Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the quarter ended March 31, 2022. Sierra Bancorp reported consolidated net income of $7.4 million, or $0.49 per diluted share, for the first quarter of 2022 compared to $11.1 million, or $0.72 per diluted share, in the first quarter of 2021. The unfavorable variance in net income came largely from a $3.8 million decrease in net interest income. The Company's return on average assets and return on average equity were 0.88% and 8.64%, respectively, in the first quarter of 2022 as compared to 1.40% and 12.94%, respectively, in the first quarter of 2021.

In April 2022, the Company opened its second loan production office in Templeton, California which demonstrates our investment in expanding our agricultural presence in the state. With the recent hire of Mark Pearce, we now have seven experienced relationship managers and a strong support team of underwriters, analysts, and other support focused on agricultural lending throughout California. While we have reduced exposure in the dairy industry, some of the areas of focus include winery and vineyard lending on the Central Coast and diversified farming operations in the Central Valley.

“Action is the foundational key to all success.” – Pablo Picasso

“Over the past few months, we have successfully added new agricultural, commercial real estate, and mortgage warehouse experts to our lending team,” stated Kevin McPhaill, President and CEO. “This has created a higher level of energy and excitement as we look to grow these segments of our loan portfolio. In addition to our new lenders, new loan opportunities have increased throughout our branches as our bankers diligently work with existing and new customers throughout our markets. We have also launched new deposit products and enhanced our treasury services as we look to add to our already strong deposit growth. While this year will have challenges, there will be opportunities as well. We are excited about our prospects and look forward to continued success this year!” McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the first quarter of 2021)

  • The $3.8 million, or 13%, decrease in net interest income is due mostly to a $3.4 million decrease in interest income resulting primarily from lower loan volumes combined with lower rates. In addition, there was a $0.4 million unfavorable increase in interest expense due to the issuance of subordinated debt during the third quarter of 2021.
  • The provision for credit losses on loans & leases at $0.6 million is $0.4 million higher as a result of higher charge-offs partially offset by a reduction in the pooled allowance under the new current expected credit losses (“CECL”) methodology implemented on January 1, 2022.
  • All capital ratios were above the regulatory requirements for a well-capitalized institution. The Community Bank Leverage ratio was 11.65% for Bank of the Sierra. The Sierra Bancorp leverage ratio was 10.48%.
  • Sierra Bancorp repurchased 182,562 shares totaling $4.9 million in the first quarter of 2022.
  • Our Board of Directors declared a cash dividend of $0.23 per share on April 21, 2022. This is the 93rd consecutive quarterly dividend paid by Sierra Bancorp. The cash dividend is payable on May 12, 2022 to shareholders of record at the close of business on May 2, 2022.

Linked Quarter Changes (comparisons to the three months ended December 31, 2021)

  • Net income decreased by $2.2 million, or 23%, driven mostly by a $1.8 million decline in net interest income and a $0.6 million provision for credit losses compared to a $1.2 million provision reversal in the prior quarter.
  • Noninterest expense decreased $2.0 million, or 9%, favorably impacting net income, mostly due to a decrease in professional fees.

Balance Sheet Changes (comparisons to December 31, 2021)

  • Total assets were relatively unchanged at $3.4 billion.
  • Deposits increased by $83.4 million, or 3%. The growth in deposits came primarily from noninterest bearing or low-cost transaction and savings accounts, while higher-cost time deposits decreased slightly.
  • Gross loan balances were flat at $2.0 billion, however real estate secured loans increased $62.9 million, due mostly to high quality jumbo single family mortgage loan pool purchases. This increase was offset by a reduction in commercial and industrial loans of $22.6 million due predominately to Small Business Administration Paycheck Protection Program (“SBA PPP”) loan forgiveness. Other significant declines included a decrease in Mortgage Warehouse lines for $44.0 million due to reduced refinance activity.

Other financial highlights are reflected in the following table.

 

 

 

 

 

 

 

 

 

 

FINANCIAL HIGHLIGHTS

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

 

 

 

As of or for the

 

 

 

three months ended

 

 

 

3/31/2022

 

 

12/31/2021

 

 

3/31/2021

Net income

 

$

7,407

 

$

9,621

 

$

11,078

Diluted earnings per share

 

$

0.49

 

$

0.63

 

$

0.72

Return on average assets

 

 

0.88%

 

 

1.10%

 

 

1.40%

Return on average equity

 

 

8.64%

 

 

10.47%

 

 

12.94%

 

 

 

 

 

 

 

 

 

 

Net interest margin (tax-equivalent)

 

 

3.21%

 

 

3.31%

 

 

3.93%

Yield on average loans and leases

 

 

4.32%

 

 

4.59%

 

 

4.53%

Cost of average total deposits

 

 

0.08%

 

 

0.08%

 

 

0.09%

Efficiency ratio (tax-equivalent) (1)

 

 

67.08%

 

 

64.86%

 

 

