Sierra Bancorp Reports Financial Results for Fourth Quarter and the Year Ending 2022

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, 2022. Sierra Bancorp reported consolidated net income in the fourth quarter of 2022 of $7.1 million, or $0.47 per diluted share, compared to net income of $9.6 million, or $0.63 per diluted share, in the fourth quarter of 2021. The Company's fourth quarter 2022 return on average assets and return on average equity was 0.79% and 9.62%, respectively, as compared to 1.10% and 10.47%, respectively, for the same comparative period in 2021.

For the year ended 2022, the Company recognized net income of $33.7 million, or $2.25 per diluted share, as compared to $43.0 million, or $2.80 per diluted share, for the same period in 2021. The Company’s financial performance metrics for the year ended 2022 include a return on average assets and a return on average equity of 0.97% and 10.66%, respectively, compared to 1.29% and 12.05%, respectively, for the same period in 2021. The primary reason for the change in earnings in 2022 as compared to 2021 is due to an $14.5 million increase in the provision for credit losses on loans and leases, net of taxes.

“As we exit 2022, we are very proud of the accomplishments made by our banking team,” stated Kevin McPhaill, President and CEO. “We successfully grew both loans and deposits while navigating a challenging rate environment – not an easy task for most financial institutions. As a community bank, we demonstrate our commitment to all our markets every day and are grateful for the positive response from our loyal customers. We look forward to opportunities in the coming year and will continue to work closely with our communities and customers to help us all thrive in 2023 and beyond!” McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the fourth quarter of 2021)

  • Net income for the fourth quarter of 2022 decreased $2.5 million or 26%, to $7.1 million. There was a $7.7 million increase in the provision for credit losses on loan and leases. The increase in the provision for credit losses is mostly due to a fourth quarter 2022 charge-off of $6.8 million related to one dairy loan relationship. This increase in provision for credit losses was partially offset by a $2.8 million positive net interest income variance along with a $0.5 million gain on a low-income housing tax credit fund partnership investment, $0.5 million gain on the sale of investment securities, and $0.4 million increase in miscellaneous income.
  • The $2.8 million increase to net interest income for the fourth quarter of 2022 was driven by an $8.9 million expansion in investment interest income, $6.7 million of which was from collateralized loan obligations (“CLOs”), partially offset by a $4.9 million increase in interest expense and a $1.2 million decline in loan and lease interest income. The increase in interest expense is largely due to a $3.1 million increase in expense related to time deposit accounts and a $1.8 million increase in the cost of borrowed funds. These increases to interest expense are due to shift from being a net seller of Federal Funds at December 31, 2021 to a net purchaser of funds at December 31, 2022 coupled with a 368 bp increase to the rate on the Prime Index Certificate of Deposit account offered by the bank. The rate on the Prime Index account is tied to a spread to the Wall Street Journal Prime Rate and varies from Prime minus 400 bps to Prime minus 325 bps. During 2022, the Prime rate increased by 425 basis points. The yield on interest earning assets increased 91 bps for the fourth quarter of 2022 while the cost of interest-bearing liabilities increased 90 bps resulting in a 32 bp increase in net interest margin.
  • Noninterest income for the fourth quarter of 2022 increased $0.6 million, or 8% due to a $0.3 million increase in other service charge income, a $0.5 million gain on the sale of securities, and a $0.5 million gain on a low-income tax credit fund partnership investment. These favorable variances were partially offset by an unfavorable change in income related to our investment in a Small Business Investment Company.
  • Noninterest expense for the fourth quarter of 2022 decreased by $0.7 million. There was a $1.7 million increase in salaries and benefits from the strategic hiring of lending and management staff, offset by a positive $2.2 million variance in professional services costs mostly due to legal expenses.

Year to-Date Changes (comparisons to the year ended 2021)

  • Net income for 2022 decreased by $9.4 million, or 22% primarily due to an $14.5 million increase in the provision for credit losses on loans and leases, net of taxes.
  • Noninterest income for 2022 increased by $2.7 million, or 10%, due to increased service charge income of $0.7 million, a $1.5 million increase in the nonrecurring gains from the sales of investment securities, an $0.8 million increase in the gain on low-income tax credit fund investments and a $3.0 million increase in gains from the sale of other assets. These increases were partially offset by a $3.6 million unfavorable variance in the fluctuation in income on bank-owned life insurance (BOLI) designed to invest in funds to offset the Company’s deferred compensation plan described in the next paragraph.
  • Noninterest expense increased $1.2 million, or 1%, due mostly to a $4.6 million increase in salary and benefits expense for new loan production teams and a $0.7 million restitution payment to customers charged nonsufficient fund fees on representments in the past five years, partially offset by lower legal costs, telecommunications, and a positive variance in director’s deferred compensation expense which is linked to the unfavorable changes in bank-owned life insurance income described in the above paragraph.

Balance Sheet Changes (comparisons to December 31, 2021)

  • Total assets increased by $237.6 million, or 7%, to $3.6 billion, during 2022, due mostly to an increase in deposits and borrowed funds which facilitated loan growth and the purchase of investment securities in 2022.
  • Cash and due from banks decreased $180.4 million to $77.1 million for the year due mostly to an increase in investment securities.
  • Investment securities increased $298.5 million, or 31%, to $1.3 billion primarily due to $181.5 million in strategic purchases of CLOs, as well as other investment securities.
  • Gross loans increased $63.2 million due predominantly to the purchase of $173.1 million in high quality jumbo single family mortgage loan pools earlier in the year. Organic loan production for the year ending 2022 was $292.2 million, as compared to $128.4 million for the comparative period in 2021. These loan increases were offset by $317.8 million in loan maturities, charge-offs and payoffs, a $29.7 million decline in PPP balances due to loan forgiveness by the SBA, and a decline in credit line utilization of $84.3 million. The decrease in line utilization includes a $35.7 million decline in mortgage warehouse line utilization due to higher interest rates reducing the demand for mortgages.
  • Deposits totaled $2.8 billion at December 31, 2022, representing a year-to-date increase of $64.6 million, or 2%. The growth in deposits came primarily from an increase in time deposits of $165.7 million offset by a decrease in other deposit balances of $101.1 million.
  • Short-term debt increased by $221.3 million during 2022 to $328.2 million at December 31, 2022. Overnight repurchase agreements increased $2.3 million to $109.2 million, FHLB borrowings and overnight fed funds increased by $219.0 million.

