• Net income of $43.0 million for the year ended December 31, 2021, as compared to $35.4 million for the same period in 2020, an increase of $7.6 million or 21%.
  • Return on average assets was 1.29%, return on average equity was 12.05%, and diluted earnings per share were $2.80 for the twelve months ended 2021.
  • Deposit growth of $157.0 million, or 6% during the year ended 2021.
  • Hired several new commercial lenders with diverse experience in the fourth quarter of 2021.

Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the three-and twelve-month periods ended December 31, 2021. Sierra Bancorp reported consolidated net income in the fourth quarter of 2021 of $9.6 million, or $0.63 per diluted share, compared to net income of $9.0 million, or $0.58 per diluted share, in the fourth quarter of 2020. The Company's fourth quarter 2021 return on average assets and return on average equity was 1.10% and 10.47%, respectively, as compared to 1.12% and 10.49%, respectively, for the same comparative period in 2020.

For the year ended 2021, the Company recognized net income of $43.0 million, or $2.80 per diluted share, as compared to $35.4 million, or $2.32 per diluted share, for the same period in 2020. The Company’s financial performance metrics for the year ended 2021 include an annualized return on average assets and a return on average equity of 1.29% and 12.05%, respectively, compared to 1.22% and 10.80%, respectively, for the same period in 2020.

“We are proud of our efforts to help our customers and communities through these challenging times. Our tireless work is reflected in our fourth quarter results that complete a record-breaking year for income,” stated Kevin McPhaill, President and CEO. “Henry Ford said it best, ‘Coming together is a beginning; keeping together is progress; working together is success.’ With 2021 now complete, we look forward to opportunities in 2022 and beyond!" McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the fourth quarter of 2020)

  • Net income for the fourth quarter of 2021 increased $0.6 million to $9.6 million, there was a $1.2 million negative provision for loan and lease losses in the fourth quarter of 2021, lower salary and benefit costs for $0.8 million partially offset by an increase in litigation expense and related legal reserves. Compared to 2020, there was a $2.2 million provision for loan and lease losses; the $3.4 million decrease in provision being attributable to the impact of continued improvements in the overall economy, a reduction in historical loss rates, a decline in specific reserves on impaired loans, net loan recoveries in 2021, a change in the mix of loans, and lower outstanding balances of net loans and leases; lower FTE was responsible for the decrease in salaries and benefits.
  • Net interest income for the fourth quarter of 2021 decreased by $2.3 million mostly due to a 57 bps decline in the yield on earning assets and a shift in mix due to higher levels of cash invested overnight with the Federal Reserve Bank and increased lower yielding investment balances.
  • Noninterest income for the fourth quarter of 2021 increased $1.1 million, or 18%, due to a $0.3 million increase in debit card interchange income from increased usage, $0.4 million in life insurance proceeds and $0.3 million from the sale of underlying assets within an investment in a Small Business Investment Company. Noninterest expense for the fourth quarter of 2021 increased by $1.4 million due mostly to a $1.3 million increase in legal expenses.

Year to-Date Changes (comparisons to the year ended 2020)

  • Net income for 2021 increased by $7.6 million, or 21%. The most significant line-item changes were a $12.2 million decrease in the provision for loan and lease losses, and an increase of $4.2 million or 4% in net interest income, due mostly to higher average loan balances and a continued favorable deposit mix with cost of funds decreasing 10 bps. These items were partially offset by a $7.6 million increase in noninterest expense in 2021 as compared to the prior year due to higher salary & benefits expense, data processing expenses, debit card processing costs, and professional services expense.
  • Noninterest income for 2021 increased by $1.9 million, or 7%, due to greater interchange fee income, increases in BOLI income, and increases in the fair market value of equity securities partially offset by nonrecurring gains in 2020 from the sales of investments, and the sale of assets within a low-income housing tax credit fund in 2020 that did not reoccur in 2021.

Balance Sheet Changes (comparisons to December 31, 2020)

  • Total assets increased by $150.3 million, or 5%, to $3.4 billion, during 2021.
  • Cash and due from banks increased $186.1 million, to $257.5 million for the year due mostly to higher deposit balances coupled with lower loan balances.
  • Investment securities increased $429.3 million, or 79%, to $973.3 million primarily due to bond purchases.
  • During 2020, gross loans increased by $700.5 million, or 40%. Following this tremendous loan growth in 2020, overall loan balances declined $473.4 million, or 19%. For the two-year period of 2020 and 2021, overall loan balances increased by $227.2 million, or 13%. The decline in loan balances during 2021 was due mostly to lower utilization of mortgage warehouse lines resulting in a $206.5 million decline in overall mortgage warehouse outstanding balances due primarily to reduced refinancing activity. Other significant declines included a $155.7 million decline in real estate loans mostly due to lower commercial real estate and construction loan balances, and a $99.3 million decrease in commercial and industrial loans, which was predominately due to Small Business Administration Paycheck Protection Program (“SBA PPP”) loan forgiveness.
  • Deposits totaled $2.8 billion at December 31, 2021, representing a year-to-date increase of $157.0 million, or 6%. The growth in deposits came primarily from core transaction and savings accounts, while higher-cost time and wholesale brokered deposits decreased by $159.0 million, or 31%.
  • Short-term debt decreased to $106.9 million at December 31, 2021. While overnight repurchase agreements increased $67.8 million to $106.9 million, FHLB borrowings and overnight fed funds decreased to zero, from $143.0 million.
  • Long-term debt increased to $49.1 million at December 31, 2021 from the issuance of $50 million in ten year 3.25% fixed to floating subordinated notes in the third quarter of 2021.

Other financial highlights are reflected in the following table.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL HIGHLIGHTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At or For the

 

 

At or For the

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

12/31/2021

 

 

9/30/2021

 

 

12/31/2020

 

 

12/31/2021

 

 

12/31/2020

Net income

 

$

9,621

 

 

$

10,605

 

 

$

8,979

 

 

$

43,012

 

 

$

35,444

 

Diluted earnings per share

 

$

0.63

 

 

$

0.69

 

 

$

0.58

 

 

$

2.80

 

 

$

2.32

 

Return on average assets

 

 

1.10

%

 

 

1.26

%

 

 

1.12

%

 

 

1.29

%

 

 

1.22

%

Return on average equity

 

 

10.47

%

 

 

11.62

%

 

 

10.49

%

 

 

12.05

%

 

 

10.80

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (tax-equivalent)

 

 

3.31

%

 

 

3.46

%

 

 

3.91

%

 

 

3.56

%

 

 

3.95

%

Yield on average loans and leases

 

 

4.59

%

 

 

4.61

%

 

 

4.41

%

 

 

4.57

%

 

 

4.65

%

Cost of average total deposits

 

 

0.08

%

 

 

0.08

%

 

 

0.09

%

 

 

0.09

%

 

 

0.16

%

Efficiency ratio (tax-equivalent)¹

 

 

64.86

%

 

 

59.75

%

 

 

58.68

%

 

 

