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SIERRA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
75
4.
LOANS AND LEASES
The composition of the loan and lease portfolio is as follows (dollars in thousands):
2015
2014
Real estate:
Secured by residential, commercial and professional
office properties, including construction and
development
421,174
$
370,639
$
Secured by residential properties
223,752
188,552
Secured by farm land
133,182
145,039
Total real estate loans
778,108
704,230
Agricultural
46,237
27,746
Commercial and industrial
113,207
113,771
Mortgage warehouse lines
180,355
106,021
Consumer
14,949
18,885
Total loans
1,132,856
970,653
Deferred loan and lease origination cost, net
2,169
1,651
Allowance for loan and lease losses
(10,423)
(11,248)
Loans, net
1,124,602
$
961,056
$
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.