56.43%

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,418,854

 

$

3,371,014

 

$

3,326,037

Loans & leases net of deferred fees

 

$

1,982,131

 

$

1,987,861

 

$

2,284,751

Noninterest demand deposits

 

$

1,104,691

 

$

1,084,544

 

$

1,020,350

Total deposits

 

$

2,864,943

 

$

2,781,572

 

$

2,853,892

Noninterest-bearing deposits over total deposits

 

 

38.6%

 

 

39.0%

 

 

35.8%

 

 

 

 

 

 

 

 

 

 

Shareholders equity / total assets

 

 

9.5%

 

 

10.8%

 

 

10.5%

Tangible common equity ratio (2)

 

 

8.7%

 

 

9.9%

 

 

9.6%

Book value per share

 

$

21.59

 

$

23.74

 

$

22.58

Tangible book value per share (2)

 

$

19.58

 

$

21.73

 

$

20.54

(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 $24.8 million for the first quarter of 2022, a decrease of $1.8 million, or 7%, as compared to the fourth quarter of 2021 and a decrease of $3.8 million, or 13%, as compared to the first quarter of 2021. As compared to the fourth quarter of 2021, overall loan interest income declined by $2.9 million, or 12%, due primarily to a $95.8 million decline in average loan balances, as well as by a 27 basis point decrease in loan yield. There was no change in the cost of interest bearing liabilities for the first three months of 2022 as compared to the prior linked quarter.

For the first quarter of 2022 as compared to the same quarter in 2021, average loan balances decreased $415.3 million, primarily in real estate loans, mortgage warehouse lines and SBA PPP loans contributing to the $5.6 million decrease in loan interest income. In addition, there was an unfavorable rate variance due to a 21 bps decrease in loan yield. While overall deposit costs declined in the first quarter of 2022 as compared to the same quarter in 2021, there was an 8 bps increase in the overall cost of interest bearing liabilities due to $50 million in subordinated debentures issued at 3.25% in September 2021.

At March 31, 2022, approximately 16% of the Bank’s loan portfolio is schedule to mature or reprice within twelve months with another 9% repricing within three years. In addition, approximately $347.3 million, or 34%, of the securities portfolio consists of floating rate bonds that will reprice in less than 90 days.

Interest expense was $1.3 million for the first quarter of 2022, relatively unchanged from the linked quarter, and an increase of $0.4 million, or 47% from the same period in 2021. The increase in the quarterly comparison is attributable to the issuance of subordinated debentures described above, as the interest expense on deposit accounts was primarily flat.

Our net interest margin was 3.21% for the first quarter of 2022, as compared to 3.31% for the linked quarter and 3.93% for the quarter ending March 31, 2021. Average overnight cash balances from increased liquidity due to deposit growth were $194.8 million in the first quarter of 2022 and $311.4 million in the fourth quarter of 2021, yielded an average rate of 19 and 15 bps respectively. The average balance of overnight cash was $76.5 million in the first quarter of 2021. The average balance of investment accounts increased $159.2 million for the first quarter of 2022 as compared to the fourth quarter of 2021 and increased $494.9 million over the same quarter in 2021. The yield on investment balances increased 6 bps for the first quarter of 2022 as compared to the fourth quarter of 2021 but declined 27 bps over the same quarter in 2021.

Provision for Credit Losses

The Company implemented 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) on January 1, 2022. Upon implementation the Company recorded a $10.4 million increase in the allowance for credit losses, which included a $0.9 million reserve for unfunded commitments as an adjustment to equity, net of deferred taxes.

The Company recorded a provision for credit losses on loan and leases of $0.6 million in the first quarter of 2022, as compared to a benefit for loan and lease losses of $1.2 million in the fourth quarter of 2021, and a provision for loan and lease losses of $0.3 million in the first quarter of 2021. The higher provision for credit losses in the first quarter of 2022 over both the linked quarter and the same quarter in 2021, was primarily due to the impact of a $1.8 million in net charge-offs in the first quarter of 2022, partially offset by a decrease in the allowance for credit losses for loans evaluated on a pool basis. The increase in net charge-offs in the first quarter of 2022 was primarily related to a single loan relationship that defaulted in late March 2022 upon the discovery of new information. No additional allowance was booked for this loan individually evaluated for expected losses. The first quarter of 2022 decrease in the allowance for credit losses evaluated on a pooled basis was primarily due to a decline in the qualitative factors resulting from improvements in regional economic factors. The net benefit for loan losses in the fourth quarter of 2021 was due mostly to lower historical loan loss rates, a decline in outstanding balances on loans, and a change in the mix of loans.

The Company recorded a benefit for credit losses on unfunded commitments in the first quarter of 2022 for $0.1 million with no corresponding benefit or provision in the first quarter of 2021. The benefit for credit losses was due to a reduction in the reserve rate utilized in the calculation of the reserve as well as reductions in availability of credit lines.

