Sierra Bancorp Announces Earnings Accompanied By Solid Asset and Deposit Growth
July 20, 2020
- Loans & Leases, Net of Fees increased by $408.7 million, or 23% quarter-over-quarter, including $116.2 million in Paycheck Protection Program loans and $109.5 million of seasonal increases in mortgage warehouse lines
- Deposits grew by $327.4 million, or 15% during the second quarter of 2020
- Quarterly deposit growth was highlighted by a $245.0 million increase in noninterest demand deposits which lowered our quarterly cost of average total deposits to 0.15% as compared to 0.34% in the prior linked quarter
Porterville, CA – July 20, 2020 – 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, 2020. Sierra Bancorp reported consolidated net income of $8.3 million, or $0.54 per diluted share, for the second quarter of 2020, compared to $8.8 million, or $0.57 per diluted share, in the second quarter of 2019. The Company’s return on average assets and return on average equity were 1.19% and 10.30%, respectively, in the second quarter of 2020, as compared to 1.39% and 12.27%, respectively, in the second quarter of 2019.
For the first six months of 2020, the Company recognized net income of $16.1 million as compared to $17.7 million for the same period in 2019. The Company’s financial performance metrics for the first half of 2020 include an annualized return on average equity of 10.14%, a return on average assets of 1.21%, and diluted earnings per share of $1.05.
“Some people want it to happen, some wish it would happen, others make it happen.”
– Michael Jordan
“We are proud of our team’s ability to move quickly during the pandemic so our bank could operate effectively,” stated Kevin McPhaill, President and CEO. “During the second quarter, we elected to participate in the Paycheck Protection Program to help our customers through these challenging times. Also, we experienced exceptional growth in our mortgage warehouse lines and solid organic growth primarily due to our loan production groups in Northern and Southern California. We had strong deposit growth during this period as well. All of these events led to significant asset growth as we reached $3.0 billion in total assets – another record for us! While we know the pandemic continues to evolve and we are in a very dynamic environment, our team is capable and ready for the challenge. We are proud of our second quarter results and remain cautiously optimistic as we look to the second half of the year,” McPhaill concluded.
Quarterly Changes (comparisons to the second quarter of 2019)
- The change in quarterly net income was primarily due to a $1.8 million increase in the provision for loan and lease losses due to continued economic uncertainty.
- Overall net interest income remained relatively unchanged as declines in loan yields were mostly offset by higher balances and lower interest expense.
- The $0.8 million favorable increase in noninterest income is due to a $0.7 million gain from the disposal of a low-income housing tax credit fund investment, a $0.5 million increase in bank-owned life insurance (BOLI) income, and a $0.4 million gain from the sale of debt securities. These increases were partially offset by a $0.5 million decline in customer service charges.
- Noninterest expense increased by $0.2 million, or 1%, due mostly to higher deferred compensation expense.
Year to-Date Changes (comparisons to the first six-months of 2019)
- Net income declined by $1.6 million due mostly to an increase of $3.3 million in the provision for loan and lease losses, offset by the corresponding increases previously discussed in noninterest income for the quarterly comparison.
- Noninterest income increased by $1.2 million, or 11%, due mostly to the changes described above.
Balance Sheet Changes (comparisons to December 31, 2019)
- Total assets increased to $3.1 billion, representing an increase of $516.2 million, or 20%, during the first half of the year.
- Loan growth in 2020 of $444.0 million, or 25%, highlighted by a $205.2 million increase in non-agricultural real estate loans, a $149.0 million favorable change in outstanding balances of mortgage warehouse lines, and a $106.0 million increase in commercial and industrial loans.
- Deposits totaled $2.5 billion at June 30, 2020, representing a year-to-date increase of $338.4 million, or 16%. The growth in deposits came primarily from core transaction and savings accounts, while higher-cost time deposits decreased.