Business Wire | Jan 24, 2022 08:01AM EST

Sierra Bancorp Announces Record 2021 Earnings

Jan. 24, 2022

PORTERVILLE, Calif.--(BUSINESS WIRE)--Jan. 24, 2022--Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the three-and twelve-month periods ended December 31, 2021. Sierra Bancorp reported consolidated net income in the fourth quarter of 2021 of $9.6 million, or $0.63 per diluted share, compared to net income of $9.0 million, or $0.58 per diluted share, in the fourth quarter of 2020. The Company's fourth quarter 2021 return on average assets and return on average equity was 1.10% and 10.47%, respectively, as compared to 1.12% and 10.49%, respectively, for the same comparative period in 2020.

For the year ended 2021, the Company recognized net income of $43.0 million, or $2.80 per diluted share, as compared to $35.4 million, or $2.32 per diluted share, for the same period in 2020. The Company's financial performance metrics for the year ended 2021 include an annualized return on average assets and a return on average equity of 1.29% and 12.05%, respectively, compared to 1.22% and 10.80%, respectively, for the same period in 2020.

"We are proud of our efforts to help our customers and communities through these challenging times. Our tireless work is reflected in our fourth quarter results that complete a record-breaking year for income," stated Kevin McPhaill, President and CEO. "Henry Ford said it best, 'Coming together is a beginning; keeping together is progress; working together is success.' With 2021 now complete, we look forward to opportunities in 2022 and beyond!" McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the fourth quarter of 2020)

* Net income for the fourth quarter of 2021 increased $0.6 million to $9.6 million, there was a $1.2 million negative provision for loan and lease losses in the fourth quarter of 2021, lower salary and benefit costs for $0.8 million partially offset by an increase in litigation expense and related legal reserves. Compared to 2020, there was a $2.2 million provision for loan and lease losses; the $3.4 million decrease in provision being attributable to the impact of continued improvements in the overall economy, a reduction in historical loss rates, a decline in specific reserves on impaired loans, net loan recoveries in 2021, a change in the mix of loans, and lower outstanding balances of net loans and leases; lower FTE was responsible for the decrease in salaries and benefits. * Net interest income for the fourth quarter of 2021 decreased by $2.3 million mostly due to a 57 bps decline in the yield on earning assets and a shift in mix due to higher levels of cash invested overnight with the Federal Reserve Bank and increased lower yielding investment balances. * Noninterest income for the fourth quarter of 2021 increased $1.1 million, or 18%, due to a $0.3 million increase in debit card interchange income from increased usage, $0.4 million in life insurance proceeds and $0.3 million from the sale of underlying assets within an investment in a Small Business Investment Company. Noninterest expense for the fourth quarter of 2021 increased by $1.4 million due mostly to a $1.3 million increase in legal expenses.

Year to-Date Changes (comparisons to the year ended 2020)

* Net income for 2021 increased by $7.6 million, or 21%. The most significant line-item changes were a $12.2 million decrease in the provision for loan and lease losses, and an increase of $4.2 million or 4% in net interest income, due mostly to higher average loan balances and a continued favorable deposit mix with cost of funds decreasing 10 bps. These items were partially offset by a $7.6 million increase in noninterest expense in 2021 as compared to the prior year due to higher salary & benefits expense, data processing expenses, debit card processing costs, and professional services expense. * Noninterest income for 2021 increased by $1.9 million, or 7%, due to greater interchange fee income, increases in BOLI income, and increases in the fair market value of equity securities partially offset by nonrecurring gains in 2020 from the sales of investments, and the sale of assets within a low-income housing tax credit fund in 2020 that did not reoccur in 2021.

Balance Sheet Changes (comparisons to December 31, 2020)

* Total assets increased by $150.3 million, or 5%, to $3.4 billion, during 2021. * Cash and due from banks increased $186.1 million, to $257.5 million for the year due mostly to higher deposit balances coupled with lower loan balances. * Investment securities increased $429.3 million, or 79%, to $973.3 million primarily due to bond purchases. * During 2020, gross loans increased by $700.5 million, or 40%. Following this tremendous loan growth in 2020, overall loan balances declined $473.4 million, or 19%. For the two-year period of 2020 and 2021, overall loan balances increased by $227.2 million, or 13%. The decline in loan balances during 2021 was due mostly to lower utilization of mortgage warehouse lines resulting in a $206.5 million decline in overall mortgage warehouse outstanding balances due primarily to reduced refinancing activity. Other significant declines included a $155.7 million decline in real estate loans mostly due to lower commercial real estate and construction loan balances, and a $99.3 million decrease in commercial and industrial loans, which was predominately due to Small Business Administration Paycheck Protection Program ("SBA PPP") loan forgiveness. * Deposits totaled $2.8 billion at December 31, 2021, representing a year-to-date increase of $157.0 million, or 6%. The growth in deposits came primarily from core transaction and savings accounts, while higher-cost time and wholesale brokered deposits decreased by $159.0 million, or 31%. * Short-term debt decreased to $106.9 million at December 31, 2021. While overnight repurchase agreements increased $67.8 million to $106.9 million, FHLB borrowings and overnight fed funds decreased to zero, from $143.0 million. * Long-term debt increased to $49.1 million at December 31, 2021 from the issuance of $50 million in ten year 3.25% fixed to floating subordinated notes in the third quarter of 2021.

Other financial highlights are reflected in the following table.



FINANCIAL HIGHLIGHTS

(Dollars inThousands, Except per Share Data,Unaudited)

At or For the At or For the

Three Months Ended Twelve Months Ended

12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020

Net income $ 9,621 $ 10,605 $ 8,979 $ 43,012 $ 35,444

Diluted earnings $ 0.63 $ 0.69 $ 0.58 $ 2.80 $ 2.32 per share

Return on average 1.10 % 1.26 % 1.12 % 1.29 % 1.22 %assets

Return on average 10.47 % 11.62 % 10.49 % 12.05 % 10.80 %equity



Net interest margin 3.31 % 3.46 % 3.91 % 3.56 % 3.95 %(tax-equivalent)

Yield on average 4.59 % 4.61 % 4.41 % 4.57 % 4.65 %loans and leases

Cost of average 0.08 % 0.08 % 0.09 % 0.09 % 0.16 %total deposits

Efficiency ratio 64.86 % 59.75 % 58.68 % 59.92 % 57.18 %(tax-equivalent)^1



Total assets $ 3,371,014 $ 3,442,739 $ 3,220,742 $ 3,371,014 $ 3,220,742

Loans & leases net $ 1,987,861 $ 2,137,214 $ 2,459,964 $ 1,987,861 $ 2,459,964 of deferred fees

Noninterest demand $ 1,084,544 $ 1,111,411 $ 943,664 $ 1,084,544 $ 943,664 deposits

Total deposits $ 2,781,572 $ 2,820,646 $ 2,624,606 $ 2,781,572 $ 2,624,606

Noninterest-bearingdeposits over total 39.0 % 39.4 % 36.0 % 39.0 % 36.0 %deposits



Shareholders'equity / total 10.8 % 10.6 % 10.7 % 10.8 % 10.7 %assets

Tangible Common 9.9 % 9.8 % 9.8 % 9.9 % 9.8 %equity ratio

Book value per $ 23.74 $ 23.70 $ 22.35 $ 23.74 $ 22.35 share

Tangible book value $ 21.73 $ 21.69 $ 20.29 $ 21.73 $ 20.29 per share

^(1) Noninterest expense as a percentage of the sum of net interest income andnoninterest income excluding net gains (losses) from securities.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income was $26.6 million for the fourth quarter of 2021, a $2.3 million decrease, or 8%, over the fourth quarter of 2020, and increased $4.2 million, or 4%, to $109.0 million for the year ended 2021 relative to the same period in 2020.

For the fourth quarter of 2021, growth in average interest-earning assets totaled $267.2 million, or 9%, as compared to the fourth quarter of 2020. The yield on these balances was 57 basis points lower for the same period due mostly to a shift in the mix of earning assets to lower yielding investment securities, and cash held overnight at the Federal Reserve Bank.