The Company did not record a provision for credit losses on available-for-sale debt securities. Although there were debt securities in an unrealized loss position the declines in market values were primarily attributable to changes in interest rates and volatility in the financial markets and not a result of an expected credit loss.

Noninterest Income

Noninterest income decreased by $1.0 million, or 15%, to $6.1 million in the first quarter of 2022 as compared to $7.1 million in the fourth quarter of 2021. Noninterest income decreased by $0.8 million, or 11%, in the first quarter of 2022 as compared to the same quarter in 2021. The first quarter 2022 decrease of $1.0 million, compared to the fourth quarter of 2021, is primarily due to valuation decreases related to restricted equity investments for $0.3 million and BOLI fluctuations associated with deferred compensation plans for $0.9 million. In addition, there was a $1.0 million gain on sale of securities in the first quarter of 2022 as compared to $0.7 million in gains on sales of various assets in the fourth quarter of 2021.

In comparing the first quarter of 2022 to the same period in 2021, the reasons for the variances include a $1.2 million decrease in the change in the annual valuation change of restricted equity investments, as well as BOLI fluctuations associated with deferred compensation plans for $1.2 million. These negative variances were partially offset by a $1.0 million gain on the sale of investment securities in an effort to rebalance the portfolio by selling longer duration and higher price volatility securities as a hedge against rising interest rates, due to likely persistent inflationary pressures in the near-intermediate term environment.

Service charges on customer deposit account income declined by $0.1 million, or 4%, to $3.0 million in the first quarter of 2022 as compared to the fourth quarter of 2021. This same income was $0.3 million higher in the first quarter of 2022 as compared to the first quarter of 2021 due to higher returned check charges and overdraft fees.

Noninterest Expense

Total noninterest expense had a favorable decline of $2.0 million, or 9%, in the first quarter of 2022 as compared to the fourth quarter of 2021 and decreased $0.1 million compared to the first quarter of 2021.

Salaries and benefits were $1.6 million higher in the first quarter of 2022 as compared to the fourth quarter of 2021 and $0.7 million higher than the first quarter of 2021. The increase in the linked quarter and year-over-year quarterly comparison is due to several factors, including merit increases for employees due to annual performance evaluations during the first quarter of 2022, higher payroll taxes in the first quarter, the strategic hiring of lending and management staff, and the impact of a favorable bonus adjustment in the fourth quarter of 2021. Overall full-time equivalent employees were 484 at March 31, 2022 as compared to 480 at December 31, 2021 and 508 at March 31, 2021.

Occupancy expense was down $0.1 million for the linked quarters and $0.2 million lower for the first quarter of 2022 as compared to the same quarter last year. We closed five branch facilities in the second quarter of 2021 which impacted the decrease for the year-over-year quarterly comparison.

Other noninterest expense decreased $3.5 million, or 37%, in the first quarter of 2022 as compared to the fourth quarter of 2021 and was $0.6 million, or 8% lower than the first quarter of 2021. The primary reason for the decrease in both the linked quarters and the year-over-year quarterly comparison was lower professional services expense, primarily due to lower legal fees.

The Company's effective tax rate was 27.0% in the first quarter of 2022 relative to 24.2% in the fourth quarter of 2021 and 25.5% for the first quarter of 2021. The increase in the effective tax rate for the first quarter of 2022 is due to tax credits and tax-exempt income representing a smaller percentage of total taxable income.

Balance Sheet Summary

The $47.8 million, or 1% increase in total assets during the first quarter of 2022, is primarily a result of a $51.7 million increase in investment securities, due mostly to the purchase of collateralized loan obligations.

Gross loan balances remained relatively flat during the first quarter of 2022 with an overall 0.3% change. The net change did have some offsetting components with the larger fluctuations being a $44.0 million decline in mortgage warehouse line utilization, a $25.8 million decrease in non-owner occupied commercial real estate, and a $16.8 million decrease in PPP loans. These declines were mostly offset by a $109.4 million increase in 1-4 family mortgage loans due to purchases of high-quality jumbo mortgage loans. The Company’s regulatory commercial real estate concentration ratio decreased to 234% at March 31, 2022 as compared to 248% at December 31, 2021.

Regarding line utilization, unused commitments, excluding mortgage warehouse and consumer overdraft lines, were $224.4 million at March 31, 2022, compared to $242.3 million at December 31, 2021. Total utilization excluding mortgage warehouse and consumer overdraft lines was 61% at March 31, 2022, compared to 61% at December 31, 2021. Mortgage warehouse utilization was 16% at March 31, 2022, as compared to 28% at December 31, 2021.

As expected, PPP loans continue to decline as borrowers receive forgiveness on these loans. There were 160 loans for $15.0 million outstanding at March 31, 2022, compared to 438 loans for $31.8 million at December 31, 2021.

In addition to an expanded investment in agricultural lending with the recent opening of our Templeton loan production office, as described above, the real estate and mortgage warehouse teams are experiencing a build-up of existing pipelines and the boarding of new customer relationships.

