Sierra Bancorp Reports Financial Results for Third Quarter and First Nine Months of 2023

Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the three-and nine-month periods ended September 30, 2023. Sierra Bancorp reported consolidated net income of $9.9 million, or $0.68 per diluted share, for the third quarter of 2023, and $28.5 million, or $1.93 per diluted shares, for the first nine months of 2023.

Highlights for the third quarter of 2023:

Steady Earnings
- Net Income of $9.9 million, consistent with the second quarter of 2023 (the prior linked quarter), and up 8% year-to-date compared to the same period last year
- Return on Average Assets of 1.04%
- Return on Average Equity of 12.62%

Solid Asset Quality
- Total Nonperforming Loans declined to $0.8 million, or 0.04% of total gross loans
- Past due loans declined to $0.8 million, the lowest level for the past two years
- No foreclosed assets at September 30, 2023
- Net Charge-offs remained very low at just under $0.1 million
- Stable Allowance for Credit Losses on loans of $23.1 million

Stable Deposits & Liquidity
- Overall primary and secondary liquidity sources increased to $2.67 billion at September 30, 2023
- Total deposits declined by 1.6% during the quarter due mostly to declines in brokered deposits and interest-bearing transaction accounts
- Total deposits have increased by $23.6 million, or 0.8% year-to-date
- Noninterest-bearing deposits stable at 37% of total deposits

Strong Capital and Solid Asset Growth
- Total Assets at $3.74 billion, down 1% from prior linked quarter, but up 4% year-to-date
- Maintained a diversified investment portfolio designed for interest rate risk management and liquidity
- Repurchased 99,528 shares of stock during the quarter
- Tangible Book Value per share increased by 1% to $19.04 per share at September 30, 2023 compared to the prior linked quarter
- Strong regulatory Community Bank Leverage Ratio of 11.00% for our subsidiary Bank
- Tangible Common Equity Ratio of 7.5% on a consolidated basis and 9.4% for our subsidiary bank
- Dividend declared of $0.23 per share, payable on November 14, 2023, our 99th consecutive quarterly dividend

“The elevator to success is out of order. You’ll have to use the stairs, one step at a time.” - Joe Girard

“We are proud of the many accomplishments of our team of focused bankers this past quarter,” stated Kevin McPhaill, CEO and President. “Our continued strong results are even more noteworthy, given the challenging banking environment. In particular, earnings per share increased from last quarter as did tangible common equity per share. Our quarterly results demonstrate our commitment to continued active balance sheet management. Much of our success is the result of our community bank foundation, which gives us unique positioning and strong connections with our customers. As we continue to look for opportunities to improve earnings, we are excited about the remainder of 2023 and the coming year!” concluded Mr. McPhaill.

For the first nine months of 2023, the Company recognized net income of $28.6 million, or $1.93 per diluted share, as compared to $26.5 million, or $1.76 per diluted share, for the same period in 2022. The year-over-year improvement is due primarily to higher net interest income of $4.3 million, along with a $4.0 million decrease in the provision for credit losses in 2023, partially offset by a $5.2 million increase in noninterest expense. The Company’s financial performance metrics for the first nine months of 2023 include an annualized return on average assets and a return on average equity of 1.03% and 12.41%, respectively, compared to 1.03% and 10.98%, respectively, for the same period in 2022.

Financial Highlights

Quarterly Changes (comparisons to the third quarter of 2022)

Net income was unchanged at $9.9 million. Net interest income was negatively impacted by compression in the net interest margin. There was a favorable change in the provision for credit losses on loans while improvements made in noninterest income were offset by higher noninterest expenses.
Net interest income was $0.8 million lower due to a 33 bp decrease in net interest margin. There was a $231.9 million increase in average interest earning assets with an increased yield of 94 bps, however this was more than offset by a $335.4 million increase in interest bearing liabilities at 184 bps higher cost.
Noninterest income increased $1.2 million or 17% primarily due to a $0.6 million increase in bank-owned life insurance, $0.3 million in life insurance proceeds and a $0.2 million increase in service charges on deposit accounts.
Asset quality improved considerably as demonstrated by a significant decline in non-performing assets to gross loans plus foreclosed assets. This ratio fell to 0.04% at September 30, 2023, from 1.33% at the same period in 2022. Nonperforming assets declined substantially from $26.8 million at September 30, 2022, to $0.8 million at September 30, 2023, a decline of 97%. Most of the nonperforming assets at September 30, 2022 were related to a single dairy relationship that was foreclosed upon and sold in early 2023.
There was a benefit for credit losses for $0.03 million, as compared to a provision for credit losses of $1.3 million in the same quarter of 2022, due to a decrease in specific reserves for individually evaluated loans.
Liquidity continues to be very substantial with the primary liquidity ratio at 31.5% and $2.7 billion in overall available liquidity at September 30, 2023.
All required capital ratios were above the regulatory guidelines for a well-capitalized institution. The Community Bank Leverage ratio was 11.00% for Bank of the Sierra. The Sierra Bancorp Tier I leverage ratio was 10.08%.
Sierra Bancorp repurchased 99,528 shares totaling $2.0 million in the third quarter of 2023.
Our Board of Directors declared a cash dividend of $0.23 per share on October 19, 2023. This is the 99th consecutive quarterly dividend paid by Sierra Bancorp. The cash dividend is payable on November 14, 2023, to shareholders of record at the close of business on October 30, 2023.

