 

11.5%

Tangible Common Equity Ratio

 

 

9.6%

 

 

9.6%

 

 

10.4%

 

 

9.6%

 

 

10.4%

Book Value per Share

 

$

21.92

 

$

21.55

 

$

19.85

 

$

21.92

 

$

19.85

Tangible Book Value per Share

 

$

19.84

 

$

19.43

 

$

17.69

 

$

19.84

 

$

17.69

(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.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased $3.7 million to $28.1 million, for the third quarter of 2020 over the third quarter of 2019, and increased $3.5 million to $76.0 million for the first nine months of 2020 relative to the same period in 2019. For the third quarter of 2020, growth in average interest-earning assets totaled $452.8 million, or 19%, as compared to the third quarter of 2019. Although the yield on these balances was 56 basis points lower for the same period, the decrease in our cost of interest-bearing liabilities for the same period was 66 basis points resulting in an overall decline in margin of 11 basis points. Net interest income for the comparative year-to-date periods increased $3.5 million as the increase in volume of interest earning assets and favorable change in our deposit mix more than made up for the decrease in margin.

Our 2020 net interest margin has been impacted primarily by the following:

  • Market conditions, including five interest rate cuts by the Federal Open Market Committee totaling 225 bps over the past 12 months, negatively impacted our yield on existing adjustable and variable rate portfolio loans and created a lower initial interest rate for new loan volumes. In addition, given the low rate environment loan demand for our mortgage warehouse lines increased, resulting in a $92.8 million, or 55%, increase in average balances during the third quarter 2020. The average yield on mortgage warehouse lines declined to 3.16% from 3.85% for the comparative quarters.
  • Origination of SBA PPP loans, issuing 1,334 loans for $123.6 million to assist our customers impacted by the COVID 19 Pandemic. We have collected $5.0 million in loan fees related to PPP loans from the SBA which are accreted over the stated life of the loan.

On September 30, 2020, our outstanding fixed-rate loans represented 28% of our loan portfolio. Adjustable-rate loans represent 61% of our loan portfolio and range in adjustment periods from 30 days to 10 years with most of these subject to repricing after 3-years. There are $68.8 million of these adjustable-rate loans scheduled to adjust in the next quarter. Approximately 77% or $1.1 billion of these loans will not begin repricing until after three years, with $701.8 million repricing after five years. About 12% of our total portfolio, or $273.7 million, consists of variable rate loans. Of these variable rate loans, approximately $93.9 million have floors, with $85.5 million at their floors, which limited the overall reduction in rates.

Discount accretion on loans from whole-bank acquisitions enhanced our net interest margin by two basis points in the third quarter of 2020 as compared to three basis points in the third quarter 2019, and two basis points for the first nine months of 2020 relative to four basis points in the first nine months of 2019. On September 30, 2020 the remaining balance of loan discount available to be accreted was $3.3 million.

Interest expense was $1.0 million for the third quarter of 2020, a favorable decline of $2.6 million, or 73%, relative to the third quarter of 2019. For the first nine months of 2020, compared to the first nine months of 2019, interest expense declined $6.1 million, or 58%, to $4.5 million due to lower rates, higher low or no cost deposits, and lower time deposits. The average balance of higher-cost time deposits declined by $86.7 million, or 16%, in the third quarter of 2020 as compared to the third quarter of 2019. The average 2020 year-to-date balance of such time-deposits declined by $60.9 million, or 11.4%, compared to the same period in 2019. The average balance of lower or no cost transaction and savings accounts increased $158.7 million, or 7.5%, for the third quarter of 2020 compared to the same period in 2019 and increased by $91.6 million, or 10.9%, on a year-to-date basis in 2020 compared to the same period in 2019.

Provision for Loan and Lease Losses

The Company recorded a loan and lease loss provision of $2.4 million in the third quarter of 2020 relative to a provision of $1.4 million in the third quarter of 2019, and a year-to-date loan loss provision of $6.4 million in 2020 as compared to $2.1 million for the same period in 2019. The Company is subject to the adoption of the Current Expected Credit Loss ("CECL") accounting method under Financial Accounting Standards Board (FASB) Accounting Standards Update 2016-03 and related amendments, Financial Instruments – Credit Losses (Topic 326) in 2020. However, the Company elected under Section 4014 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to defer the implementation of CECL until the earlier of when the national emergency related to the outbreak of COVID-19 ends or December 31, 2020. Although this deferral will still require CECL to be implemented as of January 1, 2020, the Company elected in the first quarter of 2020 to postpone implementation in order to provide additional time to assess better the impact of the COVID-19 pandemic on the expected lifetime credit losses. At the time the decision was made, there was a significant change in economic uncertainty on the local, regional, and national levels as a result of local and state stay-at-home orders, as well as relief measures provided at a national, state, and local level. Further, the Company has taken actions to serve our communities during the pandemic, including permitting short-term payment deferrals to current customers, as well as originating bridge loans and SBA PPP loans. It was determined that more time was needed to assess the impact of the uncertainty and related actions on the Company's allowance for loan and lease losses under the CECL methodology.

