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What changed in SIERRA BANCORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SIERRA BANCORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+440 added−470 removedSource: 10-K (2025-03-03) vs 10-K (2024-03-22)

Top changes in SIERRA BANCORP's 2024 10-K

440 paragraphs added · 470 removed · 369 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

167 edited+30 added−36 removed200 unchanged
Biggest changeFactors that could affect our common stock price in the future include but are not necessarily limited to the following: ● actual or anticipated fluctuations in our operating results and financial condition; ● changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts; ● failure to meet analysts’ revenue or earnings estimates; ● speculation in the press and social media, or investment community; ● strategic actions by us or our competitors, such as acquisitions or restructurings; ● actions by shareholders; ● sales of our equity or equity-related securities, or the perception that such sales may occur; ● fluctuations in the trading volume of our common stock; ● fluctuations in the stock prices, trading volumes, and operating results of our competitors; ● market conditions in general and, in particular, for the financial services industry; ● proposed or adopted regulatory changes or developments; ● regulatory action against us; ● actual, anticipated or pending investigations, proceedings, or litigation that involve or affect us; and ● domestic and international economic factors unrelated to our performance.
Biggest changeFactors that could affect our common stock price in the future include but are not necessarily limited to the following: ● actual or anticipated fluctuations in our operating metrics and financial condition; ● changes to shares outstanding, including stock repurchases or stock issuances; ● other changes to tangible book value per share outside of operating earnings, including dividends, stock repurchases, issues of equity-based compensation, and changes to accumulated other comprehensive income; ● changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts; ● failure to meet analysts’ revenue or earnings estimates; ● speculation in the press and social media, or investment community; ● strategic actions by us or our competitors, such as acquisitions or restructurings; ● actions by shareholders; ● sales of our equity or equity-related securities, or the perception that such sales may occur; ● fluctuations in the trading volume of our common stock; ● fluctuations in the stock prices, trading volumes, and operating results of our competitors; ● market conditions in general and, in particular, for the financial services industry; ● proposed or adopted regulatory changes or developments; ● regulatory action against us; ● changes in perceptions around capital ratios; ● actual, anticipated, or pending investigations, proceedings, or litigation that involve or affect us; and ● domestic and international economic factors unrelated to our performance. ​ 23 Table of Contents The stock market and, more specifically, the market for financial institution stocks, has experienced significant volatility over the past several years.
In recent periods in particular, retaliatory tariffs levied by certain countries in response to tariffs imposed by the US Government on imports from those countries have created a high degree of uncertainty and disruption in the agricultural community in California, due to the level of goods that are exported.
In recent periods in particular, retaliatory tariffs levied by certain countries in response to tariffs imposed by the US Government on imports from those countries have created a high degree of uncertainty and disruption in the California agricultural community, due to the level of goods that are exported.
Additionally, our noninterest expense has risen materially in adverse economic cycles due to the costs of reappraising adversely classified assets, write-downs on foreclosed assets resulting from declining property values, operating costs related to foreclosed assets, legal and other costs associated with loan collections, and various other expenses that would not typically be incurred in a normal operating environment.
Additionally, our noninterest expense has risen materially in past adverse economic cycles due to the costs of reappraising adversely classified assets, write-downs on foreclosed assets resulting from declining property values, operating costs related to foreclosed assets, legal and other costs associated with loan collections, and various other expenses that would not typically be incurred in a normal operating environment.
Under the Patriot Act, financial institutions are subject to prohibitions regarding specified financial transactions and account relationships, as well as enhanced due diligence and “know your customer” standards in their dealings with higher risk, including foreign individuals and entities. The Patriot Act also requires all financial institutions to establish an anti-money laundering programs.
Under the Patriot Act, financial institutions are subject to prohibitions regarding specified financial transactions and account relationships, as well as enhanced due diligence and “know your customer” standards in their dealings with higher risk, including foreign individuals and entities. The Patriot Act also requires all financial institutions to establish anti-money laundering programs.