Net interest income for the comparative year-to-date periods increased due to a $415.4 million, or 15%, growth in average interest-earning assets. The yield on these average balances was 46 basis points lower for the same period but was partially offset by a 10 basis point drop in interest paid on liabilities. The net impact of this lower rate was a 39 basis point decrease in our net interest margin for the year ending December 31, 2021 as compared to the same period in 2020.

Loan income during the fourth quarter 2021 included $0.5 million related to fee income, net of origination costs, recognized on SBA PPP loans. Similarly, SBA PPP loan fees, net of origination costs of $3.8 million were recognized for the year ended December 31, 2021. At December 31, 2021, approximately $1.1 million of unearned fees, net of origination costs related to SBA PPP loans, remains on the balance sheet.

At December 31, 2021, approximately 20% of the bank's loan portfolio is scheduled to mature or reprice within twelve months with another 11% repricing within three years. In addition, approximately $332 million of the securities portfolio consists of floating rate bonds.

Interest expense was $1.3 million for the fourth quarter of 2021, an increase of $0.4 million, or 43%, relative to the fourth quarter of 2020. For the year ended 2021, compared to the same period in 2020, interest expense declined $1.4 million, or 25%, to $4.1 million. The increase in interest expense for the quarterly comparison is attributable to the issuance of subordinated notes, as the interest expense on deposit accounts was mainly flat. For the year ended 2021, compared to the year ended 2020, the average balance of higher cost time deposits fell by $58.6 million or 12%, while lower or no cost transaction and savings accounts increased $430.0 million or 22%, contributing to the positive year to date variance.

Our net interest margin was significantly impacted by the additional overnight cash balances resulting from increased liquidity from deposit growth in 2021 coupled with lower loan balances. This additional liquidity was deployed in overnight funding and lower yielding investment bonds. Average overnight cash balances were $311.3 million during the fourth quarter 2021 and $269.9 million for the year ended December 31, 2021. This overnight funding earned an average rate of 15 and 14 basis points, respectively, for the fourth quarter and year ended December 31, 2021. The average balance of investment accounts increased $315.6 million for the fourth quarter of 2021 as compared to the same period in 2020 and $69.9 million for the year ended 2021 as compared to the year ended 2020. The yield on investment balances declined 65 bps for the fourth quarter of 2021 as compared to the same period in 2020 and declined 67 bps for the year ended December 31, 2021 as compared to the same period in 2020.

Provision for Loan and Lease Losses

The Company recorded a net benefit related to loan and lease loss provision of $1.2 million in the fourth quarter of 2021 relative to a provision of $2.2 million in the fourth quarter of 2020, and a year-to-date net benefit for loan and lease loss provision of $3.7 million in 2021 as compared to $8.6 million loan and lease loss provision expense for the same period in 2020. The Company's $3.4 million, favorable decline in provision for loan and lease losses in the fourth quarter of 2021 as compared to the fourth quarter of 2020, and the $12.2 million favorable decrease, for the year ending 2021 compared to the same period in 2020 is due mostly to lower historical loan loss rates, a decline in outstanding balances on loans, a change in the mix of loans, and net year-to-date 2021 recoveries of previously charged-off loan balances. During 2021, management adjusted its qualitative risk factors under our current incurred loss model for improved economic conditions, improvements in the severity and volume of past due loans, and a reduction in the level of concentrations of credit in non-owner occupied real estate loans.

The Company elected to defer the adoption of the Current Expected Credit Loss ("CECL") accounting method under Financial Accounting Standards Board (FASB) Accounting Standards Update 2016-03 and related amendments, Financial Instruments - Credit Losses (Topic 326) to January 1, 2022. The Company's decision to defer the adoption of CECL was done primarily to provide additional time to better assess the impact of the COVID-19 pandemic on the expected lifetime credit losses. At the time the decision was made, there was a significant change in economic uncertainty on the local, regional, and national levels as a result of local and state stay-at-home orders, as well as relief measures provided at a national, state, and local level. Further, the Company has taken actions to serve our communities during the pandemic, including permitting short-term payment deferrals to current customers, as well as originating bridge loans and SBA PPP loans. Upon adoption of CECL, the Company was required to make an adjustment to equity, net of taxes, equal to the difference between the allowance for credit losses calculated under the CECL method and the allowance for loan and lease losses as calculated under the incurred loss method as of December 31, 2021. Therefore, on January 1, 2022, the Company recorded a $10.4 million increase in the allowance for credit losses, which includes a $0.9 million reserve for unfunded commitments as an adjustment to equity, net of deferred taxes.

Noninterest Income

Total noninterest income reflects increases of $1.1 million, or 18%, for the quarter ended December 31, 2021 as compared to the same quarter in 2020, and $1.9 million, or 7%, for the year ended December 31, 2021 as compared to the same period in 2020. The quarterly and year-to-date comparisons were primarily impacted by higher interchange income, life insurance proceeds and a gain on the sale of underlying limited partnership assets, however, the comparable year-to-date periods also included an increase of $0.4 million in the valuation gain of restricted equity investments owned by the Company, a $0.4 million favorable fluctuation in income on Bank-Owned Life Insurance (BOLI) associated with deferred compensation plans, and a $0.6 million favorable change in low-income housing tax credit fund expenses. The year-to-date increases were offset by a $0.4 million gain on the sale of debt securities from the restructuring of the portfolio in 2020 and a $1.6 million nonrecurring gain on the wrap up of low-income housing tax credit funds also in 2020.

Service charges on customer deposit account income increased $0.2 million, or 5%, to $3.2 million in the fourth quarter of 2021 as compared to the fourth quarter of 2020. This increase is primarily due to increases in analysis fee and overdraft income during the comparable periods. This service charge income was $0.1 million higher, or 1%, for the year ending December 31, 2021, as compared to the same period in 2020. The increase for the year-to-date comparison is primarily a result of increases in ATM fees and service charges on money service business accounts partially offset by decreases in overdraft income.

Noninterest Expense

Total noninterest expense increased by $1.4 million, or 7%, in the fourth quarter of 2021 relative to the fourth quarter of 2020, and by $7.6 million, or 10%, for the year ended 2021 as compared to the same period in 2020.

Salaries and Benefits were $0.8 million, or 7%, lower in the fourth quarter of 2021 as compared to the fourth quarter of 2020 and $2.3 million, or 6%, higher for the year ended 2021 compared to the same period in 2020. Overall full-time equivalent employees were 480 at December 31, 2021 as compared to 501 at December 31, 2020. This decline accounted for the favorable quarterly variance while a $2.3 million decline in salary expense deferrals related to the decrease in loan originations were primarily responsible for the negative year to date variance.

Occupancy expenses were $0.1 million lower for the fourth quarter of 2021 as compared to the same quarter in 2020 and unchanged for the year ended 2021 as compared to the same period in 2020. The primary reason for decrease in the quarterly comparison was the closure of five branch facilities earlier in the year, which included the early termination of two leases immediately.

Other noninterest expense increased $2.3 million, or 32% for the fourth quarter 2021 as compared to the fourth quarter in 2020, and increased $5.4 million, or 21% for the year ended 2021 as compared to the same period in 2020. The variance for the fourth quarter of 2021 compared to the same period in 2020 was primarily driven by an increase of $1.7 million in legal and accounting costs due mostly to an increase in legal costs, related legal reserves, and additional costs related to the outsourcing of certain audit functions. Additionally, there were increases of $0.2 million in data processing costs resulting from increases in core banking system expenses, and $0.4 million in increase in debit card processing costs due to higher debit card usage. These higher costs were partially offset by a $0.2 million decrease in foreclosed assets costs, due to the sale of all but two bank owned properties and a $0.2 million decrease in ATM servicing costs. For the year-over-year comparison the categories of increase were the same as with the quarterly comparison, along with increases in FDIC assessments for $0.4 million, a $0.3 million in data communications, and a $0.4 million increase in director's expense, $0.2 million of which is linked to the changes in BOLI income, partially offset by a $0.4 million decrease in ATM servicing costs. All the Company's ATM machines were either upgraded or replaced in 2021, resulting in lower servicing costs.