59.92

%

 

 

57.18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,371,014

 

 

$

3,442,739

 

 

$

3,220,742

 

 

$

3,371,014

 

 

$

3,220,742

 

Loans & leases net of deferred fees

 

$

1,987,861

 

 

$

2,137,214

 

 

$

2,459,964

 

 

$

1,987,861

 

 

$

2,459,964

 

Noninterest demand deposits

 

$

1,084,544

 

 

$

1,111,411

 

 

$

943,664

 

 

$

1,084,544

 

 

$

943,664

 

Total deposits

 

$

2,781,572

 

 

$

2,820,646

 

 

$

2,624,606

 

 

$

2,781,572

 

 

$

2,624,606

 

Noninterest-bearing deposits over total deposits

 

 

39.0

%

 

 

39.4

%

 

 

36.0

%

 

 

39.0

%

 

 

36.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity / total assets

 

 

10.8

%

 

 

10.6

%

 

 

10.7

%

 

 

10.8

%

 

 

10.7

%

Tangible Common equity ratio

 

 

9.9

%

 

 

9.8

%

 

 

9.8

%

 

 

9.9

%

 

 

9.8

%

Book value per share

 

$

23.74

 

 

$

23.70

 

 

$

22.35

 

 

$

23.74

 

 

$

22.35

 

Tangible book value per share

 

$

21.73

 

 

$

21.69

 

 

$

20.29

 

 

$

21.73

 

 

$

20.29

 

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

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income was $26.6 million for the fourth quarter of 2021, a $2.3 million decrease, or 8%, over the fourth quarter of 2020, and increased $4.2 million, or 4%, to $109.0 million for the year ended 2021 relative to the same period in 2020.

For the fourth quarter of 2021, growth in average interest-earning assets totaled $267.2 million, or 9%, as compared to the fourth quarter of 2020. The yield on these balances was 57 basis points lower for the same period due mostly to a shift in the mix of earning assets to lower yielding investment securities, and cash held overnight at the Federal Reserve Bank.

Net interest income for the comparative year-to-date periods increased due to a $415.4 million, or 15%, growth in average interest-earning assets. The yield on these average balances was 46 basis points lower for the same period but was partially offset by a 10 basis point drop in interest paid on liabilities. The net impact of this lower rate was a 39 basis point decrease in our net interest margin for the year ending December 31, 2021 as compared to the same period in 2020.

Loan income during the fourth quarter 2021 included $0.5 million related to fee income, net of origination costs, recognized on SBA PPP loans. Similarly, SBA PPP loan fees, net of origination costs of $3.8 million were recognized for the year ended December 31, 2021. At December 31, 2021, approximately $1.1 million of unearned fees, net of origination costs related to SBA PPP loans, remains on the balance sheet.

At December 31, 2021, approximately 20% of the bank’s loan portfolio is scheduled to mature or reprice within twelve months with another 11% repricing within three years. In addition, approximately $332 million of the securities portfolio consists of floating rate bonds.

Interest expense was $1.3 million for the fourth quarter of 2021, an increase of $0.4 million, or 43%, relative to the fourth quarter of 2020. For the year ended 2021, compared to the same period in 2020, interest expense declined $1.4 million, or 25%, to $4.1 million. The increase in interest expense for the quarterly comparison is attributable to the issuance of subordinated notes, as the interest expense on deposit accounts was mainly flat. For the year ended 2021, compared to the year ended 2020, the average balance of higher cost time deposits fell by $58.6 million or 12%, while lower or no cost transaction and savings accounts increased $430.0 million or 22%, contributing to the positive year to date variance.

Our net interest margin was significantly impacted by the additional overnight cash balances resulting from increased liquidity from deposit growth in 2021 coupled with lower loan balances. This additional liquidity was deployed in overnight funding and lower yielding investment bonds. Average overnight cash balances were $311.3 million during the fourth quarter 2021 and $269.9 million for the year ended December 31, 2021. This overnight funding earned an average rate of 15 and 14 basis points, respectively, for the fourth quarter and year ended December 31, 2021. The average balance of investment accounts increased $315.6 million for the fourth quarter of 2021 as compared to the same period in 2020 and $69.9 million for the year ended 2021 as compared to the year ended 2020. The yield on investment balances declined 65 bps for the fourth quarter of 2021 as compared to the same period in 2020 and declined 67 bps for the year ended December 31, 2021 as compared to the same period in 2020.

Provision for Loan and Lease Losses

The Company recorded a net benefit related to loan and lease loss provision of $1.2 million in the fourth quarter of 2021 relative to a provision of $2.2 million in the fourth quarter of 2020, and a year-to-date net benefit for loan and lease loss provision of $3.7 million in 2021 as compared to $8.6 million loan and lease loss provision expense for the same period in 2020. The Company's $3.4 million, favorable decline in provision for loan and lease losses in the fourth quarter of 2021 as compared to the fourth quarter of 2020, and the $12.2 million favorable decrease, for the year ending 2021 compared to the same period in 2020 is due mostly to lower historical loan loss rates, a decline in outstanding balances on loans, a change in the mix of loans, and net year-to-date 2021 recoveries of previously charged-off loan balances. During 2021, management adjusted its qualitative risk factors under our current incurred loss model for improved economic conditions, improvements in the severity and volume of past due loans, and a reduction in the level of concentrations of credit in non-owner occupied real estate loans.

The Company elected to defer 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) to January 1, 2022. The Company’s decision to defer the adoption of CECL was done primarily to provide additional time to better assess 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. Upon adoption of CECL, the Company was required to make an adjustment to equity, net of taxes, equal to the difference between the allowance for credit losses calculated under the CECL method and the allowance for loan and lease losses as calculated under the incurred loss method as of December 31, 2021. Therefore, on January 1, 2022, the Company recorded a $10.4 million increase in the allowance for credit losses, which includes a $0.9 million reserve for unfunded commitments as an adjustment to equity, net of deferred taxes.

Noninterest Income

Total noninterest income reflects increases of $1.1 million, or 18%, for the quarter ended December 31, 2021 as compared to the same quarter in 2020, and $1.9 million, or 7%, for the year ended December 31, 2021 as compared to the same period in 2020. The quarterly and year-to-date comparisons were primarily impacted by higher interchange income, life insurance proceeds and a gain on the sale of underlying limited partnership assets, however, the comparable year-to-date periods also included an increase of $0.4 million in the valuation gain of restricted equity investments owned by the Company, a $0.4 million favorable fluctuation in income on Bank-Owned Life Insurance (BOLI) associated with deferred compensation plans, and a $0.6 million favorable change in low-income housing tax credit fund expenses. The year-to-date increases were offset by a $0.4 million gain on the sale of debt securities from the restructuring of the portfolio in 2020 and a $1.6 million nonrecurring gain on the wrap up of low-income housing tax credit funds also in 2020.

