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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.31 | 1.50% | 20.92 | 8.36 | 22.80 | 21.00 | 20.61 | 20.66 | 21,596 | 22:30:00 |
Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the three- and six-month periods ended June 30, 2021. Sierra Bancorp reported consolidated net income of $11.7 million, or $0.76 per diluted share, for the second quarter of 2021, compared to $8.3 million, or $0.54 per diluted share, in the second quarter of 2020.
For the first six months of 2021, the Company recognized net income of $22.8 million as compared to $16.1 million for the same period in 2020. The Company's financial performance metrics for the first half of 2021 include an annualized return on average equity of 13.11%, a return on average assets of 1.41%, and diluted earnings per share of $1.48.
“We are pleased to report another quarter of record earnings!” stated Kevin McPhaill, President and CEO. “Our strong results in the second quarter of 2021 are thanks to the continued hard work and persistence of our banking team. While we anticipate headwinds during the second half of this year due to historically low interest rates and competitive pressures, our core earnings engine remains strong, and our team is committed to meeting these challenges. We will continue to look for additional opportunities and we are excited about the future of Bank of the Sierra!” McPhaill concluded.
Financial Highlights
Quarterly Changes (comparisons to the second quarter of 2020)
Year to-Date Changes (comparisons to the first six-months of 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)
As of or for the
As of or for the
three months ended
six months ended
6/30/2021
3/31/2021
6/30/2020
6/30/2021
6/30/2020
Net income
$
11,708
$
11,078
$
8,303
$
22,786
$
16,110
Diluted earnings per share
$
0.76
$
0.72
$
0.54
$
1.48
$
1.05
Return on average assets
1.42
%
1.40
%
1.19
%
1.41
%
1.21
%
Return on average equity
13.29
%
12.94
%
10.30
%
13.11
%
10.14
%
Net interest margin (tax-equivalent)
3.60
%
3.93
%
3.81
%
3.76
%
3.97
%
Yield on average loans and leases
4.57
%
4.53
%
4.56
%
4.55
%
4.86
%
Cost of average total deposits
0.09
%
0.09
%
0.15
%
0.09
%
0.24
%
Efficiency ratio (tax-equivalent)¹
58.79
%
56.43
%
57.78
%
57.57
%
58.33
%
Total assets
$
3,272,048
$
3,326,037
$
3,110,044
$
3,272,048
$
3,110,044
Loans & leases net of deferred fees
$
2,140,961
$
2,284,751
$
2,209,480
$
2,140,961
$
2,209,480
Noninterest demand deposits
$
1,073,833
$
1,020,350
$
949,662
$
1,073,833
$
949,662
Total deposits
$
2,775,914
$
2,853,892
$
2,506,754
$
2,775,914
$
2,506,754
Noninterest-bearing deposits over total deposits
38.7
%
35.8
%
37.9
%
38.7
%
37.9
%
Shareholders equity / total assets
10.9
%
10.5
%
10.5
%
10.9
%
10.5
%
Tangible common equity ratio
10.1
%
9.6
%
9.6
%
10.1
%
9.6
%
Book value per share
$
23.21
$
22.58
$
21.55
$
23.21
$
21.55
Tangible book value per share
$
21.19
$
20.54
$
19.43
$
21.19
$
19.43
(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 $27.2 million for the second quarter of 2021, a $3.0 million increase, or 13% over the second quarter of 2020, and increased $7.8 million, or 16% to $55.7 million for the first six months of 2021 relative to the same period in 2020.
For the second quarter of 2021, growth in average interest-earning assets totaled $491.8 million, or 19%, as compared to the second quarter of 2020. The yield on these balances was 29 basis points lower for the same period due mostly to a shift in the mix of earning assets to lower yielding assets and a decline in investment yields. This decrease in yield was partially offset by an 11 basis point drop in the cost of our interest-bearing liabilities for the same period.
Net interest income for the comparative year-to-date periods increased due to a $565.0 million, or 23%, growth in average interest-earning assets. The yield on these average balances was 37 basis points lower for the same period, but was partially offset by a 25 basis point drop in interest paid on liabilities. The net impact of this lower rate was a 21 basis point decrease in our net interest margin for the six-months ending June 30, 2021 as compared to the same period in 2020.