The Company's provision for income taxes was 24.2% of pre-tax income in the fourth quarter of 2021 relative to 24.6% in the fourth quarter of 2020, and 24.8% of pre-tax income for the year ended December 31, 2021 relative to 23.8% for the same period in 2020. The increase in effective tax rate in the fourth quarter and year to date 2021 is due to tax credits and tax-exempt income representing a smaller percentage of total taxable income.

Balance Sheet Summary

Balance sheet changes for the year ended December 31, 2021 include an increase in total assets of $150.3 million, or 5%, primarily a result of increases in cash and due from banks and investments securities of $186.1 million and $429.3 million, respectively, net of a $468.6 million decrease in net loan balances.

The increase in investment securities of $429.3 million in 2021 consisted primarily of increases in municipal bonds of $76.5 million, corporate securities of $28.5 million, and AAA and AA tranches of collateralized loan obligations of $332.2 million. The purchases of AAA and AA tranches of collateralized loan obligations ("CLOs") in 2021 is primarily a balance sheet diversification strategy as management continues to utilize available liquidity. In addition to providing asset class diversification given the high level of real estate backed earning assets on the balance sheet, these floating rate CLOs are more asset sensitive which complements the longer-term fixed-rate earning assets.

Gross loan balances decreased $473.4 million during the year ended December 31, 2021, primarily as a result of a $206.5 million decline in mortgage warehouse line utilization, an $87.6 million decline in SBA PPP loans due mostly to forgiveness of such loans, and a net decrease of $155.7 million in real estate secured loans, primarily from construction and other commercial real estate loans.

During 2021, in an effort to reduce its concentration risk, the Company strategically lowered its regulatory commercial real estate concentration ratio from 378% at December 31, 2020 to 248% at December 31, 2021. The ratio at December 31, 2021 would have been 265% if not for a $25.0 million capital infusion from the Company to the Bank in the fourth quarter of 2021. During 2022, the Company expects the ratio to increase.

The overall decline in real estate secured loans during 2021 was partially offset by an increase of $149.6 million in 1-4 family residential real estate loans due to the $208.0 million purchase of mortgage loans during the second half of 2021. These loan purchases were designed as a bridge to organic loan growth as the Bank's core loan pipeline continues to improve with the recent hiring of strategic lending team lift-outs as detailed below:

* The Bank's mortgage warehouse team program will be refreshed and rebuilt under the direction and leadership of a new Mortgage Warehouse Market President, Tim McAvenia, who was hired for this role in the fourth quarter of 2021. * The Real Estate Industries Group (REIG) hired two new commercial real estate loan officers who are expected to continue the Bank's commitment to serving the commercial real estate markets. John Penrith, VP & Commercial Loan Officer and Sean Hart, VP & Senior Commercial Loan Officer were appointed to complement the REIG. In addition, further lending teams are currently being recruited along with additional underwriters to support the REIG. * Expansion of the agricultural lending and commercial & industrial (C&I) lending capabilities of the Bank is a key third element. In December 2021, Matt Dusi was hired as the new Agricultural and Commercial Lending President. Matt is actively recruiting additional lenders to expand the Agricultural and C&I teams with key lender lift outs across our footprint. Like the other groups, these relationship managers will be complemented with a team of portfolio managers who will assist with underwriting support, portfolio management, and identification of opportunities for additional credit extensions. It is recognized that we cannot rely upon relationship managers alone for loan growth. Instead, a full team to support prudently underwritten loans is needed to minimize risk.

Unused commitments, excluding mortgage warehouse and consumer overdraft lines, were $242.3 million at December 31, 2021, compared to $260.0 million at December 31, 2020. Total line utilization, excluding mortgage warehouse and consumer overdraft lines, was 55% at December 31, 2021 and 57% at December 31, 2020. Mortgage warehouse utilization declined significantly to 33% at December 31, 2021, as compared to 71% at December 31, 2020.

The Company participated in the SBA PPP as authorized by the CARES Act. We began accepting and funding loans under this program in April 2020. There were 438 loans for $31.8 million outstanding at December 31, 2021, compared to 1,274 loans for $117.2 million at December 31, 2020. There were 723 new SBA PPP loans for $49.6 million made during the year ended December 31, 2021. During the same period the SBA forgave $137.9 million of SBA PPP loans and honored their guaranty for $0.7 million.

Deposit balances reflect growth of $157.0 million, or 6%, during the year ended December 31, 2021. Core non-maturity deposits increased by $316.0 million, or 15%, while customer time deposits decreased by $119.1 million, or 29%. Wholesale brokered deposits decreased by $40.0 million to $60.0 million. Overall noninterest-bearing deposits as a percent of total deposits at December 31, 2021, increased to 39.0%, as compared to 36.0% at December 31, 2020.

Other interest-bearing liabilities of $106.9 million on December 31, 2021 consists exclusively of customer repurchase agreements. Other interest-bearing liabilities at December 31, 2020 of $182.0 million consisted of $100.0 million of fed funds purchased, $39.1 million of customer repurchase agreements, $37.9 million of FHLB overnight borrowings and $5.0 million of FHLB short term borrowings.

Long term debt increased to $49.1 million for the year ended December 31, 2021, from the issuance of $50 million in 3.25% fixed - floating subordinated debt with a ten-year maturity in the third quarter of 2021. The Company contributed $25 million of additional capital to the Bank in the fourth quarter of 2021 and is utilizing the remainder of the funds for general corporate purposes, which includes repurchasing shares of common stock, among other things.

Additionally, subordinated debentures totaled $35.3 million and $35.1 million at December 31, 2021 and December 31, 2020, respectively, in the form of long-term borrowings from trust subsidiaries formed specifically to issue trust preferred securities.

The Company continues to have substantial liquidity. At December 31, 2021, and December 31, 2020, the Company had the following sources of primary and secondary liquidity ($ in thousands):



Primary and Secondary Liquidity Sources December 31, December 31, 2021 2020

Cash and due from banks $ 257,528 $ 71,417

Unpledged investment securities 806,132 311,983

Excess pledged securities 47,024 52,892

FHLB borrowing availability 787,519 535,404

Unsecured lines of credit 305,000 230,000

Funds available through fed discount 50,608 58,127window

Totals $ 2,253,811 $ 1,259,823

Total capital of $362.5 million at December 31, 2021 reflects an increase of $18.6 million, or 5%, relative to year-end 2020. The increase in equity during the year ended December 31, 2021 was due to the addition of $43.0 million in net income, offset by a $7.2 million unfavorable swing in accumulated other comprehensive income/loss, $13.2 million in dividends paid, and $5.2 million in share repurchases. The remaining difference is related to stock options exercised and restricted stock granted during the year.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, decreased by $4.0 million to $4.6 million for the year ended December 31, 2021. The Company's ratio of nonperforming loans to gross loans decreased to 0.23% at December 31, 2021 from 0.31% at December 31, 2020. All the Company's impaired assets are periodically reviewed and are either well-reserved based on current loss expectations or are carried at the fair value of the underlying collateral, net of expected disposition costs.

The Company's allowance for loan and lease losses was $14.3 million at December 31, 2021, as compared to a balance of $17.7 million at December 31, 2020. The allowance was 0.72% of total loans at both December 31, 2021 and December 31, 2020.

The $3.5 million decrease in the allowance for loan and lease losses during the year ended December 31, 2021, resulted from the $3.7 million benefit associated with loan and lease loss provision combined with net loan recoveries of previously charged off loan balances for $0.2 million. For further information regarding the Company's decision to defer the implementation of CECL under Section 4014 of the CARES Act, as well as further detail on the decrease loan and lease loss provision during the fourth quarter and year ended 2021, please see the discussion above under Provision for Loan and Lease Losses.

Management's detailed analysis indicates that the Company's allowance for loan and lease losses should be sufficient to cover credit losses inherent in loan and lease balances outstanding as of December 31, 2021, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the loan and lease loss allowance.

The Company provided loan modification deferrals to customers under Section 4013 of the CARES Act, which are not treated as troubled debt restructured loans. As of December 31, 2021, we had three remaining loans for one customer relationship totaling $10.4 million. All these loans are fully secured by real estate collateral.