Furthermore, the Bank is a member of the Allpoint network, which provides our deposit customers with surcharge-free access to over 55,000 ATMs across the United States, Puerto Rico, Mexico, Canada, Australia and the United Kingdom, and customers have access to electronic point-of-sale payment alternatives nationwide via the Pulse network.
Furthermore, the Bank is a member of the Allpoint network, which provides our deposit customers with surcharge-free access to over 55,000 ATMs across the United States, Puerto Rico, Mexico, Canada, Australia and the United Kingdom. Customers also have access to electronic point-of-sale payment alternatives nationwide via the Pulse network.
The relatively large California market has been particularly attractive to out-of-state institutions. 4 Table of Contents For years we have countered rising competition by offering a broad array of products with flexibility in structure and terms that cannot always be matched by our competitors.
The relatively large California market has been attractive to out-of-state institutions. 4 Table of Contents For years we have countered rising competition by offering a broad array of products with flexibility in structure and terms that cannot always be matched by our competitors.
Such banks have substantially greater lending limits than we have, offer certain services we cannot offer directly, and often operate with economies of scale that result in relatively low operating costs. We also compete with numerous financial and quasi-financial institutions for deposits and loans, including providers of financial services via the internet.
Such banks have substantially greater lending limits, offer certain services we cannot offer directly, and often operate with economies of scale that result in relatively low operating costs. We also compete with numerous financial and quasi-financial institutions, including providers of financial services via the internet, for deposits and loans.
Regulation of the Company Generally The Company is a legal entity separate and distinct from the Bank and its other subsidiaries. As a bank holding company, the Company is regulated under the Bank Holding Company Act of 1956 (the “BHC Act”), and is subject to supervision, regulation and inspection by the Federal Reserve Board.
Regulation of the Company Generally The Company is a legal entity separate and distinct from the Bank and its other subsidiaries. As a bank holding company, the Company is regulated under the Bank Holding Company Act of 1956 (the “BHC Act”), and is subject to supervision, regulation, and inspection by the Federal Reserve Board (“FRB”).
Adverse developments, such as, continued inflation, health epidemics or pandemics (or expectations about them) interest rate volatility, international trade disputes, oil price volatility, the level of U.S. debt, including the debt ceiling (and the potential inability to raise the debt ceiling), and global economic conditions, could depress business and/or consumer confidence levels, negatively impact real estate values, and otherwise lead to economic weakness which could have one or more of the following undesirable effects on our business: ● a rapid decrease in low-cost or noninterest bearing deposits; ● a lack of demand for loans or other products and services offered by us; ● an inability to retain and recruit employees due to competition for labor; ● increased competition for loans or other earning assets; ● a decline in the value of our loans or other assets secured by real estate; ● a decline in the value of fixed-rate investment securities which could lead to a reduction in capital due to declines in other comprehensive income/(loss); ● an increase in the reliance on wholesale funding; ● a credit impairment of our investment securities; or ● an increase in the number of borrowers who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to us, which in turn could result in higher levels of nonperforming assets, net charge-offs and provisions for credit losses.
Adverse developments, such as, continued interest rate volatility, inflation, tariffs, jobs market, health epidemics or pandemics (or expectations about them) interest rate volatility, international trade disputes, oil price volatility, the level of U.S. debt, including the debt ceiling (and the potential inability to raise the debt ceiling), and global economic conditions, could depress business and/or consumer confidence levels, negatively impact real estate values, and otherwise lead to economic weakness which could have one or more of the following undesirable effects on our business: ● a decrease in low-cost or noninterest bearing deposits; ● a slowing of demand for loans or other products and services offered by us; ● an inability to retain and recruit employees due to competition for labor; ● increased competition for loans or other earning assets; ● a decline in the value of our loans or other assets secured by real estate; ● a decline in the value of fixed-rate investment securities, which could lead to a reduction in capital due to declines in other comprehensive income/(loss); ● an increase in the reliance on wholesale funding; ● a credit impairment of our investment securities; or ● an increase in the number of borrowers who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to us, which in turn could result in higher levels of nonperforming assets, net charge-offs, and provisions for credit losses.