Loan income during the second quarter of 2021 included $1.0 million related to fee income, net of origination costs, recognized on Small Business Administration Paycheck Protection Program (“SBA PPP”) loans. Similarly, SBA PPP loan fees, net of origination costs of $2.4 million were recognized for the six months ended June 30, 2021. At June 30, 2021, approximately $2.4 million of unearned fees, net of origination costs related to SBA PPP loans remains on the balance sheet.
Interest expense was $0.9 million for the second quarter of 2021, a decline of $0.3 million, or 27%, relative to the second quarter of 2020. For the first six months of 2021, compared to the first six months of 2020, interest expense declined $1.7 million, or 49%, to $1.8 million. The significant decline in interest expense is attributable to a favorable shift in deposit mix as higher cost time deposits declined by $62.7 million, or 14%, in the second quarter of 2021 as compared to the second quarter of 2020, and fell by $132.1 million, or 26%, compared to the fourth quarter of 2020, while lower or no cost transaction and savings accounts increased $323.3 million, or 17%, for the second quarter of 2021 compared to the same period in 2020 and increased by $280.6 million, or 14%, over the fourth quarter of 2020.
Our net interest margin was primarily impacted by the additional liquidity from significant deposit growth in 2021 coupled with lower loan balances. This additional liquidity was mostly deployed in overnight funding at an average rate of 11 basis points for the second quarter and six-months ending June 30, 2021. Discount accretion on loans from whole-bank acquisitions enhanced our net interest margin by two basis points in the second quarter of 2021 compared to one basis point in the second quarter of 2020, and by two basis points for the first half of 2021 and for the same period in 2020. On June 30, 2021, the remaining balance of loan discount available to be accreted was $2.8 million. In addition, investment yields have continued to decline given the overall rate environment in 2021. The overall impact of a lower net interest margin was more than offset by higher earning assets in 2021 as compared to 2020.
Provision for Loan and Lease Losses
The Company recorded a net benefit related to loan and lease loss provision of $2.1 million in the second quarter of 2021 relative to a loan and lease loss provision expense of $2.2 million in the second quarter of 2020, and a year-to-date net benefit for loan and lease loss provision of $1.9 million in 2021 as compared to $4.0 million loan and lease loss provision expense for the same period in 2020. The Company's $4.3 million, or 195%, favorable decline in provision for loan and lease losses in the second quarter of 2021 as compared to the second quarter of 2020, and the $5.9 million favorable decrease, or 146%, in the first six months of 2021 compared to the same period in 2020 is due mostly to lower historical loan loss rates, lower average balances on loans, net recoveries of previously charged-off loan balances, and changes to qualitative factors. 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, enhancements in the quality of the Company’s loan review system, and a reduction in the level of concentrations of credit in non-owner occupied real estate loans.
The Company was subject to the adoption in the first quarter of 2020 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). Prior to the close of the first quarter of 2020, the Company elected under Section 4014 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to defer the implementation of CECL until the earlier of when the national emergency related to the outbreak of COVID-19 ends or December 31, 2020. Later in 2020, the Consolidated Appropriations Act, 2021 extended the deferral of implementation of CECL to the earlier of the first day of the fiscal year, beginning after the national emergency terminates or January 1, 2022. The Company’s decision to defer the adoption of CECL was done primarily to provide additional time to assess better the impact of the COVID-19 pandemic on the expected lifetime credit losses. At the time the decision was made, there was a significant change in economic uncertainty on the local, regional, and national levels as a result of local and state stay-at-home orders, as well as relief measures provided at a national, state, and local level. Further, the Company has taken actions to serve our communities during the pandemic, including permitting short-term payment deferrals to current customers, as well as originating bridge loans and SBA PPP loans.
Noninterest Income
Total noninterest income decreased by $0.3 million, or 4%, for the quarter ended June 30, 2021 as compared to the same quarter in 2020 and increased $0.4 million, or 3%, for the comparable year-to-date periods. The quarterly and year-to-date comparison includes a $0.7 million non-recurring gain resulting from the wrap-up of a low-income housing tax credit fund investment and a $0.4 million gain from the sale of debt securities which occurred in the second quarter of 2020. The year-to-date comparison also reflects a $0.7 million favorable swing in bank-owned life insurance (BOLI) income, resulting from fluctuations in income on BOLI associated with deferred compensation plans and a $0.4 million favorable increase in the valuation of equity securities.
