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Sierra Bancorp Reports Improved Financial Results for Second Quarter and First Six Months of 2024

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, 2024. Sierra Bancorp reported consolidated net income of $10.3 million, or $0.71 per diluted share, for the second quarter of 2024, compared to $9.9 million, or $0.67 per diluted share, in the second quarter of 2023. On a linked-quarter (three months ended March 31, 2024) basis, the Company reported an increase of $0.9 million, or 10%, in net income.

Highlights for the second quarter of 2024:

  • Improved Earnings
    • Diluted Earnings per Share increased 11%, or $0.07, from the prior linked quarter.
    • Increased Return on Average Assets to 1.14%, from 1.06%, in the prior linked quarter.
    • Higher Return on Average Equity of 11.95%, compared to 11.09%, in the prior linked quarter.
    • Improved net interest income by $1.5 million, or 5%, as compared to the prior linked quarter.
    • Net interest margin grew by 7 basis points from the prior linked quarter to 3.69%.
  • Strong Asset Quality
    • Total Nonperforming Loans to total gross loans declined 56% to 0.29% at June 30, 2024.
    • No foreclosed assets at June 30, 2024.
    • Regulatory Commercial Real Estate concentration ratio of 241%, and a 10% decline in total commercial real estate loan balances the past three years.
    • No non-owner occupied commercial real estate loans are on nonaccrual status as of June 30, 2024.
    • Delinquencies remained low at 0.14% of total loans.
  • Asset and Deposit Growth
    • Total assets increased $128.1 million, or 14% annualized, during the quarter, to $3.7 billion.
    • Loan growth of $77.7 million, or 14% annualized, during the quarter, to $2.2 billion.
    • Total deposits increased by $95.4 million, or 13% annualized, during the quarter, to $2.9 billion.
    • Noninterest-bearing deposits of $986.9 million at June 30, 2024, represent 34% of total deposits.
  • Solid Capital and Liquidity
    • Increased Tangible Book Value (non-GAAP) per share by 3%, to $22.24 per share during the quarter.
    • Repurchased 178,168 shares of stock during the quarter.
    • Raised dividend by $0.01 for the quarter to $0.24 per share, payable on August 15, 2024.
    • Strong regulatory Community Bank Leverage Ratio of 11.6%, at June 30, 2024, for our subsidiary Bank.
    • Tangible Common Equity Ratio (non-GAAP) of 8.8%, at June 30, 2024, on a consolidated basis.
    • Overall primary and secondary liquidity sources of $2.5 billion at June 30, 2024.

“In any team sport, the best teams have consistency and chemistry.” Roger Staubach

“We are excited to share our strong second quarter results! The solid improvements achieved in the past two quarters demonstrate our balanced commitment to both our communities and shareholders as we complement growth with a focus on balance sheet strategy in a challenging interest rate environment,” stated Kevin McPhaill, CEO and President. “Our expanding and diversified banking teams continue to strengthen existing customer relationships while also bringing new relationships to the Bank. We are proud of our results for the first half of 2024 and believe that building this foundation will enable us to continue providing both exemplary service to our customers and strong and consistent returns for our shareholders,” concluded Mr. McPhaill.

For the first six months of 2024, the Company recognized net income of $19.6 million, or $1.35 per diluted share, as compared to $18.7 million, or $1.26 per diluted share, for the same period in 2023, a 5% increase. The Company's improved financial performance metrics for the first half of 2024 include a return on average assets of 1.10%, and net interest margin of 3.66%, as compared to a return on average assets of 1.02%, and a net interest margin of 3.43% for the same period in 2023.

Quarterly Income Changes (comparisons to the second quarter of 2023)

  • Net income increased by $0.3 million, or 3%, to $10.3 million due to higher net interest income and lower noninterest expenses partially offset by an increase in the provision for credit losses, and lower noninterest income.
  • The $1.9 million, or 7%, increase in net interest income was driven by a 30 basis points increase in net interest margin. A $180.9 million decrease in other borrowed funds due to the bond sale and restructuring in early 2024 along with higher loan yields were the primary drivers of the net interest margin increase.
  • Noninterest income decreased $0.4 million, primarily from nonrecurring gains on the sale of investments in the second quarter of 2023.
  • Noninterest expense improved due to a strategic internal reorganization in the fourth quarter of 2023 which optimized our team structure, and better aligned our resources and processes.

Linked Quarter Income Changes (comparisons to the three months ended March 31, 2024)

  • Net income improved by $0.9 million, or 10%, driven mostly by a $1.5 million increase in net interest income partially offset by a $0.8 million increase in the provision for credit losses. Net nonrecurring gains in the first quarter of 2024 were more than offset by lower noninterest expenses in the second quarter of 2024.
  • Net interest income increased by $1.5 million, due to higher average earnings assets coupled with a 7 basis points increase in net interest margin for the same reasons listed in the quarterly comparison above.
  • Noninterest income was down $1.0 million, due mostly to the first quarter of 2024 including a gain on the sale/leaseback of two bank-owned branch buildings partially offset by the loss on the sale of bonds from a balance sheet restructure.
  • Noninterest expense was down $1.8 million, mostly from salary expense decreases from the strategic reduction in force in 2023. These operational efficiencies were partially offset by higher occupancy costs resulting from the sale/leaseback of owned branch locations in the previous two quarters. Lower directors deferred compensation expense discussed in further detail below, mitigated some of the higher occupancy costs.

Year-to-Date Income Changes (comparisons to the first six-months of 2023)

  • Net income increased by $0.9 million, or 5%, due mostly to higher net interest income primarily resulting from a decrease in higher cost borrowed funds partially offset by an increase in the provision for credit losses, and an increase in occupancy expenses from the sale/leaseback in late 2023.
  • The provision for credit losses on loans was $1.0 million, an increase of $0.7 million, due to higher net charge-offs.
  • Net interest income increased by $2.4 million, or 4%, due mostly to an increase in interest income and a decrease in higher cost borrowed funds.
  • Noninterest income increased $1.6 million, or 11%, primarily from an increase in service charges on deposit accounts, and a $0.9 million positive variance in BOLI income tied to our nonqualified deferred compensation plan.

Balance Sheet Changes (comparisons to December 31, 2023)

  • Total assets decreased 1%, or $48.6 million, due primarily to the strategic restructuring of our lower-yielding bond portfolio in the first quarter of 2024, mostly offset by increases in loan balances.
  • Gross loans increased $144.5 million, or 7%, due to a $158.1 million increase in mortgage warehouse loans, and a $13.5 million increase in farmland loans, partially offset by smaller declines in other categories. Specifically, there was a $27.0 million decrease in non-agricultural real estate loans, a $0.4 million increase in other commercial loans, and a $0.5 million reduction in consumer loans. In addition to strong favorable growth in mortgage warehouse, new credit extended, including new fundings on non-mortgage warehouse lines of credit, was $75.3 million year to date in 2024 vs $89.6 million year to date in 2023.
  • Deposits increased by $181.2 million, or 7%. The growth in deposits came primarily from brokered deposits, as overall customer deposits decreased $30.4 million. Brokered deposits added in 2024 were one year or less and are used to fund increases in mortgage warehouse balances in 2024.
  • Other interest-bearing liabilities decreased $239.6 million mostly from a decrease in overnight borrowings facilitated by the strategic balance sheet restructuring in the first quarter of 2024.