We attract deposits throughout our market area via referrals from existing customers and, direct-mail campaigns by offering a customer-oriented product mix, competitive pricing, convenient locations, drive-through banking, and multiple delivery channels. We strive to retain our deposit customers by providing a consistently high level of service.
We attract deposits throughout our market area via referrals from existing customers and, direct-mail campaigns due to our customer-oriented product mix, competitive pricing, convenient locations, drive-through banking, and multiple delivery channels. We strive to retain our deposit customers by providing a consistently high level of service.
The Company invests in its employees’ future by sponsoring and prioritizing continued education throughout its employee ranks. The Company requires certain of its employees and directors to participate in educational activities and training curriculum to stay current on industry-related topics, including compliance, human resource, cyber and other enterprise risks.
The Company invests in its employees’ future by sponsoring and prioritizing continued education throughout its employee ranks. The Company requires certain of its employees and directors to participate in educational activities and training curriculum to stay current on industry-related topics, including compliance, human resources, cyber and other enterprise risks.
We offer a variety of other banking products and services to complement and support our lending and deposit products, including remote deposit capture and payroll services for business customers. Our chief products and services relate to extending loans and accepting deposits. Our lending activities cover real estate, commercial (including small business), mortgage warehouse, agricultural, and consumer loans.
We offer a variety of other banking products and services to complement and support our lending and deposit products, including remote deposit capture and payroll services for business customers. Our chief products and services relate to making loans and accepting deposits. Lending activities cover real estate, commercial (including small business), mortgage warehouse, agricultural, and consumer loans.
Rising interest rates have decreased the value of the Company’s held-to-maturity and available for sale securities portfolio, and certain fixed-rate loans and the Company would realize losses if it were required to sell such securities or loans to meet liquidity needs.
Rising interest rates since 2022 have decreased the value of the Company’s held-to-maturity and available-for-sale securities portfolio and certain fixed-rate loans and the Company would realize losses if it were required to sell such securities or loans to meet liquidity needs.
Recent Accounting Pronouncements Information on recent accounting pronouncements is contained in Note 2 to the consolidated financial statements. Competition The banking business in California is generally highly competitive. Continued consolidation within the banking industry, including many bank transactions within our market in 2023, has heightened competition in recent periods.
Recent Accounting Pronouncements Information on recent accounting pronouncements is contained in Note 2 to the consolidated financial statements. Competition The banking business in California is generally highly competitive. Continued consolidation within the banking industry, including many bank transactions within our market in 2024, has heightened competition in recent periods.
This could occur, for example, if information was erroneously provided to parties who are not permitted to have the information, either by fault of our systems, employees, or counterparties, or where such information is intercepted or otherwise inappropriately taken by third parties.
This could occur, for example, if information were erroneously provided to parties who are not permitted to have the information, either by fault of our systems, employees, or counterparties, or where such information is intercepted or otherwise inappropriately taken by third parties.
Capital levels, as measured by these standards, are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions. Our Common Equity Tier 1 capital includes common stock, additional paid-in capital, and retained earnings, less the following: disallowed goodwill and intangibles, disallowed deferred tax assets, and any insufficient additional capital to cover the deductions.
Capital levels, as measured by these standards, are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions. 7 Table of Contents Our Common Equity Tier 1 capital includes common stock, additional paid-in capital, and retained earnings, less the following: disallowed goodwill and intangibles, disallowed deferred tax assets, and any insufficient additional capital to cover the deductions.
Qualifying banking organizations that elect to use the community bank leverage ratio framework and that maintain a leverage ratio of greater than required minimums will be considered to have satisfied the generally applicable risk based and leverage capital requirements in the agencies' capital rules (generally applicable rule) and, if applicable, will be considered to have met the well capitalized ratio requirements for purposes of section 38 of the Federal Deposit Insurance Act.
Qualifying banking organizations that elect to use the CBLR framework and that maintain a leverage ratio of greater than required minimums will be considered to have satisfied the generally applicable risk based and leverage capital requirements in the agencies' capital rules (generally applicable rule) and, if applicable, will be considered to have met the well capitalized ratio requirements for purposes of section 38 of the Federal Deposit Insurance Act.