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

 

 

 

12/31/2022

 

 

9/30/2022

 

 

12/31/2021

 

 

12/31/2022

 

 

12/31/2021

Net income

 

$

7,113

 

 

$

9,935

 

 

$

9,621

 

 

$

33,659

 

 

$

43,012

 

Diluted earnings per share

 

$

0.47

 

 

$

0.66

 

 

$

0.63

 

 

$

2.25

 

 

$

2.80

 

Return on average assets

 

 

0.79

%

 

 

1.13

%

 

 

1.10

%

 

 

0.97

%

 

 

1.29

%

Return on average equity

 

 

9.62

%

 

 

12.84

%

 

 

10.47

%

 

 

10.66

%

 

 

12.05

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (tax-equivalent)

 

 

3.63

%

 

 

3.63

%

 

 

3.31

%

 

 

3.47

%

 

 

3.56

%

Yield on average loans and leases

 

 

4.38

%

 

 

4.28

%

 

 

4.59

%

 

 

4.32

%

 

 

4.57

%

Yield on investments

 

 

4.40

%

 

 

3.51

%

 

 

1.55

%

 

 

3.07

%

 

 

1.66

%

Cost of average total deposits

 

 

0.51

%

 

 

0.24

%

 

 

0.08

%

 

 

0.24

%

 

 

0.09

%

Efficiency ratio (tax-equivalent)¹

 

 

57.55

%

 

 

58.10

%

 

 

64.86

%

 

 

60.16

%

 

 

59.92

%

 

 

 

 

 

Total assets

 

$

3,608,590

 

 

$

3,532,289

 

 

$

3,371,014

 

 

$

3,608,590

 

 

$

3,371,014

 

Loans & leases net of deferred fees

 

$

2,052,817

 

 

$

2,020,016

 

 

$

1,987,861

 

 

$

2,052,817

 

 

$

1,987,861

 

Noninterest demand deposits

 

$

1,088,199

 

 

$

1,118,245

 

 

$

1,084,544

 

 

$

1,088,199

 

 

$

1,084,544

 

Total deposits

 

$

2,846,164

 

 

$

2,885,468

 

 

$

2,781,572

 

 

$

2,846,164

 

 

$

2,781,572

 

Noninterest-bearing deposits over total deposits

 

 

38.2

%

 

 

38.8

%

 

 

39.0

%

 

 

38.2

%

 

 

39.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity / total assets

 

 

8.4

%

 

 

8.4

%

 

 

10.8

%

 

 

8.4

%

 

 

10.8

%

Tangible Common equity ratio

 

 

7.7

%

 

 

7.6

%

 

 

9.9

%

 

 

7.7

%

 

 

9.9

%

Book value per share

 

$

20.01

 

 

$

19.56

 

 

$

23.74

 

 

$

20.01

 

 

$

23.74

 

Tangible book value per share

 

$

18.06

 

 

$

17.58

 

 

$

21.73

 

 

$

18.06

 

 

$

21.73

 

(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 $29.4 million for the fourth quarter of 2022, a $2.8 million increase, or 11% over the fourth quarter of 2021, and increased $0.6 million, or 1%, to $109.6 million for the year ended 2022 relative to the same period in 2021.

For the fourth quarter of 2022, growth in average interest-earning assets totaled $52.5 million, or 2%, as compared to the fourth quarter of 2021. The yield on these balances was 91 basis points higher for the same period due mostly to a shift in the mix of earning assets and the result of recent interest rate increases by the Federal Open Market Committee. This increase in yield was offset by a 90 basis point increase in the cost of our interest-bearing liabilities for the same period. Although transaction and savings deposit rates have not changed, higher costs of time deposits and borrowed funds including overnight purchases are the primary reasons for the increase in interest expense.

The Company continues to offer floating rate CDs which are indexed to prime. These floating rate CDs increased $90.4 million, or 38%, to $329.3 million at December 31, 2022, as compared to $238.9 million at December 31, 2021. Due to the increase in the prime rate during 2022, interest expense on floating rate CDs has increased $2.5 million for the fourth quarter of 2022 over the fourth quarter of 2021, and increased $3.8 million for the year ending 2022 as compared to the same period in 2021. These CDs require a minimum balance and pay a rate that is 325 – 400 basis points below the Wall Street Journal Prime rate, with a 20 basis point minimum rate. Any future increases in the Wall Street Journal Prime rate will cause this interest expense to increase on the entire balance of such accounts while a decline in the Prime rate will result in an immediate reduction of interest expense on the entire balance of such accounts.

Net interest income for the comparative year-to-date periods increased $0.6 million, or 1%, due to a change in mix of average interest-earning assets. Investment balances, with an average yield of 3.07% increased $284.7 million, while gross average loan balances yielding 4.32% decreased $163.3 million. The overall yield on the average balances of earning assets was 15 basis points higher for the comparative periods, partially offset by a 39 basis point increase in interest paid on liabilities. The net impact was a 9 basis point decrease in our net interest margin for the year ending December 31, 2022, as compared to the same period in 2021.

The increase in investments includes a net increase of $166.2 million of exclusively AAA and AA tranches of floating rate CLOs, for a total cost basis of $515.0 million at December 31, 2022. The average yield on such CLOs for December 2022 was 6.11% as compared to an average yield in December 2021 of 1.51%. These CLOs have extensive prepurchase analyses performed with respect to the individual issuances, as well as various internal concentration limits. Although AAA and AA tranches of CLOs have historically not had charge-offs, management monitors this portfolio quarterly.

Interest expense was $6.2 million for the fourth quarter of 2022, an increase of $4.9 million, relative to the fourth quarter of 2021. For the year ended 2022, compared to the same period in 2021, interest expense increased $8.2 million, to $12.2 million. The increase in interest expense for the quarterly comparison is attributable to a $225.7 million increase in average interest-bearing liabilities with a 90 bps increase in cost. The increase was primarily in higher cost customer time deposits, wholesale brokered deposits and short-term borrowings. Lower or no cost average transaction and savings accounts decreased $64.6 million for the quarterly comparison. For the year-to-date comparisons the increase is primarily impacted by a $118.5 million increase in the average balance of borrowed funds combined with the impact of recent interest rate increases, although some favorable deposit mix changes did positively impact interest expense with higher cost time deposits falling by $21.5 million or 5%, while lower or no cost transaction and savings accounts increased $102.0 or 10%.

The Company had $1.3 billion in adjustable and variable rate loans and $498.4 million in floating rate CLOs, as compared to $329.3 million in floating rate CDs and $35.5 million in floating rate trust preferred securities at December 31, 2022. The next rate adjustment date on the adjustable rate loans vary and can be up to ten years. It is expected that $255.7 million of the Company’s adjustable and variable rate loans will reprice in the next twelve months.

Our net interest margin was 3.63% for the fourth quarter of 2022, as compared to 3.63% for the linked quarter and 3.31% for the fourth quarter of 2021.

