SIERRA BANCORP
For the period ended Mar 31, 2025. Filed May 2, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 2, 2025
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Overview of the Results of Operations and Financial Condition
OVERVIEW OF THE RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS SUMMARY
First Quarter 2025 Compared to First Quarter 2024
First quarter 2025 net income was $9.1 million, and $0.65 per diluted share as compared to $9.3 million, and $0.64 per diluted share in the first quarter of 2024. The Company’s annualized return on average equity was 10.44% and annualized return on average assets was 1.02% for the quarter ended March 31, 2025, compared to 11.09% and 1.06%, respectively, for the same quarter in 2024. The primary drivers behind the variance in first quarter net income are as follows:
| ● | Net income for the first quarter of 2025 decreased $0.2 million, or 2%, to $9.1 million. There was a favorable increase in net interest income for $1.4 million and a $2.1 million reduction in noninterest expense, which were offset by an increase in the provision for credit losses of $1.9 million as well as reduction of noninterest income of $1.9 million. |
| ● | The $1.4 million increase in net interest income for the quarter was driven by a 12 basis point increase in the net interest margin due to lower cost of deposits and borrowings and an increase in yield on loans, partially offset by lower yields on investments. |
| ● | Noninterest income for the first quarter of 2025 as compared to the same period in 2024 decreased $1.9 million or 23%. In the first quarter of 2024 we had a loss on the sale of bonds from a balance sheet restructure for $3.0 million offset by a gain on the sale/leaseback of two bank owned branch buildings for $3.8 million, with no like transaction in the first quarter of 2025. We experienced an unfavorable variance of $1.5 million in bank owned life insurance (BOLI), but had increases in other noninterest income, primarily life insurance proceeds, and dividends for $0.5 million. |
| ● | Noninterest expense decreased $2.1 million, or 9%, compared to the first quarter of 2024. The primary driver of lower expense in the first quarter of 2025 as compared to the same period in 2024 is deferred directors’ fees as part of the Company’s deferred compensation plan. The lower deferred compensation expense was offset by lower bank-owned life insurance income, mostly due to fluctuations in underlying values of assets in the separate account BOLI policies that are designed to have similar assets to those in the deferred compensation plans. |
FINANCIAL CONDITION SUMMARY
March 31, 2025 Relative to December 31, 2024
The Company’s assets totaled $3.6 billion at March 31, 2025, a decrease of $8.1 million, or 0.2% from December 31, 2024. The following provides a summary of key balance sheet changes during the first three months of 2025:
| ● | Investment securities decreased $39.1 million, or 4.0%, to $922.4 million primarily due to paydowns in the portfolio, which were partially used to offset brokered deposit maturities. |
| ● | Gross loans decreased $24.6 million, due to a $43.2 million decrease in mortgage warehouse line utilization, due to seasonality and two large line paydowns shortly before quarter-end, partially offset by a favorable increase in organic loan growth of $18.6 million, mostly commercial real estate. During the final week of the quarter, two mortgage warehouse customers paid down their lines by $41.3 million as part of normal operations. |
| ● | Deposits decreased by $41.8 million, or 1%. The decline in deposits came from an $85.0 million, planned decrease in brokered deposits, while overall customer deposits increased $43.2 million. |
| ● | Other interest-bearing liabilities increased $9.9 million, from an increase in repurchase agreements. |
Total capital of $351.8 million at March 31, 2025, reflects a decrease of $5.5 million, or 2%, compared to December 31, 2024. The decrease in equity during the first quarter of 2025 is due to net income of $9.1 million, offset by a $3.5 million dividend paid to shareholders, $14.2 million in share repurchases, and a $2.4 million favorable swing in other comprehensive income due principally to positive changes in investment securities’ fair value. The remaining difference is related to equity compensation recognized during the quarter.
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