Service charges on customer deposit account income increased $0.2 million, or 5%, to $3.2 million in the fourth quarter of 2021 as compared to the fourth quarter of 2020. This increase is primarily due to increases in analysis fee and overdraft income during the comparable periods. This service charge income was $0.1 million higher, or 1%, for the year ending December 31, 2021, as compared to the same period in 2020. The increase for the year-to-date comparison is primarily a result of increases in ATM fees and service charges on money service business accounts partially offset by decreases in overdraft income.

Noninterest Expense

Total noninterest expense increased by $1.4 million, or 7%, in the fourth quarter of 2021 relative to the fourth quarter of 2020, and by $7.6 million, or 10%, for the year ended 2021 as compared to the same period in 2020.

Salaries and Benefits were $0.8 million, or 7%, lower in the fourth quarter of 2021 as compared to the fourth quarter of 2020 and $2.3 million, or 6%, higher for the year ended 2021 compared to the same period in 2020. Overall full-time equivalent employees were 480 at December 31, 2021 as compared to 501 at December 31, 2020. This decline accounted for the favorable quarterly variance while a $2.3 million decline in salary expense deferrals related to the decrease in loan originations were primarily responsible for the negative year to date variance.

Occupancy expenses were $0.1 million lower for the fourth quarter of 2021 as compared to the same quarter in 2020 and unchanged for the year ended 2021 as compared to the same period in 2020. The primary reason for decrease in the quarterly comparison was the closure of five branch facilities earlier in the year, which included the early termination of two leases immediately.

Other noninterest expense increased $2.3 million, or 32% for the fourth quarter 2021 as compared to the fourth quarter in 2020, and increased $5.4 million, or 21% for the year ended 2021 as compared to the same period in 2020. The variance for the fourth quarter of 2021 compared to the same period in 2020 was primarily driven by an increase of $1.7 million in legal and accounting costs due mostly to an increase in legal costs, related legal reserves, and additional costs related to the outsourcing of certain audit functions. Additionally, there were increases of $0.2 million in data processing costs resulting from increases in core banking system expenses, and $0.4 million in increase in debit card processing costs due to higher debit card usage. These higher costs were partially offset by a $0.2 million decrease in foreclosed assets costs, due to the sale of all but two bank owned properties and a $0.2 million decrease in ATM servicing costs. For the year-over-year comparison the categories of increase were the same as with the quarterly comparison, along with increases in FDIC assessments for $0.4 million, a $0.3 million in data communications, and a $0.4 million increase in director’s expense, $0.2 million of which is linked to the changes in BOLI income, partially offset by a $0.4 million decrease in ATM servicing costs. All the Company’s ATM machines were either upgraded or replaced in 2021, resulting in lower servicing costs.

The Company's provision for income taxes was 24.2% of pre-tax income in the fourth quarter of 2021 relative to 24.6% in the fourth quarter of 2020, and 24.8% of pre-tax income for the year ended December 31, 2021 relative to 23.8% for the same period in 2020. The increase in effective tax rate in the fourth quarter and year to date 2021 is due to tax credits and tax-exempt income representing a smaller percentage of total taxable income.

Balance Sheet Summary

Balance sheet changes for the year ended December 31, 2021 include an increase in total assets of $150.3 million, or 5%, primarily a result of increases in cash and due from banks and investments securities of $186.1 million and $429.3 million, respectively, net of a $468.6 million decrease in net loan balances.

The increase in investment securities of $429.3 million in 2021 consisted primarily of increases in municipal bonds of $76.5 million, corporate securities of $28.5 million, and AAA and AA tranches of collateralized loan obligations of $332.2 million. The purchases of AAA and AA tranches of collateralized loan obligations (“CLOs”) in 2021 is primarily a balance sheet diversification strategy as management continues to utilize available liquidity. In addition to providing asset class diversification given the high level of real estate backed earning assets on the balance sheet, these floating rate CLOs are more asset sensitive which complements the longer-term fixed-rate earning assets.

Gross loan balances decreased $473.4 million during the year ended December 31, 2021, primarily as a result of a $206.5 million decline in mortgage warehouse line utilization, an $87.6 million decline in SBA PPP loans due mostly to forgiveness of such loans, and a net decrease of $155.7 million in real estate secured loans, primarily from construction and other commercial real estate loans.

During 2021, in an effort to reduce its concentration risk, the Company strategically lowered its regulatory commercial real estate concentration ratio from 378% at December 31, 2020 to 248% at December 31, 2021. The ratio at December 31, 2021 would have been 265% if not for a $25.0 million capital infusion from the Company to the Bank in the fourth quarter of 2021. During 2022, the Company expects the ratio to increase.

The overall decline in real estate secured loans during 2021 was partially offset by an increase of $149.6 million in 1-4 family residential real estate loans due to the $208.0 million purchase of mortgage loans during the second half of 2021. These loan purchases were designed as a bridge to organic loan growth as the Bank’s core loan pipeline continues to improve with the recent hiring of strategic lending team lift-outs as detailed below:

  • The Bank’s mortgage warehouse team program will be refreshed and rebuilt under the direction and leadership of a new Mortgage Warehouse Market President, Tim McAvenia, who was hired for this role in the fourth quarter of 2021.
  • The Real Estate Industries Group (REIG) hired two new commercial real estate loan officers who are expected to continue the Bank’s commitment to serving the commercial real estate markets. John Penrith, VP & Commercial Loan Officer and Sean Hart, VP & Senior Commercial Loan Officer were appointed to complement the REIG. In addition, further lending teams are currently being recruited along with additional underwriters to support the REIG.
  • Expansion of the agricultural lending and commercial & industrial (C&I) lending capabilities of the Bank is a key third element. In December 2021, Matt Dusi was hired as the new Agricultural and Commercial Lending President. Matt is actively recruiting additional lenders to expand the Agricultural and C&I teams with key lender lift outs across our footprint. Like the other groups, these relationship managers will be complemented with a team of portfolio managers who will assist with underwriting support, portfolio management, and identification of opportunities for additional credit extensions. It is recognized that we cannot rely upon relationship managers alone for loan growth. Instead, a full team to support prudently underwritten loans is needed to minimize risk.

Unused commitments, excluding mortgage warehouse and consumer overdraft lines, were $242.3 million at December 31, 2021, compared to $260.0 million at December 31, 2020. Total line utilization, excluding mortgage warehouse and consumer overdraft lines, was 55% at December 31, 2021 and 57% at December 31, 2020. Mortgage warehouse utilization declined significantly to 33% at December 31, 2021, as compared to 71% at December 31, 2020.

The Company participated in the SBA PPP as authorized by the CARES Act. We began accepting and funding loans under this program in April 2020. There were 438 loans for $31.8 million outstanding at December 31, 2021, compared to 1,274 loans for $117.2 million at December 31, 2020. There were 723 new SBA PPP loans for $49.6 million made during the year ended December 31, 2021. During the same period the SBA forgave $137.9 million of SBA PPP loans and honored their guaranty for $0.7 million.