About Sierra Bancorp

Sierra Bancorp is the holding company for Bank of the Sierra (www.bankofthesierra.com), which is in its 45th year of operations and is the largest independent bank headquartered in the South San Joaquin Valley. Bank of the Sierra is a community-centric regional bank, which offers a broad range of retail and commercial banking services through full-service branches located within the counties of Tulare, Kern, Kings, Fresno, Ventura, San Luis Obispo and Santa Barbara. The Bank also maintains an online branch and provides specialized lending services through an agricultural credit center, an SBA center and a dedicated loan production office in Roseville, California. In 2021, Bank of the Sierra was recognized as one of the strongest community banks in the country, with a 5?star rating from Bauer Financial.

Forward-Looking Statements

The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward-looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties including but not limited to our borrowers' actual payment performance as loan deferrals related to the COVID-19 pandemic expire, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance, the health of the national and local economies, the Company's ability to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully deploy new technology, the success of acquisitions and branch expansion, changes in interest rates, loan portfolio performance, and other factors detailed in the Company's SEC filings, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Form 10-K and Form 10-Q.



STATEMENT OF CONDITION

(Dollars inThousands, Unaudited)



ASSETS 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020

Cash and due $ 257,528 $ 422,350 $ 373,902 $ 346,211 $ 71,417 from banks

Investment 973,314 732,312 607,474 552,931 543,974 securities

Real estate loans

1-4 familyresidential 21,369 34,720 37,165 36,818 48,565 construction

Otherconstruction/ 25,299 25,512 27,682 50,433 71,980 land

1-4 family - 289,457 220,240 106,599 126,949 139,836 closed-end

Equity lines 26,588 31,341 33,334 36,276 38,075

Multi-family 53,458 55,628 58,230 58,324 61,865 residential

Commercial realestate - owner 334,446 345,116 359,021 359,777 343,199 occupied

Commercial realestate - 882,888 995,921 1,048,153 1,071,532 1,062,498 non-owneroccupied

Farmland 106,706 124,446 125,783 126,157 129,905

Total real 1,740,211 1,832,924 1,795,967 1,866,266 1,895,923 estate loans

Agricultural 33,990 43,296 42,952 45,476 44,872 production loans

Commercial & 109,791 132,292 150,632 183,762 209,048 industrial

Mortgage 101,184 126,486 150,351 187,940 307,679 warehouse lines

Consumer loans 4,550 4,828 4,894 5,024 5,589

Gross loans & 1,989,726 2,139,826 2,144,796 2,288,468 2,463,111 leases

Deferred loan & (1,865 ) (2,612 ) (3,835 ) (3,717 ) (3,147 )lease fees

Allowance forloan & lease (14,256 ) (15,617 ) (16,421 ) (18,319 ) (17,738 )losses

Net loans & 1,973,605 2,121,597 2,124,540 2,266,432 2,442,226 leases



Bank premises & 23,571 24,490 25,949 26,795 27,505 equipment

Other assets 142,996 141,990 140,183 133,668 135,620

Total assets $ 3,371,014 $ 3,442,739 $ 3,272,048 $ 3,326,037 $ 3,220,742



LIABILITIES & CAPITAL

Noninterest $ 1,084,544 $ 1,111,411 $ 1,073,833 $ 1,020,350 $ 943,664 demand deposits

Interest-bearingtransaction 744,553 765,823 752,137 770,271 668,346 accounts

Savings deposits 450,785 451,248 435,076 415,230 368,420

Money market 147,793 141,348 133,977 136,653 131,232 deposits

Customer time 293,897 290,816 295,891 411,388 412,944 deposits

Wholesalebrokered 60,000 60,000 85,000 100,000 100,000 deposits

Total deposits 2,781,572 2,820,646 2,775,914 2,853,892 2,624,606



Long-term debt 49,141 49,221 - - -

Juniorsubordinated 35,302 35,258 35,213 35,169 35,124 debentures

Otherinterest-bearing 106,937 92,553 70,535 56,527 182,038 liabilities

Total deposits &interest-bearing 2,972,952 2,997,678 2,881,662 2,945,588 2,841,768 liabilities



Other 35,568 80,554 32,657 32,468 35,078 liabilities

Total capital 362,494 364,507 357,729 347,981 343,896

Totalliabilities & $ 3,371,014 $ 3,442,739 $ 3,272,048 $ 3,326,037 $ 3,220,742 capital





GOODWILL & INTANGIBLE ASSETS

(balances in $000's, unaudited)

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

Goodwill

$

27,357

$

27,357

$

27,357

$

27,357

$

27,357

Core deposit intangible

3,275

3,527

3,780

4,038

4,307

Total intangible assets

$

30,632

$

30,884

$

31,137

$

31,395

$

31,664

CREDIT QUALITY

(balances in $000's, unaudited)

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

Non-accruing loans

$

4,522

$

6,788

$

7,276

$

8,599

$

7,598

Foreclosed assets

93

93

774

945

971

Total nonperforming assets

$

4,615

$

6,881

$

8,050

$

9,544

$

8,569

Performing TDR's (not included in NPA's)

$

4,910

$

5,509

$

10,774

$

10,596

$

11,382

Net (recoveries) charge offs

$

(168

)

$

(329

)

$

(533

)

$

(331

)

$

735

Past due & still accruing (30-89)

$

2,013

$

380

$

3,197

$

2,991

$

1,656

Loans deferred under CARES act

$

10,411

$

10,411

$

10,411

$

22,437

$

29,500

Non-performing loans to gross loans

0.23

%

0.32

%

0.34

%

0.38

%

0.31

%

NPA's to loans plus foreclosed assets

0.23

%

0.32

%

0.38

%

0.42

%

0.35

%

Allowance for loan losses to loans

0.72

%

0.73

%

0.77

%

0.80

%

0.72

%

SELECT PERIOD-END STATISTICS

(unaudited)

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

Shareholders' equity / total assets

10.8

%

10.6

%

10.9

%

10.5

%

10.7

%

Gross loans / deposits

71.5

%

75.9

%

77.3

%

80.2

%

93.8

%

Non-interest bearing deposits / total deposits

39.0

%

39.4

%

38.7

%

35.8

%

36.0

%



GOODWILL &INTANGIBLE ASSETS

(balances in$000's, unaudited)

12/31/ 9/30/ 6/30/ 3/31/ 12/31/ 2021 2021 2021 2021 2020

Goodwill $ 27,357 $ 27,357 $ 27,357 $ 27,357 $ 27,357

Core deposit 3,275 3,527 3,780 4,038 4,307 intangible

Totalintangible $ 30,632 $ 30,884 $ 31,137 $ 31,395 $ 31,664 assets



CREDIT QUALITY

(balances in$000's, unaudited)

12/31/ 9/30/ 6/30/ 3/31/ 12/31/ 2021 2021 2021 2021 2020

Non-accruing $ 4,522 $ 6,788 $ 7,276 $ 8,599 $ 7,598 loans

Foreclosed 93 93 774 945 971 assets

Totalnonperforming $ 4,615 $ 6,881 $ 8,050 $ 9,544 $ 8,569 assets



PerformingTDR's (not $ 4,910 $ 5,509 $ 10,774 $ 10,596 $ 11,382 included inNPA's)

Net(recoveries) $ (168 ) $ (329 ) $ (533 ) $ (331 ) $ 735 charge offs



Past due &still accruing $ 2,013 $ 380 $ 3,197 $ 2,991 $ 1,656 (30-89)

Loans deferredunder CARES $ 10,411 $ 10,411 $ 10,411 $ 22,437 $ 29,500 act



Non-performingloans to gross 0.23 % 0.32 % 0.34 % 0.38 % 0.31 %loans

NPA's to loansplus 0.23 % 0.32 % 0.38 % 0.42 % 0.35 %foreclosedassets

Allowance forloan losses to 0.72 % 0.73 % 0.77 % 0.80 % 0.72 %loans



SELECTPERIOD-END STATISTICS

(unaudited)