Provision for Credit Losses on Loans and Leases

The Company recorded a provision related to credit losses on loans and leases of $6.5 million in the fourth quarter of 2022 relative to a net benefit of $1.2 million in the fourth quarter of 2021, and a year-to-date provision for credit losses on loans and leases of $10.9 million in 2022 as compared to a $3.7 million loan and lease loss provision net benefit for the same period in 2021. The Company's $7.7 million unfavorable increase in provision for credit losses on loans and leases in the fourth quarter of 2022 as compared to the fourth quarter of 2021, and the $14.5 million unfavorable increase for the year ending 2022 compared to the same period in 2021 are primarily due to the impact of $11.5 million in net charge-offs during the year ending 2022. The elevated net charge-offs were mostly due to two loan relationships; one dairy loan relationship with total charge-offs of $8.7 million and a single office building loan relationship that was sold at a $1.9 million discount due to an increased risk of default that would have likely led to a prolonged collection period.

Noninterest Income

Total noninterest income reflects increases of $0.6 million, or 8%, for the quarter ended December 31, 2022 as compared to the same quarter in 2021, and $2.7 million, or 10% for the year ended December 31, 2022 as compared to the same period in 2021. The quarterly comparison was primarily impacted by the sale of investment securities for a gain of $0.5 million. For the year-to-date comparison there was $0.7 million in higher service charge income, $1.5 million in gains on the sale of investment securities, a $0.8 million favorable change in other small business partnership expenses, and $3.2 million in gains on the sale of other assets partially offset by a $3.7 million unfavorable fluctuation in income on Bank-Owned Life Insurance (BOLI) associated with deferred compensation plans.

Service charges on customer deposit account income decreased $0.1 million, or 3%, to $3.1 million in the fourth quarter of 2022 as compared to the fourth quarter of 2021. This decrease is primarily due to lower overdraft income during the comparable periods. This service charge income was $0.7 million higher, or 6%, for the year ending December 31, 2022, as compared to the same period in 2021. The increase for the year-to-date comparison is primarily a result of increases in analysis fee and overdraft income.

Noninterest Expense

Total noninterest expense decreased by $0.7 million, or 3%, in the fourth quarter of 2022 relative to the fourth quarter of 2021, and increased by $1.2 million, or 1%, for the year ended 2022 as compared to the same period in 2021.

Salaries and Benefits were $1.7 million, or 17%, higher in the fourth quarter of 2022 as compared to the fourth quarter of 2021 and $4.6 million, or 11%, higher for the year ended 2022 compared to the same period in 2021. Overall full-time equivalent employees were 491 at December 31, 2022 as compared to 480 at December 31, 2021. This increase accounted for the unfavorable quarterly and year-to-date variances. The increase in FTE was due to the strategic hiring of lending and management staff during 2022.

Occupancy expenses were $0.2 million higher for the fourth quarter of 2022 as compared to the same quarter in 2021 and $0.1 million lower for the year ended 2022 as compared to the same period in 2021. The primary reason for increase in the quarterly comparison was an increase in furniture and equipment expense to outfit our new agricultural loan production offices while the decrease in the year-to-date comparison was from the consolidation of five branch facilities in 2021.

Other noninterest expense decreased $2.6 million, or 27%, for the fourth quarter 2022 as compared to the fourth quarter in 2021, and decreased $3.3 million, or 10%, for the year ended 2022 as compared to the same period in 2021. The variance for the fourth quarter of 2022 compared to the same period in 2021 was primarily driven by a decrease of $2.3 million in legal and audit review costs due mostly to decreases in legal costs, related legal reserves, decreased costs related to certain audit functions which were previously outsourced, and lower hiring/recruiting costs. For the year-over-year comparison the categories of decrease were legal costs for $2.5 million, certain audit costs for $0.6 million, director’s deferred compensation expense for $2.2 million which is linked to the fluctuation in BOLI income, $0.6 million in reduced ATM network costs, $0.4 million in lower consultant costs and $0.5 million in reduced telecommunication costs, partially offset by $0.7 million in restitution payments to customers charged nonsufficient fund fees in the past five years for representments, $0.9 million in increased debit card processing costs and $0.4 million in increased core processing costs. In late 2022, the Company renegotiated its core processing contract and expects annual savings from this renegotiation of approximately $1.0 million. In addition, the Company is expecting to convert its debit card processing to a new provider in the second quarter of 2023 which will result in lower processing costs.

The Company's provision for income taxes was 21.1% of pre-tax income in the fourth quarter of 2022 relative to 24.2% in the fourth quarter of 2021, and 25.1% of pre-tax income for the year ended December 31, 2022 relative to 24.8% for the same period in 2021. The decrease in effective tax rate in the fourth quarter is due to tax credits and tax-exempt income representing a larger percentage of total taxable income, while the year-to-date increase is the opposite with tax credits and tax-exempt income representing a smaller percentage of total taxable income. The decline in tax-exempt income is due mostly to unfavorable changes in bank-owned life insurance with investments linked to the Company’s deferred compensation plan.

Balance Sheet Summary

Balance sheet changes for the year ended December 31, 2022 include an increase in total assets of $237.6 million, or 7%, primarily as a result of a $298.5 million increase in investment securities, a $63.2 million increase in gross loans and leases, a $63.4 million increase in other assets, net of a $180.4 million decrease in cash and due from banks.

The increase in investment securities of $298.5 million in 2022 consisted primarily of purchases of $60.8 million of U.S. government agency securities, municipal bonds of $175.6 million, corporate securities of $36.7 million, AAA and AA tranches of floating rate CLOs of $181.5 million, and mortgage-backed securities of $71.9 million, offset by principal paydowns and maturities. The purchases of AAA and AA tranches of CLOs in 2021 and 2022 were primarily a balance sheet diversification strategy. 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 increased $63.2 million during the year ended December 31, 2022. The increase was primarily a result of an increase in 1-4 family residential real estate loans, mostly from the purchase of $173.1 million in high quality jumbo mortgage loans. Other positive variances from organic growth included a $6.7 million increase in agricultural real estate, and a $38.2 million increase in multi-family real estate. Negatively impacting these positive variances were loan paydowns and maturities resulting in net declines in many categories even with solid loan production. In particular, there was a $28.3 million net decrease in construction loans, a $33.0 million decrease in commercial and industrial loans, a $6.1 million decrease in agricultural production loans and a $35.7 million unfavorable variance in mortgage warehouse loans. Further, SBA PPP loan forgiveness resulted in a $29.7 million decline in loan balances, included in the commercial and industrial variance noted above.

