SIERRA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
74
4.
LOANS AND LEASES
The composition of the loan and lease portfolio is as follows (dollars in thousands):
2014
2013
Real estate:
Secured by residential, commercial and professional
office properties, including construction and
development
370,639
$
318,383
$
Secured by residential properties
188,552
150,952
Secured by farm land
145,039
108,504
Total real estate loans
704,230
577,839
Agricultural
27,746
25,180
Commercial and industrial
113,771
103,262
Mortgage warehouse lines
106,021
73,425
Consumer
18,885
23,536
Total loans
970,653
803,242
Deferred loan and lease origination cost, net
1,651
1,522
Allowance for loan and lease losses
(11,248)
(11,677)
Loans, net
961,056
$
793,087
$
December 31,
The Company monitors the credit quality of loans on a continuous basis using the regulatory and
accounting classifications of pass, special mention, substandard and impaired to characterize and qualify
the associated credit risk. Loans classified as “loss” are immediately charged-off. The Company uses the
following definitions of risk classifications:
Pass
– Loans listed as pass include larger non-homogeneous loans not meeting the risk rating
definitions below and smaller, homogeneous loans not assessed on an individual basis.
Special Mention –
Loans classified as special mention have the potential weakness that deserves
management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration
of the repayment prospects for the loan or of the institution’s credit position and some future date.
Substandard –
Loans classified as substandard are those loans with clear and well-defined
weaknesses such as a highly leveraged position, unfavorable financial operating results and/or trends, or
uncertain repayment sources or poor financial condition, which may jeopardize ultimate recoverability of
the debt.
Impaired –
A loan is considered impaired, when, based on current information and events, it is
probable that the Company will be unable to collect all amounts due according to the contractual terms of
the loan agreement. Additionally, all loans classified as troubled debt restructurings are considered
impaired.