12/31/ 9/30/ 6/30/ 3/31/ 12/31/ 2021 2021 2021 2021 2020

Shareholders'equity / total 10.8 % 10.6 % 10.9 % 10.5 % 10.7 %assets

Gross loans / 71.5 % 75.9 % 77.3 % 80.2 % 93.8 %deposits

Non-interestbearing 39.0 % 39.4 % 38.7 % 35.8 % 36.0 %deposits /total deposits

CONSOLIDATED INCOME STATEMENT

(Dollars in Thousands, Unaudited)

Qtr Ended:

Year Ended:

12/31/2021

9/30/2021

12/31/2020

12/31/2021

12/31/2020

Interest income

$

27,897

$

27,629

$

29,762

$

113,076

$

110,243

Interest expense

1,331

913

930

4,050

5,408

Net interest income

26,566

26,716

28,832

109,026

104,835

(Benefit) provision for loan & lease losses

(1,200

)

(600

)

2,200

(3,650

)

8,550

Net interest income after provision

27,766

27,316

26,632

112,676

96,285

Service charges

3,169

3,186

3,013

11,846

11,765

BOLI income

203

1,048

415

2,648

2,412

Gain on investments

-

11

-

11

390

Other noninterest income

3,730

3,290

2,611

13,574

11,583

Total noninterest income

7,102

7,535

6,039

28,079

26,150

Salaries & benefits

10,237

10,618

11,042

42,431

40,178

Occupancy expense

2,366

2,359

2,452

9,837

9,842

Other noninterest expenses

9,572

7,898

7,263

31,288

25,892

Total noninterest expense

22,175

20,875

20,757

83,556

75,912

Income before taxes

12,693

13,976

11,914

57,199

46,523

Provision for income taxes

3,072

3,371

2,935

14,187

11,079

Net income

$

9,621

$

10,605

$

8,979

$

43,012

$

35,444

TAX DATA

Tax-exempt municipal income

$

1,761

$

1,578

$

1,475

$

6,218

$

5,707

Interest income - fully tax equivalent

$

28,365

$

28,048

$

30,154

$

114,729

$

111,760



CONSOLIDATEDINCOME STATEMENT

(Dollars inThousands, Qtr Ended: Year Ended:Unaudited)

12/31/ 9/30/ 12/31/ 12/31/ 12/31/ 2021 2021 2020 2021 2020

Interest $ 27,897 $ 27,629 $ 29,762 $ 113,076 $ 110,243income

Interest 1,331 913 930 4,050 5,408 expense

Net interest 26,566 26,716 28,832 109,026 104,835 income



(Benefit)provision (1,200 ) (600 ) 2,200 (3,650 ) 8,550 for loan &lease losses

Net interestincome after 27,766 27,316 26,632 112,676 96,285 provision



Service 3,169 3,186 3,013 11,846 11,765 charges

BOLI income 203 1,048 415 2,648 2,412

Gain on - 11 - 11 390 investments

Othernoninterest 3,730 3,290 2,611 13,574 11,583 income

Totalnoninterest 7,102 7,535 6,039 28,079 26,150 income



Salaries & 10,237 10,618 11,042 42,431 40,178 benefits

Occupancy 2,366 2,359 2,452 9,837 9,842 expense

Othernoninterest 9,572 7,898 7,263 31,288 25,892 expenses

Totalnoninterest 22,175 20,875 20,757 83,556 75,912 expense



Income 12,693 13,976 11,914 57,199 46,523 before taxes

Provisionfor income 3,072 3,371 2,935 14,187 11,079 taxes

Net income $ 9,621 $ 10,605 $ 8,979 $ 43,012 $ 35,444



TAX DATA

Tax-exemptmunicipal $ 1,761 $ 1,578 $ 1,475 $ 6,218 $ 5,707 income

Interestincome - $ 28,365 $ 28,048 $ 30,154 $ 114,729 $ 111,760fully taxequivalent

PER SHARE DATA

(unaudited)

Qtr Ended:

Year Ended:

12/31/2021

9/30/2021

12/31/2020

12/31/2021

12/31/2020

Basic earnings per share

$

0.63

$

0.70

$

0.59

$

2.82

$

2.33

Diluted earnings per share

$

0.63

$

0.69

$

0.58

$

2.80

$

2.32

Common dividends

$

0.22

$

0.22

$

0.20

$

0.87

$

0.80

Weighted average shares outstanding

15,226,834

15,257,367

15,222,044

15,241,957

15,216,749

Weighted average diluted shares

15,297,414

15,343,543

15,456,984

15,353,445

15,280,325

Book value per basic share (EOP)

$

23.74

$

23.70

$

22.35

$

23.74

$

22.35

Tangible book value per share (EOP)

$

21.73

$

21.69

$

20.29

$

21.73

$

20.29

Common shares outstanding (EOP)

15,270,010

15,382,518

15,388,423

15,270,010

15,388,423

KEY FINANCIAL RATIOS

(unaudited)

Qtr Ended:

Year Ended:

12/31/2021

9/30/2021

12/31/2020

12/31/2021

12/31/2020

Return on average equity

10.47

%

11.62

%

10.49

%

12.05

%

10.80

%

Return on average assets

1.10

%

1.26

%

1.12

%

1.29

%

1.22

%

Net interest margin (tax-equivalent)

3.31

%

3.46

%

3.91

%

3.56

%

3.95

%

Efficiency ratio (tax-equivalent)^1

64.86

%

59.75

%

58.68

%

59.92

%

57.18

%

Net charge-offs (recoveries) to avg loans (not annualized)

0.01

%

0.01

%

0.00

%

(0.01

)%

0.04

%

(1) Noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities.



PER SHARE DATA

(unaudited) Qtr Ended: Year Ended:

12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020

Basic earnings $ 0.63 $ 0.70 $ 0.59 $ 2.82 $ 2.33 per share

Diluted earnings $ 0.63 $ 0.69 $ 0.58 $ 2.80 $ 2.32 per share

Common dividends $ 0.22 $ 0.22 $ 0.20 $ 0.87 $ 0.80



Weighted averageshares 15,226,834 15,257,367 15,222,044 15,241,957 15,216,749 outstanding

Weighted average 15,297,414 15,343,543 15,456,984 15,353,445 15,280,325 diluted shares



Book value perbasic share $ 23.74 $ 23.70 $ 22.35 $ 23.74 $ 22.35 (EOP)

Tangible bookvalue per share $ 21.73 $ 21.69 $ 20.29 $ 21.73 $ 20.29 (EOP)



Common sharesoutstanding 15,270,010 15,382,518 15,388,423 15,270,010 15,388,423 (EOP)



KEY FINANCIAL RATIOS

(unaudited) Qtr Ended: Year Ended:

12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020

Return on 10.47 % 11.62 % 10.49 % 12.05 % 10.80 %average equity

Return on 1.10 % 1.26 % 1.12 % 1.29 % 1.22 %average assets

Net interestmargin 3.31 % 3.46 % 3.91 % 3.56 % 3.95 %(tax-equivalent)

Efficiency ratio(tax-equivalent) 64.86 % 59.75 % 58.68 % 59.92 % 57.18 %^1

Net charge-offs(recoveries) to 0.01 % 0.01 % 0.00 % (0.01 ) 0.04 %avg loans (not %annualized)

^(1) Noninterest expense as a percentage of the sum of net interest income andnoninterest income excluding net gains (losses) from securities.