The Company's $1.0 million, or 74%, increase in provision for loan and lease losses in the third quarter of 2020 as compared to the third quarter of 2019, and the $4.3 million, or 210% increase in the first nine months of 2020 compared to the same period in 2019 is due to growth in organic non-owner occupied commercial real estate loans, downgrades of certain loans deferred under section 4016 of the Cares Act and the continued uncertainty surrounding the estimated impact that COVID-19 will have on the economy and our loan customers. Management adjusted its qualitative risk factors under our current incurred loss model for economic conditions, changes in the mix of the portfolio due to loans subject to a payment deferral, potential changes in collateral values due to reduced cash flows, and external factors such as government actions. In particular, the uncertainty regarding our customers' ability to repay loans could be adversely impacted by COVID-19 given higher unemployment rates, requests for payment deferrals, temporary business shut-downs, and reduced consumer and business spending.

Noninterest Income

Total noninterest income reflects increases of $1.2 million, or 21%, for the quarter ended September 30, 2020 as compared to the same period in 2019, and $2.5 million, or 14% for the year-to-date period ended September 30, 2020 as compared to the same period in 2019. The third quarter 2020 comparison to the third quarter 2019 includes a $0.8 million non-recurring gain resulting from the wrap-up of a low-income housing tax credit fund investment, as well as a $0.7 million favorable fluctuation in income on Bank-Owned Life Insurance (BOLI) associated with deferred compensation plans. Those increases were partially offset by lower service charges on deposits. In comparing the 2020 year-to-date period to the same period in 2019, the variances in noninterest income came from a $0.4 million increase in BOLI income, a $1.4 million gain from the wrap up of low-income housing tax credit fund investments, a decrease of $0.6 million in low-income housing tax credit fund expenses, an increase of $0.2 million in the valuation gain of restricted equity investments owned by the Company and a $0.4 million gain on the sale of debt securities from the restructuring of the portfolio in the second quarter.

Service charges on customer deposit account income declined by $0.3 million, or 10%, to $3.0 million in the third quarter of 2020 as compared to the third quarter of 2019. This service charge income was $0.6 million lower, or 7%, in the first nine months of 2020, as compared to the same period in 2019. These declines are primarily a result of decreases in overdraft income offset by increases in interchange income and other deposit fees including analysis.

Noninterest Expense

Total noninterest expense increased by $2.2 million, or 13%, in the third quarter of 2020 relative to the third quarter of 2019, and by $2.6 million, or 5%, in the first nine months of 2020 as compared to the same period in 2019.

Salaries and Benefits were $0.9 million, or 10%, higher in the third quarter of 2020 as compared to the third quarter of 2019 and $2.1 million, or 8%, higher for the first nine months of 2020 compared to the same period in 2019. The reason for this increase is due to several factors, including merit increases for employees due to annual performance evaluations for 2019, new loan production teams for the northern and southern California markets, and a focus on hiring higher-level staff and management. Salary expense deferrals related to loan originations were $0.1 million lower in the third quarter of 2020 relative to the third quarter of 2019, and $0.4 million higher for the first nine months of 2020 compared to the same period in 2019. There have not been any permanent or temporary reductions in employees as a result of COVID-19 although total full-time equivalent employees have declined from 512 at September 30, 2019 to 491 at September 30, 2020.

Occupancy expenses remained relatively flat for the respective comparative periods. Other noninterest expense increased $1.2 million, or 21%, for the third quarter 2020 as compared to the third quarter in 2019, but was only $0.4 million, or 2%, higher for the first nine months of 2020 as compared to the same period in 2019. The variance for the third quarter of 2020 compared to the same period in 2019 was primarily driven by a $0.6 million increase in loan servicing expense, due mostly to write-downs of other real estate owned assets; a $0.5 million increase in professional services; partially offset by a $0.3 million decrease in advertising costs. The $0.5 million change in professional services includes a $0.2 million increase in FDIC assessments due to the Small Bank Assessment credits applied against FDIC deposit insurance costs in the comparative quarter for 2019, a $0.5 million increase in deferred compensation expense for directors, which is linked to the changes in BOLI income, and a $0.2 million reduction in consulting costs. The Company continues to actively consider a variety of operational efficiency opportunities. For the first nine months of 2020, the $0.4 million increase in other noninterest expense was driven by a $0.6 million increase in loan services costs (mostly in foreclosed assets), a $0.3 million increase in deposit services costs, a $0.2 million increase in sundry losses, partially offset by a $0.5 million decrease in advertising costs and a $0.2 million decrease in professional services expense.

The Company's provision for income taxes was 23.4% of pre-tax income in the third quarter of 2020 relative to 24.2% in the third quarter of 2019, and 23.5% of pre-tax income for the first nine months of 2020 relative to 24.9% for the same period in 2019. The decline in tax rate in the third quarter of 2020 is due mostly to a higher percent of the income being tax-exempt income.

Balance Sheet Summary

Balance sheet changes during the first nine months of 2020 include an increase in total assets of $605.8 million, or 23%, due mostly to a $617.7 million increase, or 35%, in the loan portfolio. This significant increase in loan balances in 2020 is due to a $437.8 million increase in non-agricultural real estate loans, a $123.6 million increase in PPP loans, and a $98.4 million change in mortgage warehouse line utilization. Non-agricultural real estate loan balances increased due to deliberate and concentrated efforts of our Northern and Southern market loan production teams. These teams were added in the first quarter 2020 as part of a strategic initiative that began in 2019 to expand our geographic footprint. Our loan pipeline at September 30, 2020 remains robust but has softened from the previous quarter due to a strategic shift to focus on further diversifying our loan mix. Based on this pipeline, we expect continued loan growth in the fourth quarter but not at the same pace as the prior two quarters. Mortgage warehouse loan balances increased due to market factors favorably impacting line utilization due to both mortgage originations and refinancing activity, as well as normal seasonal mortgage activity.