Year to-Date Income Changes (comparisons to the first nine-months of 2022)

Net income increased $2.0 million, or 8%. There was an increase of $4.3 million or 5% in net interest income, due mostly to an overall increase in interest rates. We experienced higher yields and balances on loans and investment securities, which were partly offset by higher overall funding costs.
Earnings per share increased to $1.93, an increase of 10% from $1.76 per share.
The provision for credit losses was $0.2 million, a decrease of $4.0 million due to a decrease in specific reserves on individual loans as well as lower net loan charge-offs.
Noninterest income decreased by $0.8 million, or 3%. In 2022 there was a $1.0 million recovery of prior year legal expenses, a $1.0 million gain on the sale of investment securities, and a $3.2 million gain on the sale of other assets with no like corresponding event in 2023. Positively impacting the first nine months of 2023 there was a $2.8 million positive variance in deferred compensation BOLI and a $0.4 million increase in life insurance proceeds.
Noninterest expense increased $5.2 million, or 8%, due mostly to the increases in salary expense for new loan production teams and a negative variance in director’s deferred compensation expense which is linked to the favorable changes in bank-owned life insurance income described above.

Statement of Condition Changes (comparisons to December 31, 2022)

Total assets increased by $130.3 million, or 4%, to $3.7 billion, during the first nine months of the year due mostly to an increase in wholesale deposits and borrowed funds which facilitated the purchase of investment securities as well as modest loan growth.
Cash and due from banks increased $11.4 million to $88.5 million during the first nine months of the year due to an increase in interest earning bank balances.
Investment securities increased by $62.1 million, or 5%, to $1.2 billion primarily due to strategic purchases of high-quality AAA and AA rated, collateralized loan obligations and government agency securities.
Gross loans increased $47.9 million predominantly due to a $42.2 million increase in mortgage warehouse line utilization. In addition, C&I and Agricultural production loans increased, but were partially offset by a decline in Farmland loans due to a foreclosure of a single dairy relationship in early 2023.
Deposits totaled $2.9 billion at September 30, 2023, representing a year-to-date increase of $23.6 million, or 1%. The growth in deposits came mostly from a $45.0 million increase in brokered deposits primarily acquired prior to March 2023 as part of the Company’s interest rate risk management and liquidity strategy.
Long term debt and subordinated debentures were relatively unchanged. Other interest-bearing liabilities increased $83.7 million, or 26%, and consisted primarily of long term FHLB advances.

Other financial highlights are reflected in the following table.

FINANCIAL HIGHLIGHTS

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

As of or for the

three months ended

nine months ended

9/30/2023

6/30/2023

9/30/2022

9/30/2023

9/30/2022

Net income

9,885

9,919

9,935

28,555

26,546

Diluted earnings per share

0.68

0.67

0.66

1.93

1.76

Return on average assets

1.04%

1.07%

1.13%

1.03%

Return on average equity

12.62%

13.06%

12.84%

12.41%

10.98%

Net interest margin (tax-equivalent) (1)

3.30%

3.39%

3.63%

3.39%

3.41%

Yield on average loans

4.73%

4.74%

4.28%

4.66%

4.30%

Yield on investments

5.25%

5.02%

3.51%

5.00%

2.61%

Cost of average total deposits

1.20%

1.09%

0.24%

1.04%

0.15%

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

61.46%

62.27%

58.10%

62.83%

61.10%

Total assets

3,738,880

3,762,461

3,532,289

3,738,880

3,532,289

Loans net of deferred fees

2,100,973

2,094,464

2,020,016

2,100,973

2,020,016

Noninterest demand deposits

1,059,878

1,066,498

1,118,245

1,059,878

1,118,245

Total deposits

2,869,720

2,918,759

2,885,468

2,869,720

2,885,468

Noninterest-bearing deposits over total deposits

36.9%

36.5%

38.8%

36.9%

38.8%

Shareholders' equity / total assets

8.3%

8.2%

8.4%

8.3%

8.4%

Tangible common equity ratio (2)

7.5%

7.6%

7.5%

7.6%

Book value per share

21.01

20.90

19.56

21.01

19.56

Tangible book value per share (2)

19.04

18.93

17.58

19.04

17.58

(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 $28.1 million, for the third quarter of 2023, a $0.8 million decrease, or 3% over the third quarter of 2022, but increased $4.3 million, or 5%, to $84.5 million for the first nine months of 2023 relative to the same period in 2022.

For the third quarter of 2023, growth in average interest-earning assets totaled $231.9 million, or 7%, as compared to the third quarter of 2022. The yield on these balances was 94 basis points higher for the same period due mostly to an increase in investment securities as well as loan growth and the result of interest rate increases by the Federal Open Market Committee. This increase in yield was offset by a 184 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.