NON-GAAP FINANCIAL MEASURES

(Unaudited)

12/31/2021

9/30/2021

12/31/2020

Total stockholders' equity

$

362,494

$

364,507

$

343,896

Less: goodwill and other intangible assets

30,632

30,884

31,664

Tangible common equity

$

331,862

$

333,623

$

312,232

Total assets

$

3,371,014

$

3,442,739

$

3,220,742

Less: goodwill and other intangible assets

30,632

30,884

31,664

Tangible assets

$

3,340,382

$

3,411,855

$

3,189,078

Common shares outstanding

15,270,010

15,382,518

15,388,423

Book value per common share

$

23.74

$

23.70

$

22.35

Tangible book value per common share

$

21.73

$

21.69

$

20.29

Equity ratio - GAAP (total stockholders' equity / total assets)

10.75

%

10.59

%

10.68

%

Tangible common equity ratio (tangible common equity / tangible assets)

9.93

%

9.78

%

9.79

%



NON-GAAP FINANCIAL MEASURES

(Unaudited)

12/31/2021 9/30/2021 12/31/2020

Total stockholders' $ 362,494 $ 364,507 $ 343,896 equity

Less: goodwill and other 30,632 30,884 31,664 intangible assets

Tangible common equity $ 331,862 $ 333,623 $ 312,232



Total assets $ 3,371,014 $ 3,442,739 $ 3,220,742

Less: goodwill and other 30,632 30,884 31,664 intangible assets

Tangible assets $ 3,340,382 $ 3,411,855 $ 3,189,078



Common shares outstanding 15,270,010 15,382,518 15,388,423



Book value per common $ 23.74 $ 23.70 $ 22.35 share

Tangible book value per $ 21.73 $ 21.69 $ 20.29 common share

Equity ratio - GAAP(total stockholders' 10.75 % 10.59 % 10.68 %equity / total assets)

Tangible common equityratio (tangible common 9.93 % 9.78 % 9.79 %equity / tangible assets)

NONINTEREST INCOME/EXPENSE

(Dollars in Thousands, Unaudited)

For three months ended:

For twelve months ended:

Noninterest income:

12/31/2021

9/30/2021

12/31/2020

12/31/2021

12/31/2020

Service charges on deposit accounts

$

3,169

$

3,186

$

3,013

$

11,846

$

11,765

Checkcard fees

2,165

2,192

1,840

8,485

7,023

Bank-owned life insurance

203

1,048

415

4,797

2,412

Other service charges and fees

992

708

871

2,648

4,084

Gain on sale of securities

-

11

-

11

390

Loss on tax credit investment

(133

)

-

(158

)

(524

)

(1,189

)

Other

706

390

58

816

1,665

Total noninterest income

$

7,102

$

7,535

$

6,039

$

28,079

$

26,150

As a % of average interest earning assets (1)

0.87

%

0.96

%

0.81

%

0.90

%

0.97

%

Noninterest expense:

Salaries and employee benefits

$

10,237

$

10,618

$

11,042

$

42,431

$

40,178

Occupancy costs

Furniture & equipment

409

406

447

1,720

2,028

Premises

1,957

1,953

2,005

8,117

7,814

Advertising and marketing costs

539

370

539

1,521

1,889

Data processing costs

1,481

1,470

1,295

5,890

4,661

Deposit services costs

2,298

2,402

2,223

9,049

8,483

Loan services costs

Loan processing

158

109

228

501

880

Foreclosed assets

(6

)

(19

)

(170

)

72

253

Other operating costs

Telephone & data communications

431

534

456

2,013

1,775

Postage & mail

56

60

57

308

321

Other

906

470

558

2,176

1,647

Professional services costs

Legal & accounting

2,703

966

988

4,794

1,989

Other professional service

796

1,320

819

4,015

2,990

Stationery & supply costs

85

107

104

345

446

Sundry & tellers

125

109

166

604

558

Total noninterest expense

$

22,175

$

20,875

$

20,757

$

83,556

$

75,912

As a % of average interest earning assets (1)

2.72

%

2.66

%

2.77

%

2.69

%

2.82

%

Efficiency ratio (2)(3)

64.86

%

59.75

%

58.68

%

59.92

%

57.18

%



NONINTEREST INCOME/EXPENSE

(Dollars in Thousands, Unaudited)

For three months ended: For twelve months ended:

Noninterest 12/31/ 9/30/ 12/31/ 12/31/ 12/31/2020income: 2021 2021 2020 2021

Servicecharges on $ 3,169 $ 3,186 $ 3,013 $ 11,846 $ 11,765 depositaccounts

Checkcard fees 2,165 2,192 1,840 8,485 7,023

Bank-owned 203 1,048 415 4,797 2,412 life insurance

Other servicecharges and 992 708 871 2,648 4,084 fees

Gain on sale - 11 - 11 390 of securities

Loss on taxcredit (133 ) - (158 ) (524 ) (1,189 )investment

Other 706 390 58 816 1,665

Totalnoninterest $ 7,102 $ 7,535 $ 6,039 $ 28,079 $ 26,150 income

As a % ofaverageinterest 0.87 % 0.96 % 0.81 % 0.90 % 0.97 %earning assets^ (1)



Noninterest expense:

Salaries andemployee $ 10,237 $ 10,618 $ 11,042 $ 42,431 $ 40,178 benefits

Occupancy costs

Furniture & 409 406 447 1,720 2,028 equipment

Premises 1,957 1,953 2,005 8,117 7,814

Advertisingand marketing 539 370 539 1,521 1,889 costs

Dataprocessing 1,481 1,470 1,295 5,890 4,661 costs

Deposit 2,298 2,402 2,223 9,049 8,483 services costs

Loan services costs

Loan 158 109 228 501 880 processing

Foreclosed (6 ) (19 ) (170 ) 72 253 assets

Otheroperating costs

Telephone &data 431 534 456 2,013 1,775 communications

Postage & mail 56 60 57 308 321

Other 906 470 558 2,176 1,647

Professional services costs

Legal & 2,703 966 988 4,794 1,989 accounting

Otherprofessional 796 1,320 819 4,015 2,990 service

Stationery & 85 107 104 345 446 supply costs

Sundry & 125 109 166 604 558 tellers

Totalnoninterest $ 22,175 $ 20,875 $ 20,757 $ 83,556 $ 75,912 expense

As a % ofaverageinterest 2.72 % 2.66 % 2.77 % 2.69 % 2.82 %earning assets^ (1)

Efficiency 64.86 % 59.75 % 58.68 % 59.92 % 57.18 %ratio ^(2)(3)

(1)

Annualized.

(2)

Tax equivalent.

(3)

Noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and bank owned life insurance income.

(1) Annualized.

(2) Tax equivalent.

Noninterest expense as a percentage of the sum of net interest income and(3) noninterest income excluding net gains (losses) from securities and bank owned life insurance income.

AVERAGE BALANCES AND RATES

(Dollars in Thousands, Unaudited)

For the quarter ended

For the quarter ended

For the quarter ended

December 31, 2021

September 30, 2021

December 31, 2020

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Balance (1)

Expense

Rate (2)

Balance (1)

Expense

Rate (2)

Balance (1)

Expense

Rate (2)

Assets

Investments:

Federal funds sold/interest-earning due from's

$

311,386

$

120

0.15

%

$

379,597

$

146

0.15

%

$

4,071

$

2

0.20

%

Taxable

593,959

2,403

1.61

%

389,524

1,679

1.71

%

338,554

1,657

1.95

%

Non-taxable

285,811

1,679

2.95

%

259,996

1,578

3.05

%

225,583

1,461

3.26

%

Total investments

1,191,156

4,202

1.55

%

1,029,117

3,403

1.47

%

568,208

3,120

2.46

%

Loans and Leases: (3)

Real estate

1,794,285

20,864

4.61

%

1,775,611

20,805

4.65

%

1,866,418

21,629

4.61

%

Agricultural Production

38,191

361

3.75

%

43,243

410

3.76

%

45,143

418

3.68

%

Commercial

118,159

1,457

4.89

%

140,105

1,796

5.09

%

213,725

2,077

3.87

%

Consumer

4,720

237

19.92

%

4,862

205

16.73

%

5,873

239

16.19

%

Mortgage warehouse lines

90,736

747

3.27

%

118,036

982

3.30

%

270,401

2,250

3.31

%

Other

1,430

29

8.05

%

1,463

28

7.59

%

1,617

29

7.13

%

Total loans and leases

2,047,521

23,695

4.59

%

2,083,320

24,226

4.61

%

2,403,177

26,642

4.41

%

Total interest earning assets (4)

3,238,677

27,897

3.47

%

3,112,437

27,629

3.58

%

2,971,385

29,762

4.04

%

Other earning assets

21,425

15,713

20,092

Non-earning assets

206,344

212,116

202,996

Total assets

$

3,466,446

$

3,340,266

$

3,194,473

Liabilities and shareholders' equity

Interest bearing deposits:

