Sierra Bancorp(BSRR) - 2025 Q1 - Quarterly Results

Q1 2025 Financial Performance Overview Sierra Bancorp reported solid Q1 2025 results with consolidated net income of $9.1 million, marked by a stable balance sheet, strong capital, and improved operational metrics First Quarter 2025 Highlights Sierra Bancorp achieved solid Q1 2025 results, including improved net interest margin and efficiency, growth in customer deposits and organic loans, and continued capital returns Key Financial Highlights | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $9.1 million | $9.3 million | | Diluted EPS | $0.65 | $0.64 | - The net interest margin improved to 3.74%, compared to 3.65% in the prior quarter and 3.62% in Q1 2024[6] - The efficiency ratio improved significantly to 60.62% from 65.97% in the same quarter of 2024[6] - The company strategically reduced higher-cost brokered deposits by $85.0 million while growing all other customer deposits by $43.2 million[6] - Returned capital to shareholders by repurchasing 476,770 shares at an average price of $29.71 and declaring a dividend of $0.25 per share[6] Key Financial Metrics Summary This section presents a comparative overview of key financial metrics for Q1 2025, highlighting diluted EPS growth and improved net interest margin Comparative Financial Metrics | Financial Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net income (in thousands) | $9,101 | $10,364 | $9,330 | | Diluted earnings per share | $0.65 | $0.72 | $0.64 | | Return on average assets | 1.02% | 1.13% | 1.06% | | Return on average equity | 10.44% | 11.49% | 11.09% | | Net interest margin (tax-equivalent) | 3.74% | 3.65% | 3.62% | | Efficiency ratio (tax-equivalent) | 60.62% | 59.74% | 65.97% | | Total assets (in thousands) | $3,606,183 | $3,614,271 | $3,553,072 | | Tangible book value per share | $23.44 | $23.15 | $21.61 | Detailed Financial Analysis This section provides an in-depth analysis of the company's income statement, balance sheet, and asset quality for the quarter Income Statement Analysis The income statement analysis shows a 5% YoY increase in net interest income, offset by a 23% YoY decrease in noninterest income, leading to stable net income Net Interest Income Net interest income increased 5% YoY to $30.1 million, driven by higher loan balances and yields, with the net interest margin expanding to 3.74% - Net interest income was $30.1 million, up $1.4 million (5%) from Q1 2024[14] - The YoY increase was driven by a $232.2 million rise in average loan balances and a 37 basis point increase in loan yield[15] - Net interest margin expanded to 3.74% in Q1 2025, up from 3.62% in Q1 2024 and 3.65% in Q4 2024[16] Provision for Credit Losses The company recorded a $2.0 million provision for credit losses in Q1 2025, a significant increase YoY due to higher specific reserves on evaluated loans Provision for Credit Losses on Loans | Period | Provision for Credit Losses (Loans) | | :--- | :--- | | Q1 2025 | $2.0 million | | Q4 2024 | $2.3 million | | Q1 2024 | $0.1 million | - The YoY increase in provision was mainly due to higher specific reserves on individually evaluated loans[18] Noninterest Income Noninterest income decreased 23% YoY to $6.6 million, primarily due to unfavorable BOLI changes and the non-recurrence of prior year gains - Noninterest income decreased by $1.9 million (23%) YoY and $0.9 million (12%) QoQ to $6.6 million[21] - The YoY decrease was primarily caused by a $1.5 million unfavorable change in BOLI and the non-recurrence of gains from a Q1 2024 strategic balance sheet restructure[22] Noninterest Expense Total noninterest expense decreased 9% YoY to $22.4 million, mainly driven by lower deferred directors' fees, with employee count at 489 - Noninterest expense decreased by $2.1 million (9%) YoY and $0.4 million (2%) QoQ[25] - The main driver of the decrease was lower deferred directors' fees, which are economically offset by lower BOLI income recorded in noninterest income[25][28] - Full-time equivalent employees stood at 489, down from 492 a year ago but up from 485 at the end of 2024[26] Balance Sheet Analysis The balance sheet remained stable at $3.6 billion, with active management of funding mix, positive organic loan growth, and strong liquidity and capital levels Asset and Loan Portfolio Total assets slightly decreased to $3.6 billion, with gross loans down due to mortgage warehouse paydowns, masking positive organic loan growth - Gross loans decreased by $24.6 million, or 1%, during Q1 2025, primarily due to a $43.2 million decrease in mortgage warehouse line utilization[31] - Organic loan growth was positive, led by a $22.5 million increase in commercial real estate loans[31] Loan Rollforward | Loan Rollforward (in thousands) | Q1 2025 | | :--- | :--- | | Beginning Balance | $2,331,341 | | New credit extended | $66,370 | | Change in mortgage warehouse | ($46,139) | | Pay-downs, maturities, etc. | ($32,681) | | Ending Balance | $2,306,762 | Deposits and Liquidity Total deposits decreased by $41.8 million due to planned brokered deposit reduction, offset by core non-maturity deposit growth, maintaining substantial liquidity - Total deposits decreased by $41.8 million, reflecting a planned $85.0 million reduction in brokered deposits[35] - Core non-maturity deposits increased by $52.6 million, and noninterest-bearing deposits rose to 36.4% of total deposits, up from 34.8% in Q4 2024[35] Liquidity Sources | Liquidity Sources (in thousands) | March 31, 2025 | | :--- | :--- | | Cash and cash equivalents | $159,711 | | Unpledged investment securities | $522,332 | | FHLB borrowing availability | $633,368 | | Unsecured lines of credit | $479,785 | | Total Sources | $2,259,374 | Capital Position Total capital decreased by $5.5 million to $351.8 million due to capital returns, yet capital ratios remain strong with tangible book value per share increasing - Total capital decreased by $5.5 million to $351.8 million, driven by capital returns to shareholders[38] - The decrease reflects $9.1 million net income offset by $14.2 million in share repurchases and a $3.5 million dividend[38] - The tangible book value per share increased by 1% during the quarter to $23.44[6] Asset Quality Asset quality improved in Q1 2025, with nonperforming assets decreasing to $18.2 million and the allowance for credit losses increasing to 1.17% of total loans - Total nonperforming assets decreased by $1.5 million (7%) to $18.2 million during the quarter[39] - The ratio of nonperforming assets to loans plus foreclosed assets improved to 0.79% from 0.84% at the end of 2024[39] - The allowance for credit losses on loans increased to $27.1 million, or 1.17% of total loans, up from 1.07% at year-end 2024[41] - Subsequent to quarter-end, a $6.5 million non-accrual loan relationship was paid in full, further reducing non-accrual loans[40] Financial Statements and Supplementary Data This section provides detailed unaudited financial statements and supplementary data, offering a comprehensive view of the company's financial position and performance Consolidated Financial Statements This section presents the unaudited Statement of Condition and Consolidated Income Statement for Q1 2025, with comparative prior period data - The detailed Statement of Condition (Balance Sheet) is provided, showing assets, liabilities, and capital as of March 31, 2025, compared to the four preceding quarters[44] - The detailed Consolidated Income Statement is provided for the three months ended March 31, 2025, compared to Q4 2024 and Q1 2024[48] Credit Quality and Key Ratios This section provides detailed tables on credit quality metrics, including nonperforming loans and charge-offs, and key financial ratios for profitability and efficiency - A detailed table on Credit Quality metrics is presented, including nonperforming loans, net charge-offs, and allowance ratios for the last five quarters[46] - A table of Key Financial Ratios is provided, including Return on Equity, Return on Assets, Net Interest Margin, and Efficiency Ratio for Q1 2025 and prior periods[50] Per Share Data This table details per-share metrics, including basic and diluted EPS, dividends, book value, and tangible book value, along with share counts - A detailed table of Per Share Data is provided, showing EPS, dividends, book value, and share counts for Q1 2025, Q4 2024, and Q1 2024[49] Non-GAAP Financial Measures This section provides reconciliations for non-GAAP financial measures like tangible common equity and tax-equivalent efficiency ratio to their GAAP equivalents - Reconciliations of GAAP to non-GAAP measures are provided for Tangible Common Equity, Tangible Assets, Tangible Book Value per Share, and the tax-equivalent Efficiency Ratio[52] Other Supplementary Data This section includes supplementary tables for Goodwill and Intangible Assets, Noninterest Income and Expense breakdowns, and Average Balances and Rates - A table detailing Goodwill and Intangible Assets is provided for the last five quarters[45] - A detailed breakdown of Noninterest Income and Noninterest Expense components is presented for Q1 2025 and comparative quarters[53] - A comprehensive table of Average Balances, Income/Expense, and Yields/Rates for all major asset and liability categories is included[55]