Net interest income for the comparative year-to-date periods increased $4.3 million, or 5%, due to a change in mix of average interest-earning assets, mostly the deployment of lower yielding interest earning due from bank balances into higher yielding investment securities. Investment balances, which includes overnight funds, with an average yield of 5.0% increased $157.0 million, while gross average loan balances yielding 4.7% increased $64.0 million. The overall yield on the average balances of earning assets was 114 basis points higher for the comparative periods, offset by a 171 basis point increase in interest paid on liabilities. The net impact of these various changes was a 2 basis point decrease in our net interest margin for the nine-months ending September 30, 2023, as compared to the same period in 2022.

Interest expense was $14.3 million for the third quarter of 2023, an increase of $11.3 million, relative to the third quarter of 2022. For the first nine months of 2023, compared to the same period in 2022, interest expense increased $30.2 million to $36.1 million. The significant increase in interest expense is attributable to an unfavorable shift in interest bearing liabilities and the impact of recent interest rate increases, as the average balance of deposits, including lower cost core deposits decreased $93.2 million while higher cost borrowed funds and wholesale brokered deposits increased by $352.7 million in the third quarter of 2023 as compared to the third quarter of 2022. For the year-to-date comparisons the increase is attributable to a shift from lower cost transaction accounts to higher cost time accounts as well as an increase in borrowed funds. For the first nine months of 2023, higher cost customer time deposits increased $218.9 million, wholesale brokered deposits increased $106.6 million and borrowed funds increased $247.5 million, while lower cost or no cost deposits decreased $278.4 million.

Our net interest margin was 3.30% for the third quarter of 2023, as compared to 3.39% for the linked quarter and 3.63% for the third quarter of 2022. While the yield of interest-earning assets increased 9 basis points for the third quarter of 2023 as compared to the linked quarter, the cost of interest-bearing liabilities increased 26 basis points for the same period of comparison. The average balance of interest-earning assets increased $24.7 million for the linked quarter while the increase in interest-bearing liabilities was $9.0 million for the same period. Even though the volume increase of interest earning assets was more than the increase in interest-bearing liabilities, the larger rate increase on liabilities caused the compression in the linked quarter. Any future FOMC rate hikes could cause further compression in the net interest margin, since overnight borrowing funds instantly reprice higher while there is a lag in the increased yield on interest-earning assets.

Provision for Loan and Lease Losses

The overall provision for credit losses resulted in a benefit of $0.03 million for the third quarter of 2023; there was a $0.1 million provision for credit losses related to loans and leases offset by a $0.2 million benefit for credit losses from unfunded commitments and no provision for held-to-maturity investment securities, relative to a provision for credit losses of $1.3 million in the third quarter of 2022, and a year-to-date provision for credit losses on loans and leases of $0.2 million in 2023 as compared to $4.2 million for the same period in 2022. The Company's $1.3 million decrease in the provision for credit losses on loans and leases in the third quarter of 2023 as compared to the third quarter of 2022, and the $4.0 million year to date decrease in the provision for credit losses, compared to the same period in 2022 was primarily due to the impact of $4.3 million in net charge-offs in the first nine months of 2022 with only $0.4 million in net charge offs for the first nine months of 2023. The decrease in net charge-offs in the first nine months of 2023 was primarily related to a single office building loan relationship that was sold at a discount due to an increased risk of default that would have likely led to a prolonged collection period and a single dairy loan relationship.

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 increased $1.2 million, or 17%, for the quarter ended September 30, 2023, as compared to the same quarter in 2022, and decreased $.08 million, or 3% for the year-to-date period ended September 30, 2023, as compared to the same period in 2022. The quarterly and year-to-date comparisons were both impacted by favorable fluctuations in income on bank-owned life insurance (BOLI) with underlying investments mapped directly to the Company’s deferred compensation plan. The quarterly comparison was also positively impacted by an increase in service charges on deposit accounts for $0.2 million, life insurance proceeds for $0.3 million, and $0.4 million in income from an investment in an SBA loan fund. The year-to-date decrease is the result of 2022 events that did not recur in 2023, including a $1.0 million gain on the sale of debt securities, $3.6 million from gains on the sale of other assets, and the recovery of prior period legal expenses, partially offset by income from an investment in an SBA loan fund for $1.0 million in 2023. Service charges on customer deposit accounts were basically unchanged at $6.1 million in the third quarter of 2023 as compared to the third quarter of 2022, however for the year-to-date comparison there was a $0.3 million decrease primarily due to decreases in ATM and debit card income.

Noninterest Expense

Total noninterest expense increased by $1.6 million, or 7%, in the third quarter of 2023 relative to the third quarter of 2022, and by $5.2 million, or 8%, for the first nine months of 2023 as compared to the same period in 2022.