Demand deposits

$

131,810

$

80

0.24

%

$

148,175

$

86

0.23

%

$

123,717

$

69

0.22

%

NOW

615,245

112

0.07

%

605,620

115

0.08

%

536,127

93

0.07

%

Savings accounts

451,369

65

0.06

%

443,406

63

0.06

%

366,080

52

0.06

%

Money market

146,174

25

0.07

%

139,433

26

0.07

%

129,536

27

0.08

%

Time Deposits

291,516

241

0.33

%

293,379

248

0.31

%

416,069

310

0.30

%

Wholesale Brokered Deposits

60,000

49

0.32

%

72,283

53

0.29

%

53,750

28

0.21

%

Total interest bearing deposits

1,696,114

572

0.13

%

1,702,296

591

0.14

%

1,625,279

579

0.14

%

Borrowed funds:

Other Interest-Bearing Liabilities

98,326

86

0.35

%

79,132

41

0.21

%

175,025

98

-

Long-Term Debt

49,156

430

3.47

%

3,812

38

3.95

%

-

-

-

Subordinated Debentures

35,276

243

2.73

%

35,229

243

2.74

%

35,098

253

2.87

%

Total borrowed funds

147,482

516

1.65

%

118,173

322

1.08

%

210,123

351

0.66

%

Total interest bearing liabilities

1,878,872

1,331

0.28

%

1,820,469

913

0.20

%

1,835,402

930

0.20

%

Demand deposits - Noninterest bearing

1,120,323

1,104,506

979,593

Other liabilities

102,838

53,134

39,106

Shareholders' equity

364,413

362,157

340,372

Total liabilities and shareholders' equity

$

3,466,446

$

3,340,266

$

3,194,473

Interest income/interest earning assets

3.47

%

3.58

%

4.04

%

Interest expense/interest earning assets

0.16

%

0.12

%

0.13

%

Net interest income and margin (5)

$

26,566

3.31

%

$

26,716

3.46

%

$

28,832

3.91

%



AVERAGE BALANCES AND RATES

(Dollars inThousands,Unaudited)

For the quarter ended For the quarter ended For the quarter ended

December 31, 2021 September 30, 2021 December 31, 2020

Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/

Balance ^ Expense Rate ^ Balance ^ Expense Rate ^ Balance ^ Expense Rate ^ (1) (2) (1) (2) (1) (2)

Assets

Investments:

Federal funds sold/interest-earning $ 311,386 $ 120 0.15 % $ 379,597 $ 146 0.15 % $ 4,071 $ 2 0.20 %due from's

Taxable 593,959 2,403 1.61 % 389,524 1,679 1.71 % 338,554 1,657 1.95 %

Non-taxable 285,811 1,679 2.95 % 259,996 1,578 3.05 % 225,583 1,461 3.26 %

Total investments 1,191,156 4,202 1.55 % 1,029,117 3,403 1.47 % 568,208 3,120 2.46 %



Loans and Leases: ^(3)

Real estate 1,794,285 20,864 4.61 % 1,775,611 20,805 4.65 % 1,866,418 21,629 4.61 %

Agricultural 38,191 361 3.75 % 43,243 410 3.76 % 45,143 418 3.68 %Production

Commercial 118,159 1,457 4.89 % 140,105 1,796 5.09 % 213,725 2,077 3.87 %

Consumer 4,720 237 19.92 % 4,862 205 16.73 % 5,873 239 16.19 %

Mortgage warehouse 90,736 747 3.27 % 118,036 982 3.30 % 270,401 2,250 3.31 %lines

Other 1,430 29 8.05 % 1,463 28 7.59 % 1,617 29 7.13 %

Total loans and 2,047,521 23,695 4.59 % 2,083,320 24,226 4.61 % 2,403,177 26,642 4.41 %leases

Total interestearning assets ^ 3,238,677 27,897 3.47 % 3,112,437 27,629 3.58 % 2,971,385 29,762 4.04 %(4)

Other earning 21,425 15,713 20,092 assets

Non-earning assets 206,344 212,116 202,996

Total assets $ 3,466,446 $ 3,340,266 $ 3,194,473



Liabilities andshareholders' equity

Interest bearing deposits:

Demand deposits $ 131,810 $ 80 0.24 % $ 148,175 $ 86 0.23 % $ 123,717 $ 69 0.22 %

NOW 615,245 112 0.07 % 605,620 115 0.08 % 536,127 93 0.07 %

Savings accounts 451,369 65 0.06 % 443,406 63 0.06 % 366,080 52 0.06 %

Money market 146,174 25 0.07 % 139,433 26 0.07 % 129,536 27 0.08 %

Time Deposits 291,516 241 0.33 % 293,379 248 0.31 % 416,069 310 0.30 %

Wholesale Brokered 60,000 49 0.32 % 72,283 53 0.29 % 53,750 28 0.21 %Deposits

Total interest 1,696,114 572 0.13 % 1,702,296 591 0.14 % 1,625,279 579 0.14 %bearing deposits

Borrowed funds:

OtherInterest-Bearing 98,326 86 0.35 % 79,132 41 0.21 % 175,025 98 - Liabilities

Long-Term Debt 49,156 430 3.47 % 3,812 38 3.95 % - - -

Subordinated 35,276 243 2.73 % 35,229 243 2.74 % 35,098 253 2.87 %Debentures

Total borrowed 147,482 516 1.65 % 118,173 322 1.08 % 210,123 351 0.66 %funds

Total interestbearing 1,878,872 1,331 0.28 % 1,820,469 913 0.20 % 1,835,402 930 0.20 %liabilities

Demand deposits -Noninterest 1,120,323 1,104,506 979,593 bearing

Other liabilities 102,838 53,134 39,106

Shareholders' 364,413 362,157 340,372 equity

Total liabilitiesand shareholders' $ 3,466,446 $ 3,340,266 $ 3,194,473 equity





Interest income/interest earning 3.47 % 3.58 % 4.04 %assets

Interest expense/interest earning 0.16 % 0.12 % 0.13 %assets

Net interestincome and margin $ 26,566 3.31 % $ 26,716 3.46 % $ 28,832 3.91 %^(5)

(1)

Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

(2)

Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate.

(3)

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $0.8 million and $1.0 million for the quarters ended December 31, 2021 and 2020, respectively, and $1.0 million for the quarter ended September 30, 2021.

(4)

Non-accrual loans have been included in total loans for purposes of computing total earning assets.

(5)

Net interest margin represents net interest income as a percentage of average interest-earning assets.

(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

(2) Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate.

Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and(3) loan acquisition FMV amortization were $0.8 million and $1.0 million for the quarters ended December 31, 2021 and 2020, respectively, and $1.0 million for the quarter ended September 30, 2021.

(4) Non-accrual loans have been included in total loans for purposes of computing total earning assets.

(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.

AVERAGE BALANCES AND RATES

(Dollars in Thousands, Unaudited)

Year Ended December 31,

2021

2020

2019

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Assets

Balance(1)

Expense

Rate(2)

Balance(1)

Expense

Rate(2)

Balance(1)

Expense

Rate(2)

Investments:

Federal funds sold/due from banks

$

269,919

$

370

0.14

%

$

25,228

$

156

0.62

%

$

16,346

$

376

2.30

%

Taxable

406,790

7,239

1.78

%

379,024

8,199

2.16

%

423,453

10,139

2.39

%

Non-taxable

258,472

6,218

3.05

%

216,387

5,707

3.34

%

160,787

4,534

3.57

%

Total investments

935,181

13,827

1.66

%

620,639

14,062

2.51

%

600,586

15,049

2.71

%

Loans and Leases:(3)

Real estate

1,818,362

84,074

4.62

%

1,610,686

79,175

4.92

%

1,440,465

79,777

5.54

%

Agricultural

42,866

1,598

3.73

%

47,299

1,887

3.99

%

50,042

2,973

5.94

%

Commercial

153,880

7,828

5.09

%

179,924

6,738

3.74

%

117,679

5,918

5.03

%

Consumer

4,993

831

16.64

%

6,584

1,069

16.24

%

8,497

1,340

15.77

%

Mortgage warehouse

147,996

4,807

3.25

%

221,319

7,135

3.22

%

134,171

5,695

4.24

%

Other

1,485

111

7.47

%

2,878

177

6.15

%

2,894

195

6.74

%

Total loans and leases

2,169,582

99,249

4.57

%

2,068,690

96,181

4.65

%

1,753,748

95,898

5.47

%

Total interest earning assets (4)

