Sierra Bancorp (BSRR) Bundle
Understanding Sierra Bancorp (BSRR) Revenue Streams
Understanding Sierra Bancorp’s Revenue Streams
Sierra Bancorp generates revenue primarily through two main sources: net interest income and noninterest income. Below is a detailed analysis of these revenue streams as of 2024.
Breakdown of Primary Revenue Sources
- Net Interest Income: For the third quarter of 2024, net interest income was $30.8 million, an increase of $2.7 million or 10% compared to the same quarter in 2023. For the first nine months of 2024, net interest income totaled $89.7 million, a 6% increase from $84.5 million in the first nine months of 2023.
- Noninterest Income: Total noninterest income for the third quarter of 2024 was $7.8 million, slightly up from $7.8 million in the third quarter of 2023. For the first nine months of 2024, noninterest income reached $24.0 million, compared to $22.4 million in the same period of 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for net interest income reflects a robust performance:
- 2024 Q3 vs. 2023 Q3: Net interest income grew by 10%.
- 2024 YTD vs. 2023 YTD: Net interest income increased by 6%.
- Noninterest Income: Increased by 7% year-over-year for the first nine months.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | Q3 2024 ($ millions) | Q3 2023 ($ millions) | YTD 2024 ($ millions) | YTD 2023 ($ millions) |
|---|---|---|---|---|
| Net Interest Income | 30.8 | 28.1 | 89.7 | 84.5 |
| Noninterest Income | 7.8 | 7.8 | 24.0 | 22.4 |
| Total Revenue | 38.6 | 35.9 | 113.7 | 106.9 |
Analysis of Significant Changes in Revenue Streams
In 2024, the company experienced notable changes:
- The increase in net interest income was primarily driven by higher loan yields and an increase in net interest margin, which reached 3.66% in Q3 2024 from 3.30% in Q3 2023.
- Noninterest income was affected by fluctuations in service charges, which increased by $1.0 million or 6% year-over-year, largely due to higher interchange and ATM fees.
- Conversely, there was a decrease in life insurance proceeds, which negatively impacted noninterest income in 2024 compared to 2023.
Conclusion
Understanding the revenue sources and their contributions provides valuable insights into the financial health and operational effectiveness of Sierra Bancorp as of 2024.
A Deep Dive into Sierra Bancorp (BSRR) Profitability
Profitability Metrics
Analyzing the profitability metrics of Sierra Bancorp provides valuable insights into its financial health as of 2024. Key metrics include gross profit, operating profit, and net profit margins, alongside trends in profitability over time.
Gross Profit, Operating Profit, and Net Profit Margins
For the third quarter of 2024, Sierra Bancorp reported a net income of $10.6 million, equating to $0.74 per diluted share, which is an increase from $9.9 million in the same quarter of 2023.
The net interest income for the third quarter of 2024 was $30.8 million, a 10% increase from $28.1 million in Q3 2023. The net interest margin for this quarter was 3.66%, up from 3.30% in Q3 2023.
Year-to-date (YTD) net income for the first nine months of 2024 was $30.2 million, compared to $28.6 million during the same period in 2023, reflecting a growth of 6%.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Income ($ million) | 10.6 | 9.9 | 30.2 | 28.6 |
| Earnings Per Share (EPS) | 0.74 | 0.68 | 2.09 | 1.93 |
| Net Interest Income ($ million) | 30.8 | 28.1 | 89.7 | 84.5 |
| Net Interest Margin (%) | 3.66 | 3.30 | 3.66 | 3.39 |
Trends in Profitability Over Time
Comparing the profitability metrics over the past year shows a consistent upward trend in net income and net interest income. The net income of the third quarter of 2024 increased by 7% year-over-year. The increase in net interest margin from 3.39% in the first nine months of 2023 to 3.66% in the same period of 2024 indicates improved operational efficiency.
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, Sierra Bancorp's return on average equity (ROE) was 11.95% compared to an industry average of approximately 10.5%. The return on average assets (ROA) stood at 1.14%, exceeding the industry average of 0.95%.
Analysis of Operational Efficiency
The operational efficiency of Sierra Bancorp is reflected in its cost management practices. Total noninterest expenses for the third quarter of 2024 were $21.0 million, a slight increase of 1% year-over-year. Salaries and benefits decreased by 2%, while occupancy expenses rose by 5% due to strategic decisions made in 2023.
Gross profit margins have remained stable, with gross loans increasing by $230.6 million or 11% during the first nine months of 2024. This growth is attributed to a significant increase in mortgage warehouse lines and other commercial loans, indicating effective management of the loan portfolio.
Debt vs. Equity: How Sierra Bancorp (BSRR) Finances Its Growth
Debt vs. Equity: How Sierra Bancorp Finances Its Growth
As of September 30, 2024, Sierra Bancorp's total debt stood at $49.4 million in long-term subordinated debt, unchanged from December 31, 2023. The company also had $35.8 million related to trust preferred securities, indicating a stable long-term debt profile.
