Bank of the Sierra’s participation in the Paycheck Protection Program helped the Porterville-based bank reach a record $3.1 billion in assets for the first half of 2020
PORTERVILLE – A Tulare County based bank has had a record year during the pandemic, much of which can be attributed to helping small businesses in the area.
On July 20, Sierra Bancorp, parent of Bank of the Sierra, announced it reached $3 billion in assets during the second quarter, a record for the Porterville-based bank. The record was driven by a $4087.7 million increase in loans and leases, or a 23% increase over the first quarter. The bank’s loans were bolstered by providing $116.2 million in Paycheck Protection Program loans, the federal loan program implemented by the Small Business Administration in response to the government-induced shut down of entire sectors of the economy in an effort to flatten the curve of positive cases throughout the spring and early summer.
“We are proud of our team’s ability to move quickly during the pandemic so our bank could operate effectively,” President and CEO Kevin McPhaill said in a July 20 statement. “During the second quarter, we elected to participate in the Paycheck Protection Program to help our customers through these challenging times.”
The bank also saw deposits grow by $327.4 million, or 15% during the quarter ending on June 30. Quarterly deposit growth was highlighted by a $245.0 million increase in noninterest demand deposits which lowered Bank of the Sierra’s quarterly cost of average total deposits to 0.15% as compared to 0.34% in the prior linked quarter. The growth in deposits came primarily from core transaction and savings accounts, while higher-cost time deposits decreased.
Total assets increased to $3.1 billion, representing an increase of $516.2 million, or 20%, during the first half of the year.
“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!,” McPhaill stated. “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.”
Sierra Bancorp reported consolidated net income of $8.3 million, or $0.54 per diluted share, for the second quarter of 2020, compared to $8.8 million, or $0.57 per diluted share, in the second quarter of 2019. The Company’s return on average assets and return on average equity were 1.19% and 10.30%, respectively, in the second quarter of 2020, as compared to 1.39% and 12.27%, respectively, in the second quarter of 2019.
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. The Company’s financial performance metrics for the first half of 2020 include an annualized return on average equity of 10.14%, a return on average assets of 1.21%, and diluted earnings per share of $1.05. 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.
Overall net interest income remained relatively unchanged as declines in loan yields were mostly offset by higher balances and lower interest expense. The $0.8 million favorable increase in noninterest income is due to a $0.7 million gain from the disposal of a low-income housing tax credit fund investment, a $0.5 million increase in bank-owned life insurance (BOLI) income, and a $0.4 million gain from the sale of debt securities. These increases were partially offset by a $0.5 million decline in customer service charges.
Noninterest expense increased by $0.2 million, or 1%, due mostly to higher deferred compensation expense.