Deposit balances reflect growth of $157.0 million, or 6%, during the year ended December 31, 2021. Core non-maturity deposits increased by $316.0 million, or 15%, while customer time deposits decreased by $119.1 million, or 29%. Wholesale brokered deposits decreased by $40.0 million to $60.0 million. Overall noninterest-bearing deposits as a percent of total deposits at December 31, 2021, increased to 39.0%, as compared to 36.0% at December 31, 2020.

Other interest-bearing liabilities of $106.9 million on December 31, 2021 consists exclusively of customer repurchase agreements. Other interest-bearing liabilities at December 31, 2020 of $182.0 million consisted of $100.0 million of fed funds purchased, $39.1 million of customer repurchase agreements, $37.9 million of FHLB overnight borrowings and $5.0 million of FHLB short term borrowings.

Long term debt increased to $49.1 million for the year ended December 31, 2021, from the issuance of $50 million in 3.25% fixed – floating subordinated debt with a ten-year maturity in the third quarter of 2021. The Company contributed $25 million of additional capital to the Bank in the fourth quarter of 2021 and is utilizing the remainder of the funds for general corporate purposes, which includes repurchasing shares of common stock, among other things.

Additionally, subordinated debentures totaled $35.3 million and $35.1 million at December 31, 2021 and December 31, 2020, respectively, in the form of long-term borrowings from trust subsidiaries formed specifically to issue trust preferred securities.

The Company continues to have substantial liquidity. At December 31, 2021, and December 31, 2020, the Company had the following sources of primary and secondary liquidity ($ in thousands):

 

 

 

 

 

 

 

Primary and Secondary Liquidity Sources

 

 

December 31, 2021

 

 

December 31, 2020

Cash and due from banks

 

$

257,528

 

$

71,417

Unpledged investment securities

 

 

806,132

 

 

311,983

Excess pledged securities

 

 

47,024

 

 

52,892

FHLB borrowing availability

 

 

787,519

 

 

535,404

Unsecured lines of credit

 

 

305,000

 

 

230,000

Funds available through fed discount window

 

 

50,608

 

 

58,127

Totals

 

$

2,253,811

 

$

1,259,823

Total capital of $362.5 million at December 31, 2021 reflects an increase of $18.6 million, or 5%, relative to year-end 2020. The increase in equity during the year ended December 31, 2021 was due to the addition of $43.0 million in net income, offset by a $7.2 million unfavorable swing in accumulated other comprehensive income/loss, $13.2 million in dividends paid, and $5.2 million in share repurchases. The remaining difference is related to stock options exercised and restricted stock granted during the year.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, decreased by $4.0 million to $4.6 million for the year ended December 31, 2021. The Company's ratio of nonperforming loans to gross loans decreased to 0.23% at December 31, 2021 from 0.31% at December 31, 2020. All the Company's impaired assets are periodically reviewed and are either well-reserved based on current loss expectations or are carried at the fair value of the underlying collateral, net of expected disposition costs.

The Company's allowance for loan and lease losses was $14.3 million at December 31, 2021, as compared to a balance of $17.7 million at December 31, 2020. The allowance was 0.72% of total loans at both December 31, 2021 and December 31, 2020.

The $3.5 million decrease in the allowance for loan and lease losses during the year ended December 31, 2021, resulted from the $3.7 million benefit associated with loan and lease loss provision combined with net loan recoveries of previously charged off loan balances for $0.2 million. 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 decrease loan and lease loss provision during the fourth quarter and year ended 2021, please see the discussion above under Provision for Loan and Lease Losses.

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 December 31, 2021, 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 are not treated as troubled debt restructured loans. As of December 31, 2021, we had three remaining loans for one customer relationship totaling $10.4 million. All these loans are fully secured by real estate collateral.

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, an SBA center and a dedicated loan production office in Roseville, California. In 2021, Bank of the Sierra was recognized as one of the strongest 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

Cash and due from banks

 

$

257,528

 

 

$

422,350

 

 

$

373,902

 

 

$

346,211

 

 

$

71,417

 

Investment securities

 

 

973,314

 

 

 

732,312

 

 

 

607,474

 

 

 

552,931

 

 

 

543,974

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-4 family residential construction

 

 

21,369

 

 

 

34,720

 

 

 

37,165

 

 

 

36,818

 

 

 

48,565

 

Other construction/land

 

 

25,299

 

 

 

25,512

 

 

 

27,682

 

 

 

50,433

 

 

 

71,980

 

1-4 family - closed-end

 

 

289,457

 

 

 

220,240

 

 

 

106,599

 

 

 

126,949

 

 

 

139,836

 

Equity lines

 

 

26,588

 

 

 

31,341

 

 

 

33,334

 

 

 

36,276

 

 

 

38,075

 

Multi-family residential

 

 

53,458

 

 

 

55,628

 

 

 

58,230

 

 

 

58,324

 

 

 

61,865

 

Commercial real estate - owner occupied

 

 

334,446

 

 

 

345,116

 

 

 

359,021

 

 

 

359,777

 

 

 

343,199

 

Commercial real estate - non-owner occupied

 

 

882,888

 

 

 

995,921

 

 

 

1,048,153

 

 

 

1,071,532

 

 

 

1,062,498

 

Farmland

 

 

106,706

 

 

 

124,446

 

 

 

125,783

 

 

 

126,157

 

 

 

129,905

 

Total real estate loans

 

 

1,740,211

 

 

 

1,832,924

 

 

 

1,795,967

 

 

 

1,866,266

 

 

 

1,895,923

 

Agricultural production loans

 

 

33,990

 

 

 

43,296

 

 

 

42,952

 

 

 

45,476

 

 

 

44,872

 

Commercial & industrial

 

 

109,791

 

 

 

132,292

 

 

 

150,632

 

 

 

183,762

 

 

 

209,048

 

Mortgage warehouse lines

 

 

101,184

 

 

 

126,486

 

 

 

150,351

 

 

 

187,940

 

 

 

307,679

 

Consumer loans

 

 

4,550

 

 

 

4,828

 

 

 

4,894

 

 

 

5,024

 

 

 

5,589

 

Gross loans & leases

 

 

1,989,726

 

 

 

2,139,826

 

 

 

2,144,796

 

 

 

2,288,468

 

 

 

2,463,111

 

Deferred loan & lease fees

 

 

(1,865

)

 

 

(2,612

)

 

 

(3,835

)

 

 

(3,717

)

 

 

(3,147

)

Allowance for loan & lease losses

 

 

(14,256

)

 

 

(15,617

)

 

 

(16,421

)

 

 

(18,319

)

 

 

(17,738

)

Net loans & leases

 

 

1,973,605

 

 

 

2,121,597

 

 

 

2,124,540

 

 

 

2,266,432

 

 

 

2,442,226

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank premises & equipment

 

 

23,571

 

 

 

24,490

 

 

 

25,949

 

 

 

26,795

 

 

 

27,505

 

Other assets

 

 

142,996

 

 

 

141,990

 

 

 

140,183

 

 

 

133,668

 

 

 

135,620

 

Total assets

 