Service charges on customer deposit account income increased by $0.1 million, or 4%, to $2.7 million in the second quarter of 2021 as compared to the second quarter of 2020. This service charge income was $0.3 million lower, or 5%, in the first six months of 2021, as compared to the same period in 2020. These declines in the year-to-date comparison are primarily a result of a net decline in overdraft income partially offset by higher interchange income on debit cards.
Noninterest Expense
Total noninterest expense increased by $2.2 million, or 12%, in the second quarter of 2021 relative to the second quarter of 2020, and by $4.7 million, or 13%, in the first six months of 2021 as compared to the first six months of 2020.
Salaries and Benefits were $1.2 million, or 13%, higher in the second quarter of 2021 as compared to the second quarter of 2020 and $2.1 million, or 11% higher for the first six months of 2021 compared to the same period in 2020. The reason for this increase is primarily due to lower salary expense deferrals related to the decrease in loan originations for both the quarterly and year-to-date comparisons.
Occupancy expenses were $0.1 million higher for the second quarter of 2021 as compared to the same quarter in 2020 and $0.3 million higher for the first half of 2021 as compared to the first half of 2020. The primary reason for this increase was an acceleration of leasehold improvement amortization for two leased branch facilities that were closed during the second quarter. See the discussion of branch closures below.
Other noninterest expense increased $0.9 million, or 15%, for the second quarter 2021 as compared to the second quarter in 2020, and increased $2.2 million, or 19%, for the first half of 2021 as compared to the same period in 2020. The variance for second quarter of 2021 compared to the same period in 2020 was driven an increase of $0.5 million or 45% in data processing costs, due mostly to increases in core processor costs, price increases in loan processing software and additional software to compliment the Company’s digital strategy. We also experienced a $0.2 million increase in data communication costs, a $0.3 million increase in legal costs and a $0.3 million increase in other professional services costs. Other professional services variances include a $0.1 million increase in FDIC assessments, and a $0.1 million increase in deferred compensation expense for directors, which is linked to the changes in BOLI income. For the year-over-year comparison the categories of increase were the same as with the quarterly comparison, along with a $0.4 million increase in check-card processing costs.
The Company's provision for income taxes was 25.3% of pre-tax income in the second quarter of 2021 relative to 23.2% in the second quarter of 2020, and 25.4% of pre-tax income for the first half of 2021 relative to 23.6% for the same period in 2020. The increase in effective tax rate in the second quarter of 2021 is due to tax credits and tax-exempt income representing a smaller percentage of total taxable income.
As a result of the COVID-19 pandemic, several of our branch lobbies were fully or partially closed throughout the pandemic. All of these branch lobbies have reopened, except for five locations that the Company decided to permanently close in June 2021. This decision to close these branches was made as a result of a change in customer behaviors brought about by the COVID-19 pandemic along with an efficiency review. All of the five closed locations were located outside of the Bank’s primary market area. Customers affected by these branch closures were notified. Many of our customers have found an added convenience and ease of transacting business through online and mobile banking services which precipitated our decision to close locations where in-person transaction volumes no longer warranted a traditional brick-and-mortar branch. The acceleration of amortization of leasehold improvements for these locations increased depreciation expense by $0.4 million in the second quarter of 2021 and by $0.5 million year-to-date 2021. Most of the staff at these five locations were re-located to existing branches with position vacancies, however four individuals elected to leave the Company. It is projected that closing these five branch locations will result in annual noninterest expense savings of between $0.8 and $1.0 million.
Balance Sheet Summary
Balance sheet changes during the first half of 2021 include an increase in total assets of $51.3 million, or 2%, primarily a result of a $302.5 million increase in cash and due from banks, and an increase of $63.5 million, or 12%, in investment securities, net of a $317.7 million decrease in net loan balances.
The decrease in gross loan balances as compared to December 31, 2020 was primarily a result of a $157.3 million decline in mortgage warehouse line utilization. In addition, there was a net decrease of $100.0 million in real estate secured loans, primarily from construction and other commercial real estate loans as the Company strategically lowered its regulatory commercial real estate concentration ratio from 378% at December 31, 2020 to 335% at June 30, 2021. Further, SBA PPP loan forgiveness resulted in a $49.0 million decline in loan balances. The loan pipeline at June 30, 2021 continues to improve as compared to the past two quarters.