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

 

 

6/30/2024

 

3/31/2024

 

6/30/2023

 

6/30/2024

 

6/30/2023

Net income

 

$

10,263

 

 

$

9,330

 

 

$

9,919

 

 

$

19,593

 

 

$

18,670

 

Diluted earnings per share

 

$

0.71

 

 

$

0.64

 

 

$

0.67

 

 

$

1.35

 

 

$

1.26

 

Return on average assets

 

 

1.14

%

 

 

1.06

%

 

 

1.07

%

 

 

1.10

%

 

 

1.02

%

Return on average equity

 

 

11.95

%

 

 

11.09

%

 

 

13.06

%

 

 

11.52

%

 

 

12.30

%

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (tax-equivalent) (1)

 

 

3.69

%

 

 

3.62

%

 

 

3.39

%

 

 

3.66

%

 

 

3.43

%

Yield on average loans

 

 

5.16

%

 

 

4.89

%

 

 

4.74

%

 

 

5.03

%

 

 

4.62

%

Yield on investments

 

 

5.58

%

 

 

5.59

%

 

 

5.02

%

 

 

5.57

%

 

 

4.88

%

Cost of average total deposits

 

 

1.53

%

 

 

1.38

%

 

 

1.09

%

 

 

1.46

%

 

 

0.96

%

Cost of funds

 

 

1.67

%

 

 

1.58

%

 

 

1.50

%

 

 

1.62

%

 

 

1.32

%

Efficiency ratio (tax-equivalent) (1) (2)

 

 

59.15

%

 

 

65.97

%

 

 

62.27

%

 

 

62.51

%

 

 

63.53

%

 

 

 

 

 

Total assets

 

$

3,681,202

 

 

$

3,553,072

 

 

$

3,762,461

 

 

$

3,681,202

 

 

$

3,762,461

 

Loans net of deferred fees

 

$

2,234,816

 

 

$

2,157,078

 

 

$

2,094,464

 

 

$

2,234,816

 

 

$

2,094,464

 

Noninterest demand deposits

 

$

986,927

 

 

$

968,996

 

 

$

1,066,498

 

 

$

986,927

 

 

$

1,066,498

 

Total deposits

 

$

2,942,410

 

 

$

2,847,004

 

 

$

2,918,759

 

 

$

2,942,410

 

 

$

2,918,759

 

Noninterest-bearing deposits over total deposits

 

 

33.5

%

 

 

34.0

%

 

 

36.5

%

 

 

33.5

%

 

 

36.5

%

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity / total assets

 

 

9.5

%

 

 

9.7

%

 

 

8.2

%

 

 

9.5

%

 

 

8.2

%

Tangible common equity ratio (2)

 

 

8.8

%

 

 

9.0

%

 

 

7.5

%

 

 

8.8

%

 

 

7.5

%

Book value per share

 

$

24.19

 

 

$

23.56

 

 

$

20.90

 

 

$

24.19

 

 

$

20.90

 

Tangible book value per share (2)

 

$

22.24

 

 

$

21.61

 

 

$

18.93

 

 

$

22.24

 

 

$

18.93

 

Community bank leverage ratio

 

 

11.6

%

 

 

11.6

%

 

 

10.8

%

 

 

11.6

%

 

 

10.8

%

Tangible common equity ratio (bank only) (2)

 

 

10.6

%

 

 

10.6

%

 

 

9.3

%

 

 

10.6

%

 

 

9.3

%

(1)

Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.

(2)

See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income was $30.2 million for the second quarter of 2024, a $1.9 million increase, or 7% over the second quarter of 2023. This increase in interest income for the quarterly comparison was due primarily to an increase in interest income on loans for $4.2 million, augmented by a $0.8 million decrease in interest expense due to the reduction in borrowed funds facilitated by a balance sheet restructuring, partially offset by a related decline in interest income on investments of $1.6 million, or 10%, due to the sale of low yielding investments.

For the second quarter of 2024, although the balance of average interest-earning assets was $106.2 million lower, the yield was 71 basis points higher as compared to the same period in 2023. There was a 23 basis point increase in the cost of our interest-bearing liabilities for the same period, which offset some of the higher yields on the asset side.

Net interest income for the comparative year-to-date periods increased $2.4 million, due to the strategic decision to change the mix on interest earning assets, selling off lower yielding bonds in the fourth quarter of 2023, and first quarter of 2024, moderated by an increase in interest rates paid on interest-bearing liabilities. There was a $112.5 million, or 6%, increase in average loan and lease balances yielding 41 basis points higher for the same period, while average investment balances decreased $229.1 million, yielding 69 basis points higher for the same period. Average interest-bearing liabilities decreased $83.7 million, mostly in borrowed funds. The cost of interest-bearing liabilities was 41 basis points higher for the comparative periods. The favorable net impact of the mix and rate change was a 23 basis point increase in our net interest margin for the six-months ending June 30, 2024 as compared to the same period in 2023.

At June 30, 2024, approximately 27% of the Bank’s loan portfolio is scheduled to mature or reprice within twelve months and an additional 11% could reprice within three years. In addition, approximately $519.9 million, or 50.5%, of the securities portfolio consists of floating rate bonds that reprice quarterly. Office commercial real estate loans generally have an adjustable rate, with most rate adjustments occurring beyond two years. During the next 24 months, we have 36 office commercial real estate loans totaling $46.7 million with scheduled interest rate resets. Additionally, there are three office commercial real estate loans totaling $3.3 million that will mature during the same time frame. The Bank’s practice is to make commercial real estate loans with an “at origination” loan-to-value of 65% or lower.

Interest expense was $13.3 million for the second quarter of 2024, an increase of $0.8 million, relative to the second quarter of 2023. For the first six months of 2024, compared to the first six months of 2023, interest expense increased $3.7 million, to $25.6 million. The increase in interest expense is primarily attributable to an increase in interest rates paid on certain time deposits, and a shift in deposits to higher interest rate accounts partially offset by lower balances on other borrowings. There was an unfavorable shift in the deposit mix in the second quarter of 2024 as compared to the same period in 2023 due to increased demand from customers for higher rates. Higher cost customer time deposits increased by $23.0 million, and wholesale brokered deposits increased by $129.3 million, while lower cost and noninterest bearing deposits decreased by $181.4 million. A $128.9 million decrease in borrowed funds mitigated some of the unfavorable shift for the quarterly comparison. For the first half of 2024, as compared to the same period in 2023, customer time deposits increased $61.6 million, and wholesale brokered deposits increased $85.9 million, while borrowed funds decreased $88.7 million, and other deposits decreased $218.7 million.

Our net interest margin was 3.69% for the second quarter of 2024, as compared to 3.62% for the linked quarter and 3.39% for the second quarter of 2023. While the yield of interest-earning assets increased 16 basis points for the second quarter of 2024 as compared to the linked quarter, the cost of interest-bearing liabilities increased 10 basis points for the same period of comparison. The average balance of interest-earning assets increased $86.9 million for the linked quarter, while the increase in interest-bearing liabilities was $93.3 million for the same period. The decrease in higher cost borrowed funds over the increase in yield on interest-earning assets improved the net interest margin in the second quarter of 2024 over the same period in 2023, and for the linked quarters.