With regards to line utilization, excluding mortgage warehouse and consumer overdraft lines, unused commitments were $304.8 million on September 30, 2020, as compared to $303.4 million on December 31, 2019. Total utilization, excluding mortgage warehouse and consumer overdraft lines was 55% at September 30, 2020, as compared to 59% at December 31, 2019. Commercial line utilization was 57% on September 30, 2020, as compared to 61% on December 31, 2019. Mortgage warehouse utilization was 61% at September 30, 2020, as compared to 59% on December 31, 2019.

The Company’s core deposit intangible assets decreased $0.8 million to $4.6 million at September 30, 2020 from $5.4 million at December 31, 2019. Goodwill remained at $27.4 million during the first nine months of 2020 and was approximately 8% of total capital at September 30, 2020. The Company performed a qualitative test for impairment and determined that no goodwill impairment was probable at September 30, 2020. The Company will continue to evaluate qualitative factors to determine if a quantitative test for goodwill impairment is necessary.

As of September 30, 2020, deposit balances reflected growth of $423.3 million, or 20%, during the first nine months of 2020. Core non-maturity deposits increased by $467.4 million, or 28%, during this period while customer time deposits decreased by $44.1 million, or 9%. Wholesale brokered deposits of $50.0 million were unchanged at September 30, 2020 as compared to December 31, 2019. Overall noninterest-bearing deposits as a percent of total deposits at September 30, 2020, increased to 37.7%, as compared to 31.9% at December 31, 2019. Other interest-bearing liabilities of $229.7 million on September 30, 2020 is comprised of $36.7 million of customer repurchase agreements, $148.0 million in overnight FHLB borrowings, $5.0 million in short term borrowings, $5.0 million in long term borrowings, and $35.1 million in subordinated debentures. The increase in overnight FHLB borrowings was due mostly to support organic growth in non-owner occupied commercial real estate loans, PPP loans and changes in mortgage warehouse line utilization. It is anticipated that normal seasonal volatility will reduce utilization on mortgage warehouse lines and PPP loans will start to be forgiven in 2021.

The Company continues to have substantial liquidity. At September 30, 2020, and December 31, 2019, the Company had the following sources of primary and secondary liquidity ($ in thousands):

 

 

 

 

 

 

 

Primary and Secondary Liquidity Sources

 

 

September 30, 2020

 

 

December 31, 2019

Cash and Due From Banks

 

$

88,933

 

$

80,077

Unpledged Investment Securities

 

 

339,125

 

 

366,012

Excess Pledged Securities

 

 

61,655

 

 

70,955

FHLB Borrowing Availability

 

 

380,600

 

 

443,200

Unsecured Lines of Credit

 

 

80,000

 

 

80,000

Funds Available through Fed Discount Window

 

 

65,125

 

 

59,198

Totals

 

$

1,015,438

 

$

1,099,441

In addition to the primary and secondary sources of liquidity listed above, the Company has also been approved to borrow $12 million from the Federal Reserve’s Paycheck Protection Program Liquidity Facility (PPPLF). Should the Company wish to draw on the PPPLF it would be required to pledge individual SBA PPP loans as collateral. The loans are taken as collateral at their face value. Due to the Company’s liquidity throughout the third quarter of 2020 and expected liquidity in the fourth quarter of 2020, it has elected not to utilize the PPPLF at this time.

Total capital of $336.2 million at September 30, 2020 reflects an increase of $27.0 million, or 9%, relative to year-end 2019. The increase in equity during the first nine months of 2020 was due to the addition of $26.5 million in net income, and a $11.6 million favorable swing in accumulated other comprehensive income/loss, net of $9.1 million in dividends paid, and $2.6 million in stock repurchases prior to March 15, 2020. The remaining difference is related to stock options exercised during the first nine months.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, increased by $3.6 million to $10.2 million for the first nine months of 2020 primarily due to the impact of one commercial real estate credit that went into foreclosure and the downgrade of certain loans deferred due to COVID 19 for which repayment has become uncertain. The Company's ratio of nonperforming loans to gross loans decreased to 0.30% at September 30, 2020 from 0.33% at December 31, 2019. All of the Company's impaired assets are periodically reviewed and are either well-reserved based on current loss expectations, carried at the fair value of the underlying collateral, net of expected disposition costs or are sufficiently collateralized such that no specific reserve or impairment is necessary for the impaired asset in question. The single loan which moved to other real estate owned during the quarter has a pending contract and is expected to close escrow towards the end of October. There was a $4.9 million increase during the third quarter of 2020 in past due loans between 30-89 days and still accruing to $7.2 million at September 30, 2020. This increase was primarily attributable to 2 loans for $6.5 million that returned to current status shortly after September 30, 2020.

