April 25, 2022
Porterville, Calif. – (Business Wire) – Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the quarter ended March 31, 2022. Sierra Bancorp reported consolidated net income of $7.4 million, or $0.49 per diluted share, for the first quarter of 2022 compared to $11.1 million, or $0.72 per diluted share, in the first quarter of 2021. The unfavorable variance in net income came largely from a $3.8 million decrease in net interest income. The Company’s return on average assets and return on average equity were 0.88% and 8.64%, respectively, in the first quarter of 2022 as compared to 1.40% and 12.94%, respectively, in the first quarter of 2021.
In April 2022, the Company opened its second loan production office in Templeton, California which demonstrates our investment in expanding our agricultural presence in the state. With the recent hire of Mark Pearce, we now have seven experienced relationship managers and a strong support team of underwriters, analysts, and other support focused on agricultural lending throughout California. While we have reduced exposure in the dairy industry, some of the areas of focus include winery and vineyard lending on the Central Coast and diversified farming operations in the Central Valley.
“Action is the foundational key to all success.” – Pablo Picasso
“Over the past few months, we have successfully added new agricultural, commercial real estate, and mortgage warehouse experts to our lending team,” stated Kevin McPhaill, President and CEO. “This has created a higher level of energy and excitement as we look to grow these segments of our loan portfolio. In addition to our new lenders, new loan opportunities have increased throughout our branches as our bankers diligently work with existing and new customers throughout our markets. We have also launched new deposit products and enhanced our treasury services as we look to add to our already strong deposit growth. While this year will have challenges, there will be opportunities as well. We are excited about our prospects and look forward to continued success this year!” McPhaill concluded.
Quarterly Changes (comparisons to the first quarter of 2021)
- The $3.8 million, or 13%, decrease in net interest income is due mostly to a $3.4 million decrease in interest income resulting primarily from lower loan volumes combined with lower rates. In addition, there was a $0.4 million unfavorable increase in interest expense due to the issuance of subordinated debt during the third quarter of 2021.
- The provision for credit losses on loans & leases at $0.6 million is $0.4 million higher as a result of higher charge-offs partially offset by a reduction in the pooled allowance under the new current expected credit losses (“CECL”) methodology implemented on January 1, 2022.
- All capital ratios were above the regulatory requirements for a well-capitalized institution. The Community Bank Leverage ratio was 11.65% for Bank of the Sierra. The Sierra Bancorp leverage ratio was 10.48%.
- Sierra Bancorp repurchased 182,562 shares totaling $4.9 million in the first quarter of 2022.
- Our Board of Directors declared a cash dividend of $0.23 per share on April 21, 2022. This is the 93rd consecutive quarterly dividend paid by Sierra Bancorp. The cash dividend is payable on May 12, 2022 to shareholders of record at the close of business on May 2, 2022.
Linked Quarter Changes (comparisons to the three months ended December 31, 2021)
- Net income decreased by $2.2 million, or 23%, driven mostly by a $1.8 million decline in net interest income and a $0.6 million provision for credit losses compared to a $1.2 million provision reversal in the prior quarter.
- Noninterest expense decreased $2.0 million, or 9%, favorably impacting net income, mostly due to a decrease in professional fees.
Balance Sheet Changes (comparisons to December 31, 2021)
- Total assets were relatively unchanged at $3.4 billion.
- Deposits increased by $83.4 million, or 3%. The growth in deposits came primarily from noninterest bearing or low-cost transaction and savings accounts, while higher-cost time deposits decreased slightly.
- Gross loan balances were flat at $2.0 billion, however real estate secured loans increased $62.9 million, due mostly to high quality jumbo single family mortgage loan pool purchases. This increase was offset by a reduction in commercial and industrial loans of $22.6 million due predominately to Small Business Administration Paycheck Protection Program (“SBA PPP”) loan forgiveness. Other significant declines included a decrease in Mortgage Warehouse lines for $44.0 million due to reduced refinance activity.