Sierra Bancorp · NASDAQ:BSRR
Sierra Bancorp — Debt Investor Presentation (September 2021)
34 slides from Sierra Bancorp's debt investor presentation, Sep 24, 2021
Slide 1: Fixed Income Investor Presentation
Fixed Income Investor Presentation SIERRA BANCORP SEPTEMBER 2021
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Sierra Bancorp’s management and are: • subject to contingencies & uncertaintie
Slide 3: Today's Presenters
3 TODAY’S PRESENTERS Kevin McPhaill President, Chief Executive Officer & Director Christopher Treece Executive VP & Chief Financial Officer Hugh Boyle Executive VP & Chief Credit Officer .. President and Chief Executive Officer of Bank of the Sierra and of Sierra Bancorp since April 1, 2015 and Dire
Slide 4: Preliminary Term Sheet
4 PRELIMINARY TERM SHEET Issuer (Exchange: Ticker) Security Rating(1) Security Offering Maturity / Call Type Coupon Frequency Use of Proceeds Sole Placement Agent Sierra Bancorp (NASDAQ: BSRR) BBB- by Kroll Bond Rating Agency (initiated on 9/9/2021) Fixed rate for 5 years paid semi-annually; floatin
Slide 5: Franchise Overview and Investment Highlights
FRANCHISE OVERVIEW AND INVESTMENT HIGHLIGHTS
Slide 6: Company Overview
6 As of or for the six months ended 6/30/2021 Balance Sheet ($mm) Total Assets $3,272.0 Gross Loans $2,144.8 Total Deposits $2,775.9 Total Equity $357.7 Gross Loans / Deposits (%) 77.3 Profitability and Rates (%) Net Income ($mm) $22.8 Return on Average Assets 1.41 Return on Average Equity 13.1 Net
Slide 7: Key Credit Investor Highlights
7 KEY CREDIT INVESTOR HIGHLIGHTS Experienced executive management team consisting of a combination of tenured and newer executives with a focus on both growth and operating/digital efficiencies Disciplined expense management as evidenced by an efficiency ratio of 57.3% as of Q2 2021. High quality, C
Slide 8: Bank of the Sierra mission and values
BANK # SIERRA WE WILL HELP MAKE. EVERY COMMUNITY WE'RE PART OF BETTER sa Ae OH She ae Anticipate and meet needs wh abroad range of solutions Provide quality service ona timely, competitive bass. Be passionate about being the right person on Encourage creativity and maximize every opportunity toimpro
Slide 9: Historical Growth
9 HISTORICAL GROWTH $130 $148 $276 $1,287 $1,335 $1,438 $1,410 $1,637 $1,797 $2,033 $2,340 $2,523 $2,594 $3,221 $3,272 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q2 2021 Acquired Santa Clara Valley Bank, N.A. with $130 million in assets Acquired OCB Bancorp with $276 million in assets Ac
Slide 10: Deposit Market Share and Demographics
10 DEPOSIT MARKET SHARE AND DEMOGRAPHICS BSRR Market Information Market Demographics Deposit Deposit 5-Yr Current Current HH 2021 - 2026 2021 - 2026 Branches Deposits Rank Market Share Deposit CAGR Population Income Pop. Growth HHI Growth County Name (#) ($mm) (#) (%) (%) (#) ($) (%) (%) Tulare, CA
Slide 11: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 12: Financial Update – Q2 2021
12 FINANCIAL UPDATE – Q2 2021 .. Record net income of $11.7 million and $22.8 million for the three and six months ended 6/30/2021, respectively, compared to $8.3 million and $16.1 million for the three and six months ended 6/30/2020. .. Return on average assets improved to 1.42% for the second quar
Slide 13: Balance Sheet Growth
13 $206 $256 $273 $309 $344 $358 2016 2017 2018 2019 2020 2021 Q2 $1,263 $1,558 $1,732 $1,763 $2,463 $2,145 2016 2017 2018 2019 2020 2021 Q2 $2,033 $2,340 $2,523 $2,594 $3,221 $3,272 2016 2017 2018 2019 2020 2021 Q2 BALANCE SHEET GROWTH Total Assets ($mm) Gross Loans ($mm) Total Deposits ($mm) Total
Slide 14: Profitability Trends
14 $30,037 $35,763 $43,482 $51,118 $51,473 $29,207 2016 2017 2018 2019 2020 2021 YTD 1.63% 1.70% 1.80% 1.99% 1.77% 1.81% 2016 2017 2018 2019 2020 2021 YTD 8.71% 8.82% 11.37% 12.23% 10.80% 13.11% 2016 2017 2018 2019 2020 2021 YTD 0.95% 0.93% 1.23% 1.40% 1.22% 1.41% 2016 2017 2018 2019 2020 2021 YTD P
Slide 15: Profitability Trends (Cont.)