Salaries and Benefits were $1.1 million, or 10%, higher in the third quarter of 2023 as compared to the third quarter of 2022 and $2.5 million, or 7%, higher for the first nine months of 2023 compared to the same period in 2022. The reason for this increase is primarily due to the hiring of higher paid new lending teams and management staff for both the quarterly and year-to-date comparisons. There were 487 full-time equivalent employees at September 30, 2023 as compared to 491 at December 31, 2022 and 500 at September 30, 2022.

Occupancy expenses were relatively unchanged for the third quarter and the first nine-months of 2023 as compared to the same periods in 2022.

Other noninterest expense increased $0.5 million, or 6%, for the third quarter 2023 as compared to the third quarter in 2022, and increased $2.7 million, or 13%, for the first nine months of 2023 as compared to the same period in 2022. The variances for the third quarter of 2023 compared to the same period in 2022 were primarily driven by a $0.6 million unfavorable variance in directors deferred compensation expense, linked to the changes in BOLI income, higher FDIC assessment costs, increased marketing costs associated with a deposit acquisition campaign and elevated debit card losses. These increased expenses were partially offset by lower costs in core processing, debit card processing and ATM network costs. For the year-over-year comparison, the categories of increase were the same as with the quarterly comparison, along with a $0.2 million decrease in deposit statement costs offset by increased foreclosed asset costs related to the foreclosure and subsequent sale of one large loan relationship in the first quarter of 2023.

The Company's provision for income taxes was 25.8% of pre-tax income in the third quarter of 2023 relative to 25.1% in the third quarter of 2022, and 25.2% of pre-tax income for the first nine months of 2023 relative to 26.1% for the same period in 2022. The changes in effective tax rate for both the quarterly and year-to-date comparisons is due to the volatility in the Bank Owned Life Insurance asset value associated with our non-qualified deferred compensation plans.

Balance Sheet Summary

Balance sheet changes during the first nine months of 2023 include an increase in total assets of $130.3 million, or 4%, primarily a result of a $62.1 million increase in investments securities, and a $47.9 million increase in gross loans.

The increase in investment securities of $62.1 million for the year-to-date period consisted primarily of increases in AAA and AA tranches of collateralized loan obligations of $56.5 million and in callable government agency securities for $56.0 million, partially offset by decreases in mortgage-backed securities, corporate bonds and state and municipal bonds.

Gross loan balances increased $47.9 million during the first nine months of 2023, as compared to December 31, 2022. The increase was primarily a result of a $42.1 million increase in mortgage warehouse utilization, $22.6 million increase in commercial real estate, and a $35.4 million increase in other commercial loans. 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 $22.4 million decrease in farmland, $11.1 million decrease in other construction and $18.7 million decrease in residential real estate. Further, SBA PPP loan forgiveness resulted in a $1.3 million decline in loan balances, included in the other commercial loan variance noted above.

As indicated in the loan roll forward below, new credit extended for the third quarter of 2023 decreased $14.0 million over the same period in 2022 and decreased $66.4 million for the year-to-date comparisons. This decline in organic loan growth is attributable to competitive pressures in our market and management’s unwillingness to compromise the quality of new loans originated, combined with a lack of demand due to the current high interest rate environment. We also had $37.0 million in loan paydowns and maturities, and a decrease in mortgage warehouse and credit line utilization of $25.5 million in the third quarter.

LOAN ROLLFORWARD

(Dollars in Thousands, Unaudited)

For the three months ended:

For the nine months ended:

September 30, 2023

June 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

Gross loans beginning balance

2,094,391

2,033,968

2,022,662

2,052,940

1,989,726

New credit extended

68,980

37,030

82,958

158,619

225,054

Loan purchases

—

173,082

Changes in line of credit utilization

(22,517

)

6,622

(7,811

)

(41,685

)

(45,201

)

Change in mortgage warehouse

(3,032

)

42,145

(11,581

)

42,146

(54,630

)

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

(37,012

)

(25,374

)

(65,864

)

(111,210

)

(267,667

)

Gross loans ending balance

2,100,810

2,094,391

2,020,364

2,100,810

2,020,364

(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 $216.4 million at September 30, 2023, compared to $219.7 million at December 31, 2022. Total line utilization, excluding mortgage warehouse and overdraft lines, was 59.7% at September 30, 2022 and 58.7% at December 31, 2022. Mortgage warehouse utilization increased to 25.0% at September 30, 2023, as compared to 9.9% at December 31, 2022.

PPP loans continue to decline as borrowers receive forgiveness on these loans. There were nine loans for $0.4 million outstanding at September 30, 2023, compared to fourteen loans for $1.8 million at December 31, 2022.

Deposit balances reflect growth of $23.6 million, or 1%, during the first nine months of 2023. Core non-maturity deposits decreased by $173.6 million, or 7%, while customer time deposits increased by $152.1 million, or 38%. Wholesale brokered deposits increased by $45.0 million, or 38%. Overall noninterest-bearing deposits as a percent of total deposits at September 30, 2023, were 36.9%, as compared to 38.2% at December 31, 2022.

Other interest-bearing liabilities of $411.9 million on September 30, 2023, consist of $94.9 million in customer repurchase agreements, $182.0 million of FHLB borrowings and $135.0 million in fed funds purchased.