Deposit balances grew by $83.4 million, or 3%, during the first quarter of 2022 to $2.9 billion at March 31, 2022. Core non-maturity deposits increased $83.6 million, or 3%, for the first three months of 2022, while customer time deposits declined by $0.2 million. There was no change in brokered deposits during the quarter. Overall noninterest-bearing deposits as a percent of total deposits decreased slightly to 38.6% at March 31, 2022, compared to 39.0% at December 31, 2021, and increased from 35.8% at March 31, 2021. Other interest-bearing liabilities of $192.3 million at March 31, 2022, include $107.8 million of customer repurchase agreements, $49.2 million in subordinated debt, and $35.3 million in trust preferred securities.

The Company continues to have substantial liquidity. At March 31, 2022, and December 31, 2021, the Company had the following sources of primary and secondary liquidity (dollars in thousands):

 

 

 

 

 

 

 

Primary and secondary liquidity sources

 

 

March 31, 2022

 

 

December 31, 2021

Cash and cash equivalents

 

$

253,534

 

$

257,528

Unpledged investment securities

 

 

861,857

 

 

806,132

Excess pledged securities

 

 

40,403

 

 

47,024

FHLB borrowing availability

 

 

748,101

 

 

787,519

Unsecured lines of credit

 

 

305,000

 

 

305,000

Funds available through fed discount window

 

 

44,587

 

 

50,608

Totals

 

$

2,253,482

 

$

2,253,811

Total capital of $325.7 million at March 31, 2022, reflects a decrease of $36.8 million, or 10%, compared to December 31, 2021. The decrease in equity during the first quarter of 2022 is due to net income of $7.4 million, offset by a $3.5 million dividend paid to shareholders, $4.9 million in share repurchases and a $28.9 million unfavorable swing in other comprehensive income/loss due principally to changes in investment securities' fair value. The remaining difference is related to stock options exercised and restricted stock compensation recognized during the quarter.

Asset Quality

Total nonperforming assets, comprised of non-accrual loans and foreclosed assets, increased by $25.9 million, during the first quarter of 2022. The increase resulted from an increase in non-accrual loans, primarily as a result of one relationship in the dairy industry consisting of four separate loans. These loans were written down by $1.96 million in the first quarter of 2022 and no further allowance for credit losses was deemed necessary on these loans. The Company's ratio of nonperforming assets to loans plus foreclosed assets increased to 1.54% at March 31, 2022, from 0.23% at December 31, 2021 due primarily to the loan relationship downgrade previously mentioned. All the Company's nonperforming assets are individually evaluated for credit loss quarterly and management believes the established allowance for credit loss on such loans are appropriate.

The Company's allowance for credit losses on loans and leases was $22.5 million at March 31, 2022, as compared to $14.3 million at December 31, 2021, and $18.3 million at March 31, 2021. The $8.3 million increase in the allowance for credit losses on loan and leases during the first quarter of 2022 is due to a $9.5 million one-time adjustment from the implementation of CECL on January 1, 2022, a $0.6 million provision for credit losses on loan and leases, and net loan charge-offs of $1.8 million.

The allowance was 1.14% of total loans at March 31, 2022, 0.72% of total loans at December 31, 2021, and 0.80% of total loans at March 31, 2021. Management's detailed analysis indicates that the Company's allowance for credit losses on loan and leases should be sufficient to cover credit losses for the life of the loan and leases outstanding as of March 31, 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.

The Company provided loan modification deferrals to customers under Section 4013 of the CARES Act, which were not treated as troubled debt restructured loans. As of March 31, 2022 there are no loans remaining on deferred status.

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 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 impacts of inflation, 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, closure or consolidation, 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

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

Cash and due from banks

 

$

253,534

 

 

$

257,528

 

 

$

422,350

 

 

$

373,902

 

 

$

346,211

 

Investment securities available-for-sale, at fair value

 

 

1,025,032

 

 

 

973,314

 

 

 

732,312

 

 

 

607,474

 

 

 

552,931

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-4 family residential construction

 

 

8,800

 

 

 

21,369

 

 

 

34,720

 

 

 

37,165

 

 

 

36,818

 

Other construction/land

 

 

24,633

 

 

 

25,299

 

 

 

25,512

 

 

 

27,682

 

 

 

50,433

 

1-4 family - closed-end

 

 

398,871

 

 

 

289,457

 

 

 

220,240

 

 

 

106,599

 

 

 

126,949

 

Equity lines

 

 

23,389

 

 

 

26,588

 

 

 

31,341

 

 

 

33,334

 

 

 

36,276

 

Multi-family residential

 

 

59,711

 

 

 

53,458

 

 

 

55,628

 

 

 

58,230

 

 

 

58,324

 

Commercial real estate - owner occupied

 

 

331,764

 

 

 

334,446

 

 

 

345,116

 

 

 

359,021

 

 

 

359,777

 

Commercial real estate - non-owner occupied

 