$

3,371,014

 

 

$

3,442,739

 

 

$

3,272,048

 

 

$

3,326,037

 

 

$

3,220,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES & CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest demand deposits

 

$

1,084,544

 

 

$

1,111,411

 

 

$

1,073,833

 

 

$

1,020,350

 

 

$

943,664

 

Interest-bearing transaction accounts

 

 

744,553

 

 

 

765,823

 

 

 

752,137

 

 

 

770,271

 

 

 

668,346

 

Savings deposits

 

 

450,785

 

 

 

451,248

 

 

 

435,076

 

 

 

415,230

 

 

 

368,420

 

Money market deposits

 

 

147,793

 

 

 

141,348

 

 

 

133,977

 

 

 

136,653

 

 

 

131,232

 

Customer time deposits

 

 

293,897

 

 

 

290,816

 

 

 

295,891

 

 

 

411,388

 

 

 

412,944

 

Wholesale brokered deposits

 

 

60,000

 

 

 

60,000

 

 

 

85,000

 

 

 

100,000

 

 

 

100,000

 

Total deposits

 

 

2,781,572

 

 

 

2,820,646

 

 

 

2,775,914

 

 

 

2,853,892

 

 

 

2,624,606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

49,141

 

 

 

49,221

 

 

 

-

 

 

 

-

 

 

 

-

 

Junior subordinated debentures

 

 

35,302

 

 

 

35,258

 

 

 

35,213

 

 

 

35,169

 

 

 

35,124

 

Other interest-bearing liabilities

 

 

106,937

 

 

 

92,553

 

 

 

70,535

 

 

 

56,527

 

 

 

182,038

 

Total deposits & interest-bearing liabilities

 

 

2,972,952

 

 

 

2,997,678

 

 

 

2,881,662

 

 

 

2,945,588

 

 

 

2,841,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

35,568

 

 

 

80,554

 

 

 

32,657

 

 

 

32,468

 

 

 

35,078

 

Total capital

 

 

362,494

 

 

 

364,507

 

 

 

357,729

 

 

 

347,981

 

 

 

343,896

 

Total liabilities & capital

 

$

3,371,014

 

 

$

3,442,739

 

 

$

3,272,048

 

 

$

3,326,037

 

 

$

3,220,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOODWILL & INTANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(balances in $000's, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

Goodwill

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

Core deposit intangible

 

 

3,275

 

 

 

3,527

 

 

 

3,780

 

 

 

4,038

 

 

 

4,307

 

Total intangible assets

 

$

30,632

 

 

$

30,884

 

 

$

31,137

 

 

$

31,395

 

 

$

31,664

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(balances in $000's, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

Non-accruing loans

 

$

4,522

 

 

$

6,788

 

 

$

7,276

 

 

$

8,599

 

 

$

7,598

 

Foreclosed assets

 

 

93

 

 

 

93

 

 

 

774

 

 

 

945

 

 

 

971

 

Total nonperforming assets

 

$

4,615

 

 

$

6,881

 

 

$

8,050

 

 

$

9,544

 

 

$

8,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

4,910

 

 

$

5,509

 

 

$

10,774

 

 

$

10,596

 

 

$

11,382

 

Net (recoveries) charge offs

 

$

(168

)

 

$

(329

)

 

$

(533

)

 

$

(331

)

 

$

735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due & still accruing (30-89)

 

$

2,013

 

 

$

380

 

 

$

3,197

 

 

$

2,991

 

 

$

1,656

 

Loans deferred under CARES act

 

$

10,411

 

 

$

10,411

 

 

$

10,411

 

 

$

22,437

 

 

$

29,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans to gross loans

 

 

0.23

%

 

 

0.32

%

 

 

0.34

%

 

 

0.38

%

 

 

0.31

%

NPA's to loans plus foreclosed assets

 

 

0.23

%

 

 

0.32

%

 

 

0.38

%

 

 

0.42

%

 

 

0.35

%

Allowance for loan losses to loans

 

 

0.72

%

 

 

0.73

%

 

 

0.77

%

 

 

0.80

%

 

 

0.72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECT PERIOD-END STATISTICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2021

 

 

9/30/2021

 

 

6/30/2021

 

 

3/31/2021

 

 

12/31/2020

Shareholders’ equity / total assets

 

 

10.8

%

 

 

10.6

%

 

 

10.9

%

 

 

10.5

%

 

 

10.7

%

Gross loans / deposits

 

 

71.5

%

 

 

75.9

%

 

 

77.3

%

 

 

80.2

%

 

 

93.8

%

Non-interest bearing deposits / total deposits

 

 

39.0

%

 

 

39.4

%

 

 

38.7

%

 

 

35.8

%

 

 

36.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

Qtr Ended:

 

 

Year Ended:

 

 

 

12/31/2021

 

 

9/30/2021

 

 

12/31/2020

 

 

12/31/2021

 

 

12/31/2020

Interest income

 

$

27,897

 

 

$

27,629

 

 

$

29,762

 

$

113,076

 

 

$

110,243

Interest expense

 

 

1,331

 

 

 

913

 

 

 

930

 

 

 

4,050

 

 

 

5,408

 

Net interest income

 

 

26,566

 

 

 

26,716

 

 

 

28,832

 

 

 

109,026

 

 

 

104,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Benefit) provision for loan & lease losses

 

 

(1,200

)

 

 

(600

)

 

 

2,200

 

 

 

(3,650

)

 

 

8,550

 

Net interest income after provision

 

 

27,766

 

 

 

27,316

 

 

 

26,632

 

 

 

112,676

 

 

 

96,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges

 

 

3,169

 

 

 

3,186

 

 

 

3,013

 

 

 

11,846

 

 

 

11,765

 

BOLI income

 

 

203

 

 

 

1,048

 

 

 

415

 

 

 

2,648

 

 

 

2,412

 

Gain on investments

 

 

-

 

 

 

11

 

 

 

-

 

 

 

11

 

 

 

390

 

Other noninterest income

 

 

3,730

 

 

 

3,290

 

 

 

2,611

 

 

 

13,574

 

 

 

11,583

 

Total noninterest income

 

 

7,102

 

 

 

7,535

 

 

 

6,039

 

 

 

28,079

 

 

 

26,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries & benefits

 

 

10,237

 

 

 

10,618

 

 

 

11,042

 

 

 

42,431

 

 

 

40,178

 

Occupancy expense

 

 

2,366

 

 

 

2,359

 

 

 

2,452

 

 

 

9,837

 

 

 

9,842

 

Other noninterest expenses

 

 

9,572

 

 

 

7,898

 

 

 

7,263

 

 

 

31,288

 

 

 

25,892

 

Total noninterest expense

 

 

22,175

 

 

 

20,875

 

 

 

20,757

 

 

 

83,556

 

 

 

75,912

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

12,693

 

 

 

13,976

 

 

 

11,914

 

 

 

57,199

 

 

 

46,523

 

Provision for income taxes

 

 

3,072

 

 