Unused commitments, excluding mortgage warehouse and consumer overdraft lines, were $224.8 million at June 30, 2021, compared to $260.0 million at December 31, 2020. Total line utilization, excluding mortgage warehouse and consumer overdraft lines, was 56% at June 30, 2021 and 57% at December 31, 2020. Mortgage warehouse utilization declined significantly to 43% at June 30, 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 943 loans for $68.0 million outstanding at June 30, 2021, compared to 1,274 loans for $117.2 million at December 31, 2020. During the second quarter of 2021, the Bank originated, and the SBA approved, funding for $16.1 million in SBA PPP loans while the SBA forgave $45.5 million of SBA PPP loans.
Deposit balances reflect growth of $151.3 million, or 6%, during the first six months of 2021. Core non-maturity deposits increased by $283.4 million, or 13%, while customer time deposits decreased by $117.1 million, or 28%. Wholesale brokered deposits decreased by $15.0 million to $85.0 million. Overall noninterest-bearing deposits as a percent of total deposits at June 30, 2021, increased to 38.7%, as compared to 36.0% at December 31, 2020. Other interest-bearing liabilities of $70.5 million on June 30, 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.
The Company continues to have substantial liquidity. At June 30, 2021, and December 31, 2020, the Company had the following sources of primary and secondary liquidity (Dollars in Thousands):
Primary and secondary liquidity sources
June 30, 2021
December 31, 2020
Cash and cash equivalents
$
373,902
$
71,417
Unpledged investment securities
482,039
311,983
Excess pledged securities
44,262
52,892
FHLB borrowing availability
662,641
535,404
Unsecured lines of credit
305,000
230,000
Funds available through fed discount window
62,897
58,127
Totals
$
1,930,741
$
1,259,823
Total capital of $357.7 million at June 30, 2021 reflects an increase of $13.8 million, or 4%, relative to year-end 2020. The increase in equity during the first half of 2021 was due to the addition of $22.8 million in net income, offset by a $3.0 million unfavorable swing in accumulated other comprehensive income/loss, and net of $6.5 million in dividends paid. The remaining difference is related to stock options exercised during the quarter. The Company executed no share repurchases during the first half of 2021.
Asset Quality
Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, decreased by $0.5 million to $8.1 million for the first half of 2021. The Company's ratio of nonperforming loans to gross loans increased to 0.34% at June 30, 2021 from 0.31% at December 31, 2020; this was due to a decrease in the gross loan and lease portfolio, since nonperforming loans decreased $0.3 million during the same period. All of 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 $16.4 million at June 30, 2021, as compared to a balance of $17.7 million at December 31, 2020 and $13.6 million at June 30, 2020. The allowance was 0.77% of total loans at June 30, 2021, and 0.72% at December 31, 2020 and 0.61% at June 30, 2020.
The $1.3 million decrease in the allowance for loan and lease losses during the first half of the year resulted from the $1.9 million benefit associated with loan and lease loss provision combined with net loan recoveries of previously charged off loan balances for $0.5 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 in loan and lease loss provision during the second quarter and first half of 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 June 30, 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 June 30, 2021, we had three remaining loans for two customer relationships totaling $10.4 million. All of these loans are fully secured by real estate collateral. We expect all customers to show an ability and willingness to pay full principal and interest payments upon maturity of their deferment periods.
About Sierra Bancorp
Sierra Bancorp is the holding company for Bank of the Sierra (www.bankofthesierra.com), which is in its 44th 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 and top-performing community banks in the country, with a 5‑star rating from Bauer Financial.
Forward-Looking Statements
The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties including but not limited to the health of the national and local economies, the Company's ability to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully deploy new technology, the success of acquisitions and branch expansion, changes in interest rates, loan portfolio performance, and other factors detailed in the Company's SEC filings, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Form 10‑K and Form 10‑Q.