 

857,051

 

 

 

882,888

 

 

 

995,921

 

 

 

1,048,153

 

 

 

1,071,532

 

Farmland

 

 

98,865

 

 

 

106,706

 

 

 

124,446

 

 

 

125,783

 

 

 

126,157

 

Total real estate loans

 

 

1,803,084

 

 

 

1,740,211

 

 

 

1,832,924

 

 

 

1,795,967

 

 

 

1,866,266

 

Agricultural production loans

 

 

31,663

 

 

 

33,990

 

 

 

43,296

 

 

 

42,952

 

 

 

45,476

 

Commercial and industrial

 

 

87,173

 

 

 

109,791

 

 

 

132,292

 

 

 

150,632

 

 

 

183,762

 

Mortgage warehouse lines

 

 

57,178

 

 

 

101,184

 

 

 

126,486

 

 

 

150,351

 

 

 

187,940

 

Consumer loans

 

 

4,233

 

 

 

4,550

 

 

 

4,828

 

 

 

4,894

 

 

 

5,024

 

Gross loans and leases

 

 

1,983,331

 

 

 

1,989,726

 

 

 

2,139,826

 

 

 

2,144,796

 

 

 

2,288,468

 

Deferred loan and lease fees

 

 

(1,200

)

 

 

(1,865

)

 

 

(2,612

)

 

 

(3,835

)

 

 

(3,717

)

Allowance for credit losses on loans and leases

 

 

(22,530

)

 

 

(14,256

)

 

 

(15,617

)

 

 

(16,421

)

 

 

(18,319

)

Net loans and leases

 

 

1,959,601

 

 

 

1,973,605

 

 

 

2,121,597

 

 

 

2,124,540

 

 

 

2,266,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank premises and equipment

 

 

23,239

 

 

 

23,571

 

 

 

24,490

 

 

 

25,949

 

 

 

26,795

 

Other assets

 

 

157,448

 

 

 

142,996

 

 

 

141,990

 

 

 

140,183

 

 

 

133,668

 

Total assets

 

$

3,418,854

 

 

$

3,371,014

 

 

$

3,442,739

 

 

$

3,272,048

 

 

$

3,326,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest demand deposits

 

$

1,104,691

 

 

$

1,084,544

 

 

$

1,111,411

 

 

$

1,073,833

 

 

$

1,020,350

 

Interest-bearing transaction accounts

 

 

776,457

 

 

 

744,553

 

 

 

765,823

 

 

 

752,137

 

 

 

770,271

 

Savings deposits

 

 

480,178

 

 

 

450,785

 

 

 

451,248

 

 

 

435,076

 

 

 

415,230

 

Money market deposits

 

 

149,918

 

 

 

147,793

 

 

 

141,348

 

 

 

133,977

 

 

 

136,653

 

Customer time deposits

 

 

293,699

 

 

 

293,897

 

 

 

290,816

 

 

 

295,891

 

 

 

411,388

 

Wholesale brokered deposits

 

 

60,000

 

 

 

60,000

 

 

 

60,000

 

 

 

85,000

 

 

 

100,000

 

Total deposits

 

 

2,864,943

 

 

 

2,781,572

 

 

 

2,820,646

 

 

 

2,775,914

 

 

 

2,853,892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

49,151

 

 

 

49,141

 

 

 

49,221

 

 

 

-

 

 

 

-

 

Subordinated debentures

 

 

35,347

 

 

 

35,302

 

 

 

35,258

 

 

 

35,213

 

 

 

35,169

 

Other interest-bearing liabilities

 

 

107,760

 

 

 

106,937

 

 

 

92,553

 

 

 

70,535

 

 

 

56,527

 

Total deposits and interest-bearing liabilities

 

 

3,057,201

 

 

 

2,972,952

 

 

 

2,997,678

 

 

 

2,881,662

 

 

 

2,945,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on unfunded loan commitments

 

 

1,040

 

 

 

203

 

 

 

203

 

 

 

193

 

 

 

289

 

Other liabilities

 

 

34,922

 

 

 

35,365

 

 

 

80,351

 

 

 

32,464

 

 

 

32,179

 

Total capital

 

 

325,691

 

 

 

362,494

 

 

 

364,507

 

 

 

357,729

 

 

 

347,981

 

Total liabilities and capital

 

$

3,418,854

 

 

$

3,371,014

 

 

$

3,442,739

 

 

$

3,272,048

 

 

$

3,326,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOODWILL AND INTANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

Goodwill

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

Core deposit intangible

 

 

3,022

 

 

 

3,275

 

 

 

3,527

 

 

 

3,780

 

 

 

4,038

 

Total intangible assets

 

$

30,379

 

 

$

30,632

 

 

$

30,884

 

 

$

31,137

 

 

$

31,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

Non-accruing loans

 

$

30,446

 

 

$

4,522

 

 

$

6,788

 

 

$

7,276

 

 