 

3,371

 

 

 

2,935

 

 

 

14,187

 

 

 

11,079

 

Net income

 

$

9,621

 

 

$

10,605

 

 

$

8,979

 

 

$

43,012

 

 

$

35,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TAX DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt municipal income

 

$

1,761

 

 

$

1,578

 

 

$

1,475

 

 

$

6,218

 

 

$

5,707

 

Interest income - fully tax equivalent

 

$

28,365

 

 

$

28,048

 

 

$

30,154

 

 

$

114,729

 

 

$

111,760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

Qtr Ended:

 

 

Year Ended:

 

 

 

12/31/2021

 

 

9/30/2021

 

 

12/31/2020

 

 

12/31/2021

 

 

12/31/2020

Basic earnings per share

 

$

0.63

 

 

$

0.70

 

 

$

0.59

 

 

$

2.82

 

 

$

2.33

 

Diluted earnings per share

 

$

0.63

 

 

$

0.69

 

 

$

0.58

 

 

$

2.80

 

 

$

2.32

 

Common dividends

 

$

0.22

 

 

$

0.22

 

 

$

0.20

 

 

$

0.87

 

 

$

0.80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

15,226,834

 

 

 

15,257,367

 

 

 

15,222,044

 

 

 

15,241,957

 

 

 

15,216,749

 

Weighted average diluted shares

 

 

15,297,414

 

 

 

15,343,543

 

 

 

15,456,984

 

 

 

15,353,445

 

 

 

15,280,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per basic share (EOP)

 

$

23.74

 

 

$

23.70

 

 

$

22.35

 

 

$

23.74

 

 

$

22.35

 

Tangible book value per share (EOP)

 

$

21.73

 

 

$

21.69

 

 

$

20.29

 

 

$

21.73

 

 

$

20.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (EOP)

 

 

15,270,010

 

 

 

15,382,518

 

 

 

15,388,423

 

 

 

15,270,010

 

 

 

15,388,423

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY FINANCIAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

Qtr Ended:

 

 

Year Ended:

 

 

 

12/31/2021

 

 

9/30/2021

 

 

12/31/2020

 

 

12/31/2021

 

 

12/31/2020

Return on average equity

 

 

10.47

%

 

 

11.62

%

 

 

10.49

%

 

 

12.05

%

 

 

10.80

%

Return on average assets

 

 

1.10

%

 

 

1.26

%

 

 

1.12

%

 

 

1.29

%

 

 

1.22

%

Net interest margin (tax-equivalent)

 

 

3.31

%

 

 

3.46

%

 

 

3.91

%

 

 

3.56

%

 

 

3.95

%

Efficiency ratio (tax-equivalent)¹

 

 

64.86

%

 

 

59.75

%

 

 

58.68

%

 

 

59.92

%

 

 

57.18

%

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

 

 

0.01

%

 

 

0.01

%

 

 

0.00

%

 

 

(0.01

)%

 

 

0.04

%

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

 

 

 

 

 

 

 

 

 

 

NON-GAAP FINANCIAL MEASURES

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2021

 

 

9/30/2021

 

 

12/31/2020

Total stockholders' equity

 

$

362,494

 

 

$

364,507

 

 

$

343,896

 

Less: goodwill and other intangible assets

 

 

30,632

 

 

 

30,884

 

 

 

31,664

 

Tangible common equity

 

$

331,862

 

 

$

333,623

 

 

$

312,232

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,371,014

 

 

$

3,442,739

 

 

$

3,220,742

 

Less: goodwill and other intangible assets

 

 

30,632

 

 

 

30,884

 

 

 

31,664

 

Tangible assets

 

$

3,340,382

 

 

$

3,411,855

 

 

$

3,189,078

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

15,270,010

 

 

 

15,382,518

 

 

 

15,388,423

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

23.74

 

 

23.70

 

 

22.35

 

Tangible book value per common share

 

$

21.73

 

 

$

21.69

 

 

$

20.29

 

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

 

 

10.75

%

 

 

10.59

%

 

 

10.68

%

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

 

 

9.93

%

 

 

9.78

%

 

 

9.79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME/EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

For three months ended:

 

 

For twelve months ended:

Noninterest income:

 

 

12/31/2021

 

 

9/30/2021

 

 

12/31/2020

 

 

12/31/2021

 

12/31/2020

Service charges on deposit accounts

 

$

3,169

 

 

$

3,186

 

 

$

3,013

 

 

$

11,846

 

 

$

11,765

 

Checkcard fees

 

 

2,165

 

 

 

2,192

 

 

 

1,840

 

 

 

8,485

 

 

 

7,023

 

Bank-owned life insurance

 

 

203

 

 

 

1,048

 

 

 

415

 

 

 

4,797

 

 

 

2,412

 

Other service charges and fees

 

 

992

 

 

 

708

 

 

 

871

 

 

 

2,648

 

 

 

4,084

 

Gain on sale of securities

 

 

 

 

 

11

 

 

 

 

 

 

11

 

 

 

390

 

Loss on tax credit investment

 

 

(133

)

 

 

 

 

 

(158

)

 

 

(524

)

 

 

(1,189

)

Other

 

 

706

 

 

 

390

 

 

 

58

 

 

 

816

 

 

 

1,665

 

Total noninterest income

 

$

7,102

 

 

$

7,535

 

 

$

6,039

 

 

$

28,079

 

 

$

26,150

 

As a % of average interest earning assets (1)

 

 

0.87

%

 

 

0.96

%

 

 

0.81

%

 

 

0.90

%

 

 

0.97

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

10,237

 

 

$

10,618

 

 

$

11,042

 

 

$

42,431

 

 

$

40,178

 

Occupancy costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Furniture & equipment

 

 

409

 

 

 

406

 

 

 

447

 

 

 

1,720

 

 

 

2,028

 

Premises

 

 

1,957

 

 

 

1,953

 

 

 

2,005

 

 

 

8,117

 

 

 

7,814

 

Advertising and marketing costs

 

 

539

 

 

 

370

 

 

 

539

 

 

 

1,521

 

 

 

1,889

 

Data processing costs

 

 

1,481

 

 

 

1,470

 

 

 

1,295

 

 

 

5,890

 

 

 

4,661

 

Deposit services costs

 

 

2,298

 

 

 

2,402

 

 

 

2,223

 

 

 

9,049

 

 

 

8,483

 

Loan services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan processing

 

 

158

 

 

 

109

 

 

 

228

 

 

 

501

 

 

 

880

 

Foreclosed assets

 

 

(6

)

 

 

(19

)

 

 

(170

)

 

 

72

 

 

 

253

 

Other operating costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone & data communications

 

 

431

 

 

 

534

 

 

 

456

 

 

 

2,013

 

 

 

1,775

 

Postage & mail

 

 

56

 

 

 

60

 

 

 

57

 

 

 

308

 

 

 

321

 

Other

 

 

906

 

 

 

470

 

 

 

558

 

 

 

2,176

 

 

 