STATEMENT OF CONDITION
(Dollars in Thousands, Unaudited)
ASSETS
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
Cash and due from banks
$
373,902
$
346,211
$
71,417
$
88,933
$
156,611
Investment securities
607,474
552,931
543,974
577,278
599,333
Real estate loans
1-4 family residential construction
37,165
36,818
48,565
75,532
89,225
Other construction/land
27,682
50,433
71,980
83,797
90,545
1-4 family - closed-end
106,599
126,949
139,836
162,022
178,071
Equity lines
33,334
36,276
38,075
38,620
44,318
Multi-family residential
58,230
58,324
61,865
61,740
55,921
Commercial real estate - owner occupied
359,021
359,777
343,199
328,832
313,863
Commercial real estate - non-owner occupied
1,048,153
1,071,532
1,062,498
945,374
691,292
Farmland
125,783
126,157
129,905
127,964
134,454
Total real estate loans
1,795,967
1,866,266
1,895,923
1,823,881
1,597,689
Agricultural production loans
42,952
45,476
44,872
45,782
48,516
Commercial and industrial
150,632
183,762
209,048
217,224
221,502
Mortgage warehouse lines
150,351
187,940
307,679
287,516
338,124
Consumer loans
4,894
5,024
5,589
5,897
6,266
Gross loans and leases
2,144,796
2,288,468
2,463,111
2,380,300
2,212,097
Deferred loan and lease fees
(3,835
)
(3,717
)
(3,147
)
(3,078
)
(2,617
)
Allowance for loan and lease losses
(16,421
)
(18,319
)
(17,738
)
(15,586
)
(13,560
)
Net loans and leases
2,124,540
2,266,432
2,442,226
2,361,636
2,195,920
Bank premises and equipment
25,949
26,795
27,505
27,216
27,779
Other assets
140,183
133,668
135,620
144,555
130,401
Total assets
$
3,272,048
$
3,326,037
$
3,220,742
$
3,199,618
$
3,110,044
LIABILITIES AND CAPITAL
Noninterest demand deposits
$
1,073,833
$
1,020,350
$
943,664
$
975,750
$
949,662
Interest-bearing transaction accounts
752,137
770,271
668,346
656,922
641,815
Savings deposits
435,076
415,230
368,420
361,857
346,262
Money market deposits
133,977
136,653
131,232
126,918
125,420
Customer time deposits
295,891
411,388
412,944
420,266
433,595
Wholesale brokered deposits
85,000
100,000
100,000
50,000
10,000
Total deposits
2,775,914
2,853,892
2,624,606
2,591,713
2,506,754
Junior subordinated debentures
35,213
35,169
35,124
35,079
35,035
Other interest-bearing liabilities
70,535
56,527
182,038
194,657
204,449
Total deposits and interest-bearing liabilities
2,881,662
2,945,588
2,841,768
2,821,449
2,746,238
Other liabilities
32,657
32,468
35,078
41,922
36,373
Total capital
357,729
347,981
343,896
336,247
327,433
Total liabilities and capital
$
3,272,048
$
3,326,037
$
3,220,742
$
3,199,618
$
3,110,044
GOODWILL AND INTANGIBLE ASSETS
(Dollars in Thousands, Unaudited)
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
Goodwill
$
27,357
$
27,357
$
27,357
$
27,357
$
27,357
Core deposit intangible
3,780
4,038
4,307
4,575
4,844
Total intangible assets
$
31,137
$
31,395
$
31,664
$
31,932
$
32,201
CREDIT QUALITY
(Dollars in Thousands, Unaudited)
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
Non-accruing loans
$
7,276
$
8,599
$
7,598
$
7,186
$
5,808
Foreclosed assets
774
945
971
2,970
2,893
Total nonperforming assets
$
8,050
$
9,544
$
8,569
$
10,156
$
8,701
Performing TDR's (not included in NPA's)
$
10,774
$
10,596
$
11,382
$
7,708
$
9,192
Net (recoveries) / charge offs
$
(533
)
$
(331
)
$
735
$
687
$
363
Past due & still accruing (30-89)
$
3,197
$
2,991
$
1,656
$
7,201
$
2,333
Loans deferred under CARES Act
$
10,411
$
22,437
$
29,500
$
405,858
$
386,243
Non-performing loans to gross loans
0.34
%
0.38
%
0.31
%
0.30
%
0.26
%
NPA's to loans plus foreclosed assets
0.38
%
0.42
%
0.35
%
0.43
%
0.39
%
Allowance for loan and lease losses to loans
0.77
%
0.80
%
0.72
%
0.65
%
0.61
%