$

8,599

 

Foreclosed assets

 

 

93

 

 

 

93

 

 

 

93

 

 

 

774

 

 

 

945

 

Total nonperforming assets

 

$

30,539

 

 

$

4,615

 

 

$

6,881

 

 

$

8,050

 

 

$

9,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

4,568

 

 

$

4,910

 

 

$

5,509

 

 

$

10,774

 

 

$

10,596

 

Net (recoveries) / charge offs

 

$

1,778

 

 

$

(168

)

 

$

(329

)

 

$

(533

)

 

$

(331

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due & still accruing (30-89)

 

$

2,809

 

 

$

2,013

 

 

$

380

 

 

$

3,197

 

 

$

2,991

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans to gross loans

 

 

1.54

%

 

 

0.23

%

 

 

0.32

%

 

 

0.34

%

 

 

0.38

%

NPA's to loans plus foreclosed assets

 

 

1.54

%

 

 

0.23

%

 

 

0.32

%

 

 

0.38

%

 

 

0.42

%

Allowance for credit losses on loans and leases to loans

 

 

1.14

%

 

 

0.72

%

 

 

0.73

%

 

 

0.77

%

 

 

0.80

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECT PERIOD-END STATISTICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/31/2022

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

Shareholders’ equity / total assets

 

 

9.5

%

 

 

10.8

%

 

 

10.6

%

 

 

10.9

%

 

 

10.5

%

Gross loans / deposits

 

 

69.2

%

 

 

71.5

%

 

 

75.9

%

 

 

77.3

%

 

 

80.2

%

Non-interest bearing deposits / total deposits

 

 

38.6

%

 

 

39.0

%

 

 

39.4

%

 

 

38.7

%

 

 

35.8

%

 

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

For the three months ended:

 

 

 

3/31/2022

 

 

12/31/2021

 

 

3/31/2021

Interest income

 

$

26,081

 

 

$

27,897

 

 

$

29,458

Interest expense

 

 

1,325

 

 

 

1,331

 

 

 

903

Net interest income

 

 

24,756

 

 

 

26,566

 

 

 

28,555

 

 

 

 

 

 

 

 

 

 

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

 

 

600

 

 

 

(1,200

)

 

 

250

Benefit for credit losses on unfunded loan commitments

 

 

(94

)

 

 

-

 

 

 

-

Net interest income after provision

 

 

24,250

 

 

 

27,766

 

 

 

28,305

 

 

 

 

 

 

 

 

 

 

Service charges

 

 

3,040

 

 

 

3,169

 

 

 

2,767

BOLI (expense) income

 

 

(645

)

 

 

203

 

 

 

583

Gain on investments

 

 

1,032

 

 

 

-

 

 

 

-

Other noninterest income

 

 

2,636

 

 

 

3,730

 

 

 

3,480

Total noninterest income

 

 

6,063

 

 

 

7,102

 

 

 

6,830

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

11,805

 

 

 

10,237

 

 

 

11,151

Occupancy expense

 

 

2,294

 

 

 

2,366

 

 

 

2,486

Other noninterest expenses

 

 

6,074

 

 

 

9,572

 

 

 

6,634

Total noninterest expense

 

 

20,173

 

 

 

22,175

 

 

 

20,271

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

10,140

 

 

 

12,693

 

 

 

14,864

Provision for income taxes

 

 

2,733

 

 

 

3,072

 

 

 

3,786

Net income

 

$

7,407

 

 

$

9,621

 

 

$

11,078

 

 

 

 

 

 

 

 

 

 

TAX DATA

 

 

 

 

 

 

 

 

 

Tax-exempt muni income

 

$

1,726

 

 

$

1,761

 

 

$

1,449

Interest income - fully tax equivalent

 

$

26,540

 

 

$

28,365

 

 

$

29,843

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

 

3/31/2022

 

 

12/31/2021

 

 

3/31/2021

Basic earnings per share

 

$

0.49

 

 

$

0.63

 

 

$

0.73

 

Diluted earnings per share

 

$

0.49

 

 

$

0.63

 

 

$

0.72

 

Common dividends

 

$

0.23

 

 

$

0.22

 

 

$

0.21

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

15,021,138

 

 

 

15,226,834

 

 

 

15,223,010

 

Weighted average diluted shares

 

 

15,120,990

 

 

 

15,297,414

 

 

 

15,337,710

 

 

 

 

 

 

 

 

 

 

 

Book value per basic share (EOP)

 

$

21.59

 

 

$

23.74

 

 

$

22.58

 

Tangible book value per share (EOP)

 

$

19.58

 

 

$

21.73

 

 

$

20.54

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (EOP)

 

 

15,086,032

 

 

 

15,270,010

 

 

 

15,410,763

 

 

 

 

 

 

 

 

 

 

 

KEY FINANCIAL RATIOS

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

 

3/31/2022

 

 

12/31/2021

 

 

3/31/2021

Return on average equity

 

 

8.64

%

 

 

10.47

%

 

 

12.94

%

Return on average assets

 

 

0.88

%

 

 

1.10

%

 

 

1.40

%

Net interest margin (tax-equivalent)

 

 

3.21

%

 

 

3.31

%

 

 

3.93

%

Efficiency ratio (tax-equivalent)¹

 

 

67.08

%

 

 

64.86

%

 

 

56.43

%

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

 

 

0.09

%

 

 

0.01

%

 

(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.

