Sierra Bancorp, parent company of Bank of the Sierra, had a record first and second quarters for net income, despite working against historically low interest rates.

The bank netted $11.7 million in Q1 and $22.8 million in Q2, compared to $8.3 million and $16.1 million in respective quarters.

“We are pleased to report another quarter of record earnings!” said Kevin McPhaill, president and CEO of the Porterville-based bank in their quarterly report.

The change in quarterly net income between the second quarter in 2020 and 2021 was primarily due to a $2.1 million negative provision for loan and lease losses, the financial statement said. It’s attributed to the impact of a strengthening economy, lower historical loss rates, net recoveries during the past two quarters and a $272.7 million decrease in average balances of net loans and losses.

Net interest income increased $3 million, primarily due to increases in average loan balances and a lower cost of funds. 

Return on average equity increased to 13.29% in Q2 of 2021, compared to 10.3% for Q2 in 2020. Return on average assets improved by 1.42% in the second quarter of 2021, compared to 1.19% for the same quarter in 2020. 

Total assets increased by $53.1 million to $3.3 billion, or 2%, during the first half of this year. Higher deposit balances and lower loan balances caused cash and due from banks to increase 424% to $373.9 million during the first and second quarters.

Gross loans declined by $318.3 million, attributed to a $157.3 million decline in mortgage warehouse line utilization, a $100 million decline in real estate loans and a $58.4 million decrease in commercial and industrial loans.

The company delayed adopting the Current Expected Credit Loss accounting method from the beginning of 2020 to the beginning of 2022. The decision was made to provide additional time to assess the impact of Covid-19 on the economy, and on the expected lifetime credit losses, the statement said. 

“Our strong results in the second quarter of 2021 are thanks to the continued hard work and persistence of our banking team. While we anticipate headwinds during the second half of this year due to historically low interest rates and competitive pressures, our core earnings engine remains strong, and our team is committed to meeting these challenges. We will continue to look for additional opportunities and we are excited about the future of Bank of the Sierra!” said McPhaill.