As indicated in the loan roll forward below, new credit extended for the fourth quarter of 2022 increased $31.8 million over the same period in 2021 and increased $163.9 million for the year-to-date comparisons. This organic loan growth is attributable to the new agricultural and commercial real estate lending teams added earlier this year. Contributing to our organic growth, loans purchased during the year ending 2022 totaled $173.1 million, however, we had $317.8 million in loan paydowns and maturities, along with a $35.7 million decrease in mortgage warehouse line utilization and a $48.6 million decrease in line of credit utilization.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOAN ROLLFORWARD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended:

 

For the twelve months ended:

 

 

 

December 31,

2022

 

 

September 30,

2022

 

 

December 31,

2021

 

 

December 31,

2022

 

 

December 31,

2021

Gross loans beginning balance

 

$

2,020,364

 

 

$

2,022,662

 

 

$

2,139,826

 

 

$

1,989,726

 

 

$

2,463,111

 

New credit extended

 

 

67,170

 

 

 

82,958

 

 

 

35,415

 

 

 

292,224

 

 

 

128,365

 

Loan purchases

 

 

 

 

 

 

 

 

85,700

 

 

 

173,082

 

 

 

207,991

 

Changes in line of credit utilization

 

 

(3,361

)

 

 

(7,811

)

 

 

(53,910

)

 

 

(48,562

)

 

 

(109,419

)

Change in mortgage warehouse

 

 

18,885

 

 

 

(11,581

)

 

 

(25,302

)

 

 

(35,745

)

 

 

(206,494

)

Pay-downs, maturities, charge-offs and amortization (1)

 

 

(50,118

)

 

 

(65,864

)

 

 

(192,003

)

 

 

(317,785

)

 

 

(493,828

)

Gross loans ending balance

 

 

2,052,940

 

 

 

2,020,364

 

 

 

1,989,726

 

 

 

2,052,940

 

 

 

1,989,726

 

(1)

Includes $1.6 million from the sale of a performing loan during the second quarter of 2022.

Unused commitments, excluding mortgage warehouse and overdraft lines, were $219.7 million at December 31, 2022, compared to $219.6 million at December 31, 2021. Total line utilization, excluding mortgage warehouse and overdraft lines, was 59% at December 31, 2022 and 61% at December 31, 2021 and was 32% at December 31, 2022 and 48% at December 31, 2021, including mortgage warehouse lines. Mortgage warehouse utilization declined to 10% at December 31, 2022, as compared to 27% at December 31, 2021. Total mortgage warehouse availability increased to $594.6 million at December 31, 2022 as compared to $276.8 million at December 31, 2021.

PPP loans continue to decline as borrowers receive forgiveness on these loans. There were 14 loans for $1.8 million outstanding at December 31, 2022, compared to 440 loans for $31.8 million at December 31, 2021.

Deposit balances reflect growth of $64.6 million, or 2%, during the year ended December 31, 2022. Core non-maturity deposits decreased by $101.1 million, or 4%, while customer time deposits increased by $105.7 million, or 36%. Wholesale brokered deposits increased by $60.0 million to $120.0 million. Overall noninterest-bearing deposits as a percent of total deposits at December 31, 2022, decreased to 38.2%, as compared to 39.0% at December 31, 2021.

Long term debt, which consisted of $35.5 million in trust preferred securities and $49.2 million in subordinated debt was $84.7 million for the year ended December 31, 2022 and remained relatively unchanged during 2022.

Other interest-bearing liabilities of $328.2 million on December 31, 2022 consisted of $109.2 million in customer repurchase agreements, $125.0 million in overnight fed funds purchased, and $94.0 million in overnight FHLB advances. Other interest-bearing liabilities at December 31, 2021 consisted exclusively of $106.9 million in customer repurchase agreements.

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

 

 

 

 

 

 

 

Primary and Secondary Liquidity Sources

 

 

December 31, 2022

 

 

December 31, 2021

Cash and due from banks

 

$

77,131

 

$

257,528

Unpledged investment securities

 

 

1,097,164

 

 

806,132

Excess pledged securities

 

 

43,096

 

 

47,024

FHLB borrowing availability

 

 

718,842

 

 

787,519

Unsecured lines of credit

 

 

237,000

 

 

305,000

Funds available through fed discount window

 

 

42,278

 

 

50,608

Totals

 

$

2,215,511

 

$

2,253,811

Total capital of $303.6 million at December 31, 2022 reflects a decrease of $58.9 million, or 16%, relative to year-end 2021. The decrease in equity during the year ended December 31, 2022 was primarily due to a $67.7 million unfavorable swing in accumulated other comprehensive income (loss), a one-time adjustment from the implementation of CECL on January 1, 2022, for $7.3 million, $13.9 million in dividends paid, and $4.9 million in share repurchases. The declines were partially offset by $33.7 million in net income. 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, increased by $15.0 million to $19.6 million for the year ended December 31, 2022. The Company's ratio of nonperforming loans to gross loans increased to 0.96% at December 31, 2022 from 0.23% at December 31, 2021. The increase resulted from an increase in non-accrual loan balances, primarily as a result of a downgrade in the first quarter of 2022 of one loan relationship in the dairy industry consisting of four separate loans. At December 31, 2022, nonaccrual loans totaled $19.6 million compared to $4.5 million at December 31, 2021. 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.

Subsequent to year end, $18.1 million of nonaccrual loans within the aforementioned dairy relationship were foreclosed upon and were moved to other real estate owned or other foreclosed assets at net realizable value. The Company sold a portion of such assets for $2.4 million, which constituted book value, and continues to actively work with interested buyers to sell the remaining assets of the dairy.

The Company's allowance for credit losses on loans and leases was $23.1 million at December 31, 2022, as compared to a balance of $14.3 million at December 31, 2021. The allowance was 1.12% of total loans at December 31, 2022 and was 0.72% of total loans at December 31, 2021.

The $8.8 million increase in the allowance for credit losses on loans and leases during the year ended December 31, 2022, resulted from a $9.5 million one-time adjustment from the implementation of CECL on January 1, 2022, a $10.9 million provision for credit losses on loans and leases, offset by net loan charge-offs of $11.5 million.

Management's detailed analysis indicates that the Company's allowance for credit losses on loans and leases should be sufficient to cover credit losses inherent in loan and lease balances outstanding as of December 31, 2022, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the loan and lease loss allowance.

About Sierra Bancorp

Sierra Bancorp is the holding Company for Bank of the Sierra (www.bankofthesierra.com), which is in its 46th 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 agricultural credit centers in Templeton, California, an SBA center, and a loan production office in Roseville, California. In 2022, Bank of the Sierra was recognized as one of the strongest and top-performing community banks in the country, with a 5-star rating from Bauer Financial.

