Sierra Bancorp Reports 2020 Earnings

Rhea-AI Summary

Sierra Bancorp (Nasdaq: BSRR) reported Q4 2020 net income of $9.0 million, or $0.58 per diluted share, down from $9.3 million, or $0.60 per diluted share, in Q4 2019. The return on average assets decreased to 1.12%, while return on average equity dropped to 10.49%. Net income for the full year was $35.4 million, compared to $36.0 million in 2019. Key factors include a $4.0 million increase in net interest income, a $1.7 million rise in loan loss provisions, and a $2.8 million rise in noninterest expense due to increased salaries and legal costs.

Positive

• Net interest income increased by $4.0 million due to higher loan volumes and reduced interest expenses.
• Strong loan growth indicates a solid banking strategy during economic uncertainty.

Negative

• Net income decreased by $0.5 million year-over-year.
• Return on average assets and return on average equity declined significantly.
• Provision for loan & lease losses increased by $6.0 million for the year.

Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced fourth quarter of 2020 net income of $9.0 million, or $0.58 per diluted share, compared to net income of $9.3 million, or $0.60 per diluted share, in the fourth quarter of 2019. The Company's return on average assets was 1.12% in the fourth quarter of 2020, as compared to 1.41% in the fourth quarter of 2019, with return on average equity of 10.49% as compared to 11.97%, for the same comparative periods. The nominal change in net income is driven primarily by a higher provision for loan and lease losses and noninterest expense, which was mostly offset by higher net interest income due mostly to higher loan balances combined with a lower cost of funds on interest bearing liabilities and higher noninterest income.

For the year ended 2020, the Company recognized net income of $35.4 million, or $2.32 per diluted share, as compared to $36.0 million, or $2.33 per diluted share, for the same period in 2019.

“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing.” - Pele

"In 2020, our banking team pivoted operationally, continued to focus on quality growth, and demonstrated their commitment to providing the best experience possible for our customers," stated Kevin McPhaill, President and CEO. "All banks encountered new challenges this past year due to an unprecedented pandemic which continued into the fourth quarter. We are proud of how our Bank met these challenges. Our strong results demonstrate that our focus on the communities that we serve provided the core loans and deposits needed to continue this success in 2021!" McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the fourth quarter of 2019)

• The $4.0 million increase in net interest income is due to a $2.0 million increase in interest income attributable mostly to higher loan volumes partially offset by lower rates. The interest income growth was enhanced by a $2.0 million decrease in interest expense due to an increase in noninterest bearing deposits and lower rates on the remaining deposits and borrowed funds.
• The provision for loan & lease losses is $1.7 million higher primarily due to the increase in core loan volume as well as continued uncertainty in the economy.
• The $0.2 million favorable increase in noninterest income is due to a $0.2 million loss from the sale of debt securities in the fourth quarter of 2019. Customer service charges on deposit accounts were lower in the quarterly comparison, but increases in debit card interchange income mostly offset the decrease.
• Noninterest expense increased by $2.8 million, due mostly to a $2.1 million increase in salaries and benefits, a $0.2 million increase in FDIC assessments, and a $0.5 million increase in legal expenses.

Year to-Date Changes (comparisons to the year ended 2019)

• Net income decreased by $0.5 million, or 1%. While overall net income remained relatively flat year-over-year, there were some changes in individual line items, including a $6.0 million increase in the provision for loan and lease losses and a $5.3 million increase in noninterest expense, which were mostly offset by a $7.5 million increase in net interest income as well

FAQ

What were Sierra Bancorp's earnings for Q4 2020?

Sierra Bancorp reported a net income of $9.0 million or $0.58 per diluted share for Q4 2020.

How did Sierra Bancorp perform in 2020 compared to 2019?

For the year 2020, Sierra Bancorp had a net income of $35.4 million, a slight decrease from $36.0 million in 2019.

What contributed to the increase in Sierra Bancorp's net interest income?

The $4.0 million increase in net interest income was primarily due to higher loan volumes and lower rates on interest-bearing liabilities.

What was the return on average assets for Sierra Bancorp in Q4 2020?

The return on average assets for Q4 2020 was 1.12%, down from 1.41% in Q4 2019.

What were the main factors affecting Sierra Bancorp's financial performance in 2020?

Key factors included an increase in loan loss provisions by $6.0 million and a $5.3 million rise in noninterest expense.