1,647

 

Professional services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal & accounting

 

 

2,703

 

 

 

966

 

 

 

988

 

 

 

4,794

 

 

 

1,989

 

Other professional service

 

 

796

 

 

 

1,320

 

 

 

819

 

 

 

4,015

 

 

 

2,990

 

Stationery & supply costs

 

 

85

 

 

 

107

 

 

 

104

 

 

 

345

 

 

 

446

 

Sundry & tellers

 

 

125

 

 

 

109

 

 

 

166

 

 

 

604

 

 

 

558

 

Total noninterest expense

 

$

22,175

 

 

$

20,875

 

 

$

20,757

 

 

$

83,556

 

 

$

75,912

 

As a % of average interest earning assets (1)

 

 

2.72

%

 

 

2.66

%

 

 

2.77

%

 

 

2.69

%

 

 

2.82

%

Efficiency ratio (2)(3)

 

 

64.86

%

 

 

59.75

%

 

 

58.68

%

 

 

59.92

%

 

 

57.18

%

(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

 

 

December 31, 2021

 

September 30, 2021

 

December 31, 2020

 

 

Average

Income/

Yield/

 

Average

Income/

Yield/

 

Average

Income/

Yield/

Balance (1)

Expense

Rate (2)

Balance (1)

Expense

Rate (2)

Balance (1)

Expense

Rate (2)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold/interest-earning due from's

 

$

311,386

$

120

0.15

%

 

$

379,597

$

146

0.15

%

 

$

4,071

$

2

0.20

%

Taxable

 

 

593,959

 

2,403

1.61

%

 

 

389,524

 

1,679

1.71

%

 

 

338,554

 

1,657

1.95

%

Non-taxable

 

 

285,811

 

1,679

2.95

%

 

 

259,996

 

1,578

3.05

%

 

 

225,583

 

1,461

3.26

%

Total investments

 

 

1,191,156

 

4,202

1.55

%

 

 

1,029,117

 

3,403

1.47

%

 

 

568,208

 

3,120

2.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and Leases: (3)

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

1,794,285

 

20,864

4.61

%

 

 

1,775,611

 

20,805

4.65

%

 

 

1,866,418

 

21,629

4.61

%

Agricultural Production

 

 

38,191

 

361

3.75

%

 

 

43,243

 

410

3.76

%

 

 

45,143

 

418

3.68

%

Commercial

 

 

118,159

 

1,457

4.89

%

 

 

140,105

 

1,796

5.09

%

 

 

213,725

 

2,077

3.87

%

Consumer

 

 

4,720

 

237

19.92

%

 

 

4,862

 

205

16.73

%

 

 

5,873

 

239

16.19

%

Mortgage warehouse lines

 

 

90,736

 

747

3.27

%

 

 

118,036

 

982

3.30

%

 

 

270,401

 

2,250

3.31

%

Other

 

 

1,430

 

29

8.05

%

 

 

1,463

 

28

7.59

%

 

 

1,617

 

29

7.13

%

Total loans and leases

 

 

2,047,521

 

23,695

4.59

%

 

 

2,083,320

 

24,226

4.61

%

 

 

2,403,177

 

26,642

4.41

%

Total interest earning assets (4)

 

 

3,238,677

 

27,897

3.47

%

 

 

3,112,437

 

27,629

3.58

%

 

 

2,971,385

 

29,762

4.04

%

Other earning assets

 

 

21,425

 

 

 

 

15,713

 

 

 

 

20,092

 

 

Non-earning assets

 

 

206,344

 

 

 

 

212,116

 

 

 

 

202,996

 

 

Total assets

 

$

3,466,446

 

 

 

$

3,340,266

 

 

 

$

3,194,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

131,810

$

80

0.24

%

 

$

148,175

$

86

0.23

%

 

$

123,717

$

69

0.22

%

NOW

 

 

615,245

 

112

0.07

%

 

 

605,620

 

115

0.08

%

 

 

536,127

 

93

0.07

%

Savings accounts

 

 

451,369

 

65

0.06

%

 

 

443,406

 

63

0.06

%

 

 

366,080

 

52

0.06

%

Money market

 

 

146,174

 

25

0.07

%

 

 

139,433

 

26

0.07

%

 

 

129,536

 

27

0.08

%

Time Deposits

 

 

291,516

 

241

0.33

%

 

 

293,379

 

248

0.31

%

 

 

416,069

 

310

0.30

%

Wholesale Brokered Deposits

 

 

60,000

 

49

0.32

%

 

 

72,283

 

53

0.29

%

 

 

53,750

 

28

0.21

%

Total interest bearing deposits

 

 

1,696,114

 

572

0.13

%

 

 

1,702,296

 

591

0.14

%

 

 

1,625,279

 

579

0.14

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

Other Interest-Bearing Liabilities

 

 

98,326

 

86

0.35

%

 

 

79,132

 

41

0.21

%

 

 

175,025

 

98

 

Long-Term Debt

 

 

49,156

 

430

3.47

%

 

 

3,812

 

38

3.95

%

 

 

 

 

Subordinated Debentures

 

 

35,276

 

243

2.73

%

 

 

35,229

 

243

2.74

%

 

 

35,098

 

253

2.87

%

Total borrowed funds

 

 

147,482

 

516

1.65

%

 

 

118,173

 

322

1.08

%

 

 

210,123

 

351

0.66

%

Total interest bearing liabilities

 

 

1,878,872

 

1,331

0.28

%

 

 

1,820,469

 

913

0.20

%

 

 

1,835,402

 

930

0.20

%

Demand deposits - Noninterest bearing

 

 

1,120,323

 

 

 

 

1,104,506

 

 

 

 

979,593

 

 

Other liabilities

 

 

102,838

 

 

 

 

53,134

 

 

 

 

39,106

 

 

Shareholders' equity

 

 

364,413

 

 

 

 

362,157

 

 

 

 

340,372

 

 

Total liabilities and shareholders' equity

 

$

3,466,446

 

 

 

$

3,340,266

 

 

 

$

3,194,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

3.47

%

 

 

 

3.58

%

 

 

 

4.04

%

Interest expense/interest earning assets

 

 

 

0.16

%

 

 

 

0.12

%

 

 

 

0.13

%

Net interest income and margin (5)

 

 

$

26,566

3.31

%

 

 

$

26,716

3.46

%

 

 

$

28,832

3.91

%

(1)

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

(2)

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

(3)

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $0.8 million and $1.0 million for the quarters ended December 31, 2021 and 2020, respectively, and $1.0 million for the quarter ended September 30, 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES AND RATES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

2021

 

2020

 

2019

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

Assets

 

Balance(1)

 

Expense

 

Rate(2)

 

Balance(1)

 

Expense

 

Rate(2)

 

Balance(1)

 

Expense

 

Rate(2)

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold/due from banks

 

$

269,919

 

$

370

 

0.14

%

 

$

25,228

 

$

156

 

0.62

%

 

$

16,346

 

$

376

 

2.30

%

Taxable

 