Forward-Looking Statements

The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties including but not limited to the health of the national and local economies, loan portfolio performance, 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, 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

 

 

12/31/2022

 

9/30/2022

 

6/30/2022

 

3/31/2022

 

12/31/2021

Cash and due from banks

 

$

77,131

 

 

$

86,683

 

 

$

161,875

 

 

$

253,534

 

 

$

257,528

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale, at fair value

 

 

934,923

 

 

 

1,069,434

 

 

 

864,178

 

 

 

1,025,032

 

 

 

973,314

 

Held-to-maturity, at amortized cost, net of allowance for credit losses

 

 

336,881

 

 

 

156,211

 

 

 

161,399

 

 

 

-

 

 

 

-

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-4 family residential construction

 

 

-

 

 

 

-

 

 

 

5,542

 

 

 

8,800

 

 

 

21,369

 

Other construction/land

 

 

18,412

 

 

 

18,315

 

 

 

20,816

 

 

 

24,633

 

 

 

25,299

 

1-4 family - closed-end

 

 

416,116

 

 

 

420,136

 

 

 

429,109

 

 

 

398,871

 

 

 

289,457

 

Equity lines

 

 

21,330

 

 

 

21,126

 

 

 

25,260

 

 

 

23,389

 

 

 

26,588

 

Multi-family residential

 

 

91,691

 

 

 

69,665

 

 

 

66,367

 

 

 

59,711

 

 

 

53,458

 

Commercial real estate - owner occupied

 

 

323,873

 

 

 

324,696

 

 

 

312,060

 

 

 

331,764

 

 

 

334,446

 

Commercial real estate - non-owner occupied

 

 

893,846

 

 

 

896,954

 

 

 

898,159

 

 

 

857,051

 

 

 

882,888

 

Farmland

 

 

113,394

 

 

 

117,385

 

 

 

101,675

 

 

 

98,865

 

 

 

106,706

 

Total real estate loans

 

 

1,878,662

 

 

 

1,868,277

 

 

 

1,858,988

 

 

 

1,803,084

 

 

 

1,740,211

 

Agricultural production loans

 

 

27,936

 

 

 

31,290

 

 

 

28,660

 

 

 

31,663

 

 

 

33,990

 

Commercial & industrial

 

 

76,779

 

 

 

70,147

 

 

 

72,616

 

 

 

87,173

 

 

 

109,791

 

Mortgage warehouse lines

 

 

65,439

 

 

 

46,553

 

 

 

58,134

 

 

 

57,178

 

 

 

101,184

 

Consumer loans

 

 

4,124

 

 

4,097

 

 

4,264

 

 

4,233

 

 

4,550

 

Gross loans & leases

 

 

2,052,940

 

 

 

2,020,364

 

 

 

2,022,662

 

 

 

1,983,331

 

 

 

1,989,726

 

Deferred loan & lease fees

 

 

(123

)

 

 

(348

)

 

 

(1,081

)

 

 

(1,200

)

 

 

(1,865

)

Allowance for credit losses on loans and leases

 

 

(23,060

)

 

(23,790

)

 

(22,802

)

 

(22,530

)

 

(14,256

)

Net loans & leases

 

 

2,029,757

 

 

 

1,996,226

 

 

 

1,998,779

 

 

 

1,959,601

 

 

 

1,973,605

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank premises & equipment

 

 

22,478

 

 

 

22,688

 

 

 

22,937

 

 

 

23,239

 

 

 

23,571

 

Other assets

 

 

207,420

 

 

201,047

 

 

187,467

 

 

157,448

 

 

142,996

 

Total assets

 

$

3,608,590

 

$

3,532,289

 

$

3,396,635

 

$

3,418,854

 

$

3,371,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES & CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest demand deposits

 

$

1,088,199

 

 

$

1,118,245

 

 

$

1,120,413

 

 

$

1,104,691

 

 

$

1,084,544

 

Interest-bearing transaction accounts

 

 

641,581

 

 

 

732,468

 

 

 

736,034

 

 

 

776,457

 

 

 

744,553

 

Savings deposits

 

 

456,981

 

 

 

481,882

 

 

 

482,140

 

 

 

480,178

 

 

 

450,785

 

Money market deposits

 

 

139,795

 

 

 

140,620

 

 

 

152,596

 

 

 

149,918

 

 

 

147,793

 

Customer time deposits

 

 

399,608

 

 

 

332,253

 

 

 

299,816

 

 

 

293,699

 

 

 

293,897

 

Wholesale brokered deposits

 

 

120,000

 

 

80,000

 

 

60,000

 

 

60,000

 

 

60,000

 

Total deposits

 

 

2,846,164

 

 

 

2,885,468

 

 

 

2,850,999

 

 

 

2,864,943

 

 

 

2,781,572

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

49,214

 

 

 

49,196

 

 

 

49,173

 

 

 

49,151

 

 

 

49,141

 

Junior subordinated debentures

 

 

35,481

 

 

 

35,436

 

 

 

35,392

 

 

 

35,347

 

 

 

35,302

 

Other interest-bearing liabilities

 

 

328,169

 

 

215,112

 

 

118,014

 

 

107,760

 

 

106,937

 

Total deposits & interest-bearing liabilities

 

 

3,259,028

 

 

 

3,185,212

 

 

 

3,053,578

 

 

 

3,057,201

 

 

 

2,972,952

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on unfunded loan commitments

 

 

840

 

 

 

940

 

 

 

893

 

 

 

1,040

 

 

 

203

 

Other liabilities

 

 

45,140

 

 

 

51,065

 

 

 

43,117

 

 

 

34,922

 

 

 

35,365

 

Total capital

 

 

303,582

 

 

295,072

 

 

299,047

 

 

325,691

 

 

362,494

 

Total liabilities & capital

 

$

3,608,590

 

$

3,532,289

 

$

3,396,635

 

$

3,418,854

 

$

3,371,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOODWILL & INTANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

Goodwill

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

Core deposit intangible

 

 

2,275

 

 

2,517

 

 

2,769

 

 

3,022

 

 

3,275

 

Total intangible assets

 

$

29,632

 

$

29,874

 

$

30,126

 

$

30,379

 

$

30,632

 

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

Non-accruing loans

 

$

19,579

 

 

$

26,772

 

 

$

29,745

 

 

$

30,446

 

 

$

4,522

 

Foreclosed assets

 

 

-

 

 

-

 

 

2

 

 

93

 

 

93

 

Total nonperforming assets

 

$

19,579

 

$

26,772

 

$

29,747

 

$

30,539

 

$

4,615

 

 

 

 

 

 

 

 

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

 

$

4,522

 

 

$

4,639

 

 

$

4,714

 

 

$

4,568

 

 

$

4,910

 

Net charge offs (recoveries)

 

$

11,549

 

 

$

4,280

 

 

$

4,056

 

 

$

1,778

 

 

$

(168

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due & still accruing (30-89)

 

$

1,203

 

 

$

1,242

 

 

$

1,037

 

 

$

2,809

 

 

$

2,013

 

 

 

 

 

 

 

 

 

Non-performing loans to gross loans

 

 

0.95

%

 

 

1.33

%

 

 

1.47

%

 

 

1.54

%

 

 

0.23

%

NPA's to loans plus foreclosed assets

 

 

0.95

%

 

 

1.33

%

 

 

1.47

%

 

 

1.54

%

 

 

0.23

%

Allowance for loan losses to loans

 

 

1.12

%

 

 

1.18

%

 

 

1.13

%

 

 

1.14

%

 

 

0.72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECT PERIOD-END STATISTICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2022

 

 

9/30/2022

 

 

6/30/2022

 

 

3/31/2022

 

 

12/31/2021

Shareholders equity / total assets

 

 

8.4

%

 

 

8.4

%

 

 