The Company continues to have substantial liquidity. At September 30, 2023, and December 31, 2022, the Company had the following sources of primary and secondary liquidity (Dollars in Thousands, Unaudited):

Primary and secondary liquidity sources

September 30, 2023

December 31, 2022

Cash and cash equivalents

88,542

77,131

Unpledged investment securities

854,730

1,097,164

Excess pledged securities

326,343

43,096

FHLB borrowing availability

657,548

718,842

Unsecured lines of credit

362,785

237,000

Funds available through fed discount window

383,943

42,278

Totals

2,673,891

2,215,511

Total capital of $308.9 million at September 30, 2023 reflects an increase of $5.3 million, or 2%, relative to year-end 2022. The increase in equity during the first nine months of 2023 was due to the addition of $28.6 million in net income, offset by a $5.3 million unfavorable swing in accumulated other comprehensive income/loss, due principally to changes in investment securities’ fair value, $8.5 million in share repurchases, and $10.4 million in dividends paid. The remaining difference is related to the impact of restricted stock.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, decreased by $18.8 million to $0.8 million for the first nine months of 2023. The Company's ratio of nonperforming loans to gross loans decreased to 0.4% at September 30, 2023 from 0.95% at December 31, 2022. The decrease resulted from a decrease in non-accrual loan balances, primarily as a result of the foreclosure and sale of one loan relationship in the dairy industry consisting of four separate loans in the first quarter of 2023. 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 and leases was $23.1 million at both September 30, 2023, and December 31, 2022. The flat allowance for credit losses on loans and leases was due to fewer net charge offs during the first nine-months of 2023 along with modest loan growth.

The allowance for credit losses on loans and leases was 1.10% of gross loans at September 30, 2023, and 1.12% of gross loans at December 31, 2022. Management's detailed analysis indicates that the Company's allowance for credit losses on loans and leases should be sufficient to cover credit losses for the life of the loans and leases outstanding as of September 30, 2023, 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 an agricultural credit center in Templeton, California, and a dedicated loan production office in Roseville, California. In 2023, 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 and a BBB+ rating from Kroll.

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

9/30/2023

6/30/2023

3/31/2023

12/31/2022

9/30/2022

Cash and due from banks

88,542

103,483

83,506

77,131

86,683

Investment securities

Available-for-sale, at fair value

1,010,377

1,027,538

1,040,920

934,923

1,069,434

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

323,544

328,478

332,728

336,881

156,211

Real estate loans

Residential real estate

418,782

426,608

433,185

437,446

441,262

Commercial real estate

1,331,989

1,317,945

1,318,627

1,309,410

1,291,315

Other construction/land

7,320

16,020

15,653

18,412

18,315

Farmland

90,993

92,728

92,906

113,394

117,385

Total real estate loans

1,849,084

1,853,301

1,860,371

1,878,662

1,868,277

Other commercial

140,081

126,360

101,118

104,715

101,437

Mortgage warehouse lines

107,584

110,617

68,472

65,439

46,553

Consumer loans

4,061

4,113

4,007

4,124

4,097

Gross loans

2,100,810

2,094,391

2,033,968

2,052,940

2,020,364

Deferred loan fees

163

(123

)

(348

)

Allowance for credit losses on loans

(23,060

)

(23,010

)

(23,090

)

(23,060

)

(23,790

)

Net loans

2,077,913

2,071,454

2,010,902

2,029,757

1,996,226

Bank premises and equipment

21,926

22,072

22,321

22,478

22,688

Other assets

216,578

209,436

203,607

207,420

201,047

Total assets

3,738,880

3,762,461

3,693,984

3,608,590

3,532,289

LIABILITIES AND CAPITAL

Noninterest demand deposits

1,059,878

1,066,498

1,041,748

1,088,199

1,118,245

Interest-bearing transaction accounts

561,257

584,263

637,549

641,581

732,468

Savings deposits

400,940

415,793

441,758

456,981

481,882

Money market deposits

130,914

124,834

123,162

139,795

140,620

Customer time deposits

551,731

552,371

519,771

399,608

332,253

Wholesale brokered deposits

165,000

175,000

185,000

120,000

80,000

Total deposits

2,869,720

2,918,759

2,948,988

2,846,164

2,885,468

Long-term debt

49,281

49,259

89,236

49,214

49,196

Subordinated debentures

35,615

35,570

35,526

35,481

35,436

Other interest-bearing liabilities

411,865

398,922

270,861

328,169

215,112

Total deposits and interest-bearing liabilities

3,366,481

3,402,510

3,344,611

3,259,028

3,185,212

Allowance for credit losses on unfunded loan commitments

600

750

850

840

940

Other liabilities

62,940

49,609

41,513

45,140

51,065

Total capital

308,859

309,592

307,010

303,582

295,072

Total liabilities and capital

3,738,880

3,762,461

3,693,984

3,608,590

3,532,289

GOODWILL AND INTANGIBLE ASSETS

(Dollars in Thousands, Unaudited)

