SIERRA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
88
4.
LOANS AND LEASES
(Continued)
Interest income for all performing loans, regardless of class (Pass, Special Mention, Substandard and
Impaired), is recognized on an accrual basis, with interest accrued daily. Costs associated with successful
loan originations are netted from loan origination fees, with the net amount (net deferred loan fees)
amortized over the contractual life of the loan in interest income. If a loan has scheduled periodic
payments, the amortization of the net deferred loan fee is calculated using the effective interest method
over the contractual life of the loan. If the loan does not have scheduled payments, such as a line of credit,
the net deferred loan fee is recognized as interest income on a straight line basis over the contractual life
of the loan. Fees received for loan commitments are recognized as interest income over the term of the
commitment. When loans are repaid, any remaining unamortized balances of deferred fees and costs are
accounted for through interest income.
Loan Servicing
The Company originates mortgage loans for sale to investors. During the years ended December 31,
2014, 2013, and 2012, all mortgage loans that were sold by the Company were sold without retention of
related servicing. The Company’s servicing portfolio at December 31, 2014, 2013 and 2012 totaled
$770,000, $1,585,000 and $2,596,000 respectively. At December 31, 2014, loans were principally
serviced for one investor.
Purchased Credit Impaired Loans
As part of the acquisition described in Note 21
Business Combination
,
the Company acquired on
November 14, 2014, a portfolio of loans, some of which have shown evidence of credit deterioration since
origination and it was probable at acquisition that all contractually required payments would not be
collected. The carrying amount and unpaid principal balance of those loans are as follows (dollars in
thousands):
Unpaid Principal Balance Carrying Value
Real estate secured
1,222
$
228
$
Commercial and industrial
92
-
Consumer
1
-
Total purchased credit impaired loans
1,315
$
228
$
December 31, 2014
No ALLL was recorded on purchased credit impaired loans as of December 31, 2014. Purchased credit
impaired loans acquired during the year ended December 31, 2014 for which it was probable at acquisition
that not all contractually required payments would be collected are as follows (dollars in thousands):
November 14, 2014
Contractually required payments including interest
1,447
$
Non-accretable difference
(1,221)
Cash flows expected to be collected
226
Accretable difference
-
Fair value at acquisition
226
$
Discount accretion on PCI loans was $0 for the year ended December 31, 2014.