8.8

%

 

 

9.5

%

 

 

10.8

%

Gross loans / deposits

 

 

72.1

%

 

 

70.0

%

 

 

70.9

%

 

 

69.2

%

 

 

71.5

%

Non-interest bearing deposits / total deposits

 

 

38.2

%

 

 

38.8

%

 

 

39.3

%

 

 

38.6

%

 

 

39.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

For the three months ended:

 

 

For the year ended:

 

 

 

12/31/2022

 

 

9/30/2022

 

 

12/31/2021

 

 

12/31/2022

 

 

12/31/2021

Interest income

 

$

35,603

 

 

$

31,928

 

 

$

27,897

 

 

$

121,819

 

 

$

113,076

 

Interest expense

 

 

6,240

 

 

 

3,017

 

 

 

1,331

 

 

 

12,204

 

 

 

4,050

 

Net interest income

 

 

29,363

 

 

 

28,911

 

 

 

26,566

 

 

 

109,615

 

 

 

109,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for loan and lease losses

 

 

6,538

 

 

 

1,212

 

 

 

(1,200

)

 

 

10,898

 

 

 

(3,650

)

Provision (benefit) for credit losses on loans and leases

 

 

(100

)

 

 

47

 

 

 

-

 

 

 

(294

)

 

 

-

 

(Benefit) provision for credit losses on unfunded loan commitments

 

 

45

 

 

 

-

 

 

 

-

 

 

 

63

 

 

 

-

 

Net interest income after provision

 

 

22,880

 

 

 

27,652

 

 

 

27,766

 

 

 

98,948

 

 

 

112,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges

 

 

3,074

 

 

 

3,216

 

 

 

3,169

 

 

 

12,535

 

 

 

11,846

 

BOLI income

 

 

255

 

 

 

(23

)

 

 

203

 

 

 

(996

)

 

 

2,648

 

Gain on investments

 

 

456

 

 

 

-

 

 

 

-

 

 

 

1,487

 

 

 

11

 

Other noninterest income

 

 

3,871

 

 

 

3,419

 

 

 

3,730

 

 

 

17,744

 

 

 

13,574

 

Total noninterest income

 

 

7,656

 

 

 

6,612

 

 

 

7,102

 

 

 

30,770

 

 

 

28,079

 

 

 

 

 

 

 

 

 

 

Salaries & benefits

 

 

11,983

 

 

 

11,521

 

 

 

10,237

 

 

 

47,053

 

 

 

42,431

 

Occupancy expense

 

 

2,549

 

 

 

2,470

 

 

 

2,366

 

 

 

9,718

 

 

 

9,837

 

Other noninterest expenses

 

 

6,990

 

 

 

7,005

 

 

 

9,572

 

 

 

28,032

 

 

 

31,288

 

Total noninterest expense

 

 

21,522

 

 

 

20,996

 

 

 

22,175

 

 

 

84,803

 

 

 

83,556

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

9,014

 

 

 

13,268

 

 

 

12,693

 

 

 

44,915

 

 

 

57,199

 

Provision for income taxes

 

 

1,901

 

 

 

3,333

 

 

 

3,072

 

 

 

11,256

 

 

 

14,187

 

Net income

 

$

7,113

 

 

$

9,935

 

 

$

9,621

 

 

$

33,659

 

 

$

43,012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TAX DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt municipal income

 

$

2,879

 

 

$

2,346

 

 

$

1,761

 

 

$

8,805

 

 

$

6,218

 

Interest income - fully tax equivalent

 

$

36,368

 

 

$

32,552

 

 

$

28,365

 

 

$

124,160

 

 

$

114,729

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

For the year ended:

 

 

 

12/31/2022

 

 

9/30/2022

 

 

12/31/2021

 

 

12/31/2022

 

 

12/31/2021

Basic earnings per share

 

$

0.47

 

 

$

0.66

 

 

$

0.63

 

 

$

2.25

 

 

$

2.82

 

Diluted earnings per share

 

$

0.47

 

 

$

0.66

 

 

$

0.63

 

 

$

2.25

 

 

$

2.80

 

Common dividends

 

$

0.23

 

 

$

0.23

 

 

$

0.22

 

 

$

0.92

 

 

$

0.87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

14,998,567

 

 

 

14,954,503

 

 

 

15,226,834

 

 

 

14,955,756

 

 

 

15,241,957

 

Weighted average diluted shares

 

 

14,994,653

 

 

 

15,014,048

 

 

 

15,297,414

 

 

 

14,989,810

 

 

 

15,353,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per basic share (EOP)

 

$

20.01

 

 

$

19.56

 

 

$

23.74

 

 

$

20.01

 

 

$

23.74

 

Tangible book value per share (EOP)

 

$

18.06

 

 

$

17.58

 

 

$

21.73

 

 

$

18.06

 

 

$

21.73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (EOP)

 

 

15,170,372

 

 

 

15,085,675

 

 

 

15,270,010

 

 

 

15,170,372

 

 

 

15,270,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY FINANCIAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

For the year ended:

 

 

 

12/31/2022

 

 

9/30/2022

 

 

12/31/2021

 

 

12/31/2022

 

 

12/31/2021

Return on average equity

 

 

9.62

%

 

 

12.84

%

 

 

10.47

%

 

 

10.66

%

 

 

12.05

%

Return on average assets

 

 

0.79

%

 

 

1.13

%

 

 

1.10

%

 

 

0.97

%

 

 

1.29

%

Net interest margin (tax-equivalent)

 

 

3.63

%

 

 

3.63

%

 

 

3.31

%

 

 

3.47

%

 

 

3.56

%

Efficiency ratio (tax-equivalent)¹

 

 

57.55

%

 

 

58.10

%

 

 

64.86

%

 

 

60.16

%

 

 

59.92

%

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

 

 

0.36

%

 

 

0.01

%

 

 

0.01

%

 

 

0.58

%

 

 

(0.01

)%

(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)

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2022

 

 

9/30/2022

 

 

12/31/2021

Total stockholders' equity

 

$

303,582

 

 

$

295,072

 

 

$

362,494

 

Less: goodwill and other intangible assets

 

 

29,632

 

 

 

29,874

 

 

 

30,632

 

Tangible common equity

 

$

273,950

 

 

$

265,198

 

 

$

331,862

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,608,590

 

 

$

3,532,289

 

 

$

3,371,014

 

Less: goodwill and other intangible assets

 

 

29,632

 

 

 

29,874

 

 

 

30,632

 

Tangible assets

 

$

3,578,958

 

 

$

3,502,415

 

 

$

3,340,382

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

15,170,372

 

 

 

15,085,675

 

 

 

15,270,010

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

20.01

 

 

$

19.56

 

 

$

23.74

 

Tangible book value per common share

 

$

18.06

 

 

$

17.58

 

 

$

21.73

 

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

 

 

8.41

%

 

 

8.35

%

 

 