15 1.02% 0.98% 0.84% 0.91% 0.82% 0.77% 2016 2017 2018 2019 2020 2021 YTD 3.15% 3.11% 2.90% 2.75% 2.61% 2.51% 2016 2017 2018 2019 2020 2021 YTD PROFITABILITY TRENDS (CONT.) Noninterest Income / Avg. Assets (%) Noninterest Expense / Avg. Assets (%) 64.4% 63.0% 60.9% 57.0% 57.3% 57.0% 2016 2017 2018 20
Slide 16: Favorable Low-Cost Deposit Mix
16 FAVORABLE LOW-COST DEPOSIT MIX Noninterest Demand Deposits, 38.7% Interest-Bearing Transaction, 27.1% Savings Deposits, 15.6% Money Market Deposits, 4.8% Customer Time Deposits, 10.7% Brokered Deposits, 3.1% 6/30/2021 Category ($000) (%) Noninterest Demand Deposits $1,073,833 38.7% Interest-Beari
Slide 17: Loan Portfolio Composition
17 LOAN PORTFOLIO COMPOSITION NOO CRE, 48.9% OO CRE, 16.8% Mortgage Warehouse, 7.0% 1-4 Family RE, 6.5% Farmland, 5.9% C&I, 3.7% PPP, 3.3% Construction, Land, & Land Dev., 3.0% Multifamily RE, 2.7% Ag. Production, 2.0% Consumer & Other, 0.2% 6/30/2021 Category ($000) (%) NOO CRE $1,048,153 48.9% OO
Slide 18: Total Loans Outstanding by Origination Channel
18 TOTAL LOANS OUTSTANDING BY ORIGINATION CHANNEL Porterville 4.0% Visalia 3.7% Tulare 3.4% Hanford 2.8% Bakersfield/Tehachapi 5.9% Fresno 14.9% Ventura 12.8% San Luis Obispo 6.1% SoCal LPO 12.2% NorCal LPO 13.2% Special Assets 0.3% Corporate 0.1% Ag 7.1% Consumer Mortgage 2.8% SBA 3.9% Mtg Warehous
Slide 19: Commercial Real Estate Portfolio
19 COMMERCIAL REAL ESTATE PORTFOLIO Hotel 5.6% Special Purpose 45.7% Industrial 16.1% Retail 14.0% Office 18.6% CRE OO Collateral Type Hotel 18.8% Special Purpose 5.2% Industrial 10.8% Retail 31.1% Office 31.6% Multi-Family 2.5% CRE NOO Collateral Type Owner Occupied Non-Owner Occupied Total CRE CRE
Slide 20: Mortgage Warehouse
20 MORTGAGE WAREHOUSE Source: Company Documents. Note: Financial data as of 6/30/2021 (Unaudited). 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 Unused $124,174 $129,210 $111,482 $88,456 $177,001 $125,282 $179,793 $219,649 Outstanding $218,826 $192,790 $231,518 $338,544 $290,999 $3
Slide 21: COVID-19 Response
21 COVID-19 RESPONSE Paycheck Protection Program (PPP) Loans .. Issued over 1,300 PPP loans for approximately $125 million in Round 1 .. Over 1,100 of these loans for approximately $45 million were $150,000 or less .. Total fees collected of approximately $5 million accreted over the life of the loa
Slide 22: COVID-19 Impacted Industries
22 $201,558 $71,332 $11,338 $6,337 $53,768 $57,480 $12,800 $9,427 CRE Non-Owner Occupied CRE Owner-Occupied Commercial - Secured by SFR 1-4 Unit Multi-Family Commercial Construction Ag Farm Mortgage & Ag Production Consumer SFR 1-4 Unit Mortgage and Consumer Other Commercial & Industrial COVID-19 IM
Slide 23: Asset Quality Trends
23 ASSET QUALITY TRENDS Source: Company Documents and S&P Global. 1 Excludes performing TDRs. Performing TDRs not included in NPAs/NPLs were $10,774 at 6/30/2021; $11,382 at 12/31/2020; $8,415 at 12/31/2019; $10,920 at 12/31/2018; $12,030 at 12/31/2017 and $14,182 at 12/31/2016. Net Charge-offs / Av
Slide 24: Loan Loss Reserves
24 LOAN LOSS RESERVES Gross Loans Total ALLL ALLL / Gross Loans Loan Category ($000) ($000) (%) 1-4 Family Residential Construction $37,165 $235 0.63% Other Construction / Land 27,682 272 0.98% 1-4 Family Closed-End 106,599 563 0.53% 1-4 Family Equity Lines 33,334 306 0.92% Multi-Family Residential