The Company's allowance for loan and lease losses was $15.6 million at September 30, 2020, as compared to a balance of $9.9 million at December 31, 2019, and $11.2 million at September 30, 2019. The $5.7 million increase during the first nine months of the year resulted from the addition of a $6.4 million loan loss provision in the first nine months of 2020, less $0.7 million in net charge offs recorded during the period. The additional loan loss provision in the first nine months of 2020 was precipitated primarily by the increase in non-owner-occupied commercial real estate loan balances as well as the impact of changes to qualitative factors associated with economic uncertainty during these unprecedented times. For further information regarding the Company's decision to defer the implementation of CECL under Section 4014 of the CARES Act, as well as further detail on the increase in provision during the third quarter of 2020, please see the discussion above under Provision for Loan and Lease Losses. The allowance was 0.65% of total loans at September 30, 2020, 0.56% at December 31, 2019 and 0.62% at September 30, 2019. Management's detailed analysis indicates that the Company's allowance for loan and lease losses should be sufficient to cover credit losses inherent in loan and lease balances outstanding as of September 30, 2020, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the allowance.

As discussed above under the Provision for Loan and Lease Losses, the Company recorded $6.4 million in provision for loan and lease losses in the first nine months of 2020 as compared to $2.1 million in the first nine months of 2019. This increase is primarily due to organic growth of non-owner occupied commercial real estate loans, certain downgrades to loans on deferral not treated as TDR loan modifications, and the uncertainty of economic risks associated with the COVID-19 pandemic. The Company provided loan modifications not treated as TDRs to its customers of $386.2 million and $28.3 million, during the second and third quarters of 2020, respectively. The $28.3 million in new loan modifications in the third quarter of 2020 were primarily 90-day deferrals and each borrower was current at the time the loan was modified. The four largest loans modified in the fourth quarter totaled $26.0 million with a weighted-average LTV of 48.2%. The primary purpose of these four loan deferrals was for cash management and each borrower has indicated that they expect to resume payments at the end of the deferral period.

Modifications in place prior to June 30, 2020 were typically structured to provide deferrals of both principal and interest for 180 days. As these loan modifications were for six-months, the Company believed that it was an effective use of resources to create a continuous monitoring process with dedicated internal personnel. These employees would have likely spent considerable time working through deferral extensions had we initially offered 90-day deferrals. Instead, these dedicated personnel proactively engaged with our borrowers who had temporary loan modifications to assess the likelihood that each borrower will be able to resume payments after the end of the modification period. Based on this process, as of September 30, 2020, there were 26 loan deferrals that were downgraded, out of 309 such deferrals at that date: four loans for $1.9 million to impaired or nonaccrual status, five loans for $6.5 million to substandard status, and 17 loans for $17.3 million to special mention status. In addition, other loans have been identified as needing further review to determine if payments will resume. Based on this approach of proactively working with our customers during the second and third quarter 2020, the following table summarizes management’s expectation as of September 30, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

As of 9-30-20

 

 

 

 

 

 

Borrowers that have indicated an intent to resume payments upon expiration of the deferral period

(dollars in thousands)

 

Deferment Loans

Deferment Balance

 

Deferment Loans as % of Total Loans in Category

 

Yes

 

No/Further Review Required

CRE Non-owner Occupied

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

14

$ 24,701

 

8.16%

 

$ 14,291

57.85%

 

$ 10,410

42.15%

 

Retail

 

24

46,378

 

15.10%

 

45,521

98.15%

 

857

1.85%

 

Industrial

 

7

6,150

 

7.85%

 

6,150

100.00%

 

-

0.00%

 

Hotel

 

24

106,787

 

62.04%

 

100,512

94.12%

 

6,275

5.88%

 

Special Purpose

 

9

7,640

 

11.53%

 

7,640

100.00%

 

-

0.00%

 

CRE Owner Occupied

 

72

71,332

 

21.69%

 

69,467

97.39%

 

1,865

2.61%

 

Commercial - Secured by SFR 1-4 Unit

 

14

9,982

 

17.26%

 

9,237

92.53%

 

745

7.47%

 

MultiFamily

 

4

6,337

 

7.73%

 

6,337

100.00%

 

-

0.00%

 

Commercial Construction

 

 

 

 

 

 

 

 

 

 

 

 

Hotel

 

5

40,045

 

93.23%

 

40,045

100.00%

 

-

0.00%

 

Lots/Land and Other

 

8

13,723

 

11.75%

 

13,723

100.00%

 

-

0.00%

 

Ag Farm Mortgage & Ag Production

 

25

52,345

 

30.13%

 

52,345

100.00%

 

-

0.00%

 

Consumer SFR 1-4 Unit Mortgage and Consumer Other

 

45

11,011

 

7.43%

 

5,482

49.79%

 

5,529

50.21%

 

Commercial & Industrial

 

58

9,427

 

4.34%

 

8,918

94.60%

 

509

5.40%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Loan Deferments

 

309

$ 405,858

 

 

 

$ 379,668

93.55%

 

$ 26,190

6.45%

 

 

Based on borrower intent, it is expected that approximately $352.1 million of modified loans will resume normal payments in October 2020, another $14.2 million are expected to resume payments in November 2020 and $1.6 million are expected to resume payments in December 2020. With respect to the loans above that are not expected to resume normal payments or if additional review is required, approximately $25.6 million are secured by real estate with a weighted-average loan to value of such loans of 50.4%. The value is based on the last appraisal obtained for such property.

