PORTERVILLE, Calif., Jan. 25, 2016 /PRNewswire
Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the quarter and the year ended December 31, 2015. Sierra Bancorp recognized net income of $18.067 million for the year in 2015, an improvement of $2.827 million, or 19%, relative to net income in 2014. The increase over the prior year is the result of substantially higher net interest income driven by higher interest-earning assets and an increase in non-recurring interest income, a growing level of non-interest income, and a reduced loan loss provision, partially offset by a higher tax accrual and, for the annual comparison, higher overhead expense. The Company’s return on average assets was 1.07% in 2015, up from 1.03% in 2014. The Company’s return on average equity also increased to 9.59% in 2015 from 8.18% in 2014, and diluted earnings per share increased to $1.33 in 2015 from $1.08 in 2014. For the fourth quarter of 2015 Sierra Bancorp had net income of $5.363 million, an annualized return on average equity of 11.25%, and a return on average assets of 1.24%.
Total assets were up $159 million, or 10%, during 2015 due to net growth of $162 million, or 17%, in gross loan balances that was partially offset by slightly lower levels of cash and investments. Loan growth was favorably impacted by increased utilization on mortgage warehouse lines, the purchase of $28 million in residential mortgage loans in March, and strong organic growth. Total nonperforming assets, including nonperforming loans and foreclosed assets, were reduced by almost $12 million, or 48%, during 2015. Total deposits were up $98 million, or 7%, for the year due primarily to a $96 million organic increase in core non-maturity deposits. Non-deposit borrowings were increased by $55 million in 2015 in order to meet the funding requirements created by strong loan demand.
“Never mistake motion for action.” – Ernest Hemingway
“Hemingway gives us this important reminder – just doing something is not the same as achieving results,” observed Kevin McPhaill, President and CEO. “We have worked diligently this past year to direct our attention and the actions of our bankers, some of the best in the industry, to reinforcing quality banking relationships with existing customers and obtaining new business,” he added. “This persistence resulted in strong loan and deposit growth throughout our markets during 2015, leading to improved profitability. We’re excited about our prospects for 2016 and anticipate that this will be another year of action, cultivating customer relationships and generating quality loan and deposit growth,” concluded McPhaill.
Net income increased by $1.710 million, or 47%, in the fourth quarter of 2015 relative to the fourth quarter of 2014, and was up $2.827 million, or 19%, for the year in 2015 relative to 2014. Pre-tax income actually increased by 53% and 27% for the quarter and year, respectively, but the percentage change in net income was lower due to a higher tax accrual rate in 2015. There were also significant variances in the components of pre-tax income, including some items of a nonrecurring nature, as noted below.
Net interest income was up by $1.645 million, or 12%, for the fourth quarter and $7.801 million, or 15%, for the year due primarily to growth in average interest-earning assets totaling $164 million, or 12%, in the fourth quarter of 2015 over the fourth quarter of 2014 and $203 million, or 15%, for the year in 2015 over 2014. The growth in average interest-earning assets was due to a combination of our acquisition of Santa Clara Valley Bank in the latter part of 2014, organic growth, and the purchase of residential mortgage loans in 2015. While our net interest margin was unchanged for the quarterly comparison, the positive impact of higher interest-earning assets was partially offset by a drop of two basis points in our net interest margin for the year-to-date comparison. Our lower net interest margin for the year resulted in part from relatively strong growth in lower-yielding mortgage warehouse loans and continued competitive pressures on loan yields. The comparative results for the fourth quarter and the year were both favorably impacted by non-recurring interest income, which is comprised primarily of penalties and accelerated fee recognition on loan prepayments as well as interest recoveries on non-accrual loans (net of interest reversals for loans placed on non-accrual status). Net non-recurring interest income totaled $312,000 in the fourth quarter of 2015 relative to $82,000 in the fourth quarter of 2014, and added $825,000 to interest income for the year in 2015 relative to $505,000 in 2014. Another factor in the Company’s year-to-date results of operations was our loan loss provision, which was zero in 2015 relative to $350,000 for 2014.