3,104,763

113,076

3.70

%

2,689,329

110,243

4.16

%

2,354,334

110,947

4.76

%

Other earning assets

15,043

13,103

12,421

Non-earning assets

208,678

207,590

202,810

Total assets

$

3,328,484

$

2,910,022

$

2,569,565

Liabilities and shareholders' equity

Interest bearing deposits:

Demand deposits

$

143,171

$

331

0.23

%

$

121,867

$

278

0.23

%

$

106,849

$

316

0.30

%

NOW

597,992

444

0.07

%

497,984

388

0.08

%

444,619

524

0.12

%

Savings accounts

427,803

240

0.06

%

336,620

221

0.07

%

289,727

308

0.11

%

Money market

140,365

111

0.08

%

124,755

128

0.10

%

124,625

181

0.15

%

Certificates of deposit<$100,000

70,692

190

0.27

%

77,119

326

0.42

%

88,792

1,035

1.17

%

Certificates of deposit>$100,000

262,512

849

0.32

%

359,687

2,361

0.66

%

396,465

7,896

1.99

%

Brokered deposits

81,041

225

0.28

%

36,071

246

0.68

%

48,392

1,120

2.31

%

Total interest bearing deposits

1,723,576

2,390

0.14

%

1,554,103

3,948

0.25

%

1,499,469

11,380

0.76

%

Borrowed funds:

Federal funds purchased

1,561

1

0.06

%

1,918

4

0.21

%

313

1

0.32

%

Repurchase agreements

70,443

210

0.30

%

34,614

137

0.40

%

22,090

88

0.40

%

Short term borrowings

3,625

2

0.06

%

54,244

102

0.19

%

13,229

273

2.06

%

Long term debt

13,351

468

3.51

%-

-

-

-

-

-

TRUPS

35,208

979

2.78

%

35,031

1,217

3.47

%

34,853

1,836

5.27

%

Total borrowed funds

124,188

1,660

1.34

%

125,807

1,460

1.16

%

70,485

2,198

3.12

%

Total interest bearing liabilities

1,847,764

4,050

0.22

%

1,679,910

5,408

0.32

%

1,569,954

13,578

0.86

%

Noninterest bearing demand deposits

1,064,119

862,274

664,061

Other liabilities

59,723

39,510

41,563

Shareholders' equity

356,878

328,328

293,987

Total liabilities and shareholders' equity

$

3,328,484

$

2,910,022

$

2,569,565

Interest income/interest earning assets

3.70

%

4.15

%

4.76

%

Interest expense/interest earning assets

0.14

%

0.20

%

0.58

%

Net interest income and margin(5)

$

109,026

3.56

%

$

104,835

3.95

%

$

97,369

4.19

%



AVERAGE BALANCES AND RATES

(Dollars inThousands, Unaudited)

Year Ended December 31,

2021 2020 2019

Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/

Assets Balance^(1) Expense Rate^ Balance^(1) Expense Rate^ Balance^(1) Expense Rate^ (2) (2) (2)

Investments:

Federal fundssold/due from $ 269,919 $ 370 0.14 % $ 25,228 $ 156 0.62 % $ 16,346 $ 376 2.30 %banks

Taxable 406,790 7,239 1.78 % 379,024 8,199 2.16 % 423,453 10,139 2.39 %

Non-taxable 258,472 6,218 3.05 % 216,387 5,707 3.34 % 160,787 4,534 3.57 %

Total 935,181 13,827 1.66 % 620,639 14,062 2.51 % 600,586 15,049 2.71 %investments

Loans and Leases: ^(3)

Real estate 1,818,362 84,074 4.62 % 1,610,686 79,175 4.92 % 1,440,465 79,777 5.54 %

Agricultural 42,866 1,598 3.73 % 47,299 1,887 3.99 % 50,042 2,973 5.94 %

Commercial 153,880 7,828 5.09 % 179,924 6,738 3.74 % 117,679 5,918 5.03 %

Consumer 4,993 831 16.64 % 6,584 1,069 16.24 % 8,497 1,340 15.77 %

Mortgage 147,996 4,807 3.25 % 221,319 7,135 3.22 % 134,171 5,695 4.24 %warehouse

Other 1,485 111 7.47 % 2,878 177 6.15 % 2,894 195 6.74 %

Total loans and 2,169,582 99,249 4.57 % 2,068,690 96,181 4.65 % 1,753,748 95,898 5.47 %leases

Total interestearning assets^ 3,104,763 113,076 3.70 % 2,689,329 110,243 4.16 % 2,354,334 110,947 4.76 %(4)

Other earning 15,043 13,103 12,421 assets

Non-earning 208,678 207,590 202,810 assets

Total assets $ 3,328,484 $ 2,910,022 $ 2,569,565



Liabilities andshareholders' equity

Interest bearing deposits:

Demand deposits $ 143,171 $ 331 0.23 % $ 121,867 $ 278 0.23 % $ 106,849 $ 316 0.30 %

NOW 597,992 444 0.07 % 497,984 388 0.08 % 444,619 524 0.12 %

Savings accounts 427,803 240 0.06 % 336,620 221 0.07 % 289,727 308 0.11 %

Money market 140,365 111 0.08 % 124,755 128 0.10 % 124,625 181 0.15 %

Certificates of 70,692 190 0.27 % 77,119 326 0.42 % 88,792 1,035 1.17 %deposit<$100,000

Certificates of 262,512 849 0.32 % 359,687 2,361 0.66 % 396,465 7,896 1.99 %deposit>$100,000

Brokered 81,041 225 0.28 % 36,071 246 0.68 % 48,392 1,120 2.31 %deposits

Total interest 1,723,576 2,390 0.14 % 1,554,103 3,948 0.25 % 1,499,469 11,380 0.76 %bearing deposits

Borrowed funds:

Federal funds 1,561 1 0.06 % 1,918 4 0.21 % 313 1 0.32 %purchased

Repurchase 70,443 210 0.30 % 34,614 137 0.40 % 22,090 88 0.40 %agreements

Short term 3,625 2 0.06 % 54,244 102 0.19 % 13,229 273 2.06 %borrowings

Long term debt 13,351 468 3.51 % - - - - - -

TRUPS 35,208 979 2.78 % 35,031 1,217 3.47 % 34,853 1,836 5.27 %

Total borrowed 124,188 1,660 1.34 % 125,807 1,460 1.16 % 70,485 2,198 3.12 %funds

Total interestbearing 1,847,764 4,050 0.22 % 1,679,910 5,408 0.32 % 1,569,954 13,578 0.86 %liabilities

Noninterestbearing demand 1,064,119 862,274 664,061 deposits

Other 59,723 39,510 41,563 liabilities

Shareholders' 356,878 328,328 293,987 equity

Totalliabilities and $ 3,328,484 $ 2,910,022 $ 2,569,565 shareholders'equity



Interest income/interest earning 3.70 % 4.15 % 4.76 %assets

Interest expense/interest 0.14 % 0.20 % 0.58 %earning assets

Net interestincome and $ 109,026 3.56 % $ 104,835 3.95 % $ 97,369 4.19 %margin^(5)

(1)

Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

(2)

Yields and net interest margin have been computed on a tax equivalent basis.

(3)

Loans are gross of the allowance for possible loan losses. Net loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $4.2 million, $1.9 million, and $(0.4) million for the years ended December 31, 2021, 2020, and 2019 respectively.

(4)

Non-accrual loans are slotted by loan type and have been included in total loans for purposes of total interest earning assets.

(5)

Net interest margin represents net interest income as a percentage of average interest-earning assets (tax-equivalent).

Category: Financial Source: Sierra Bancorp

View source version on businesswire.com: https://www.businesswire.com/news/home/20220124005121/en/

CONTACT: Kevin McPhaill, President/CEO (559) 782?4900 or (888) 454?BANK www.sierrabancorp.com