We also rely on third party service providers to conduct certain other aspects of our 26 Table of Contents business operations, and face similar risks relating to them. While we require regular security assessments from those third parties, we cannot be sure that their information security protocols are sufficient to withstand a cyber-attack or security breach.
We also rely on third party service providers to conduct certain other aspects of our business operations and face similar risks relating to them. While we require regular security assessments from those third parties, we cannot be sure that their information security protocols are sufficient to withstand a cyber-attack or security breach.
Abusive acts or practices are defined as those that materially interfere with a consumer’s ability to understand a term or condition of a consumer financial product or service or take unreasonable advantage of a consumer’s: (i) lack of financial savvy, (ii) inability to protect himself in the selection or use of consumer financial products or services, or (iii) reasonable reliance on a covered entity to act in the consumer’s interests.
Abusive acts or practices are defined as those that materially interfere with a consumer’s ability to understand a term or condition of a consumer financial product or service or take unreasonable advantage of a consumer’s lack of financial savvy, inability to protect himself in the selection or use of consumer financial products or services, or reasonable reliance on a covered entity to act in the consumer’s interests.
Bank of the Sierra received credits to reduce our FDIC assessments. On October 18, 2022 the FDIC adopted a final rule to increase the base deposit insurance rate uniformly by 2 basis points, beginning with the first quarterly assessment period of 2023. The FDIC also concurrently maintained the Designated Reserve Ratio (DRR) for the DIF at 2.00% for 2023.
Bank of the Sierra received credits to reduce our FDIC assessments. On October 18, 2022, the FDIC adopted a final rule to increase the base deposit insurance rate uniformly by 2 basis points, beginning with the first quarterly assessment period of 2023. The FDIC also concurrently maintained the DRR for the DIF at 2.00% for 2023.
Nonperforming assets adversely affect our results of operations and financial condition and can take significant time to resolve. Our nonperforming loans may return to elevated levels, which would negatively impact earnings, possibly in a material way depending on the severity. We do not record interest income on non-accrual loans, thereby adversely affecting income levels.
Nonperforming assets adversely affect our results of operations and financial condition and can take significant time to resolve. Our nonperforming loans may increase, which would negatively impact earnings, possibly in a material way depending on the severity. We do not record interest income on non-accrual loans, thereby adversely affecting income levels.
As of December 31, 2023, the Company’s only other subsidiaries were Sierra Statutory Trust II, Sierra Capital Trust III, and Coast Bancorp Statutory Trust II, which were formed solely to facilitate the issuance of capital trust pass-through securities (“TRUPS”).
As of December 31, 2024, the Company’s only other subsidiaries were Sierra Statutory Trust II, Sierra Capital Trust III, and Coast Bancorp Statutory Trust II, which were formed solely to facilitate the issuance of capital trust pass-through securities (“TruPS”).
Fluctuations in interest rates can affect the demand of customers for products and services, and an increase in the general level of interest rates may adversely affect the ability of certain borrowers to make variable-rate loan payments.
Fluctuations in interest rates can affect the demand of customers for products and services, and an increase in the general level of interest rates may adversely affect the ability of certain borrowers to make variable-rate or adjustable-rate loan payments.
A bank holding company that also qualifies as and elects to become a “financial holding company” may engage in a broader range of activities that are financial in nature or complementary to a financial activity (as determined by the Federal Reserve or Treasury regulations), such as securities underwriting and dealing, insurance underwriting and agency, and making merchant banking investments.
A bank holding company that also qualifies as and elects to become a “financial holding company” may engage in a broader range of activities that are financial in nature or complementary to a financial activity (as determined by the FRB or Treasury regulations), such as securities underwriting and dealing, insurance underwriting and agency, and making merchant banking investments.
Based on our capital levels at December 31, 2023 and 2022, the Company and the Bank met all capital adequacy requirements to which they are subject, utilizing the Capital Simplification for Qualifying Community Bank Organization.
Based on our capital levels at December 31, 2024 and 2023, the Company and the Bank met all capital adequacy requirements to which they are subject, utilizing the Capital Simplification for Qualifying Community Bank Organization.