Provision for Credit Losses

The provision for credit losses on loans was $0.9 million for the second quarter of 2024, as compared to a $0.1 million provision for credit losses related to loans in the second quarter of 2023. There was a year-to-date provision for credit losses on loans of $1.0 million in 2024, as compared to $0.3 million for the same period in 2023. The Company's $0.8 million increase in the provision for credit losses on loans in the second quarter of 2024, as compared to the second quarter of 2023, and the $0.7 million year to date increase in the provision for credit losses on loans, compared to the same period in 2023, was primarily due to the impact of $2.9 million in net charge-offs in the first six months of 2024, with only $0.4 million in net charge-offs for the first six months of 2023. The increase in net charge-offs in the second quarter of 2023 was primarily related to a single office building, which was subsequently foreclosed upon and sold.

There was a benefit for credit losses on unfunded commitments for $0.02 million in the second quarter of 2024, and $0.01 million for the first six months of 2024, as compared to a $0.01 million benefit for credit losses in the second quarter of 2023 and a $0.1 million benefit for credit losses in the first six months of 2023.

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

Noninterest Income

Total noninterest income decreased by $0.4 million, or 5%, for the quarter ended June 30, 2024, as compared to the same quarter in 2023 and increased $1.6 million, or 11%, for the comparable year-to-date periods. The quarterly comparison decrease primarily resulted from a $0.4 million non-recurring bond sale gain in 2023. The year-to-date increase reflects a $2.9 million loss on the sale of investment securities in 2024, offset by a $3.8 million gain on the sale/leaseback of bank owned branch locations. There were $0.5 million in life insurance proceeds in 2023, with no like amount in 2024. These favorable variances to the year-to-date comparisons were augmented by a $1.2 million increase in the value of separate account corporate-owned life insurance assets tied to non-qualified deferred compensation plans.

The Company maintains a non-qualified deferred compensation plan for officers and directors, which allows the participant to defer a portion of their earnings tax-free. Participants are allowed to choose different hypothetical investment alternatives to determine their individualized return on their deferred compensation. The Company has chosen to offset the cost of this liability with a Corporate Owned Life Insurance Policy (“COLI”) which is funded based on deferral elections from the participants. Although the COLI is not directly tied to the deferred compensation plan, the COLI is invested in similar fund types as those selected by the participants. There is some inefficiency in net earnings of the COLI asset as compared to the deferred compensation liability created by the cost of insurance, differences in balances, and differences in individual fund performance. During the second quarter, and first six-months of 2024, earnings from the COLI was $0.3 million, and $1.3 million, respectively, while additional expense from the related deferred compensation liability was $0.3 million, and $1.4 million, respectively. Most of such expense is reported as Professional Fees under Directors Fees as such expense is related to deferral of past directors’ fees. Specifically, $0.3 million for the quarterly comparison, and $1.2 million for the year-to-date comparison, respectively, is reflected as directors’ fees as part of the overall Professional Fees expense line item. The tax benefit of having tax-free earnings with tax-deductible expense was $0.2 million during the second quarter of 2024, and $0.8 million for the first six-months of 2024.

Service charges on customer deposit account income decreased by $0.5 million, or 9%, to $6.2 million in the second quarter of 2024, as compared to the second quarter of 2023, and $0.8 million higher, or 8%, in the first six months of 2024, as compared to the same period in 2023. These increases in the quarterly and year-to-date comparisons are primarily a result of higher interchange and ATM fees, along with increased service charges on analysis accounts.

Noninterest Expense

Total noninterest expense favorably declined by $0.3 million, or 1%, in the second quarter of 2024, relative to the second quarter of 2023, but increased by $1.3 million, or 3%, in the first six months of 2024, as compared to the first six months of 2023.

Salaries and Benefits were $0.1 million, or 1%, lower in the second quarter of 2024, as compared to the second quarter of 2023, and were $0.3 million, or 1%, higher for the first six months of 2024, compared to the same period in 2023. The reason for the decrease in the quarterly comparison is due to a strategic decision to improve operational efficiencies. The increase in the year-over-year comparison is primarily due to increases related to annual performance evaluations. Overall full-time equivalent employees were 501 at June 30, 2024, as compared to 489 at December 31, 2023, and 502 at June 30, 2023. Included in full-time equivalent employees at June 30, 2024, were 18 summer interns and temporary employees.

Occupancy expenses increased by $0.7 million, and $1.4 million for the second quarter, and the first half of 2024 as compared to the same periods in 2023. The reason for the increases in both comparisons is due to increased rent expense from the sale/leaseback transactions in the fourth quarter of 2023, and first quarter of 2024.

Other noninterest expense decreased $0.9 million, or 11%, for the second quarter 2024, as compared to the second quarter in 2023, and decreased $0.4 million, or 3%, for the first half of 2024, as compared to the same period in 2023. FDIC assessment costs decreased by $0.2 million for the quarterly comparisons but were flat for the year-to-date comparison. Deferred compensation expense for directors decreased $0.1 million for the quarterly comparison but increased $0.9 million for the year-to-date comparison, which is linked to the changes in life insurance income as described in detail above. There were decreases in debit card processing and ATM network costs of $0.6 million for both the quarterly and year-to-date comparisons due to a branding change from Mastercard to Visa and the subsequent conversion costs related to that change. Additionally, we incurred a $0.3 million loss that is reflected in noninterest expense during the second quarter of 2023, with no such like event in 2024. For the year-to-date comparison there was also elevated foreclosed assets costs for the first half of 2023, as compared to the same period in 2024, due to the foreclosure and subsequent sale of one large credit in the first quarter of 2023.

The Company's effective tax rate was 27.8% of pre-tax income in the second quarter of 2024, relative to 26.2% in the second quarter of 2023, and 27.1% of pre-tax income for the first half of 2024 relative to 25.0% for the same period in 2023. The increase in effective tax rate for both the quarterly and year-to-date comparisons is due to the tax credits and tax-exempt income representing a smaller percentage of total taxable income.

Balance Sheet Summary

The $48.6 million, or 1%, decrease in total assets during the first half of 2024, is primarily a result of a $326.4 million decrease in investment securities, from the sale of bonds from the strategic securities transaction, partially offset by a $144.5 million increase in gross loans and a $105.4 million increase in cash on hand.

The increase in gross loan balances as compared to December 31, 2023, was primarily a result of organic increases of $13.5 million in farmland loans, and a favorable change of $158.1 million in mortgage warehouse balances. Counterbalancing these positive variances were loan paydowns and maturities resulting in net declines in many categories even with higher loan production. In particular, there was a $27.0 million net decrease in non-agricultural real estate loans.

As indicated in the loan rollforward table below, new credit extended for the second quarter of 2024, increased $5.3 million over the linked quarter to $40.3 million and increased $3.3 million over the same period in 2023. Organic loan growth has been languid due to competitive pressures in our market and lower loan demand in the current interest rate environment. We also had $22.7 million in loan paydowns and maturities, a $10.4 million decline in line of credit utilization, offset by an increase of $70.5 million in mortgage warehouse line utilization.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOAN ROLLFORWARD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended:

 

For the six months ended:

 

 

 

June 30,

2024

 

 

March 31,

2024

 

 

June 30,

2023

 

 

June 30,

2024

 

 

June 30,

2023

Gross loans beginning balance

 

$

2,156,864

 

 

$

2,090,075

 

 

$

2,033,968

 

 

$

2,090,075

 

 

$

2,052,940

 

New credit extended

 

 

40,313

 

 

 

34,966

 

 

 

37,030

 

 

 

75,279

 

 

 

89,639

 

Changes in line of credit utilization (1)

 

 

(10,412

)

 

 

(24,928

)

 

 

6,622

 

 

 

(35,340

)

 

 

(19,168

)

Change in mortgage warehouse

 

 

70,498

 

 

 

87,562

 

 

 

42,145

 

 

 

158,060

 

 

 

45,178

 

Pay-downs, maturities, charge-offs and amortization

 

 

(22,735

)

 

 

(30,811

)

 

 

(25,374

)

 

 

(53,546

)

 

 

(74,198

)

Gross loans ending balance

 

$

2,234,528

 

 

$

2,156,864

 

 

$

2,094,391

 

 

 

2,234,528

 

 

 

2,094,391

 

(1)

Change does not include new balances on lines of credit extended during the respective periods as such balances are included as part of “New credit extended” line above.