SELECT PERIOD-END STATISTICS
(Unaudited)
6/30/2021
3/31/2021
12/31/2020
9/30/2020
6/30/2020
Shareholders equity / total assets
10.9
%
10.5
%
10.7
%
10.5
%
10.5
%
Gross loans / deposits
77.3
%
80.2
%
93.8
%
91.8
%
88.2
%
Non-interest bearing deposits / total deposits
38.7
%
35.8
%
36.0
%
37.6
%
37.9
%
CONSOLIDATED INCOME STATEMENT
(Dollars in Thousands, Unaudited)
For the three months ended:
For the six months ended:
6/30/2021
3/31/2021
6/30/2020
6/30/2021
6/30/2020
Interest income
$
28,092
$
29,458
$
25,385
$
57,550
$
51,437
Interest expense
903
903
1,243
1,806
3,508
Net interest income
27,189
28,555
24,142
55,744
47,929
(Benefit) / provision for loan and lease losses
(2,100
)
250
2,200
(1,850
)
4,000
Net interest income after provision
29,289
28,305
21,942
57,594
43,929
Service charges
2,725
2,767
2,618
5,491
5,802
BOLI income
814
583
649
1,397
687
Other noninterest income
3,073
3,480
3,243
6,554
6,128
Total noninterest income
6,612
6,830
6,900
13,442
13,007
Salaries and benefits
10,425
11,151
9,266
21,576
19,438
Occupancy expense
2,626
2,486
2,504
5,112
4,832
Other noninterest expenses
7,184
6,634
6,263
13,818
11,581
Total noninterest expense
20,235
20,271
18,033
40,506
35,851
Income before taxes
15,666
14,864
10,809
30,530
21,085
Provision for income taxes
3,958
3,786
2,506
7,744
4,975
Net income
$
11,708
$
11,078
$
8,303
$
22,786
$
16,110
TAX DATA
Tax-exempt muni income
$
1,517
$
1,449
$
1,440
$
2,967
$
2,778
Interest income - fully tax equivalent
$
28,495
$
29,843
$
25,768
$
58,339
$
52,175
PER SHARE DATA
(Unaudited)
For the three months ended:
For the six months ended:
6/30/2021
3/31/2021
6/30/2020
6/30/2021
6/30/2020
Basic earnings per share
$
0.77
$
0.73
$
0.55
$
1.49
$
1.06
Diluted earnings per share
$
0.76
$
0.72
$
0.54
$
1.48
$
1.05
Common dividends
$
0.21
$
0.21
$
0.20
$
0.42
$
0.40
Weighted average shares outstanding
15,243,698
15,223,010
15,191,823
15,242,451
15,226,748
Weighted average diluted shares
15,375,825
15,337,710
15,237,655
15,365,966
15,288,009
Book value per basic share (EOP)
$
23.21
$
22.58
$
21.55
$
23.21
$
21.55
Tangible book value per share (EOP)
$
21.19
$
20.54
$
19.43
$
21.19
$
19.43
Common shares outstanding (EOP)
15,410,763
15,410,763
15,192,838
15,410,763
15,192,838
KEY FINANCIAL RATIOS
(Unaudited)
For the three months ended:
For the six months ended:
6/30/2021
3/31/2021
6/30/2020
6/30/2021
6/30/2020
Return on average equity
13.29
%
12.94
%
10.30
%
13.11
%
10.14
%
Return on average assets
1.42
%
1.40
%
1.19
%
1.41
%
1.21
%
Net interest margin (tax-equivalent)
3.60
%
3.93
%
3.81
%
3.76
%
3.97
%
Efficiency ratio (tax-equivalent)¹
58.79
%
56.43
%
57.78
%
57.57
%
58.33
%
Net (recoveries) charge offs to avg loans (not annualized)
(0.01
)%
(0.01
)%
0.00
%
(0.02
)%
0.02
%
(1) Noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities
NONINTEREST INCOME/EXPENSE
(Dollars in Thousands, Unaudited)
For the three months ended:
For the six months ended:
Noninterest income:
6/30/2021
3/31/2021
6/30/2020
6/30/2021
6/30/2020
Service charges on deposit accounts
$
2,725
$
2,767
$
2,618
$
5,491
$
5,802
Other service charges and fees
3,050
2,560
2,503
5,611
4,907
Net gains on sale of securities available-for-sale
—
—
390
—
390
Bank-owned life insurance
814
583
649
1,397
687
Other
23
920
740
943
1,221
Total noninterest income
$
6,612
$
6,830
$
6,900
$
13,442
$
13,007
As a % of average interest earning assets (1)
0.86
%
0.93
%
1.07
%
0.89
%
1.06
%
Noninterest expense:
Salaries and employee benefits
$
10,425
$
11,151
$
9,266
$
21,576
$
19,438
Occupancy costs
Furniture & equipment
453
452
619
905
1,084
Premises
2,173
2,034
1,885
4,207
3,748
Advertising and marketing costs