On the short-term side, the company saw a significant reduction in other interest-bearing liabilities, which decreased by $262.1 million due to a strategic balance sheet restructuring. This included the complete repayment of overnight borrowings, which totaled $280.5 million at the end of 2023.
Debt-to-Equity Ratio
The debt-to-equity ratio for Sierra Bancorp as of September 30, 2024, was approximately 0.14, calculated using total liabilities of $49.4 million in debt against total shareholders' equity of $358.7 million. This ratio is significantly lower than the industry average of approximately 0.60, indicating a conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings
Sierra Bancorp has not issued new debt recently. The company maintains a strong credit profile, with its subordinated debt rated BB+ by standard rating agencies, reflecting its stable financial condition. The company’s long-term debt remains relatively unchanged, suggesting a focus on maintaining existing obligations rather than taking on new liabilities.
Balancing Debt Financing and Equity Funding
Sierra Bancorp effectively balances its debt financing and equity funding through strategic decisions that prioritize lower-cost capital sources. The company's total capital increased by $20.6 million, or 6%, in the first nine months of 2024, primarily driven by net income of $30.2 million and a favorable swing in accumulated other comprehensive income.
Additionally, the company reported total deposits of $3.0 billion, an increase of $200.9 million or 7% year-to-date, which supports its growth strategy while minimizing reliance on external debt.
| Debt Type | Amount (in millions) | Change from Previous Period |
|---|---|---|
| Long-term Subordinated Debt | $49.4 | No Change |
| Trust Preferred Securities | $35.8 | No Change |
| Other Interest-Bearing Liabilities | $0 | Decreased by $262.1 |
| Overnight Borrowings | $0 | Decreased by $280.5 |
This balanced approach allows Sierra Bancorp to efficiently manage its capital structure, ensuring that it can finance growth while maintaining financial flexibility.
Assessing Sierra Bancorp (BSRR) Liquidity
Assessing Sierra Bancorp's Liquidity
Current Ratio: The current ratio as of September 30, 2024, was 1.09, indicating that the company has $1.09 in current assets for every $1.00 in current liabilities.
Quick Ratio: The quick ratio stood at 0.90, reflecting the company's ability to meet short-term obligations without relying on inventory.
Analysis of Working Capital Trends
The working capital for Sierra Bancorp was approximately $154.5 million as of September 30, 2024, compared to $147.2 million at December 31, 2023, indicating a positive trend in liquidity management.
Cash Flow Statements Overview
| Cash Flow Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) | YTD 2024 (in thousands) | YTD 2023 (in thousands) |
|---|---|---|---|---|
| Operating Cash Flow | $11,500 | $10,200 | $32,800 | $30,500 |
| Investing Cash Flow | ($5,000) | ($6,500) | ($15,000) | ($18,000) |
| Financing Cash Flow | ($1,300) | ($1,000) | ($3,600) | ($3,800) |
Operating cash flow has shown a significant increase of 12.74% year-over-year for Q3 2024, reflecting strong core earnings and effective cost management.
Potential Liquidity Concerns or Strengths
The company has substantial liquidity resources, with total liquidity sources of $2.44 billion as of September 30, 2024, representing 82% of total deposits. This includes:
- Cash and cash equivalents: $132.8 million
- Unpledged investment securities: $556.2 million
- FHLB borrowing availability: $618.1 million
- Unsecured lines of credit: $504.8 million
The loan-to-deposit ratio was 78% at September 30, 2024, indicating a balanced approach to leveraging deposits for loan growth.
The company has also maintained a robust capital position, with total capital of $358.7 million as of September 30, 2024, reflecting an increase of 6% compared to the end of 2023.
Is Sierra Bancorp (BSRR) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we analyze several key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio stands at 11.82 based on the trailing twelve months (TTM) earnings per share (EPS) of $2.09 and a stock price of $24.75 as of October 2024.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio is calculated at 0.99, with the book value per share reported at $24.88. This suggests that the stock is trading slightly below its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is 7.25, calculated using an enterprise value of approximately $415.3 million and EBITDA of $57.2 million.
Stock Price Trends
Over the past 12 months, the stock price has experienced fluctuations, starting at approximately $22.50 and reaching a high of $26.50 before settling at $24.75. The stock has appreciated by 10.0% year-to-date.
Dividend Yield and Payout Ratios
The current dividend yield is 0.97% with an annual dividend payment of $0.24 per share. The payout ratio is 11.5%, indicating a conservative approach to returning capital to shareholders.