Unused commitments, excluding mortgage warehouse and overdraft lines, were $247.1 million at June 30, 2024, compared to $203.6 million at December 31, 2023. Total line utilization, excluding mortgage warehouse and overdraft lines, was 57% at June 30, 2024, and 62% at December 31, 2023. Mortgage warehouse utilization increased to 54% at June 30, 2024, as compared to 36% at December 31, 2023. Total mortgage warehouse commitments increased by $96.5 million and $186.0 million for the three- and six-month periods ending June 30, 2024, respectively.

Deposit balances reflect growth of $181.2 million, or 7%, during the first six months of 2024. Core non-maturity deposits decreased by $41.4 million, or 2%, while customer time deposits increased by $11.0 million, or 2%. Wholesale brokered deposits increased by $211.6 million primarily to fund the growth in mortgage warehouse loans. Overall noninterest-bearing deposits as a percent of total deposits at June 30, 2024, decreased to 33.5%, as compared to 37.0% at December 31, 2023, and 36.5% at June 30, 2023. Other interest-bearing liabilities of $228.0 million on June 30, 2024, consisted of, $80.0 million in term FHLB advances, $148.0 million in customer repurchase agreements, and $35.7 million in trust preferred securities.

Overall uninsured deposits are estimated to be approximately $805.4 million, or 27% of total deposit balances, excluding public agency deposits that are subject to collateralization through a letter of credit issued by the FHLB. In addition, uninsured deposits of the Bank’s customers are eligible for FDIC pass-through insurance if the customer opens an IntraFi Insured Cash Sweep (ICS) account or a reciprocal time deposit through the Certificate of Deposit Account Registry System (CDARS). IntraFi allows for up to $225 million per customer of pass-through FDIC insurance, which would more than cover each of the Bank’s deposit customers if such customer desired to have such pass-through insurance. The Bank maintains a diversified deposit base with no significant customer concentrations and does not bank any cryptocurrency companies. At June 30, 2023, the Company had approximately 121,000 accounts and the 25 largest deposit balance customers had balances of approximately 14% of overall deposits. During the second quarter of 2024, except for seasonality fluctuations in the normal course of business, there has been no material change in the composition of our 25 largest deposit balance customers.

The Company continues to have substantial liquidity which is managed daily. At June 30, 2024, and December 31, 2023, the Company had the following sources of primary and secondary liquidity (Dollars in Thousands):

 

 

 

 

 

 

 

Primary and secondary liquidity sources

 

 

June 30, 2024

 

December 31, 2023

Cash and cash equivalents

 

$

183,990

 

$

78,602

Unpledged investment securities

 

 

533,799

 

 

792,965

Excess pledged securities

 

 

272,869

 

 

382,965

FHLB borrowing availability

 

 

672,300

 

 

586,726

Unsecured lines of credit

 

 

504,785

 

 

374,785

Funds available through fed discount window

 

 

348,444

 

 

392,034

Totals

 

$

2,516,187

 

$

2,608,077

Total capital of $350.0 million at June 30, 2024, reflects an increase of $11.9 million, or 4%, relative to year-end 2023. The increase in equity during the first half of 2024 was due to the addition of $19.6 million in net income, a $5.3 million favorable swing in accumulated other comprehensive income/loss due principally to changes in investment securities’ fair value, $7.1 million in share repurchases and net of $6.7 million in dividends paid. The remaining difference is related to stock options exercised and restricted stock compensation recognized during the quarter.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, decreased by $1.5 million to $6.5 million for the first half of 2024. The Company's ratio of nonperforming loans to gross loans decreased to 0.29% at June 30, 2024, from 0.38% at December 31, 2023. The decrease resulted from a decrease in non-accrual loan balances. All the Company's nonperforming assets are individually evaluated for credit loss quarterly and management believes the established allowance for credit loss on such loans is appropriate.

The Company's allowance for credit losses on loans was $21.6 million at June 30, 2024, as compared to $23.5 million at December 31, 2023. The decreased allowance for credit losses on loans was primarily due to a $1.5 million reduction in the allowance on loans individually evaluated for expected credit losses.

The allowance was 0.97% of gross loans at June 30, 2024, and 1.12% of gross loans at December 31, 2023, and 1.10% of gross loans at June 30, 2023. Management's detailed analysis indicates that the Company's allowance for credit losses on loans should be sufficient to cover credit losses for the life of the loans outstanding as of June 30, 2024, 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 calculates the allowance for credit losses using a combination of quantitative and qualitative factors by call report category. The largest increase in loan balances was from mortgage warehouse lines which has the lowest allowance for credit losses at 0.25%. Therefore, at June 30, 2024, approximately $0.7 million of the allowance for credit losses is attributable to mortgage warehouse lines.

About Sierra Bancorp

Sierra Bancorp is the holding Company for Bank of the Sierra (www.bankofthesierra.com), which is in its 47th year of operations.

Bank of the Sierra is a community-centric regional bank, which offers a broad range of retail and commercial banking services through full-service branches located within the counties of Tulare, Kern, Kings, Fresno, Ventura, San Luis Obispo, and Santa Barbara. The Bank also maintains an online branch and provides specialized lending services through an agricultural credit center in Templeton, California. In 2024, 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 including the impact to the Company and its customers resulting from changes to, and the level of, inflation and interest rates; changes in laws, rules, regulations, or interpretations to which the Company is subject; the Company’s ability to maintain and grow its deposit base; loan demand and continued portfolio performance, the Company's ability to attract and retain skilled employees, customers' service expectations; cyber security risks: the Company's ability to successfully deploy new technology, the success of acquisitions and branch expansion; operational risks including the ability to detect and prevent errors and fraud; the effectiveness of the Company’s enterprise risk management framework; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks that could affect stock price; changes to valuations of the Company’s assets and liabilities including the allowance for credit losses, earning assets, and intangible assets; changes to the availability of liquidity sources including borrowing lines and the ability to pledge or sell certain assets; costs related to litigation; the effects of severe weather events, pandemics, other public health crises, acts of war or terrorism, and other external events on our business; 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

 

 

6/30/2024

3/31/2024

 

12/31/2023

9/30/2023

 

6/30/2023

Cash and due from banks

 

$

183,990

 

 

$

119,244

 

 

$

78,602

 

 

$

88,542

 

 

$

103,483

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale, at fair value

 

 

716,787

 

 

 

741,789

 

 

 

1,019,201

 

 

 

1,010,377

 

 

 

1,027,538

 

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

 

 

312,879

 

 

 

316,406

 

 

 

320,057

 

 

 

323,544

 

 

 

328,478

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

396,819

 

 

 

406,443

 

 

 

412,063

 

 

 

418,782

 

 

 

426,608

 

Commercial real estate

 

 

1,316,754

 

 

 

1,327,482

 

 

 

1,328,224

 

 

 

1,334,663

 

 

 

1,317,945

 

Other construction/land

 

 