9/30/2023

6/30/2023

3/31/2023

12/31/2022

9/30/2022

Goodwill

27,357

Core deposit intangible

1,618

1,837

2,056

2,275

2,517

Total intangible assets

28,975

29,194

29,413

29,632

29,874

CREDIT QUALITY

(Dollars in Thousands, Unaudited)

9/30/2023

6/30/2023

3/31/2023

12/31/2022

9/30/2022

Non-accruing loans

781

1,141

938

19,579

26,772

Foreclosed assets

—

Total nonperforming assets

781

1,141

938

19,579

26,772

Quarterly net charge offs

157

220

7,268

224

Past due & still accruing (30-89)

806

1,873

1,241

1,203

1,242

Non-performing loans to gross loans

0.04%

0.05%

0.95%

1.33%

NPA's to loans plus foreclosed assets

0.04%

0.05%

0.95%

1.33%

Allowance for credit losses on loans

1.10%

1.14%

1.12%

1.18%

SELECT PERIOD-END STATISTICS

(Unaudited)

9/30/2023

6/30/2023

3/31/2023

12/31/2022

9/30/2022

Shareholders' equity / total assets

8.3%

8.2%

8.3%

8.4%

Gross loans / deposits

73.2%

71.8%

69.0%

72.1%

70.0%

Noninterest-bearing deposits / total deposits

36.9%

36.5%

35.3%

38.2%

38.8%

CONSOLIDATED INCOME STATEMENT

(Dollars in Thousands, Unaudited)

For the three months ended:

For the nine months ended:

9/30/2023

6/30/2023

9/30/2022

9/30/2023

9/30/2022

Interest income

42,384

40,875

31,928

120,678

86,216

Interest expense

14,297

12,558

3,017

36,143

5,963

Net interest income

28,087

28,317

28,911

84,535

80,253

(Benefit) provision for credit losses

(33

)

(70

)

1,259

157

4,184

Net interest income after provision

28,120

28,387

27,652

84,378

76,069

Service charges and fees on deposit accounts

6,055

5,691

6,008

17,127

17,464

Gain on sale of investments

351

396

1,032

BOLI income (expense)

558

658

(23

)

1,388

(1,252

)

Other noninterest income

1,149

1,313

627

3,444

5,870

Total noninterest income

7,762

8,013

6,612

22,355

23,114

Salaries and benefits

12,623

12,129

11,521

37,567

35,070

Occupancy expense

2,482

2,438

2,470

7,251

7,170

Other noninterest expenses

7,457

8,401

7,005

23,704

21,042

Total noninterest expense

22,562

22,968

20,996

68,522

63,282

Income before taxes

13,320

13,432

13,268

38,211

35,901

Provision for income taxes

3,435

3,513

3,333

9,656

9,355

Net income

9,885

9,919

9,935

28,555

26,546

TAX DATA

Tax-exempt muni income

2,679

2,741

2,346

8,233

5,926

Interest income - fully tax equivalent

43,096

41,604

32,552

122,867

87,791

PER SHARE DATA

(Unaudited)

For the three months ended:

For the nine months ended:

9/30/2023

6/30/2023

9/30/2022

9/30/2023

9/30/2022

Basic earnings per share

0.68

0.67

0.66

1.93

1.77

Diluted earnings per share

0.68

0.67

0.66

1.93

1.76

Common dividends

0.23

0.69

Weighted average shares outstanding

14,583,132

14,735,568

14,954,503

14,762,231

14,968,242

Weighted average diluted shares

14,636,477

14,754,764

15,014,048

14,791,696

15,046,883

Book value per basic share (EOP)

21.01

20.90

19.56

21.01

19.56

Tangible book value per share (EOP)

19.04

18.93

17.58

19.04

17.58

Common shares outstanding (EOP)

14,702,079

14,811,736

15,085,675

14,702,079

15,085,675

KEY FINANCIAL RATIOS

(Unaudited)

For the three months ended:

For the nine months ended:

9/30/2023

6/30/2023

9/30/2022

9/30/2023

9/30/2022

Return on average equity

12.62%

13.06%

12.84%

12.41%

10.98%

Return on average assets

1.04%

1.07%

1.13%

1.03%

Net interest margin (tax-equivalent) (1)

3.30%

3.39%

3.63%

3.39%

3.41%

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

61.46%

62.27%

58.10%

62.83%

61.10%

Net charge offs to avg loans (not annualized)

0.00%

0.01%

1.00%

0.02%

21.00%

(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".