 

 

 

 

 

 

 

 

 

 

NON-GAAP FINANCIAL MEASURES

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

3/31/2022

 

 

12/31/2021

 

 

3/31/2021

Total stockholders' equity

 

$

325,691

 

 

$

362,494

 

 

$

347,981

 

Less: goodwill and other intangible assets

 

 

30,379

 

 

 

30,632

 

 

 

31,395

 

Tangible common equity

 

$

295,312

 

 

$

331,862

 

 

$

316,586

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,418,854

 

 

$

3,371,014

 

 

$

3,326,037

 

Less: goodwill and other intangible assets

 

 

30,379

 

 

 

30,632

 

 

 

31,395

 

Tangible assets

 

$

3,388,475

 

 

$

3,340,382

 

 

$

3,294,642

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

15,086,032

 

 

 

15,270,010

 

 

 

15,410,763

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

21.59

 

 

$

23.74

 

 

$

22.58

 

Tangible book value per common share

 

$

19.58

 

 

$

21.73

 

 

$

20.54

 

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

 

 

9.53

%

 

 

10.75

%

 

 

10.46

%

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

 

 

8.72

%

 

 

9.93

%

 

 

9.61

%

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME/EXPENSE

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

For the three months ended:

Noninterest income:

 

 

3/31/2022

 

 

12/31/2021

 

 

3/31/2021

Service charges on deposit accounts

 

$

3,040

 

 

$

3,169

 

 

$

2,767

 

Checkcard fees

 

 

2,056

 

 

 

2,165

 

 

 

1,894

 

Bank-owned life insurance

 

 

(645

)

 

 

203

 

 

 

583

 

Other service charges and fees

 

 

696

 

 

 

992

 

 

 

1,718

 

Gain on sale of securities

 

 

1,032

 

 

 

 

 

 

 

Loss on tax credit investment

 

 

(113

)

 

 

(133

)

 

 

(133

)

Other

 

 

(3

)

 

 

706

 

 

 

1

 

Total noninterest income

 

$

6,063

 

 

$

7,102

 

 

$

6,830

 

As a % of average interest earning assets (1)

 

 

0.77

%

 

 

0.87

%

 

 

0.93

%

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

11,805

 

 

$

10,237

 

 

$

11,151

 

Occupancy costs

 

 

 

 

 

 

 

 

 

Furniture & equipment

 

 

454

 

 

 

409

 

 

 

452

 

Premises

 

 

1,840

 

 

 

1,957

 

 

 

2,034

 

Advertising and marketing costs

 

 

406

 

 

 

539

 

 

 

321

 

Data processing costs

 

 

1,485

 

 

 

1,481

 

 

 

1,426

 

Deposit services costs

 

 

2,245

 

 

 

2,298

 

 

 

2,068

 

Loan services costs

 

 

 

 

 

 

 

 

 

Loan processing

 

 

111

 

 

 

158

 

 

 

169

 

Foreclosed assets

 

 

(5

)

 

 

(6

)

 

 

107

 

Other operating costs

 

 

 

 

 

 

 

 

 

Telephone & data communications

 

 

444

 

 

 

431

 

 

 

380

 

Postage & mail

 

 

56

 

 

 

56

 

 

 

84

 

Other

 

 

419

 

 

 

906

 

 

 

462

 

Professional services costs

 

 

 

 

 

 

 

 

 

Legal & accounting

 

 

546

 

 

 

2,703

 

 

 

442

 

Other professional service

 

 

143

 

 

 

796

 

 

 

897

 

Stationery & supply costs

 

 

85

 

 

 

85

 

 

 

78

 

Sundry & tellers

 

 

139

 

 

 

125

 

 

 

200

 

Total noninterest expense

 

$

20,173

 

 

$

22,175

 

 

$

20,271

 

As a % of average interest earning assets (1)

 

 

2.57

%

 

 

2.72

%

 

 

2.75

%

Efficiency ratio (2)(3)

 

 

67.08

%

 

 

64.86

%

 

 

56.43

%

(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

 

 

March 31, 2022

 

December 31, 2021

 

March 31, 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

 

$

194,846

$

93

0.19

%

 

$

311,386

$

120

0.15

%

 

$

76,504

$

19

0.10

%

Taxable

 

 

744,599

 

3,490

1.90

%

 

 

593,959

 

2,403

1.61

%

 

 

317,254

 

1,578

2.02

%

Non-taxable

 

 

294,409

 

1,726

3.01

%

 

