105 / 146
SIERRA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
89
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, 2015,
2014, and 2013, all mortgage loans that were sold by the Company were sold without retention of related
servicing. The Company’s servicing portfolio at December 31, 2015, 2014, and 2013 totaled $425,000,
$770,000, and $1,585,000, respectively. At December 31, 2015, 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
1,158
$
188
$
Commercial and industrial
38
-
Consumer
1
-
Total purchased credit impaired loans
1,197
$
188
$
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, 2015
December 31, 2014