Slide 25: Capital Ratios
25 11.92% 11.32% 11.49% 11.91% 10.50% 10.68% 2016 2017 2018 2019 2020 2021Q2 9.64% 9.64% 9.61% 10.80% 9.79% 10.08% 2016 2017 2018 2019 2020 2021Q2 CAPITAL RATIOS CET 1 Ratio (%) Total Risk-Based Capital Ratio (%) TCE / TA(1) (%) Tier 1 Leverage Ratio (%) 14.09% 12.84% 12.61% 13.27% 10.97% 12.93% 201
Slide 26: Pro Forma Capital Ratios
26 10.08% 10.68% 12.93% 15.07% 9.93% 10.53% 12.88% 17.02% TCE / TA Leverage Ratio CET 1 Ratio TRBC Ratio PRO FORMA CAPITAL RATIOS Consolidated Capital Ratios Source: Company Documents & S&P Global. Note: Financial data as of 6/30/2021 (Unaudited). 1 Assumes $50 million subordinated debt raise and 0%
Slide 27: Sources of Liquidity
27 SOURCES OF LIQUIDITY Source Amount % of Total FHLB availability 662,641 $ 64.3% Federal Reserve Availability 62,897 6.1% Unsecured lines 305,000 29.6% Total Borrowing Capacity 1,030,538 $ 100.0% Q2 2021 Borrowing Capacity ($000) Q2 2021 Available for Sale Securities 82.6% 88.1% 91.7% 93.7% 80.1%
Slide 28: Interest Rate Sensitivity
28 INTEREST RATE SENSITIVITY Interest Rate Risk Management As of June 30, 2021 % Change in $ Change in Immediate Change to Interest Rates (basis points) Net Interest Income Net Interest Income +400 11.3% $11,645 +300 9.1% $9,384 +200 6.9% $7,072 +100 4.1% $4,226 Base -- -100 (8.1%) ($8,306) Source:
Slide 29: Appendix
APPENDIX
Slide 30: Interest Coverage and Double Leverage Ratio
30 INTEREST COVERAGE AND DOUBLE LEVERAGE RATIO Pro Forma(1) ($000) FY 2017 FY 2018 FY 2019 FY 2020 2021 YTD 2021 YTD Investment in bank subsidiary 285,629 $ 305,491 $ 339,449 $ 367,014 $ 384,984 $ 409,984 $ Consolidated equity 255,942 273,024 309,285 343,896 357,729 357,729 Double leverage ratio 112
Slide 31: Kroll Bond Rating as of 9/9/2021
31 KROLL BOND RATING AS OF 9/9/2021 Entity Type Rating Sierra Bancorp, Inc. Senior Unsecured Debt BBB Subordinated Debt BBB- Short-Term Debt K3 Bank of the Sierra Deposit BBB+ Senior Unsecured Debt BBB+ Subordinated Debt BBB Short-Term Deposit K2 Short-Term Debt K2 Source: Kroll Bond Rating Agency.
Slide 32: BSRR Financial Highlights
32 BSRR FINANCIAL HIGHLIGHTS For the Period Ending, 2016 2017 2018 2019 2020 Q2 2021 Balance Sheet Information ($000) Total Assets $2,032,873 $2,340,298 $2,522,502 $2,593,819 $3,220,742 $3,272,048 Total Securities 530,083 558,329 560,479 600,799 543,974 607,474 Gross Loans 1,262,531 1,557,820 1,731,
Slide 33: Non-GAAP Reconciliation
33 NON-GAAP RECONCILIATION For the Period Ending, Core PTPP ROAA ($000) 2016 2017 2018 2019 2020 2021YTD Net Interest Income $65,182 $75,701 $92,394 $97,369 $104,835 $55,744 Noninterest Income 18,885 20,720 20,379 23,343 23,813 13,442 Noninterest Expense 56,001 62,774 69,575 70,556 75,912 40,506 Pre
Slide 34: Company Contacts
NASDAQ: BSRR COMPANY CONTACTS: Kevin McPhaill, President & CEO, kmcphaill@bankofthesierra.com Christopher Treece, EVP & CFO, ctreece@bankofthesierra.com Hugh Boyle, Chief Credit & Risk Officer, hboyle@bankofthesierra.com SIERRA BANCORP KEEP CLIMBING
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