Sierra Bancorp(BSRR) - 2023 Q4 - Annual Report

Financial Position and Assets - Consolidated assets of the company as of December 31, 2023, were $3.7 billion, including gross loans of $2.1 billion, liabilities totaling $3.4 billion (including deposits of $2.8 billion), and shareholders' equity of $338.1 million[16] - Consolidated assets of the Company as of December 31, 2023, totaled $3.7 billion, including gross loans of $2.1 billion, liabilities of $3.4 billion (including deposits of $2.8 billion), and shareholders' equity of $338.1 million[16] Loan Portfolio - Gross loans totaled $2.1 billion at December 31, 2023, with real estate-secured loans comprising 86.7% of the total loan portfolio[43] - The Company's loan portfolio as of December 31, 2023, was composed of 86.7% real estate loans, 7.5% commercial loans (including agricultural and SBA loans), 5.6% mortgage warehouse loans, and 0.2% consumer loans[43] - Interest, fees, and other income on real estate-secured loans totaled $82.2 million, or 59% of net interest plus other income in 2023[43] - Interest, fees, and other income from real estate loans totaled $82.2 million in 2023, representing 59% of net interest plus other income[43] - Commercial real estate loans represent 63.4% of the loan portfolio, with retail (15.0%), office space (9.6%), and hotel industry loans (8.3%) being the most concentrated segments[44] - The Company's commercial real estate loan concentration was 63.4%, with retail (15.0%), office space (9.6%), and hotel industry loans (8.3%) being the most concentrated segments[44] Market Share and Competition - The company ranked fifth in market share with 5.1% of total deposits in its operating area as of June 30, 2023, behind Wells Fargo (20.6%), Bank of America (17.4%), JPMorgan Chase (15.4%), and U.S. Bank (6.3%)[21] - The Company ranked fifth in market share with 5.1% of total deposits in its operating region, behind Wells Fargo (20.6%), Bank of America (17.4%), JPMorgan Chase (15.4%), and U.S. Bank (6.3%)[21] - The company operates in a competitive market dominated by major banks, with Wells Fargo holding the largest deposit market share at 20.6% in the company's geographic footprint[21] - The company faces competition from non-banking institutions, including finance companies, leasing companies, and internet companies, which have leveraged innovative technologies to offer traditional banking services[46] - The California banking market is highly competitive, with continued consolidation and competition from unregulated companies[92] - The company faces strong competition in California from both financial institutions and non-banks, including fintech firms[92][93] Regulatory Compliance and Capital Adequacy - The company and its subsidiary bank qualified as well-capitalized for regulatory capital purposes as of December 31, 2023, under the Capital Simplification for Qualifying Community Bank Organization framework[38] - The Company and the Bank qualified as well-capitalized for regulatory capital purposes as of December 31, 2023, under the Capital Simplification for Qualifying Community Bank Organization framework[38] - The company opted into the community bank leverage ratio framework in Q1 2020, meeting criteria such as a leverage ratio greater than 9%, average consolidated assets under $10 billion, and off-balance-sheet exposures below 25% of total assets[31] - The company is subject to Federal Reserve and FDIC regulations, including risk-based capital guidelines and prompt corrective action provisions[32][36] - The company met all capital adequacy requirements at December 31, 2023, utilizing the Capital Simplification for Qualifying Community Bank Organization[64] - The Company's Tier 1 capital to total risk-weighted assets ratio was required to be at least 6.0%, with a Common Equity Tier 1 capital conservation buffer of 2.5% raising the effective minimum to 8.5%[35] - The Company's community bank leverage ratio framework requires a minimum leverage ratio of 9% for calendar year 2022 and beyond[37] - The company and its bank subsidiary met all capital adequacy requirements as of December 31, 2023, utilizing the Capital Simplification for Qualifying Community Bank Organization[64] - The company is subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires data collection on small business lending, particularly for women-owned, minority-owned, and small businesses[69] - The company is subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which includes enhanced compliance requirements and potential financial impacts[70] - The company's deposits are insured up to $250,000 per