About Sierra Bancorp

Sierra Bancorp is the holding company for Bank of the Sierra (www.bankofthesierra.com), which is in its 43rd 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, Los Angeles, Ventura, San Luis Obispo, and Santa Barbara. The Bank also maintains an online branch and provides specialized lending services through an agricultural credit center, an SBA center, and a dedicated loan production office in Rocklin, California. In 2020, 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 our borrowers’ actual payment performance as loan deferrals related to the COVID-19 pandemic expire, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance, the health of the national and local economies, the Company's ability to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully deploy new technology, the success of acquisitions and branch expansion, changes in interest rates, loan portfolio performance, and other factors detailed in the Company's SEC filings, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Form 10-K and Form 10-Q.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENT OF CONDITION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(balances in $000's, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

9/30/2020

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

Cash and Due from Banks

 

$

88,933

 

$

156,611

 

$

106,992

 

$

80,077

 

$

80,689

Investment Securities

 

 

577,278

 

 

599,333

 

 

620,154

 

 

600,799

 

 

599,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Loans (Non-Agricultural)

 

 

1,695,918

 

 

1,463,235

 

 

1,259,448

 

 

1,258,081

 

 

1,263,136

Agricultural Real Estate Loans

 

 

127,963

 

 

134,454

 

 

141,740

 

 

144,033

 

 

144,618

Agricultural Production Loans

 

 

45,782

 

 

48,516

 

 

49,199

 

 

48,036

 

 

49,105

Commercial & Industrial Loans & Leases

 

 

217,224

 

 

221,502

 

 

111,990

 

 

115,532

 

 

115,737

Mortgage Warehouse Lines

 

 

287,516

 

 

338,124

 

 

228,608

 

 

189,103

 

 

216,913

Consumer Loans

 

 

5,897

 

 

6,266

 

 

7,040

 

 

7,780

 

 

8,151

Gross Loans & Leases

 

 

2,380,300

 

 

2,212,097

 

 

1,798,025

 

 

1,762,565

 

 

1,797,660

Deferred Loan & Lease Fees

 

 

(3,078)

 

 

(2,617)

 

 

2,741

 

 

2,896

 

 

2,946

Allowance for Loan & Lease Losses

 

 

(15,586)

 

 

(13,560)

 

 

(11,453)

 

 

(9,923)

 

 

(11,200)

Net Loans & Leases

 

 

2,361,636

 

 

2,195,920

 

 

1,789,313

 

 

1,755,538

 

 

1,789,406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank Premises & Equipment

 

 

27,216

 

 

27,779

 

 

28,425

 

 

27,435

 

 

27,988

Other Assets

 

 

144,555

 

 

130,401

 

 

125,585

 

 

129,970

 

 

137,971

Total Assets

 

$

3,199,618

 

$

3,110,044

 

$

2,670,469

 

$

2,593,819

 

$

2,635,960

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES & CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Demand Deposits

 

$

975,750

 

$

949,662

 

$

704,700

 

$

690,950

 

$

685,528

Interest-Bearing Transaction Accounts

 

 

656,922

 

 

641,815

 

 

576,014

 

 

549,812

 

 

545,100

Savings Deposits

 

 

361,857

 

 

346,262

 

 

304,894

 

 

294,317

 

 

287,774

Money Market Deposits

 

 

126,918

 

 

125,420

 

 

113,766

 

 

118,933

 

 

124,553

Customer Time Deposits

 

 

420,266

 

 

433,595

 

 

450,017

 

 

464,362

 

 

503,252

Wholesale Brokered Deposits

 

 

50,000

 

 

10,000

 

 

30,000

 

 

50,000

 

 

50,000

Total Deposits

 

 

2,591,713

 

 

2,506,754

 

 

2,179,391

 

 

2,168,374

 

 

2,196,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Junior Subordinated Debentures

 

 

35,079

 

 

35,035

 

 

34,990

 

 

34,945

 

 

34,901

Other Interest-Bearing Liabilities

 

 

194,657

 

 

204,449

 

 

103,461

 

 

45,711

 

 

67,357

Total Deposits & Interest-Bearing Liabilities

 

 

2,821,449

 

 

2,746,238

 

 

2,317,842

 

 

2,249,030

 

 

2,298,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Liabilities

 

 

41,922

 

 

36,373

 

 

33,168

 

 

35,504

 

 

34,142

Total Capital

 

 

336,247

 

 

327,433

 

 

319,459

 

 

309,285

 

 

303,353

Total Liabilities & Capital

 

$

3,199,618

 

$

3,110,044

 

$

2,670,469

 

$

2,593,819

 

$

2,635,960

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOODWILL & INTANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(balances in $000's, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2020

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

Goodwill

 

$

27,357

 

$

27,357

 

$

27,357

 

$

27,357

 

$

27,357

Core Deposit Intangible

 

 

4,575

 

 

4,844

 

 

5,112

 

 

5,381

 

 

5,650

Total Intangible Assets

 

$

31,932

 

$

32,201

 

$

32,469

 

$

32,738

 

$

33,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(balances in $000's, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2020

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

Nonaccrual Loans

 

$

7,186

 

$

5,808

 

$

7,351

 

$

5,737

 

$

6,719

Foreclosed Assets

 

 

2,970

 

 

2,893

 

 

766

 

 

800

 

 

762

Total Nonperforming Assets

 

$

10,156

 

$

8,701

 

$

8,117

 

$

6,537

 

$

7,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

7,708

 

$

9,192

 