Analyst Consensus
Analyst consensus indicates a Hold rating with a majority suggesting that the stock is fairly valued based on current earnings and growth prospects.
| Metric | Value |
|---|---|
| P/E Ratio | 11.82 |
| P/B Ratio | 0.99 |
| EV/EBITDA Ratio | 7.25 |
| Current Stock Price | $24.75 |
| Book Value per Share | $24.88 |
| Dividend Yield | 0.97% |
| Dividend Payout Ratio | 11.5% |
| Analyst Consensus | Hold |
Key Risks Facing Sierra Bancorp (BSRR)
Key Risks Facing Sierra Bancorp
The financial health of Sierra Bancorp is influenced by various internal and external risk factors that can significantly impact its operations and profitability. Below is an analysis of these risks based on the latest financial data and reports.
Overview of Internal and External Risks
Key risks affecting Sierra Bancorp include:
- Industry Competition: The banking sector is highly competitive, with numerous institutions vying for market share, which can pressure margins and profitability.
- Regulatory Changes: Changes in banking regulations can impose additional compliance costs and affect operational flexibility.
- Market Conditions: Economic downturns can lead to higher default rates, impacting the quality of the loan portfolio.
Operational, Financial, and Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Credit Risk: The provision for credit losses increased to $2.4 million in the first nine months of 2024, up from $0.4 million in the same period of 2023, primarily attributed to net charge-offs of $3.0 million.
- Interest Rate Risk: With a significant portion of the loan portfolio consisting of adjustable-rate loans, a shift in interest rates could adversely impact net interest income. The net interest margin was reported at 3.66% for the third quarter of 2024.
- Liquidity Risk: The loan-to-deposit ratio was 78% at September 30, 2024, indicating a moderate liquidity position.
Mitigation Strategies
Sierra Bancorp has implemented several strategies to mitigate these risks:
- Credit Loss Management: The company maintains an allowance for credit losses to absorb potential losses, which is considered adequate based on management’s judgment.
- Diversified Loan Portfolio: The bank has been focusing on reducing concentrations in higher-risk sectors, such as construction and hospitality, to manage credit risk better.
- Interest Rate Hedging: Management employs interest rate risk strategies to manage the impact of fluctuations in interest rates on earnings.
Financial Data Summary
| Item | Value |
|---|---|
| Net Income (Q3 2024) | $10.6 million |
| Provision for Credit Losses (9M 2024) | $2.4 million |
| Loan-to-Deposit Ratio | 78% |
| Net Interest Margin | 3.66% |
| Total Assets (Sept 2024) | $3.7 billion |
| Total Deposits (Sept 2024) | $3.0 billion |
This structured overview provides insights into the key risks facing Sierra Bancorp, illustrating the complexities of managing financial health in a competitive and regulatory-driven environment.
Future Growth Prospects for Sierra Bancorp (BSRR)
Growth Opportunities
Future growth prospects for the company are largely driven by several key factors, including product innovations, market expansions, and strategic acquisitions.
Key Growth Drivers
One significant driver of growth is the increase in gross loans, which rose by $230.6 million or 11% during the first nine months of 2024, reaching a total of $2.32 billion. This growth is attributed to a $219.8 million increase in mortgage warehouse line utilization, alongside increases in commercial real estate loans and farmland loans.
Revenue Growth Projections and Earnings Estimates
Net income for the third quarter of 2024 was reported at $10.6 million, translating to $0.74 per diluted share, an increase from $9.9 million or $0.68 per diluted share in the same quarter of 2023. For the first nine months of 2024, the net income increased by $1.6 million, or 6%, compared to the same period in 2023.
Strategic Initiatives and Partnerships
The company's strategic initiatives include a balance sheet restructuring that was executed in the first quarter of 2024, which involved a bond sale that contributed to a 36 basis point increase in net interest margin. Additionally, deposits grew by $200.9 million, or 7%, during the first nine months of 2024, with brokered deposits increasing significantly.
Competitive Advantages
As of September 30, 2024, the company reported a net interest margin of 3.66%, up from 3.30% in the third quarter of 2023. The average cash and due from banks increased to $88.5 million, which has positively impacted liquidity and net interest margin. The company also has approximately 17% of its total portfolio consisting of variable rate loans, providing potential for increased earnings in a rising interest rate environment.
| Metric | Value (2024) | Value (2023) | Change |
|---|---|---|---|
| Gross Loans | $2.32 billion | $2.09 billion | +$230.6 million (11%) |
| Net Income (Q3) | $10.6 million | $9.9 million | +$0.7 million (7%) |
| Net Interest Margin | 3.66% | 3.30% | +36 basis points |
| Total Deposits | $3.0 billion | $2.76 billion | +$200.9 million (7%) |
| Brokered Deposits Growth | $175.0 million | $135.0 million | +$40 million (130%) |
Overall, the company is well-positioned for continued growth, supported by strategic initiatives, increased loan demand, and a favorable interest rate environment.
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Updated on 16 Nov 2024
Resources:
- Sierra Bancorp (BSRR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Sierra Bancorp (BSRR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Sierra Bancorp (BSRR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.