5,971

 

 

 

6,115

 

 

 

6,256

 

 

 

7,320

 

 

 

16,020

 

Farmland

 

 

80,807

 

 

 

66,133

 

 

 

67,276

 

 

 

90,993

 

 

 

92,728

 

Total real estate loans

 

 

1,800,351

 

 

 

1,806,173

 

 

 

1,813,819

 

 

 

1,851,758

 

 

 

1,853,301

 

Other commercial

 

 

156,650

 

 

 

143,448

 

 

 

156,272

 

 

 

137,407

 

 

 

126,360

 

Mortgage warehouse lines

 

 

274,059

 

 

 

203,561

 

 

 

116,000

 

 

 

107,584

 

 

 

110,617

 

Consumer loans

 

 

3,468

 

 

 

3,682

 

 

 

3,984

 

 

 

4,061

 

 

 

4,113

 

Gross loans

 

 

2,234,528

 

 

 

2,156,864

 

 

 

2,090,075

 

 

 

2,100,810

 

 

 

2,094,391

 

Deferred loan fees

 

 

288

 

 

 

214

 

 

 

309

 

 

 

163

 

 

 

73

 

Allowance for credit losses on loans

 

 

(21,640

)

 

 

(23,140

)

 

 

(23,500

)

 

 

(23,060

)

 

 

(23,010

)

Net loans

 

 

2,213,176

 

 

 

2,133,938

 

 

 

2,066,884

 

 

 

2,077,913

 

 

 

2,071,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank premises and equipment

 

 

16,007

 

 

 

16,067

 

 

 

16,907

 

 

 

21,926

 

 

 

22,072

 

Other assets

 

 

238,363

 

 

 

225,628

 

 

 

228,148

 

 

 

216,578

 

 

 

209,436

 

Total assets

 

$

3,681,202

 

 

$

3,553,072

 

 

$

3,729,799

 

 

$

3,738,880

 

 

$

3,762,461

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest demand deposits

 

$

986,927

 

 

$

968,996

 

 

$

1,020,772

 

 

$

1,059,878

 

 

$

1,066,498

 

Interest-bearing transaction accounts

 

 

537,731

 

 

 

532,791

 

 

 

533,947

 

 

 

561,257

 

 

 

584,263

 

Savings deposits

 

 

368,169

 

 

 

378,057

 

 

 

370,806

 

 

 

400,940

 

 

 

415,793

 

Money market deposits

 

 

136,853

 

 

 

134,533

 

 

 

145,591

 

 

 

130,914

 

 

 

124,834

 

Customer time deposits

 

 

566,132

 

 

 

560,979

 

 

 

555,107

 

 

 

551,731

 

 

 

552,371

 

Wholesale brokered deposits

 

 

346,598

 

 

 

271,648

 

 

 

135,000

 

 

 

165,000

 

 

 

175,000

 

Total deposits

 

 

2,942,410

 

 

 

2,847,004

 

 

 

2,761,223

 

 

 

2,869,720

 

 

 

2,918,759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

49,348

 

 

 

49,326

 

 

 

49,304

 

 

 

49,281

 

 

 

49,259

 

Subordinated debentures

 

 

35,749

 

 

 

35,704

 

 

 

35,660

 

 

 

35,615

 

 

 

35,570

 

Other interest-bearing liabilities

 

 

228,003

 

 

 

201,851

 

 

 

467,621

 

 

 

411,865

 

 

 

398,922

 

Total deposits and interest-bearing liabilities

 

 

3,255,510

 

 

 

3,133,885

 

 

 

3,313,808

 

 

 

3,366,481

 

 

 

3,402,510

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on unfunded loan commitments

 

 

520

 

 

 

540

 

 

 

510

 

 

 

600

 

 

 

750

 

Other liabilities

 

 

75,152

 

 

 

73,553

 

 

 

77,384

 

 

 

62,940

 

 

 

49,609

 

Total capital

 

 

350,020

 

 

 

345,094

 

 

 

338,097

 

 

 

308,859

 

 

 

309,592

 

Total liabilities and capital

 

$

3,681,202

 

 

$

3,553,072

 

 

$

3,729,799

 

 

$

3,738,880

 

 

$

3,762,461

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOODWILL AND INTANGIBLE ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2024

 

 

3/31/2024

 

 

12/31/2023

 

 

9/30/2023

 

 

6/30/2023

Goodwill

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

 

$

27,357

 

Core deposit intangible

 

 

961

 

 

 

1,180

 

 

 

1,399

 

 

 

1,618

 

 

 

1,837

 

Total intangible assets

 

$

28,318

 

 

$

28,537

 

 

$

28,756

 

 

$

28,975

 

 

$

29,194

 

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2024

 

 

3/31/2024

 

 

12/31/2023

 

 

9/30/2023

 

 

6/30/2023

Nonperforming loans

 

$

6,473

 

 

$

14,188

 

 

$

7,985

 

 

$

781

 

 

$

1,141

 

Foreclosed assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$

6,473

 

 

$

14,188

 

 

$

7,985

 

 

$

781

 

 

$

1,141

 

 

 

 

 

 

 

 

Quarterly net charge offs

 

$

2,422

 

 

$

457

 

 

$

3,618

 

 

$

67

 

 

$

157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due and still accruing (30-89)

 

$

3,172

 

 

$

1,563

 

 

$

255

 

 

$

806

 

 

$

1,873

 

Classified loans

 

$

28,829

 

 

$

34,100

 

 

$

35,577

 

 

$

39,958

 

 

$

37,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans / gross loans

 

 

0.29

%

 

 

0.66

%

 

 

0.38

%

 

 

0.04

%

 

 

0.05

%

NPA's / loans plus foreclosed assets

 

 

0.29

%

 

 

0.66

%

 

 

0.38

%

 

 

0.04

%

 

 

0.05

%

Allowance for credit losses on loans / gross loans

 

 

0.97

%

 

 

1.07

%

 

 

1.12

%

 

 

1.10

%

 

 

1.10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECT PERIOD-END STATISTICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2024

 

 

3/31/2024

 

 

12/31/2023

 

 

9/30/2023

 

 

6/30/2023

Shareholders' equity / total assets

 

 

9.5

%

 

 

9.7

%

 

 

9.1

%

 

 

8.3

%

 

 

8.2

%

Gross loans / deposits

 

 

75.9

%

 

 

75.8

%

 

 

75.7

%

 

 

73.2

%

 

 

71.8

%

Noninterest-bearing deposits / total deposits

 

 

33.5

%

 

 

34.0

%

 

 

37.0

%

 

 

36.9

%

 

 

36.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

For the three months ended:

 

 

For the six months ended:

 

 

 

6/30/2024

 

 

3/31/2024

 

 

6/30/2023

 

 

6/30/2024

 

 

6/30/2023

Interest income

 

$

43,495

 

 

$

40,961

 

 

$

40,875

 

 

$

84,455

 

 

$

78,294

 

Interest expense

 

 

13,325

 

 

 

12,244

 

 

 

12,558

 

 

 

25,568

 

 

 

21,845

 

Net interest income

 

 

30,170

 

 

 

28,717

 

 

 

28,317

 

 

 

58,887

 

 

 

56,449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit loss expense - loans

 

 

921

 

 

 

97

 

 

 

77

 

 

 

1,018

 

 

 

327

 

Credit loss (benefit) expense - unfunded commitments

 

 

(20

)

 

 

30

 

 

 

(100

)

 

 

10

 

 