$

8,188

 

$

8,415

 

$

9,067

Net Charge Offs

 

$

687

 

$

363

 

$

270

 

$

2,377

 

$

600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past Due & Still Accruing (30-89)

 

$

7,201

 

$

2,333

 

$

4,071

 

$

2,875

 

$

1,311

Non-TDR Deferred Loans

 

$

405,858

 

$

386,243

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Loans to Gross Loans

 

 

0.30%

 

 

0.26%

 

 

0.41%

 

 

0.33%

 

 

0.37%

NPA's to Loans plus Foreclosed Assets

 

 

0.43%

 

 

0.39%

 

 

0.45%

 

 

0.37%

 

 

0.42%

Allowance for Loan Losses to Loans

 

 

0.65%

 

 

0.61%

 

 

0.64%

 

 

0.56%

 

 

0.62%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECT PERIOD-END STATISTICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2020

 

 

6/30/2020

 

 

3/31/2020

 

 

12/31/2019

 

 

9/30/2019

Shareholders Equity / Total Assets

 

 

10.5%

 

 

10.5%

 

 

12.0%

 

 

11.9%

 

 

11.5%

Gross Loans / Deposits

 

 

91.8%

 

 

88.2%

 

 

82.5%

 

 

81.3%

 

 

81.9%

Noninterest Bearing Deposits / Total Deposits

 

 

37.6%

 

 

37.9%

 

 

32.3%

 

 

31.9%

 

 

31.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in $000's, unaudited)

 

 

Qtr Ended:

 

 

Qtr Ended:

 

 

Nine Months Ended:

 

 

 

9/30/2020

 

 

6/30/2020

 

 

9/30/2019

 

 

9/30/2020

 

 

9/30/2019

Interest Income

 

$

29,043

 

$

25,385

 

$

27,901

 

$

80,481

 

$

83,172

Interest Expense

 

 

969

 

 

1,243

 

 

3,526

 

 

4,478

 

 

10,625

Net Interest Income

 

 

28,074

 

 

24,142

 

 

24,375

 

 

76,003

 

 

72,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for Loan & Lease Losses

 

 

2,350

 

 

2,200

 

 

1,350

 

 

6,350

 

 

2,050

Net Interest after Provision

 

 

25,724

 

 

21,942

 

 

23,025

 

 

69,653

 

 

70,497

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Charges

 

 

2,950

 

 

2,618

 

 

3,292

 

 

8,752

 

 

9,386

BOLI Income

 

 

1,310

 

 

649

 

 

590

 

 

1,997

 

 

1,617

Gain on Investments

 

 

-

 

 

390

 

 

-

 

 

390

 

 

29

Other Noninterest Income

 

 

2,845

 

 

3,243

 

 

1,987

 

 

8,973

 

 

6,599

Total Noninterest Income

 

 

7,105

 

 

6,900

 

 

5,869

 

 

20,112

 

 

17,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries & Benefits

 

 

9,698

 

 

9,266

 

 

8,784

 

 

29,136

 

 

27,021

Occupancy Expense

 

 

2,559

 

 

2,504

 

 

2,485

 

 

7,390

 

 

7,296

Other Noninterest Expenses

 

 

7,046

 

 

6,263

 

 

5,819

 

 

18,630

 

 

18,280

Total Noninterest Expense

 

 

19,303

 

 

18,033

 

 

17,088

 

 

55,156

 

 

52,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Taxes

 

 

13,526

 

 

10,810

 

 

11,806

 

 

34,609

 

 

35,531

Provision for Income Taxes

 

 

3,170

 

 

2,506

 

 

2,854

 

 

8,144

 

 

8,855

Net Income

 

$

10,356

 

$

8,303

 

$

8,952

 

$

26,465

 

$

26,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TAX DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-Exempt Muni Income

 

$

1,467

 

$

1,440

 

$

1,160

 

$

4,246

 

$

3,276

Interest Income - Fully Tax Equivalent

 

$

29,433

 

$

25,769

 

$

28,209

 

$

81,610

 

$

84,043

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

Qtr Ended:

 

 

Qtr Ended:

 

 

Nine Months Ended:

 

 

 

9/30/2020

 

 

6/30/2020

 

 

9/30/2019

 

 

9/30/2020

 

 

9/30/2019

Basic Earnings per Share

 

 

0.68

 

 

$0.55

 

 

0.58

 

 

$ 1.74

 

 

1.74

Diluted Earnings per Share

 

 

0.67

 

 

$0.54

 

 

0.58

 

 

$ 1.72

 

 

1.73

Common Dividends

 

 

0.20

 

 

$0.20

 

 

0.19

 

 

$ 0.60

 

 

0.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

15,192,838

 

 

15,191,823

 

 

15,318,580

 

 

15,215,167

 

 

15,320,041

Weighted Average Diluted Shares

 

 

15,387,309

 

 

15,237,655

 

 

15,434,788

 

 

15,422,647

 

 

15,449,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book Value per Basic Share (EOP)

 

 

21.92

 

 

$21.55

 

 

19.85

 

 

21.92

 

 

19.85

Tangible Book Value per Share (EOP)

 

 

$ 19.84

 

 

$19.43

 

 

$17.69

 

 

$ 19.84

 

 

$17.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares Outstanding (EOP)

 

 

15,341,723

 

 

15,192,838

 