10.75

%

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

 

 

7.65

%

 

 

7.57

%

 

 

9.93

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME/EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

For three months ended:

 

 

For twelve months ended:

Noninterest income:

 

 

12/31/2022

 

 

9/30/2022

 

 

12/31/2021

 

 

12/31/2022

 

12/31/2021

Service charges on deposit accounts

 

$

3,074

 

 

$

3,216

 

 

$

3,169

 

 

$

12,535

 

 

$

11,846

 

Debit card fees

 

 

2,075

 

 

 

2,241

 

 

 

2,165

 

 

 

8,533

 

 

 

8,485

 

Bank-owned life insurance

 

 

255

 

 

 

(23

)

 

 

203

 

 

 

(996

)

 

 

2,648

 

Other service charges and fees

 

 

667

 

 

 

741

 

 

 

992

 

 

 

2,872

 

 

 

2,939

 

Gain on sale of securities

 

 

456

 

 

 

 

 

 

 

 

 

1,487

 

 

 

11

 

Gain (loss) on partnership investments

 

 

415

 

 

 

64

 

 

 

(133

)

 

 

253

 

 

 

(524

)

Other

 

 

714

 

 

 

373

 

 

 

706

 

 

 

6,086

 

 

 

2,674

 

Total noninterest income

 

$

7,656

 

 

$

6,612

 

 

$

7,102

 

 

$

30,770

 

 

$

28,079

 

As a % of average interest earning assets (1)

 

 

0.92

%

 

 

0.81

%

 

 

0.87

%

 

 

0.95

%

 

 

0.90

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

11,983

 

 

$

11,521

 

 

$

10,237

 

 

$

47,053

 

 

$

42,431

 

Occupancy costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Furniture & equipment

 

 

484

 

 

 

399

 

 

 

409

 

 

 

1,847

 

 

 

1,720

 

Premises

 

 

2,064

 

 

 

2,071

 

 

 

1,957

 

 

 

7,871

 

 

 

8,117

 

Advertising and marketing costs

 

 

407

 

 

 

466

 

 

 

539

 

 

 

1,729

 

 

 

1,521

 

Data processing costs

 

 

1,627

 

 

 

1,564

 

 

 

1,481

 

 

 

6,202

 

 

 

5,890

 

Deposit services costs

 

 

2,380

 

 

 

2,450

 

 

 

2,298

 

 

 

9,492

 

 

 

9,049

 

Loan services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan processing

 

 

124

 

 

 

128

 

 

 

158

 

 

 

550

 

 

 

501

 

Foreclosed assets

 

 

 

 

 

(3

)

 

 

(6

)

 

 

84

 

 

 

72

 

Other operating costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone & data communications

 

 

384

 

 

 

358

 

 

 

431

 

 

 

1,563

 

 

 

2,013

 

Postage & mail

 

 

47

 

 

 

47

 

 

 

56

 

 

 

373

 

 

 

308

 

Other

 

 

351

 

 

 

507

 

 

 

906

 

 

 

2,725

 

 

 

2,176

 

Professional services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal & accounting

 

 

380

 

 

 

535

 

 

 

2,703

 

 

 

2,133

 

 

 

4,794

 

Director's deferred compensation

 

 

86

 

 

 

(143

)

 

 

4

 

 

 

(1,106

)

 

 

1,137

 

Other professional service

 

 

806

 

 

 

855

 

 

 

796

 

 

 

3,111

 

 

 

2,878

 

Stationery & supply costs

 

 

172

 

 

 

114

 

 

 

85

 

 

 

486

 

 

 

345

 

Sundry & tellers

 

 

227

 

 

 

127

 

 

 

125

 

 

 

690

 

 

 

604

 

Total noninterest expense

 

$

21,522

 

 

$

20,996

 

 

$

22,179

 

 

$

84,803

 

 

$

83,556

 

As a % of average interest earning assets (1)

 

 

2.59

%

 

 

2.58

%

 

 

2.72

%

 

 

2.63

%

 

 

2.69

%

Efficiency ratio (2)(3)

 

 

57.55

%

 

 

58.10

%

 

 

64.86

%

 

 

60.16

%

 

 

59.92

%

(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, 2022

 

September 30, 2022

 

December 31, 2021

 

 

Average

Balance(1)

Income/ Expense

Yield/

Rate(2)

 

Average

Balance(1)

Income/ Expense

Yield/

Rate(2)

 

Average

Balance(1)

Income/ Expense

Yield/

Rate(2)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold/interest-earning due from's

 

$ 5,548

$ 52

3.72

%

 

$ 21,845

$ 103

1.87

%

 

$ 311,386

$ 120

0.15

%

Taxable

 

884,020

10,176

4.57

%

 

851,683

7,646

3.56

%

 

593,959

2,403

1.61

%

Non-taxable

 

362,621

2,879

3.99

%

 

336,567

2,346

3.50

%

 

285,811

1,679

2.95

%

Total investments

 

1,252,189

13,107

4.40

%

 

1,210,095

10,095

3.51

%

 

1,191,156

4,202

1.55

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and Leases: (3)

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

1,865,426

19,916

4.24

%

 

1,862,738

19,808

4.22

%

 

1,794,285

20,864

4.61

%

Agricultural Production

 

32,125

368

4.54

%

 

29,724

274

3.66

%

 

38,191

361

3.75

%

Commercial

 

74,370

1,032

5.51

%

 

75,482

973

5.11

%

 

118,159

1,457

4.89

%

Consumer

 

4,267

92

8.55

%

 

4,228

132

12.39

%

 

4,720

237

19.92

%

Mortgage warehouse lines

 

60,408

1,069

7.02

%

 

46,969

623

5.26

%

 

90,736

747

3.27

%

Other

 

2,356

19

3.20

%

 

2,349

23

3.88

%

 

1,430

29

8.05

%

Total loans and leases

 

2,038,952

22,496

4.38

%

 

2,021,490

21,833

4.28

%

 

2,047,521

23,695

4.59

%

Total interest earning assets (4)

 

3,291,141

35,603

4.38

%

 

3,231,585

31,928

4.00

%

 

3,238,677

27,897

3.47

%

Other earning assets

 

22,411

 

 

 

15,717

 

 

 

21,425

 

 

Non-earning assets

 

259,860

 

 

 

255,529

 

 

 

206,344

 

 

Total assets

 

$ 3,573,412

 

 

 

$ 3,502,831

 

 

 

$ 3,466,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$ 159,206

$ 128

0.32

%

 

$ 197,731

$ 131

0.26

%

 

$ 131,810

$ 80

0.24

%

NOW

 

510,776

78

0.06

%

 

531,205

80

0.06

%

 

615,245

112

0.07

%

Savings accounts

 

470,858

69

0.06

%

 

485,167

73

0.06

%

 

451,369

65

0.06

%

Money market

 

142,861

25

0.07

%

 

151,816

25

0.07

%

 