The following non-GAAP schedule reconciles the book value per share to the tangible book value per share and the GAAP equity ratio to the tangible equity ratio as of the dates indicated:

NON-GAAP FINANCIAL MEASURES

(Dollars in Thousands, Unaudited)

9/30/2023

6/30/2023

9/30/2022

Total stockholders' equity

308,859

309,592

295,072

Less: goodwill and other intangible assets

28,975

29,194

29,874

Tangible common equity

279,884

280,398

265,198

Total assets

3,738,880

3,762,461

3,532,289

Less: goodwill and other intangible assets

28,975

29,194

29,874

Tangible assets

3,709,905

3,733,267

3,502,415

Common shares outstanding

14,702,079

14,811,736

15,085,675

Book value per common share

21.01

20.90

19.56

Tangible book value per common share

19.04

18.93

17.58

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

8.26%

8.23%

8.35%

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

7.54%

7.51%

7.57%

For the three months ended:

Efficiency Ratio:

9/30/2023

6/30/2023

9/30/2022

Noninterest expense

22,562

22,968

20,996

Divided by:

Net interest income

28,087

28,317

28,911

Tax-equivalent interest income adjustments

712

729

624

Net interest income, adjusted

28,799

29,046

29,535

Noninterest income

7,762

8,013

6,612

Less gain on sale of securities

351

Tax-equivalent noninterest income adjustments

148

175

)

Noninterest income, adjusted

7,910

7,837

6,606

Net interest income plus noninterest income, adjusted

36,709

36,883

36,141

Efficiency Ratio (tax-equivalent)

61.46%

62.27%

58.10%

NONINTEREST INCOME/EXPENSE

(Dollars in Thousands, Unaudited)

For the three months ended:

For the nine months ended September 30,

Noninterest income:

9/30/2023

6/30/2023

9/30/2022

2023

2022

Service charges and fees on deposit accounts

6,055

5,691

6,008

17,127

17,464

Net gains on sale of securities available-for-sale

—

351

—

396

1,032

Bank-owned life insurance

558

658

(23

)

1,388

(1,252

)

Other

1,149

1,313

627

3,444

5,870

Total noninterest income

7,762

8,013

6,612

22,355

23,114

As a % of average interest earning assets (1)

0.89%

0.93%

0.81%

0.87%

0.96%

Noninterest expense:

Salaries and employee benefits

12,623

12,129

11,521

37,567

35,070

Occupancy and equipment costs

2,482

2,438

2,470

7,251

7,170

Advertising and marketing costs

723

410

466

1,646

1,322

Data processing costs

1,369

1,536

1,564

4,433

4,574

Deposit services costs

2,048

2,532

2,450

6,603

7,112

Loan services costs

Loan processing

174

151

128

452

426

Foreclosed assets

(60

)

(33

)

665

Other operating costs

765

1,490

912

3,244

3,879

Professional services costs

Legal & accounting services

493

483

535

1,623

1,753

Director's costs

732

725

(143

)

1,733

(1,192

)

Other professional service

707

832

855

2,053

2,306

Stationery & supply costs

148

125

114

414

315

Sundry & tellers

358

150

127

838

463

Total noninterest expense

22,562

22,968

20,996

68,522

63,282

As a % of average interest earning assets (1)

2.58%

2.68%

2.58%

2.67%

2.64%

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

61.46%

62.27%

58.10%

62.83%

61.10%

(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

September 30, 2023

June 30, 2023

September 30, 2022

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

23,760

415

6.93%

35,236

376

4.28%

21,845

103

1.87%

Taxable

1,005,372

14,375

5.67%

996,117

13,488

5.43%

851,683

7,646

3.56%

Non-taxable

345,645

2,679

3.89%

352,718

2,741

3.95%

336,567

2,346

3.50%

Total investments

1,374,777

17,469

5.25%

1,384,071

16,605

5.02%

1,210,095

10,095

3.51%

Loans: (3)

Real estate

1,854,055

20,764

4.44%

1,858,512

20,827

4.49%

1,862,738

19,808

4.22%

Agricultural production

37,096

649

6.94%

28,472

496

6.99%

29,724

274

3.66%

Commercial

90,348

1,392

6.11%

82,743

1,179

5.72%

75,482

973

5.11%

Consumer

4,303

8.02%

4,339

8.13%

4,228

132

12.39%

Mortgage warehouse lines

100,549

2,004

7.91%

78,187

1,658

8.51%

46,969

623

5.26%

Other

2,381

3.17%

2,483

3.55%

2,349

3.88%

Total loans

2,088,732

24,915

4.73%

2,054,736

24,270

4.74%

2,021,490

21,833

4.28%

Total interest earning assets (4)

3,463,509

42,384

4.94%

3,438,807

40,875

4.85%

3,231,585

31,928

4.00%

Other earning assets

17,355

16,952

15,717

Non-earning assets

275,883

267,433

255,529

Total assets

3,756,747

3,723,192

3,502,831

Liabilities and shareholders' equity

Interest-bearing deposits:

Demand deposits

141,745

413

1.16%

144,156

190

0.53%

197,731

131

0.26%

NOW

427,278

0.06%

454,395

0.07%

531,205

0.06%

Savings accounts

408,158

0.07%

428,222

0.06%

485,167

0.06%

Money market

127,649

194

0.60%

123,571

0.23%

151,816

0.07%

Time deposits

557,504

6,514

4.64%

540,540

6,022

4.47%

313,764

1,377

1.74%

Wholesale brokered deposits

162,065

1,509

3.69%

178,728

1,521

3.41%

63,529

0.47%

Total interest-bearing deposits

1,824,399

8,767

1.91%

1,869,612

7,943

1.70%

1,743,212

1,761

0.40%

Borrowed funds:

Repurchase agreements

83,222

0.25%

79,694

0.33%

113,933

0.24%

Other borrowings

330,221

4,286

5.15%

279,633

3,430

4.92%

45,597

320

2.78%

Long-term debt

49,268

429

3.45%

49,247

429

3.49%

49,182

427

3.44%

Subordinated debentures

35,590

762

8.49%

35,547

691

7.80%

35,409

439

4.92%

Total borrowed funds

498,301

5,530

4.40%

444,121

4,615

4.17%

244,121

1,256

2.04%

Total interest-bearing liabilities

2,322,700

14,297

2.44%

2,313,733

12,558

2.18%

1,987,333

3,017

0.60%

Demand deposits - noninterest-bearing

1,064,962

1,050,668

1,140,840

Other liabilities

58,340

54,139

67,603

Shareholders' equity

310,745

304,652

307,055

Total liabilities and shareholders' equity

3,756,747

3,723,192

3,502,831

Interest income/interest earning assets

4.94%

4.85%

4.00%

Interest expense/interest earning assets

1.64%

1.46%

0.37%

Net interest income and margin (5)

28,087

3.30%

28,317

3.39%

28,911

3.63%

(1)

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

(2)

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

(3)

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(0.3) million and $0.1 million for the quarters ended September 30, 2023 and 2022, respectively, and $(0.3) million for the quarter ended June 30, 2023.

(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 nine months ended

September 30, 2023

September 30, 2022

Average Balance(1)

Income/ Expense

Yield/ Rate(2)

Average Balance(1)

Income/ Expense

Yield/ Rate(2)

Assets

Investments:

Interest-earning due from banks

21,504

861

5.35%

120,359

466

0.52%

Taxable

991,302

39,848

5.37%

783,384

15,613

2.66%

Non-taxable

353,173

8,233

3.95%

305,212

5,926

3.29%

Total investments

1,365,979

48,942

5.00%

1,208,955

22,005

2.61%

Loans:(3)

Real estate

1,860,504

61,491

4.42%

1,820,568

57,792

4.24%

Agricultural

31,232

1,578

6.76%

31,376

809

3.45%

Commercial

81,397

3,564

5.85%

84,301

3,351

5.31%

Consumer

4,260

263

8.25%

4,313

545

16.89%

Mortgage warehouse lines

79,438

4,779

8.04%

52,650

1,626

4.13%

Other

2,443

3.34%

2,066

5.69%

Total loans

2,059,274

71,736

4.66%

1,995,274

64,211

4.30%

Total interest earning assets (4)

3,425,253

120,678

4.80%

3,204,229

86,216

3.66%

Other earning assets

16,680

15,675

Non-earning assets

271,949

235,516

Total assets

3,713,882

3,455,420

Liabilities and shareholders' equity

Interest bearing deposits:

Demand deposits

145,316

731

0.67%

207,319

357

0.23%

NOW

454,900

214

0.06%

540,078

243

0.06%

Savings accounts

431,143

196

0.06%

477,904

210

0.06%

Money market

128,856

291

0.30%

152,912

0.06%

Time deposits

520,105

17,043

4.38%

301,173

2,052

0.91%

Brokered deposits

167,782

4,235

3.37%

61,189

172

0.38%

Total interest bearing deposits

1,848,102

22,710

1.64%

1,740,575

3,105

0.24%

Borrowed funds:

Repurchase agreements

88,707

199

0.30%

110,505

228

0.28%

Other borrowings

262,755

9,828

5.00%

15,480

322

2.78%

Long-term debt

49,246

1,286

3.49%

49,162

1,284

3.49%

Subordinated debentures

35,545

2,120

7.97%

35,365

1,024

3.87%

Total borrowed funds

436,253

13,433

4.12%

210,512

2,858

1.81%

Total interest bearing liabilities

2,284,355

36,143

2.12%

1,951,087

5,963

0.41%

Demand deposits - noninterest bearing

1,062,114

1,122,556

Other liabilities

59,674

58,393

Shareholders' equity

307,739

323,384

Total liabilities and shareholders' equity

3,713,882

3,455,420

Interest income/interest earning assets

4.80%

3.66%

Interest expense/interest earning assets

1.41%

0.25%

Net interest income and margin(5)

84,535

3.39%

80,253

3.41%

(1)

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

(2)

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

(3)

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(0.7) million and $0.9 million for the nine months ended September 30, 2023 and 2022, respectively.

(4)

Non-accrual loans have been included in total loans for purposes of computing total earning assets.

(5)

Net interest margin represents net interest income as a percentage of average interest-earning assets.

Category: Financial

Source: Sierra Bancorp

View source version on businesswire.com: https://www.businesswire.com/news/home/20231023734422/en/

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

Sierra Bancorp (NASDAQ:BSRR)
過去株価チャート
から 12 2024 まで 1 2025