published on July 20, 2020 - 1:45 PM
Written by The Business Journal Staff

Sierra Bancorp, parent company of Porterville’s Bank of the Sierra, reported net income of $8.3 million for the second quarter, down about 5% from last year.

Bank of the Sierra also released details of its lending under the Paycheck Protection Program, issuing 1,241 loans for $116.2 million to assist customers impacted by Covid-19.

Bank of the Sierra also reached a milestone in the second quarter, eclipsing total assets of $3.11 billion, compared to $2.67 billion on March 31. It remains the region’s largest community bank by assets.

“We are proud of our team’s ability to move quickly during the pandemic so our bank could operate effectively,” stated Kevin McPhaill, president and CEO. “During the second quarter, we elected to participate in the Paycheck Protection Program to help our customers through these challenging times. Also, we experienced exceptional growth in our mortgage warehouse lines and solid organic growth primarily due to our loan production groups in Northern and Southern California. We had strong deposit growth during this period as well. All of these events led to significant asset growth as we reached $3.0 billion in total assets – another record for us! While we know the pandemic continues to evolve and we are in a very dynamic environment, our team is capable and ready for the challenge. We are proud of our second quarter results and remain cautiously optimistic as we look to the second half of the year.”

The change in quarterly net income was primarily due to a $1.8 million increase in the provision for loan and lease losses due to continued economic uncertainty, according to the earnings release. Overall net interest income remained relatively unchanged as declines in loan yields were mostly offset by higher balances and lower interest expense.

For the first six months of 2020, the Company recognized net income of $16.1 million as compared to $17.7 million for the same period in 2019.

For the first six months of 2020, gross loans were up by $449.5 million, or 26%, including increases of $149.0 million in mortgage warehouse lines, $205.2 million increase in non-agricultural real estate loans, and a $106 million increase in commercial and industrial loans. Mortgage warehouse loan balances increased due to market factors favorably impacting line utilization due to both mortgage originations and refinancing activity.

Non-agricultural real estate loan balances increased due to deliberate and concentrated efforts of the Northern and Southern market loan production teams. The growth in these markets was mostly due to commercial real estate and the primary driver of the $278.7 million increase in non-owner occupied commercial real estate loans. The increases in commercial and industrial loan balances were impacted by participation in the SBA PPP product as authorized by the CARES Act.

The recent growth in loans, and in particular, real estate loans, was accomplished without relaxing any of the Company’s credit standards that had been tightened after the great recession. Instead, the growth came by diversifying geography with new loan teams announced in the first quarter 2020 in our Northern and Southern California markets. Those teams have maintained these enhanced underwriting standards through the pandemic and have not compromised credit quality when sourcing new loans. However, no assurance can be given as to how these loans will perform over their lifetime.

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