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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sierra Bancorp | NASDAQ:BSRR | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 19.82 | 7.93 | 21.96 | 0 | 09:09:39 |
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)
Year to-Date Changes (comparisons to the year ended 2020)
Balance Sheet Changes (comparisons to December 31, 2020)
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:
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
View source version on businesswire.com: https://www.businesswire.com/news/home/20220124005121/en/
Kevin McPhaill, President/CEO (559) 782‑4900 or (888) 454‑BANK www.sierrabancorp.com
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