depositor, and it is subject to FDIC deposit insurance assessments, with recent changes increasing the base deposit insurance rate by 2 basis points starting in 2023[71] - The company's bank subsidiary received a "satisfactory" rating in its most recent Community Reinvestment Act (CRA) assessment in August 2022[73] - The company received a "satisfactory" CRA assessment rating in August 2022[73] - The company is subject to new CRA regulations effective April 1, 2024, with some amendments effective through January 1, 2031[79][81] - The company is required to notify its primary federal regulator within 36 hours of a computer-security incident that could materially disrupt operations[82] - Compliance with government and regulatory mandates has resulted in significant ongoing expenses, but no material effect on capital expenditures or earnings[91] Employee and Workforce Information - The company had 491 full-time and 41 part-time employees as of December 31, 2023, with full-time equivalent staffing at 485, down from 491 in 2022[23] - The Company had 491 full-time and 41 part-time employees as of December 31, 2023, with a full-time equivalent (FTE) staffing of 485, down from 491 in 2022[23] - The company increased its minimum wage to $20 per hour effective January 1, 2022, to attract and retain skilled employees[24] - The Company increased its minimum wage to $20 per hour effective January 1, 2022, to attract and retain skilled employees[24] - The company's compensation and benefits programs include equity-based compensation, health/dental/vision insurance, 401(K) plans, and paid leave, among others[24] - The company's customer base is 75% women and 25% men, with Hispanic or Latino customers making up 50% of the total[48] - 75% of the company's employees are women, while 25% are men[48] - 50% of the company's employees identify as Hispanic or Latino, followed by 38% White, 5% Asian, 5% two or more races, 1% Black or African American, and 1% unspecified[48] - The company invests in employee education and development, offering internal courses, external seminars, and assistance for higher education at accredited institutions[49] - The company invests in employee education and training, offering internal courses, external seminars, and support for higher education at accredited institutions[49] - The company had 46 employees working remotely and 157 in hybrid arrangements as of December 31, 2023[95] Deposits and Customer Accounts - The company had 120,701 deposit accounts as of December 31, 2023, down from 122,596 in 2022, while total deposits remained unchanged at $2.8 billion[90] - Total deposits remained unchanged at $2.8 billion as of December 31, 2023, compared to December 31, 2022[90] - The number of deposit accounts decreased to 120,701 at December 31, 2023, down from 122,596 at December 31, 2022[90] - The company offers a wide range of deposit products, including checking, savings, money market, and retirement accounts[90] Branch and Operational Information - The company maintains 35 full-service branches in California, along with administrative and loan production offices[88] - The company operates 35 full-service branches in California[88] Community and Social Responsibility - The company sponsors community events such as holiday toy and food drives, and tree plantings in fire-damaged areas of the National Forest[50] Stock and Market Information - The company's market value of voting stock held by non-affiliates was approximately $251 million as of June 30, 2023[86] - The aggregate market value of voting stock held by non-affiliates was approximately $251 million as of June 30, 2023[86] - The company had 14,788,121 shares of common stock outstanding as of March 1, 2024[86] - The company's common stock is listed on the Nasdaq Global Select Market under the trading symbol "BSRR"[53] Technology and Security - The company does not engage in any crypto-asset related activities, despite regulatory concerns in the sector[85] - The company does not engage in any crypto-asset related activities[85] Miscellaneous - The company's liabilities include $35.7 million in debt obligations due to its trust subsidiaries related to TRUPS issued by those entities[16] - The company's Common Equity Tier 1 capital includes common stock, additional paid-in capital, and retained earnings, with trust preferred securities qualifying as Tier 1 Capital up to 25% of Tier 1 capital[61] - The company's deposits are insured up to $250,000 per depositor under the Federal Deposit Insurance Act, with the bank subject to deposit insurance assessments to maintain the FDIC's Deposit Insurance Fund[71]