January 24, 2022
PORTERVILLE, Calif –(BUSINESS WIRE) – Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the three-and twelve-month periods ended December 31, 2021. Sierra Bancorp reported consolidated net income in the fourth quarter of 2021 of $9.6 million, or $0.63 per diluted share, compared to net income of $9.0 million, or $0.58 per diluted share, in the fourth quarter of 2020. The Company’s fourth quarter 2021 return on average assets and return on average equity was 1.10% and 10.47%, respectively, as compared to 1.12% and 10.49%, respectively, for the same comparative period in 2020.
For the year ended 2021, the Company recognized net income of $43.0 million, or $2.80 per diluted share, as compared to $35.4 million, or $2.32 per diluted share, for the same period in 2020. The Company’s financial performance metrics for the year ended 2021 include an annualized return on average assets and a return on average equity of 1.29% and 12.05%, respectively, compared to 1.22% and 10.80%, respectively, for the same period in 2020.
“We are proud of our efforts to help our customers and communities through these challenging times. Our tireless work is reflected in our fourth quarter results that complete a record-breaking year for income,” stated Kevin McPhaill, President and CEO. “Henry Ford said it best, ‘Coming together is a beginning; keeping together is progress; working together is success.’ With 2021 now complete, we look forward to opportunities in 2022 and beyond!” McPhaill concluded.
Quarterly Changes (comparisons to the fourth quarter of 2020)
- Net income for the fourth quarter of 2021 increased $0.6 million to $9.6 million, there was a $1.2 million negative provision for loan and lease losses in the fourth quarter of 2021, lower salary and benefit costs for $0.8 million partially offset by an increase in litigation expense and related legal reserves. Compared to 2020, there was a $2.2 million provision for loan and lease losses; the $3.4 million decrease in provision being attributable to the impact of continued improvements in the overall economy, a reduction in historical loss rates, a decline in specific reserves on impaired loans, net loan recoveries in 2021, a change in the mix of loans, and lower outstanding balances of net loans and leases; lower FTE was responsible for the decrease in salaries and benefits.
- Net interest income for the fourth quarter of 2021 decreased by $2.3 million mostly due to a 57 bps decline in the yield on earning assets and a shift in mix due to higher levels of cash invested overnight with the Federal Reserve Bank and increased lower yielding investment balances.
- Noninterest income for the fourth quarter of 2021 increased $1.1 million, or 18%, due to a $0.3 million increase in debit card interchange income from increased usage, $0.4 million in life insurance proceeds and $0.3 million from the sale of underlying assets within an investment in a Small Business Investment Company. Noninterest expense for the fourth quarter of 2021 increased by $1.4 million due mostly to a $1.3 million increase in legal expenses.
Year to-Date Changes (comparisons to the year ended 2020)
- Net income for 2021 increased by $7.6 million, or 21%. The most significant line-item changes were a $12.2 million decrease in the provision for loan and lease losses, and an increase of $4.2 million or 4% in net interest income, due mostly to higher average loan balances and a continued favorable deposit mix with cost of funds decreasing 10 bps. These items were partially offset by a $7.6 million increase in noninterest expense in 2021 as compared to the prior year due to higher salary & benefits expense, data processing expenses, debit card processing costs, and professional services expense.
- Noninterest income for 2021 increased by $1.9 million, or 7%, due to greater interchange fee income, increases in BOLI income, and increases in the fair market value of equity securities partially offset by nonrecurring gains in 2020 from the sales of investments, and the sale of assets within a low-income housing tax credit fund in 2020 that did not reoccur in 2021.
Balance Sheet Changes (comparisons to December 31, 2020)
- Total assets increased by $150.3 million, or 5%, to $3.4 billion, during 2021.
- Cash and due from banks increased $186.1 million, to $257.5 million for the year due mostly to higher deposit balances coupled with lower loan balances.
- Investment securities increased $429.3 million, or 79%, to $973.3 million primarily due to bond purchases.
- During 2020, gross loans increased by $700.5 million, or 40%. Following this tremendous loan growth in 2020, overall loan balances declined $473.4 million, or 19%. For the two-year period of 2020 and 2021, overall loan balances increased by $227.2 million, or 13%. The decline in loan balances during 2021 was due mostly to lower utilization of mortgage warehouse lines resulting in a $206.5 million decline in overall mortgage warehouse outstanding balances due primarily to reduced refinancing activity. Other significant declines included a $155.7 million decline in real estate loans mostly due to lower commercial real estate and construction loan balances, and a $99.3 million decrease in commercial and industrial loans, which was predominately due to Small Business Administration Paycheck Protection Program (“SBA PPP”) loan forgiveness.
- Deposits totaled $2.8 billion at December 31, 2021, representing a year-to-date increase of $157.0 million, or 6%. The growth in deposits came primarily from core transaction and savings accounts, while higher-cost time and wholesale brokered deposits decreased by $159.0 million, or 31%.
- Short-term debt decreased to $106.9 million at December 31, 2021. While overnight repurchase agreements increased $67.8 million to $106.9 million, FHLB borrowings and overnight fed funds decreased to zero, from $143.0 million.
- Long-term debt increased to $49.1 million at December 31, 2021 from the issuance of $50 million in ten year 3.25% fixed to floating subordinated notes in the third quarter of 2021.