 

15,284,491

 

 

15,341,723

 

 

15,284,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY FINANCIAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

Qtr Ended:

 

 

Qtr Ended:

 

 

Nine Months Ended:

 

 

 

9/30/2020

 

 

6/30/2020

 

 

9/30/2019

 

 

9/30/2020

 

 

9/30/2019

Return on Average Equity

 

 

12.34%

 

 

10.30%

 

 

11.78%

 

 

10.90%

 

 

12.33%

Return on Average Assets

 

 

1.34%

 

 

1.19%

 

 

1.36%

 

 

1.26%

 

 

1.40%

Net Interest Margin (Tax-Equivalent)

 

 

3.98%

 

 

3.81%

 

 

4.09%

 

 

3.97%

 

 

4.20%

Efficiency Ratio (Tax-Equivalent)¹

 

 

53.74%

 

 

57.78%

 

 

55.64%

 

 

56.64%

 

 

57.51%

Net C/O's to Avg Loans (not annualized)

 

 

0.01%

 

 

0.00%

 

 

0.00%

 

 

0.04%

 

 

0.03%

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES AND RATES

 

 

 

 

 

 

 

 

(balances in $000's, unaudited)

 

For the quarter ended

 

For the quarter ended

 

For the quarter ended

 

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

 

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

 

$ 6,942

$ 2

0.11%

 

$ 53,209

$ 12

0.09%

 

$ 23,447

$ 139

2.35%

Taxable

 

366,046

1,832

1.99%

 

403,517

2,250

2.22%

 

426,523

2,484

2.31%

Non-taxable

 

227,283

1,467

3.25%

 

216,746

1,440

3.38%

 

169,109

1,160

3.44%

Total investments

 

600,271

3,301

2.45%

 

673,472

3,702

2.44%

 

619,079

3,783

2.62%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and Leases: (3)

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

1,700,241

20,467

4.79%

 

1,477,380

18,355

5.00%

 

1,425,093

19,858

5.53%

Agricultural Production

 

47,733

435

3.63%

 

47,806

452

3.80%

 

50,394

753

5.93%

Commercial

 

226,511

2,485

4.36%

 

170,876

1,080

2.54%

 

117,414

1,461

4.94%

Consumer

 

6,226

236

15.08%

 

6,667

225

13.57%

 

8,467

354

16.59%

Mortgage warehouse lines

 

262,593

2,087

3.16%

 

206,669

1,532

2.98%

 

169,786

1,646

3.85%

Other

 

1,868

32

6.82%

 

2,811

39

5.58%

 

2,458

46

7.42%

Total loans and leases

 

2,245,172

25,742

4.56%

 

1,912,209

21,683

4.56%

 

1,773,612

24,118

5.39%

Total interest earning assets (4)

 

2,845,443

$ 29,043

4.12%

 

2,585,681

$ 25,385

4.01%

 

2,392,691

$ 27,901

4.68%

Other earning assets

 

13,190

 

 

 

13,190

 

 

 

12,743

 

 

Non-earning assets

 

215,819

 

 

 

207,623

 

 

 

199,447

 

 

Total assets

 

$ 3,074,452

 

 

 

$ 2,806,494

 

 

 

$ 2,604,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$ 140,634

$ 75

0.21%

 

$ 134,159

$ 71

0.21%

 

$ 115,971

$ 87

0.30%

NOW

 

516,915

89

0.07%

 

481,679

83

0.07%

 

446,974

133

0.12%

Savings accounts

 

354,331

51

0.06%

 

327,833

46

0.06%

 

290,221

79

0.11%

Money market

 

126,567

28

0.09%

 

125,594

31

0.10%

 

120,196

53

0.17%

Time Deposits

 

428,171

383

0.35%

 

442,762

625

0.57%

 

499,572

2,367

1.88%

Wholesale Brokered Deposits

 

29,696

15

0.20%

 

19,890

37

0.75%

 

44,946

264

2.33%

Total interest bearing deposits

 

1,596,314

641

0.16%

 

1,531,917

893

0.23%

 

1,517,880

2,983

0.78%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

Junior Subordinated Debentures

 

35,052

258

2.93%

 

35,009

311

3.57%

 

34,876

453

5.15%

Other Interest-Bearing Liabilities

 

107,596

70

0.26%

 

45,936

39

0.34%

 

37,092

90

0.96%

Total borrowed funds

 

142,648

328

0.91%

 

80,945

350

1.74%

 

71,968

543

2.99%

Total interest bearing liabilities

 

1,738,962

969

0.22%

 

1,612,862

$ 1,243

0.31%

 

1,589,848

3,526

0.88%

Demand deposits - Noninterest bearing

 

958,233

 

 

 

830,333

 

 

 

668,139

 

 

Other liabilities

 

43,521

 

 

 

39,155

 

 

 

45,488

 

 

Shareholders' equity

 

333,736

 

 

 

324,144

 

 

 

301,406

 

 

Total liabilities and shareholders' equity

 

$ 3,074,452

 

 

 

$ 2,806,494

 

 

 

$ 2,604,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

4.12%

 

 

 

4.01%

 

 

 

4.68%

Interest expense/interest earning assets

 

 

 

0.14%

 

 

 

0.20%

 

 

 

0.59%

Net interest income and margin (5)

 

 

$ 28,074

3.98%

 

 

$ 24,142

3.81%

 

 

$ 24,375

4.09%

____________________

(1)

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

(2)

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

(3)

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $1,302 thousand and $(137) thousand for the quarters ended September 30, 2020 and 2019, respectively, and $(236) thousand for the quarter ended June 30, 2020.