292
321
425
612
1,026
Data processing costs
1,513
1,426
1,045
2,939
2,187
Deposit services costs
2,282
2,068
2,229
4,350
4,025
Loan services costs
Loan processing
65
169
191
234
362
Foreclosed assets
(10
)
107
62
98
68
Other operating costs
Telephone & data communications
668
380
467
1,048
835
Postage & mail
109
84
106
193
174
Other
337
462
365
799
751
Professional services costs
Legal & accounting
682
442
357
1,125
685
Other professional service
1,004
897
701
1,899
947
Stationery & supply costs
73
78
131
151
246
Sundry & tellers
169
200
184
370
275
Total noninterest expense
$
20,235
$
20,271
$
18,033
$
40,506
$
35,851
As a % of average interest earning assets (1)
2.64
%
2.75
%
2.80
%
2.68
%
2.94
%
Efficiency ratio (2)(3)
58.79
%
56.43
%
57.78
%
57.58
%
58.33
%
(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
June 30, 2021
March 31, 2021
June 30, 2020
Average Balance (1)
Income / Expense
Yield/ Rate (2)
Average Balance (1)
Income/ Expense
Yield/ Rate (2)
Average Balance (1)
Income/ Expense
Yield/ Rate (2)
Assets
Investments:
Interest-earning due from banks
$
308,453
$
85
0.11
%
$
76,504
$
19
0.10
%
$
53,209
$
12
0.09
%
Taxable
340,690
1,573
1.85
%
317,254
1,578
2.02
%
403,517
2,250
2.24
%
Non-taxable
243,461
1,517
3.16
%
226,838
1,449
3.28
%
216,746
1,440
3.38
%
Total investments
892,604
3,175
1.61
%
620,596
3,046
2.24
%
673,472
3,702
2.44
%
Loans and leases: (3)
Real estate
1,825,600
21,015
4.62
%
1,879,359
21,391
4.62
%
1,477,380
18,355
5.00
%
Agricultural production
43,959
408
3.72
%
46,153
419
3.68
%
47,806
452
3.80
%
Commercial
166,554
2,124
5.12
%
191,656
2,451
5.19
%
170,876
1,080
2.54
%
Consumer
4,978
193
15.55
%
5,422
196
14.66
%
6,667
225
13.57
%
Mortgage warehouse lines
142,348
1,151
3.24
%
242,865
1,928
3.22
%
206,669
1,532
2.98
%
Other
1,460
26
7.14
%
1,588
27
6.90
%
2,811
39
5.58
%
Total loans and leases
2,184,899
24,917
4.57
%
2,367,043
26,412
4.53
%
1,912,209
21,683
4.56
%
Total interest earning assets (4)
3,077,503
$
28,092
3.71
%
2,987,639
$
29,458
4.05
%
2,585,681
$
25,385
4.01
%
Other earning assets
15,438
13,275
13,190
Non-earning assets
209,218
201,114
207,623
Total assets
$
3,302,159
$
3,202,028
$
2,806,494
Liabilities and shareholders' equity
Interest bearing deposits:
Demand deposits
$
161,871
$
91
0.23
%
$
130,763
$
73
0.23
%
$
134,159
$
71
0.21
%
NOW
601,339
116
0.08
%
569,171
101
0.07
%
481,679
83
0.07
%
Savings accounts
424,512
59
0.06
%
391,091
53
0.05
%
327,833
46
0.06
%
Money market
139,336
30
0.09
%
136,422
30
0.09
%
125,594
31
0.10
%
Time deposits
337,270
262
0.30
%
412,416
289
0.29
%
442,762
625
0.57
%
Wholesale brokered deposits
92,418
61
0.26
%
100,000
62
0.25
%
19,890
37
0.75
%
Total interest bearing deposits
1,756,746
619
0.14
%
1,739,863
608
0.14
%
1,531,917
893
0.23
%
Borrowed funds:
Junior subordinated debentures
35,185
245
2.79
%
35,141
247
2.85
%
35,009
311
3.57
%
Other interest-bearing liabilities
61,186
39
0.26
%
63,449
48
0.31
%
45,936
39
0.34
%
Total borrowed funds
96,371
284
1.18
%
98,590
295
1.21
%
80,945
350
1.74
%
Total interest bearing liabilities
1,853,117
903
0.20
%
1,838,453
$
903
0.20
%
1,612,862
1,243
0.31
%
Demand deposits - noninterest bearing
1,052,494
977,137
830,333
Other liabilities
43,095
39,199
39,155
Shareholders' equity
353,453
347,239
324,144
Total liabilities and shareholders' equity
$
3,302,159
$
3,202,028
$
2,806,494
Interest income/interest earning assets
3.71
%
4.05
%
4.01
%
Interest expense/interest earning assets
0.11
%
0.12
%
0.20
%
Net interest income and margin (5)
$
27,189
3.60
%
$
28,555
3.93
%
$
24,142
3.81
%
(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.
