Sierra Bancorp Reports 2020 Earnings
January 25, 2021
- Net income of $35.4 million in 2020, as compared to $36.0 million for 2019, including an increase in provision for loan and lease losses in 2020 of $6.0 million.
- Loans & Leases, Net of Fees had record growth of $694.5 million, or 39% during the year ended 2020 and by $82.7 million, or 3% in the fourth quarter of 2020 as compared to the third quarter of 2020
- Deposits increased by $456.2 million, or 21% during the year ended 2020 and by $32.9 million, or 1% in the fourth quarter of 2020 as compared to the third quarter of 2020
- The Company’s return on average assets was 1.22%, return on average equity was 10.80%, and diluted earnings per share were $2.32 for the twelve months ended 2020.
PORTERVILLE, CALIF.—(BUSINESS WIRE)—Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced fourth quarter of 2020 net income of $9.0 million, or $0.58 per diluted share, compared to net income of $9.3 million, or $0.60 per diluted share, in the fourth quarter of 2019. The Company’s return on average assets was 1.12% in the fourth quarter of 2020, as compared to 1.41% in the fourth quarter of 2019, with return on average equity of 10.49% as compared to 11.97%, for the same comparative periods. The nominal change in net income is driven primarily by a higher provision for loan and lease losses and noninterest expense, which was mostly offset by higher net interest income due mostly to higher loan balances combined with a lower cost of funds on interest bearing liabilities and higher noninterest income.
For the year ended 2020, the Company recognized net income of $35.4 million, or $2.32 per diluted share, as compared to $36.0 million, or $2.33 per diluted share, for the same period in 2019.
“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing.” – Pele
“In 2020, our banking team pivoted operationally, continued to focus on quality growth, and demonstrated their commitment to providing the best experience possible for our customers.” stated Kevin McPhaill, President and CEO. “All banks encountered new challenges this past year due to an unprecedented pandemic which continued into the fourth quarter. We are proud of how our Bank met these challenges. Our strong results demonstrate that our focus on the communities that we serve provided the core loans and deposits needed to continue this success in 2021!” McPhaill concluded.
Quarterly Changes (comparisons to the fourth quarter of 2019)
- The $4.0 million increase in net interest income is due to a $2.0 million increase in interest income attributable mostly to higher loan volumes partially offset by lower rates. The interest income growth was enhanced by a $2.0 million decrease in interest expense due to an increase in noninterest bearing deposits and lower rates on the remaining deposits and borrowed funds.
- The provision for loan & lease losses is $1.7 million higher primarily due to the increase in core loan volume as well as continued uncertainty in the economy.
- The $0.2 million favorable increase in noninterest income is due to a $0.2 million loss from the sale of debt securities in the fourth quarter of 2019. Customer service charges on deposit accounts were lower in the quarterly comparison, but increases in debit card interchange income mostly offset the decrease.
- Noninterest expense increased by $2.8 million, due mostly to a $2.1 million increase in salaries and benefits, a $0.2 million increase in FDIC assessments, and a $0.5 million increase in legal expenses.
Year to-Date Changes (comparisons to the year ended 2019)
- Net income decreased by $0.5 million, or 1%. While overall net income remained relatively flat year-over-year, there were some changes in individual line items, including a $6.0 million increase in the provision for loan and lease losses and a $5.3 million increase in noninterest expense, which were mostly offset by a $7.5 million increase in net interest income as well as increases in noninterest income
- The primary driver of the favorable change in net interest income was from the growth in noninterest bearing and low-interest bearing deposits in 2020. In addition, the impact of lower rates on earning assets was mostly offset by both a growth in loan balances and a shift in earning assets from investments to loans.
- Noninterest income increased by $2.7 million, or 11%, due in part to the fourth quarter changes described above in the quarterly comparison, but also because of an increase in the fair market value of restricted stock, fluctuations in income on BOLI associated with deferred compensation plans, lower tax credit fund expenses which are netted out of revenue, a $1.5 million gain from the disposal of a tax credit fund investment and a $0.4 million gain from the sale of debt securities.
- Noninterest expense increased $5.3 million, or 8%, due mostly to a $4.2 million increase in salaries and benefits expense. Deposit services and other professional services also contributed to the difference in the year-to-date comparisons.
Balance Sheet Changes (comparisons to December 31, 2019)
- Total assets increased by $626.9 million, or 24%, to $3.2 billion, for the year.
- Net loan growth of $694.5 million, or 39%, during 2020, was highlighted by a $507.9 million increase in non-agricultural real estate loans, as well as a $118.6 million increase in mortgage warehouse lines and $119.4 million in Paycheck Protection Program (PPP) loans.
- Deposits increased by $456.2 million, or 21%, during 2020. The growth in deposits came primarily from noninterest bearing or low-cost transaction accounts, including savings accounts. The increase in brokered deposits offset the decrease in customer time deposits.
- Other interest bearing liabilities increased by $136.3 million as we utilized overnight FHLB borrowings and fed funds purchased to partially fund loan growth in 2020, including PPP loans and increased utilization of mortgage warehouse lines.