 

(137

)

Credit loss benefit - debt securities held-to-maturity

 

 

-

 

 

 

-

 

 

 

(47

)

 

 

-

 

 

 

-

 

Net interest income after provision

 

 

29,269

 

 

 

28,590

 

 

 

28,387

 

 

 

57,859

 

 

 

56,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees on deposit accounts

 

 

6,184

 

 

 

5,726

 

 

 

5,691

 

 

 

11,909

 

 

 

11,071

 

(Loss) gain on sale of investments

 

 

-

 

 

 

(2,883

)

 

 

351

 

 

 

(2,883

)

 

 

396

 

Gain on sale of fixed assets

 

 

-

 

 

 

3,799

 

 

 

-

 

 

 

3,799

 

 

 

-

 

BOLI income

 

 

523

 

 

 

1,215

 

 

 

658

 

 

 

1,738

 

 

 

830

 

Other noninterest income

 

 

923

 

 

 

732

 

 

 

1,313

 

 

 

1,656

 

 

 

2,296

 

Total noninterest income

 

 

7,630

 

 

 

8,589

 

 

 

8,013

 

 

 

16,219

 

 

 

14,593

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

12,029

 

 

 

13,197

 

 

 

12,129

 

 

 

25,226

 

 

 

24,944

 

Occupancy expense

 

 

3,152

 

 

 

3,025

 

 

 

2,438

 

 

 

6,177

 

 

 

4,769

 

Other noninterest expenses

 

 

7,511

 

 

 

8,304

 

 

 

8,401

 

 

 

15,815

 

 

 

16,247

 

Total noninterest expense

 

 

22,692

 

 

 

24,526

 

 

 

22,968

 

 

 

47,218

 

 

 

45,960

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

14,207

 

 

 

12,653

 

 

 

13,432

 

 

 

26,860

 

 

 

24,892

 

Provision for income taxes

 

 

3,944

 

 

 

3,323

 

 

 

3,513

 

 

 

7,267

 

 

 

6,222

 

Net income

 

$

10,263

 

 

$

9,330

 

 

$

9,919

 

 

$

19,593

 

 

$

18,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TAX DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt muni income

 

$

1,592

 

 

$

1,989

 

 

$

2,741

 

 

$

3,581

 

 

$

5,555

 

Interest income - fully tax equivalent

$

43,918

 

 

$

41,490

 

 

$

41,604

 

 

$

85,407

 

 

$

79,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

For the six months ended:

 

 

 

6/30/2024

 

 

3/31/2024

 

 

6/30/2023

 

 

6/30/2024

 

 

6/30/2023

Basic earnings per share

 

$

0.72

 

 

$

0.64

 

 

$

0.67

 

 

$

1.36

 

 

$

1.26

 

Diluted earnings per share

 

$

0.71

 

 

$

0.64

 

 

$

0.67

 

 

$

1.35

 

 

$

1.26

 

Common dividends paid during period

 

$

0.23

 

 

$

0.23

 

 

$

0.23

 

 

$

0.46

 

 

$

0.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

14,300,267

 

 

 

14,508,468

 

 

 

14,735,568

 

 

 

14,404,368

 

 

 

14,853,052

 

Weighted average diluted shares

 

 

14,381,426

 

 

 

14,553,627

 

 

 

14,754,764

 

 

 

14,467,477

 

 

 

14,875,508

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per basic share (EOP)

 

$

24.19

 

 

$

23.56

 

 

$

20.90

 

 

$

24.19

 

 

$

20.90

 

Tangible book value per share (EOP) (2)

 

$

22.24

 

 

$

21.61

 

 

$

18.93

 

 

$

22.24

 

 

$

18.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (EOP)

 

 

14,466,873

 

 

 

14,645,298

 

 

 

14,811,736

 

 

 

14,466,873

 

 

 

14,811,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY FINANCIAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

For the three months ended:

 

 

For the six months ended:

 

 

 

6/30/2024

 

 

3/31/2024

 

 

6/30/2023

 

 

6/30/2024

 

 

6/30/2023

Return on average equity

 

 

11.95

%

 

 

11.09

%

 

 

13.06

%

 

 

11.52

%

 

 

12.30

%

Return on average assets

 

 

1.14

%

 

 

1.06

%

 

 

1.07

%

 

 

1.10

%

 

 

1.02

%

Net interest margin (tax-equivalent) (1)

 

 

3.69

%

 

 

3.62

%

 

 

3.39

%

 

 

3.66

%

 

 

3.43

%

Efficiency ratio (tax-equivalent) (1) (2)

 

 

59.15

%

 

 

65.97

%

 

 

62.27

%

 

 

62.51

%

 

 

63.53

%

Net charge-offs / average loans (not annualized)

 

 

0.11

%

 

 

0.02

%

 

 

0.01

%

 

 

0.13

%

 

 

0.02

%

(1)

Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.

(2)

See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".

 

 

 

 

 

 

 

 

 

 

NON-GAAP FINANCIAL MEASURES

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2024

 

 

3/31/2024

 

 

6/30/2023

Total stockholders' equity

 

$

350,020

 

 

$

345,094

 

 

$

309,592

 

Less: goodwill and other intangible assets

 

 

28,318

 

 

 

28,537

 

 

 

29,194

 

Tangible common equity

 

$

321,702

 

 

$

316,557

 

 

$

280,398

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

3,681,202

 

 

$

3,553,072

 

 

$

3,762,461

 

Less: goodwill and other intangible assets

 

 

28,318

 

 

 

28,537

 

 

 

29,194

 

Tangible assets

 

$

3,652,884

 

 

$

3,524,535

 

 

$

3,733,267

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity (bank only)

 

$

415,210

 

 

$

401,742

 

 

$

403,918

 

Less: goodwill and other intangible assets (bank only)

 

 

28,318

 

 

 

28,537

 

 

 

29,194

 

Tangible common equity (bank only)

 

$

386,892

 

 

$

373,205

 

 

$

374,724

 

 

 

 

 

 

 

 

 

 

 

Total assets (bank only)

 

$

3,678,508

 

 

$

3,550,459

 

 

$

3,762,461

 

Less: goodwill and other intangible assets (bank only)

 

 

28,318

 

 

 

28,537

 

 

 

29,194

 

Tangible assets (bank only)

 

$

3,650,190

 

 

$

3,521,922

 

 

$

3,733,267

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

14,466,946

 

 

 

14,645,298

 

 

 

14,811,736

 

 

 

 

 

 

 

 

 

 

 

Book value per common share (total stockholders' equity / shares outstanding)

 

$

24.19

 

 

$

23.56

 

 

$

20.90

 

Tangible book value per common share (tangible common equity / shares outstanding)

 

$

22.24

 

 

$

21.61

 

 

$

18.93

 

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

 

 

9.51

%

 

 

9.71

%

 

 

8.23

%

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

 

 

8.81

%

 

 

8.98

%

 

 

7.51

%

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

 

 

10.60

%

 

 

10.60

%

 

 

10.04

%

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended:

Efficiency Ratio:

 

 

6/30/2024

 

 

3/31/2024

 

 

6/30/2023

Noninterest expense

 

$

22,692

 

 

$

24,526

 

 

$

22,968

 

Divided by:

 

 

 

 

 

 

 

 

 

Net interest income

 

 

30,170

 

 

 

28,717

 

 

 

28,317

 

Tax-equivalent interest income adjustments

 

 

423

 

 

 

529

 

 

 

729

 