 

406,790

 

 

7,239

 

1.78

%

 

 

379,024

 

 

8,199

 

2.16

%

 

 

423,453

 

 

10,139

 

2.39

%

Non-taxable

 

 

258,472

 

 

6,218

 

3.05

%

 

 

216,387

 

 

5,707

 

3.34

%

 

 

160,787

 

 

4,534

 

3.57

%

Total investments

 

 

935,181

 

 

13,827

 

1.66

%

 

 

620,639

 

 

14,062

 

2.51

%

 

 

600,586

 

 

15,049

 

2.71

%

Loans and Leases: (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

1,818,362

 

 

84,074

 

4.62

%

 

 

1,610,686

 

 

79,175

 

4.92

%

 

 

1,440,465

 

 

79,777

 

5.54

%

Agricultural

 

 

42,866

 

 

1,598

 

3.73

%

 

 

47,299

 

 

1,887

 

3.99

%

 

 

50,042

 

 

2,973

 

5.94

%

Commercial

 

 

153,880

 

 

7,828

 

5.09

%

 

 

179,924

 

 

6,738

 

3.74

%

 

 

117,679

 

 

5,918

 

5.03

%

Consumer

 

 

4,993

 

 

831

 

16.64

%

 

 

6,584

 

 

1,069

 

16.24

%

 

 

8,497

 

 

1,340

 

15.77

%

Mortgage warehouse

 

 

147,996

 

 

4,807

 

3.25

%

 

 

221,319

 

 

7,135

 

3.22

%

 

 

134,171

 

 

5,695

 

4.24

%

Other

 

 

1,485

 

 

111

 

7.47

%

 

 

2,878

 

 

177

 

6.15

%

 

 

2,894

 

 

195

 

6.74

%

Total loans and leases

 

 

2,169,582

 

 

99,249

 

4.57

%

 

 

2,068,690

 

 

96,181

 

4.65

%

 

 

1,753,748

 

 

95,898

 

5.47

%

Total interest earning assets (4)

 

 

3,104,763

 

 

113,076

 

3.70

%

 

 

2,689,329

 

 

110,243

 

4.16

%

 

 

2,354,334

 

 

110,947

 

4.76

%

Other earning assets

 

 

15,043

 

 

 

 

 

 

 

13,103

 

 

 

 

 

 

 

12,421

 

 

 

 

 

Non-earning assets

 

 

208,678

 

 

 

 

 

 

 

207,590

 

 

 

 

 

 

 

202,810

 

 

 

 

 

Total assets

 

$

3,328,484

 

 

 

 

 

 

$

2,910,022

 

 

 

 

 

 

$

2,569,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

143,171

 

$

331

 

0.23

%

 

$

121,867

 

$

278

 

0.23

%

 

$

106,849

 

$

316

 

0.30

%

NOW

 

 

597,992

 

 

444

 

0.07

%

 

 

497,984

 

 

388

 

0.08

%

 

 

444,619

 

 

524

 

0.12

%

Savings accounts

 

 

427,803

 

 

240

 

0.06

%

 

 

336,620

 

 

221

 

0.07

%

 

 

289,727

 

 

308

 

0.11

%

Money market

 

 

140,365

 

 

111

 

0.08

%

 

 

124,755

 

 

128

 

0.10

%

 

 

124,625

 

 

181

 

0.15

%

Certificates of deposit<$100,000

 

 

70,692

 

 

190

 

0.27

%

 

 

77,119

 

 

326

 

0.42

%

 

 

88,792

 

 

1,035

 

1.17

%

Certificates of deposit>$100,000

 

 

262,512

 

 

849

 

0.32

%

 

 

359,687

 

 

2,361

 

0.66

%

 

 

396,465

 

 

7,896

 

1.99

%

Brokered deposits

 

 

81,041

 

 

225

 

0.28

%

 

 

36,071

 

 

246

 

0.68

%

 

 

48,392

 

 

1,120

 

2.31

%

Total interest bearing deposits

 

 

1,723,576

 

 

2,390

 

0.14

%

 

 

1,554,103

 

 

3,948

 

0.25

%

 

 

1,499,469

 

 

11,380

 

0.76

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds purchased

 

 

1,561

 

 

1

 

0.06

%

 

 

1,918

 

 

4

 

0.21

%

 

 

313

 

 

1

 

0.32

%

Repurchase agreements

 

 

70,443

 

 

210

 

0.30

%

 

 

34,614

 

 

137

 

0.40

%

 

 

22,090

 

 

88

 

0.40

%

Short term borrowings

 

 

3,625

 

 

2

 

0.06

%

 

 

54,244

 

 

102

 

0.19

%

 

 

13,229

 

 

273

 

2.06

%

Long term debt

 

 

13,351

 

 

468

 

3.51

%

 

 

 

 

 

 

 

 

 

 

 

 

TRUPS

 

 

35,208

 

 

979

 

2.78

%

 

 

35,031

 

 

1,217

 

3.47

%

 

 

34,853

 

 

1,836

 

5.27

%

Total borrowed funds

 

 

124,188

 

 

1,660

 

1.34

%

 

 

125,807

 

 

1,460

 

1.16

%

 

 

70,485

 

 

2,198

 

3.12

%

Total interest bearing liabilities

 

 

1,847,764

 

 

4,050

 

0.22

%

 

 

1,679,910

 

 

5,408

 

0.32

%

 

 

1,569,954

 

 

13,578

 

0.86

%

Noninterest bearing demand deposits

 

 

1,064,119

 

 

 

 

 

 

 

862,274

 

 

 

 

 

 

 

664,061

 

 

 

 

 

Other liabilities

 

 

59,723

 

 

 

 

 

 

 

39,510

 

 

 

 

 

 

 

41,563

 

 

 

 

 

Shareholders' equity

 

 

356,878

 

 

 

 

 

 

 

328,328

 

 

 

 

 

 

 

293,987

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

3,328,484

 

 

 

 

 

 

$

2,910,022

 

 

 

 

 

 

$

2,569,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

 

 

 

 

3.70

%

 

 

 

 

 

 

 

4.15

%

 

 

 

 

 

 

 

4.76

%

Interest expense/interest earning assets

 

 

 

 

 

 

 

0.14

%

 

 

 

 

 

 

 

0.20

%

 

 

 

 

 

 

 

0.58

%

Net interest income and margin(5)

 

 

 

 

$

109,026

 

3.56

%

 

 

 

 

$

104,835

 

3.95

%

 

 

 

 

$

97,369

 

4.19

%

(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.

(3)

Loans are gross of the allowance for possible loan losses. Net loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $4.2 million, $1.9 million, and $(0.4) million for the years ended December 31, 2021, 2020, and 2019 respectively.

(4)

Non-accrual loans are slotted by loan type and have been included in total loans for purposes of total interest earning assets.

(5)

Net interest margin represents net interest income as a percentage of average interest-earning assets (tax-equivalent).

Category: Financial Source: Sierra Bancorp

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

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