(2) Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate.
(3) Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $1.0 million and $(0.2) million for the quarters ended June 30, 2021 and 2020, respectively, and $1.4 million for the quarter ended March 31, 2021.
(4) Non-accrual loans have been included in total loans for purposes of computing total earning assets.
(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.
AVERAGE BALANCES AND RATES
(Dollars in Thousands, Unaudited)
For the six months ended
For the six months ended
June 30, 2021
June 30, 2020
Average Balance (1)
Income/ Expense
Yield/ Rate (2)
Average Balance (1)
Income/ Expense
Yield/ Rate (2)
Assets
Investments:
Interest-earning due from banks
$
193,120
$
104
0.11
%
$
45,166
$
153
0.68
%
Taxable
329,029
3,150
1.93
%
406,054
4,710
2.33
%
Non-taxable
235,204
2,967
3.22
%
206,218
2,778
3.42
%
Total investments
757,353
6,221
1.87
%
657,438
7,641
2.56
%
Loans and leases:(3)
Real estate
1,852,330
42,407
4.62
%
1,436,145
37,079
5.19
%
Agricultural
45,050
827
3.70
%
48,169
1,035
4.32
%
Commercial
179,036
4,575
5.15
%
139,287
2,176
3.14
%
Consumer
5,199
389
15.09
%
7,124
593
16.74
%
Mortgage warehouse lines
192,329
3,078
3.23
%
175,645
2,797
3.20
%
Other
1,523
53
7.02
%
4,027
116
5.79
%
Total loans and leases
2,275,467
51,329
4.55
%
1,810,397
43,796
4.86
%
Total interest earning assets (4)
3,032,820
57,550
3.88
%
2,467,835
51,437
4.25
%
Other earning assets
14,363
13,015
Non-earning assets
205,187
202,265
Total assets
$
3,252,370
$
2,683,115
Liabilities and shareholders' equity
Interest bearing deposits:
Demand deposits
$
146,403
$
164
0.23
%
$
111,445
$
134
0.24
%
NOW
585,344
217
0.07
%
469,133
205
0.09
%
Savings accounts
407,894
112
0.06
%
312,777
119
0.08
%
Money market
137,887
60
0.09
%
121,421
74
0.12
%
Time deposites
374,636
551
0.30
%
451,656
1,991
0.89
%
Brokered deposits
96,188
123
0.26
%
30,357
204
1.35
%
Total interest bearing deposits
1,748,352
1,227
0.14
%
1,496,789
2,727
0.37
%
Borrowed funds:
Junior subordinated debentures
35,164
493
2.83
%
34,986
706
4.06
%
Other interest-bearing liabilities
62,312
86
0.28
%
39,684
75
0.38
%
Total borrowed funds
97,476
579
1.20
%
74,670
781
2.10
%
Total interest bearing liabilities
1,845,828
1,806
0.20
%
1,571,459
3,508
0.45
%
Demand deposits - noninterest bearing
1,015,023
754,463
Other liabilities
41,156
37,687
Shareholders' equity
350,363
319,506
Total liabilities and shareholders' equity
$
3,252,370
$
2,683,115
Interest income/interest earning assets
3.88
%
4.25
%
Interest expense/interest earning assets
0.12
%
0.28
%
Net interest income and margin(5)
$
55,744
3.76
%
$
47,929
3.97
%
(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 $2,402 thousand and $(377) thousand for the six months ended June 30, 2021 and 2020, respectively.
(4) Non-accrual loans have been included in total loans for purposes of computing total earning assets.
(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.
Category: Financial Source: Sierra Bancorp
View source version on businesswire.com: https://www.businesswire.com/news/home/20210719005097/en/
Kevin McPhaill, President/CEO (559) 782‑4900 or (888) 454‑BANK www.sierrabancorp.com
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