Net interest income, adjusted

 

 

30,593

 

 

 

29,246

 

 

 

29,046

 

Noninterest income

 

 

7,630

 

 

 

8,589

 

 

 

8,013

 

Less (loss) gain on sale of securities

 

 

-

 

 

 

(2,883

)

 

 

351

 

Less gain on sale of fixed assets

 

 

-

 

 

 

3,799

 

 

 

-

 

Less realized gain (loss) on available-for-sale securities

 

 

-

 

 

 

66

 

 

 

-

 

Tax-equivalent noninterest income adjustments

 

 

139

 

 

 

323

 

 

 

175

 

Noninterest income, adjusted

 

 

7,769

 

 

 

7,930

 

 

 

7,837

 

Net interest income plus noninterest income, adjusted

 

$

38,362

 

 

$

37,176

 

 

$

36,883

 

Efficiency Ratio (tax-equivalent)

 

 

59.15

%

 

 

65.97

%

 

 

62.27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME/EXPENSE

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

For the three months ended:

 

For the six months ended June 30,

Noninterest income:

 

6/30/2024

 

3/31/2024

 

6/30/2023

 

2024

 

 

2023

 

Service charges and fees on deposit accounts

 

$

6,184

 

 

$

5,726

 

 

$

5,691

 

 

$

11,909

 

 

$

11,071

 

(Loss) gain on sale of securities available-for-sale

 

 

 

 

 

(2,883

)

 

 

351

 

 

 

(2,883

)

 

 

396

 

Gain on sale of fixed assets

 

 

 

 

 

3,799

 

 

 

 

 

 

3,799

 

 

 

 

Bank-owned life insurance

 

 

523

 

 

 

1,215

 

 

 

658

 

 

 

1,738

 

 

 

830

 

Other

 

 

923

 

 

 

732

 

 

 

1,313

 

 

 

1,656

 

 

 

2,296

 

Total noninterest income

 

$

7,630

 

 

$

8,589

 

 

$

8,013

 

 

$

16,219

 

 

$

14,593

 

As a % of average interest-earning assets (1)

 

 

0.92

%

 

 

1.06

%

 

 

0.93

%

 

 

0.99

%

 

 

0.86

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

12,029

 

 

$

13,197

 

 

$

12,129

 

 

$

25,226

 

 

$

24,944

 

Occupancy and equipment costs

 

 

3,152

 

 

 

3,025

 

 

 

2,438

 

 

 

6,177

 

 

 

4,769

 

Advertising and marketing costs

 

 

338

 

 

 

343

 

 

 

410

 

 

 

680

 

 

 

923

 

Data processing costs

 

 

1,680

 

 

 

1,509

 

 

 

1,536

 

 

 

3,189

 

 

 

3,064

 

Deposit services costs

 

 

2,019

 

 

 

2,133

 

 

 

2,532

 

 

 

4,152

 

 

 

4,555

 

Loan services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan processing

 

 

89

 

 

 

151

 

 

 

151

 

 

 

240

 

 

 

279

 

Foreclosed assets

 

 

 

 

 

 

 

 

(33

)

 

 

 

 

 

725

 

Other operating costs

 

 

1,094

 

 

 

926

 

 

 

1,490

 

 

 

2,021

 

 

 

2,479

 

Professional services costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal & accounting services

 

 

714

 

 

 

715

 

 

 

483

 

 

 

1,240

 

 

 

1,129

 

Director's costs

 

 

646

 

 

 

1,254

 

 

 

725

 

 

 

1,899

 

 

 

308

 

Other professional service

 

 

582

 

 

 

809

 

 

 

832

 

 

 

1,582

 

 

 

2,039

 

Stationery & supply costs

 

 

115

 

 

 

148

 

 

 

125

 

 

 

263

 

 

 

265

 

Sundry & tellers

 

 

234

 

 

 

316

 

 

 

150

 

 

 

549

 

 

 

481

 

Total noninterest expense

 

$

22,692

 

 

$

24,526

 

 

$

22,968

 

 

$

47,218

 

 

$

45,960

 

As a % of average interest-earning assets (1)

 

 

2.74

%

 

 

3.04

%

 

 

2.68

%

 

 

2.89

%

 

 

2.72

%

Efficiency ratio (tax-equivalent) (2)(3)

 

 

59.15

%

 

 

65.97

%

 

 

62.27

%

 

 

62.45

%

 

 

63.53

%

(1)

Annualized

(2)

Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.

(3)

See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES AND RATES

 

 

 

 

 

 

 

 

(Dollars in Thousands, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the quarter ended

 

For the quarter ended

 

For the quarter ended

 

 

June 30, 2024

 

March 31, 2024

 

June 30, 2023

 

 

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 accounts

 

$

43,407

$

598

5.54

%

 

$

16,996

$

243

5.75

%

 

$

35,236

$

376

4.28

%

Taxable

 

 

866,270

 

12,787

5.94

%

 

 

893,171

 

13,303

5.99

%

 

 

996,117

 

13,488

5.43

%

Non-taxable

 

 

199,942

 

1,592

4.05

%

 

 

244,997

 

1,989

4.13

%

 

 

352,718

 

2,741

3.95

%

Total investments

 

 

1,109,619

 

14,977

5.58

%

 

 

1,155,164

 

15,535

5.59

%

 

 

1,384,071

 

16,605

5.02

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans: (3)

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

1,802,190

 

20,463

4.57

%

 

 

1,806,185

 

20,190

4.50

%

 

 

1,858,512

 

20,827

4.49

%

Agricultural production

 

 

75,825

 

1,406

7.46

%

 

 

61,419

 

1,138

7.45

%

 

 

28,472

 

496

6.99

%

Commercial

 

 

77,224

 

1,174

6.11

%

 

 

79,208

 

1,183

6.01

%

 

 

82,743

 

1,179

5.72

%

Consumer

 

 

3,698

 

79

8.59

%

 

 

3,962

 

80

8.12

%

 

 

4,339

 

88

8.13

%

Mortgage warehouse lines

 

 

261,768

 

5,382

8.27

%

 

 

137,421

 

2,821

8.26

%

 

 

78,187

 

1,658

8.51

%

Other

 

 

2,291

 

14

2.46

%

 

 

2,333

 

14

2.41

%

 

 

2,483

 

22

3.55

%

Total loans

 

 

2,222,996

 

28,518

5.16

%

 

 

2,090,528

 

25,426

4.89

%

 

 

2,054,736

 

24,270

4.74

%

Total interest-earning assets (4)

 

 

3,332,615

 

43,495

5.30

%

 

 

3,245,692

 

40,961

5.14

%

 

 

3,438,807

 

40,875

4.85

%

Other earning assets

 

 

17,058

 

 

 

 

17,345

 

 

 

 

16,952

 

 

Non-earning assets

 

 

286,020

 

 

 

 

270,786

 

 

 

 

267,433

 

 

Total assets

 

$

3,635,693

 

 

 

$

3,533,823

 

 

 

$

3,723,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

131,510

$

733

2.24

%

 

$

137,961

$

699

2.04

%

 

$

144,156

$

190

0.53

%

NOW

 

 

398,001

 

148

0.15

%

 

 

398,639

 

84

0.08

%

 

 

454,395

 

76

0.07

%

Savings accounts

 

 

371,961

 

80

0.09

%

 

 

376,335

 

73

0.08

%

 

 

428,222

 

62

0.06

%

Money market

 

 

139,507

 

476

1.37

%

 

 

