Bank of the Sierra's parent stays in the black
| Monday, Nov 02 2009 12:30 PM
Last Updated Monday, Nov 02 2009 12:30 PM
Bank of the Sierra's parent company declared net income of $106,000 in the three months ended Sept. 30, down 98 percent from the year-ago period. Diluted earnings per share came to 1 cent, as compared with 59 cents in the third quarter of 2008.
Sierra Bancorp attributed the declines mainly to its decision to boost the bank's loan loss reserve by $9.6 million. The move increased loss reserves from 1.59 percent of all loans at the end of 2008 to 2.57 percent as of Sept. 30.
Other factors cited as contributing to the lower net income were a lower net interest margin, higher insurance costs, and real-estate loans that had to be written off. The bank's net charge-offs grew by 42 percent, or $2.9 million, year-to-date over the same nine months ended Sept. 30, 2008.
Helping to offset some of these declines, the company said it sold investments for a gain of $1 million.
On the positive side, company President and CEO James Holly said that growth in customer deposits has been "robust," and that this activity improved Bank of the Sierra's liquidity. Customer deposits were up by $89 million, or 9 percent, during the first nine months of 2009 as compared with the same period a year before.
Also in the third quarter, the Porterville-based bank raised $20.4 million in new capital through an August private placement of common stock, which helped increase its total risk-based capital ratio from 14 percent on June 30 to 16 percent on Sept. 30.