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(balances in $000’s, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

For the nine months ended

 

 

September 30, 2020

 

 

September 30, 2019

Assets

 

Average
Balance (1)

 

Income/
Expense

 

Average
Rate/Yield (2)

 

Average
Balance (1)

 

Income/
Expense

 

Average
Rate/Yield (2)

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold/due from time

 

$

32,332

 

$

155

 

0.64%

 

$

17,948

 

$

327

 

2.44%

Taxable

 

 

392,617

 

 

6,542

 

2.22%

 

 

423,668

 

 

7,692

 

2.43%

Non-taxable

 

 

213,294

 

 

4,246

 

3.36%

 

 

153,763

 

 

3,276

 

3.61%

Total investments

 

 

638,243

 

 

10,943

 

2.52%

 

 

595,379

 

 

11,295

 

2.73%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases:(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

1,524,821

 

 

57,544

 

5.04%

 

 

1,449,603

 

 

60,057

 

5.54%

Agricultural

 

 

48,022

 

 

1,470

 

4.09%

 

 

50,742

 

 

2,326

 

6.13%

Commercial

 

 

168,574

 

 

4,661

 

3.69%

 

 

120,011

 

 

4,575

 

5.10%

Consumer

 

 

6,822

 

 

831

 

16.27%

 

 

8,615

 

 

961

 

14.91%

Mortgage warehouse lines

 

 

204,839

 

 

4,884

 

3.18%

 

 

110,776

 

 

3,812

 

4.60%

Other

 

 

3,302

 

 

148

 

5.99%

 

 

2,995

 

 

146

 

6.52%

Total loans and leases

 

 

1,956,380

 

 

69,538

 

4.75%

 

 

1,742,742

 

 

71,877

 

5.51%

Total interest earning assets (4)

 

 

2,594,623

 

 

80,481

 

4.20%

 

 

2,338,121

 

 

83,172

 

4.81%

Other earning assets

 

 

13,074

 

 

 

 

 

 

 

12,312

 

 

 

 

 

Non-earning assets

 

 

206,816

 

 

 

 

 

 

 

204,480

 

 

 

 

 

Total assets

 

$

2,814,513

 

 

 

 

 

 

$

2,554,913

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

121,246

 

$

209

 

0.23%

 

$

111,808

 

$

248

 

0.30%

NOW

 

 

485,176

 

 

295

 

0.08%

 

 

440,443

 

 

393

 

0.12%

Savings accounts

 

 

326,730

 

 

170

 

0.07%

 

 

289,263

 

 

230

 

0.11%

Money market

 

 

123,149

 

 

101

 

0.11%

 

 

124,090

 

 

136

 

0.15%

Certificates of deposit, under $100,000

 

 

78,239

 

 

270

 

0.46%

 

 

90,103

 

 

843

 

1.25%

Certificates of deposit, $100,000 or more

 

 

365,532

 

 

2,104

 

0.77%

 

 

397,115

 

 

6,308

 

2.12%

Brokered deposits

 

 

30,135

 

 

219

 

0.97%

 

 

47,594

 

 

873

 

2.45%

Total interest bearing deposits

 

 

1,530,207

 

 

3,368

 

0.29%

 

 

1,500,416

 

 

9,031

 

0.80%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds purchased

 

 

511

 

 

1

 

0.26%

 

 

398

 

 

1

 

0.34%

Repurchase agreements

 

 

33,676

 

 

101

 

0.40%

 

 

21,389

 

 

64

 

0.40%

Short term borrowings

 

 

28,299

 

 

43

 

0.20%

 

 

6,972

 

 

123

 

2.36%

TRUPS

 

 

35,008

 

 

965

 

3.68%

 

 

34,830

 

 

1,406

 

5.40%

Total borrowed funds

 

 

97,494

 

 

1,110

 

1.52%

 

 

63,589

 

 

1,594

 

3.35%

Total interest bearing liabilities

 

 

1,627,701

 

 

4,478

 

0.37%

 

 

1,564,005

 

 

10,625

 

0.91%

Demand deposits - non-interest bearing

 

 

822,882

 

 

 

 

 

 

 

658,784

 

 

 

 

 

Other liabilities

 

 

39,646

 

 

 

 

 

 

 

42,752

 

 

 

 

 

Shareholders' equity

 

 

324,284

 

 

 

 

 

 

 

289,372

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

2,814,513

 

 

 

 

 

 

$

2,554,913

 

 

 

 

 

Interest income/interest earning assets

 

 

 

 

 

 

 

4.20%

 

 

 

 

 

 

 

4.81%

Interest expense/interest earning assets

 

 

 

 

 

 

 

0.23%

 

 

 

 

 

 

 

0.61%

Net interest income and margin(5)

 

 

 

 

$

76,003

 

3.97%

 

 

 

 

$

72,547

 

4.20%

____________________

(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 $924 thousand and $(314) thousand for the nine months ended September 30, 2020 and 2019, respectively.

(4)

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

(5)

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

Category: Financial

Source: Sierra Bancorp

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

Source: Sierra Bancorp