137,687

 

410

1.20

%

 

 

123,571

 

72

0.23

%

Time deposits

 

 

563,526

 

6,051

4.32

%

 

 

561,941

 

6,190

4.43

%

 

 

540,540

 

6,022

4.47

%

Wholesale brokered deposits

 

 

307,995

 

3,544

4.63

%

 

 

205,092

 

2,189

4.29

%

 

 

178,728

 

1,521

3.41

%

Total interest-bearing deposits

 

 

1,912,500

 

11,032

2.32

%

 

 

1,817,655

 

9,645

2.13

%

 

 

1,869,612

 

7,943

1.70

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase agreements

 

 

131,478

 

66

0.20

%

 

 

112,385

 

41

0.15

%

 

 

79,694

 

65

0.33

%

Other borrowings

 

 

98,731

 

1,042

4.24

%

 

 

119,475

 

1,372

4.62

%

 

 

279,633

 

3,430

4.92

%

Long-term debt

 

 

49,335

 

430

3.51

%

 

 

49,312

 

431

3.52

%

 

 

49,247

 

429

3.49

%

Subordinated debentures

 

 

35,723

 

755

8.50

%

 

 

35,677

 

755

8.51

%

 

 

35,547

 

691

7.80

%

Total borrowed funds

 

 

315,267

 

2,293

2.93

%

 

 

316,849

 

2,599

3.30

%

 

 

444,121

 

4,615

4.17

%

Total interest-bearing liabilities

 

 

2,227,767

 

13,325

2.41

%

 

 

2,134,504

 

12,244

2.31

%

 

 

2,313,733

 

12,558

2.18

%

Demand deposits - noninterest-bearing

 

 

978,602

 

 

 

 

990,377

 

 

 

 

1,050,668

 

 

Other liabilities

 

 

83,886

 

 

 

 

70,534

 

 

 

 

54,139

 

 

Shareholders' equity

 

 

345,438

 

 

 

 

338,408

 

 

 

 

304,652

 

 

Total liabilities and shareholders' equity

 

$

3,635,693

 

 

 

$

3,533,823

 

 

 

$

3,723,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest-earning assets

 

 

 

5.30

%

 

 

 

5.14

%

 

 

 

4.85

%

Interest expense/interest-earning assets

 

 

 

1.61

%

 

 

 

1.52

%

 

 

 

1.46

%

Net interest income and margin (5)

 

 

$

30,170

3.69

%

 

 

$

28,717

3.62

%

 

 

$

28,317

3.39

%

 

(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 federal tax rate.

(3)

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(0.3) million and $(0.3) million for the quarters ended June 30, 2024 and 2023, respectively, and $(0.3) million for the quarter ended March 31, 2024.

(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, 2024

 

 

June 30, 2023

 

 

Average

Balance (1)

 

Income/

Expense

 

Yield/

Rate (2)

 

Average

Balance (1)

 

Income/

Expense

 

Yield/

Rate (2)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning due from banks

 

$

30,202

 

$

839

 

5.57

%

 

$

20,357

 

$

446

 

4.42

%

Taxable

 

 

879,720

 

 

26,090

 

5.95

%

 

 

984,150

 

 

25,472

 

5.22

%

Non-taxable

 

 

222,469

 

 

3,581

 

4.09

%

 

 

356,999

 

 

5,555

 

3.97

%

Total investments

 

 

1,132,391

 

 

30,510

 

5.57

%

 

 

1,361,506

 

 

31,473

 

4.88

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

$

1,804,187

 

$

40,653

 

4.53

%

 

$

1,863,783

 

$

40,726

 

4.41

%

Agricultural

 

 

68,622

 

 

2,544

 

7.46

%

 

 

28,251

 

 

929

 

6.63

%

Commercial

 

 

78,216

 

 

2,357

 

6.06

%

 

 

76,848

 

 

2,172

 

5.70

%

Consumer

 

 

3,830

 

 

160

 

8.40

%

 

 

4,239

 

 

176

 

8.37

%

Mortgage warehouse lines

 

 

199,595

 

 

8,203

 

8.26

%

 

 

68,707

 

 

2,776

 

8.15

%

Other

 

 

2,312

 

 

28

 

2.44

%

 

 

2,474

 

 

42

 

3.42

%

Total loans

 

 

2,156,762

 

 

53,945

 

5.03

%

 

 

2,044,302

 

 

46,821

 

4.62

%

Total interest-earning assets (4)

 

 

3,289,153

 

 

84,455

 

5.22

%

 

 

3,405,808

 

 

78,294

 

4.72

%

Other earning assets

 

 

17,202

 

 

 

 

 

 

 

16,336

 

 

 

 

 

Non-earning assets

 

 

278,403

 

 

 

 

 

 

 

269,950

 

 

 

 

 

Total assets

 

$

3,584,758

 

 

 

 

 

 

$

3,692,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

$

134,736

 

$

1,431

 

2.14

%

 

$

147,131

 

$

319

 

0.44

%

NOW

 

 

398,320

 

 

232

 

0.12

%

 

 

468,939

 

 

147

 

0.06

%

Savings accounts

 

 

374,148

 

 

153

 

0.08

%

 

 

442,826

 

 

127

 

0.06

%

Money market

 

 

138,597

 

 

886

 

1.29

%

 

 

129,470

 

 

96

 

0.15

%

Time deposits

 

 

562,733

 

 

12,241

 

4.37

%

 

 

501,096

 

 

10,528

 

4.24

%

Brokered deposits

 

 

256,543

 

 

5,733

 

4.49

%

 

 

170,688

 

 

2,726

 

3.22

%

Total interest-bearing deposits

 

 

1,865,077

 

 

20,676

 

2.23

%

 

 

1,860,150

 

 

13,943

 

1.51

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase agreements

121,932

 

 

106

 

0.17

%

 

91,495

 

 

146

 

0.08

%

Other borrowings

 

 

109,103

 

 

2,415

 

4.45

%

 

 

228,463

 

 

5,541

 

4.89

%

Long-term debt

 

 

49,324

 

 

861

 

3.51

%

 

 

49,235

 

 

857

 

3.51

%

Subordinated debentures

 

 

35,700

 

 

1,510

 

8.51

%

 

 

35,523

 

 

1,358

 

7.71

%

Total borrowed funds

 

 

316,059

 

 

4,892

 

3.11

%

 

 

404,716

 

 

7,902

 

5.09

%

Total interest-bearing liabilities

 

 

2,181,136

 

 

25,568

 

2.36

%

 

 

2,264,866

 

 

21,845

 

1.95

%

Demand deposits - noninterest-bearing

 

 

984,489

 

 

 

 

 

 

 

1,060,666

 

 

 

 

 

Other liabilities

 

 

77,210

 

 

 

 

 

 

 

60,351

 

 

 

 

 

Shareholders' equity

 

 

341,923

 

 

 

 

 

 

 

306,211

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

3,584,758

 

 

 

 

 

 

$

3,692,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/interest-earning assets

 

 

 

 

 

 

 

5.22

%

 

 

 

 

 

 

 

4.72

%

Interest expense/interest-earning assets

 

 

 

 

 

 

 

1.56

%

 

 

 

 

 

 

 

1.29

%

Net interest income and margin(5)

 

 

 

 

$

58,887

 

3.66

%

 

 

 

 

$

56,449

 

3.43

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 federal tax rate.

(3)

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(0.7) million and $(0.4) million for the six months ended June 30, 2024 and 2023, 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

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