 

285,811

 

1,679

2.95

%

 

 

226,838

 

1,449

3.28

%

Total investments

 

 

1,233,854

 

5,309

1.90

%

 

 

1,191,156

 

4,202

1.55

%

 

 

620,596

 

3,046

2.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases: (3)

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

1,753,394

 

18,326

4.24

%

 

 

1,794,285

 

20,864

4.61

%

 

 

1,879,359

 

21,391

4.62

%

Agricultural production

 

 

33,986

 

302

3.60

%

 

 

38,191

 

361

3.75

%

 

 

46,153

 

419

3.68

%

Commercial

 

 

97,127

 

1,398

5.84

%

 

 

118,159

 

1,457

4.89

%

 

 

191,656

 

2,451

5.19

%

Consumer

 

 

4,448

 

206

18.78

%

 

 

4,720

 

237

19.92

%

 

 

5,422

 

196

14.66

%

Mortgage warehouse lines

 

 

61,255

 

510

3.38

%

 

 

90,736

 

747

3.27

%

 

 

242,865

 

1,928

3.22

%

Other

 

 

1,485

 

30

8.19

%

 

 

1,430

 

29

8.05

%

 

 

1,588

 

27

6.90

%

Total loans and leases

 

 

1,951,695

 

20,772

4.32

%

 

 

2,047,521

 

23,695

4.59

%

 

 

2,367,043

 

26,412

4.53

%

Total interest earning assets (4)

 

 

3,185,549

$

26,081

3.38

%

 

 

3,238,677

$

27,897

3.47

%

 

 

2,987,639

$

29,458

4.05

%

Other earning assets

 

 

15,679

 

 

 

 

21,425

 

 

 

 

13,275

 

 

Non-earning assets

 

 

210,724

 

 

 

 

206,344

 

 

 

 

201,114

 

 

Total assets

 

$

3,411,952

 

 

 

$

3,466,446

 

 

 

$

3,202,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

202,962

$

106

0.21

%

 

$

131,810

$

80

0.24

%

 

$

130,763

$

73

0.23

%

NOW

 

 

546,280

 

82

0.06

%

 

 

615,245

 

112

0.07

%

 

 

569,171

 

101

0.07

%

Savings accounts

 

 

467,700

 

67

0.06

%

 

 

451,369

 

65

0.06

%

 

 

391,091

 

53

0.05

%

Money market

 

 

151,339

 

23

0.06

%

 

 

146,174

 

25

0.07

%

 

 

136,422

 

30

0.09

%

Time deposits

 

 

293,684

 

234

0.32

%

 

 

291,516

 

241

0.33

%

 

 

412,416

 

289

0.29

%

Wholesale brokered deposits

 

 

60,000

 

48

0.32

%

 

 

60,000

 

49

0.32

%

 

 

100,000

 

62

0.25

%

Total interest bearing deposits

 

 

1,721,965

 

560

0.13

%

 

 

1,696,114

 

572

0.13

%

 

 

1,739,863

 

608

0.14

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

Other interest-bearing liabilities

 

 

105,238

 

82

0.31

%

 

 

98,326

 

86

0.35

%

 

 

63,449

 

48

0.31

%

Long-term debt

 

 

49,143

 

428

3.53

%

 

 

49,156

 

430

3.47

%

 

 

 

0.00

%

Subordinated debentures

 

 

35,320

 

255

2.93

%

 

 

35,276

 

243

2.73

%

 

 

35,141

 

247

2.85

%

Total borrowed funds

 

 

189,701

 

765

1.64

%

 

 

147,482

 

516

1.65

%

 

 

98,590

 

295

1.21

%

Total interest bearing liabilities

 

 

1,911,666

 

1,325

0.28

%

 

 

1,878,872

 

1,331

0.28

%

 

 

1,838,453

 

903

0.20

%

Demand deposits - noninterest bearing

 

 

1,093,709

 

 

 

 

1,120,323

 

 

 

 

977,137

 

 

Other liabilities

 

 

59,026

 

 

 

 

102,838

 

 

 

 

39,199

 

 

Shareholders' equity

 

 

347,551

 

 

 

 

364,413

 

 

 

 

347,239

 

 

Total liabilities and shareholders' equity

 

$

3,411,952

 

 

 

$

3,466,446

 

 

 

$

3,202,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

3.38

%

 

 

 

3.47

%

 

 

 

4.05

%

Interest expense/interest earning assets

 

 

 

0.17

%

 

 

 

0.16

%

 

 

 

0.12

%

Net interest income and margin (5)

 

 

$

24,756

3.21

%

 

 

$

26,566

3.31

%

 

 

$

28,555

3.93

%

_________________________ (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 expected credit losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $0.4 million and $1.4 million for the quarters ended March 31, 2022 and 2021, respectively, and $0.8 million for the quarter ended December 31, 2021.

(4)

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

(5)

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

Category: Financial Source: Sierra Bancorp

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

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