146,174

25

0.07

%

Time Deposits

 

367,164

2,859

3.09

%

 

313,764

1,377

1.74

%

 

291,516

241

0.33

%

Wholesale Brokered Deposits

 

115,652

554

1.90

%

 

63,529

75

0.47

%

 

60,000

49

0.32

%

Total interest bearing deposits

 

1,766,517

3,713

0.83

%

 

1,743,212

1,761

0.40

%

 

1,696,114

572

0.13

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

Other Interest-Bearing Liabilities

 

253,384

1,519

2.38

%

 

159,530

390

0.98

%

 

98,326

86

0.35

%

Long-Term Debt

 

49,201

429

3.46

%

 

49,182

427

3.44

%

 

49,156

430

3.47

%

Subordinated Debentures

 

35,454

579

6.48

%

 

35,409

439

4.92

%

 

35,276

243

2.73

%

Total borrowed funds

 

338,039

2,527

2.97

%

 

244,121

1,256

2.04

%

 

182,758

759

1.65

%

Total interest bearing liabilities

 

2,104,556

6,240

1.18

%

 

1,987,333

3,017

0.60

%

 

1,878,872

1,331

0.28

%

Demand deposits - Noninterest bearing

 

1,116,622

 

 

 

1,140,840

 

 

 

1,120,323

 

 

Other liabilities

 

58,959

 

 

 

67,603

 

 

 

102,838

 

 

Shareholders' equity

 

293,275

 

 

 

307,055

 

 

 

364,413

 

 

Total liabilities and shareholders' equity

 

$ 3,573,412

 

 

 

$ 3,502,831

 

 

 

$ 3,466,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

4.38

%

 

 

 

4.00

%

 

 

 

3.47

%

Interest expense/interest earning assets

 

 

 

0.75

%

 

 

 

0.37

%

 

 

 

0.16

%

Net interest income and margin (5)

 

 

$ 29,363

3.63

%

 

 

$ 28,911

3.63

%

 

 

$ 26,566

3.31

%

(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 credit losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $0.005 million and $0.8 million for the quarters ended December 31, 2022 and 2021, respectively, and $0.9 million for the quarter ended September 30, 2022.

(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 twelve months ended

 

 

For the twelve months ended

 

 

December 31, 2022

 

 

December 31, 2021

 

 

Average

Balance (1)

 

Income/

Expense

 

Yield/ Rate (2)

 

Average

Balance (1)

 

Income/

Expense

 

Yield/ Rate (2)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning due from banks

 

$

91,420

 

$

519

 

0.57

%

 

$

269,932

 

$

370

 

0.14

%

Taxable

 

 

808,750

 

 

25,789

 

3.19

%

 

 

406,790

 

 

7,239

 

1.78

%

Non-taxable

 

 

319,682

 

 

8,805

 

3.49

%

 

 

258,472

 

 

6,218

 

3.05

%

Total investments

 

 

1,219,852

 

 

35,113

 

3.07

%

 

 

935,194

 

 

13,827

 

1.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases:(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

$

1,831,874

 

$

77,708

 

4.24

%

 

$

1,818,362

 

 

84,074

 

4.62

%

Agricultural

 

 

31,565

 

 

1,176

 

3.73

%

 

 

42,866

 

 

1,598

 

3.73

%

Commercial

 

 

81,798

 

 

4,383

 

5.36

%

 

 

153,880

 

 

7,828

 

5.09

%

Consumer

 

 

4,301

 

 

638

 

14.83

%

 

 

4,993

 

 

831

 

16.64

%

Mortgage warehouse lines

 

 

54,606

 

 

2,695

 

4.94

%

 

 

147,996

 

 

4,807

 

3.25

%

Other

 

 

2,139

 

 

106

 

4.96

%

 

 

1,485

 

 

111

 

7.47

%

Total loans and leases

 

 

2,006,283

 

 

86,706

 

4.32

%

 

 

2,169,582

 

 

99,249

 

4.57

%

Total interest earning assets (4)

 

 

3,226,135

 

 

121,819

 

3.85

%

 

 

3,104,776

 

 

113,076

 

3.70

%

Other earning assets

 

 

15,685

 

 

 

 

 

 

 

15,043

 

 

 

 

 

Non-earning assets

 

 

243,340

 

 

 

 

 

 

 

208,665

 

 

 

 

 

Total assets

 

$

3,485,160

 

 

 

 

 

 

$

3,328,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

195,192

 

$

485

 

0.25

%

 

$

143,171

 

$

331

 

0.23

%

NOW

 

 

532,692

 

 

322

 

0.06

%

 

 

597,992

 

 

444

 

0.07

%

Savings accounts

 

 

476,128

 

 

278

 

0.06

%

 

 

427,803

 

 

240

 

0.06

%

Money market

 

 

150,378

 

 

95

 

0.06

%

 

 

140,365

 

 

111

 

0.08

%

Time deposits

 

 

317,806

 

 

4,914

 

0.00

%

 

 

333,204

 

 

1,039

 

0.31

%

Brokered deposits

 

 

74,917

 

 

725

 

1.55

%

 

 

81,041

 

 

225

 

0.28

%

Total interest bearing deposits

 

 

1,747,113

 

 

6,819

 

0.97

%

 

 

1,723,576

 

 

2,390

 

0.14

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest-bearing liabilities

 

 

158,095

 

 

2,069

 

1.31

%

 

 

75,629

 

 

213

 

0.28

%

Long-term debt

 

 

49,172

 

 

1,713

 

3.49

%

 

 

13,351

 

 

468

 

3.51

%

Subordinated debentures

 

 

35,387

 

 

1,603

 

3.87

%

 

 

35,208

 

 

979

 

2.78

%

Total borrowed funds

 

 

242,654

 

 

5,385

 

2.22

%

 

 

124,188

 

 

1,660

 

1.34

%

Total interest bearing liabilities

 

 

1,989,767

 

 

12,204

 

0.61

%

 

 

1,847,764

 

 

4,050

 

0.22

%

Demand deposits - noninterest bearing

 

 

1,121,060

 

 

 

 

 

 

 

1,064,119

 

 

 

 

 

Other liabilities

 

 

58,538

 

 

 

 

 

 

 

59,723

 

 

 

 

 

Shareholders' equity

 

 

315,795

 

 

 

 

 

 

 

356,878

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

3,485,160

 

 

 

 

 

 

$

3,328,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest earning assets

 

 

 

 

 

 

 

3.85

%

 

 

 

 

 

 

 

3.70

%

Interest expense/interest earning assets

 

 

 

 

 

 

 

0.38

%

 

 

 

 

 

 

 

0.14

%

Net interest income and margin(5)

 

 

 

 

$

109,615

 

3.47

%

 

 

 

 

$

109,026

 

3.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 credit losses. Net loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $0.9 million and $4.2 million for the years ended December 31, 2022 and 2021, 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

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