Deterioration in the value of these problem assets, the underlying collateral, or in the borrowers’ performance or financial condition, could adversely affect our business, results of operations and financial condition. In addition, the resolution of nonperforming assets requires a significant commitment of time from Bank staff, which can be detrimental to their performance of other responsibilities.
Deterioration in the value of these problem assets, the underlying collateral, or in the borrowers’ performance or financial condition, could adversely affect our business, results of operations and financial condition. In addition, the resolution of nonperforming assets requires a significant commitment 19 Table of Contents of time from Bank staff, which can be detrimental to their performance of other responsibilities.
Website Access Copies of our Annual Report on 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website (www.sierrabancorp.com) as soon as reasonably practicable after we have filed the material with, or furnished it to, the United States Securities and Exchange Commission (“SEC”).
Copies of our Annual Report on 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) are available free of charge through our website (www.sierrabancorp.com) as soon as reasonably practicable after we have filed the material with, or furnished it to, the United States Securities and Exchange Commission (“SEC”).
The final rule updates the CRA regulations to achieve the following goals: encourage banks to expand access to credit, investment, and banking services in LMI communities; adapt to changes in the banking industry, including internet and mobile banking; provide greater clarity and consistency in the application of the CRA regulations; 10 Table of Contents and tailor CRA evaluations and data collection to bank size and type.
The final rule updates the CRA regulations to achieve the following goals: encourage banks to expand access to credit, investment, and banking services in LMI communities; adapt to changes in the banking industry, including internet and mobile banking; provide greater clarity and consistency in the application of the CRA regulations; and tailor CRA evaluations and data collection to bank size and type.
In recent years, the state of California experienced the worst drought in its recorded history, and it is difficult to predict if the drought will resume and how long it might last. Another looming issue that could have a major impact on the agricultural industry involves water availability and distribution rights.
In recent years, California experienced the worst drought in its recorded history, and it is difficult to predict if the drought will resume and if it does how long it might last. Another looming issue that could have a major impact on the agricultural industry involves water availability and distribution rights.
Although commercial loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of such collateral in the event of default is often an insufficient source of repayment for multiple reasons, including uncollectible accounts receivable and obsolete or special-purpose inventories, among others.
Although commercial loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of such collateral in the event of default may be an insufficient source of repayment for multiple reasons, including uncollectible accounts receivable and obsolete or special-purpose inventories, among others.
These 25 Table of Contents provisions make it more difficult for another company to acquire us, which could cause our shareholders to lose an opportunity to be paid a premium for their shares in an acquisition transaction and reduce the current and future market price of our common stock.
These provisions make it more difficult for another company to acquire us, which could cause our shareholders to lose an opportunity to be paid a premium for their shares in an acquisition transaction and reduce the current and future market price of our common stock.
Under certain conditions, the Federal Reserve has the authority to restrict the payment of cash dividends by a bank holding company as an unsafe and unsound banking practice and may require a bank holding company to obtain the approval of the Federal Reserve prior to purchasing or redeeming its own equity securities.
Under certain conditions, the FRB has the authority to restrict the payment of cash dividends by a bank holding company as an unsafe and unsound banking practice and may require a bank holding company to obtain the approval of the FRB prior to purchasing or redeeming its own equity securities.
As a result, we must make interest payments on the debentures before any dividends can be paid on our common stock, and in the event of our bankruptcy, dissolution or liquidation, the holders of debt securities must be paid in full before any distributions may be made to the holders of our common stock.
As a result, we must make interest payments on the debentures before any dividends can be paid on our common stock, and in the event of our bankruptcy, dissolution or liquidation, the holders of debt securities must be paid in full before any distributions may be made to the holders of our 24 Table of Contents common stock.
The Federal Reserve also has the authority to regulate the debt of bank holding companies. A bank holding company is required to act as a source of financial and managerial strength for its subsidiary banks and must commit resources as necessary to support such subsidiaries.
The FRB also has the authority to regulate the debt of bank holding companies. A bank holding company is required to act as a source of financial and managerial strength for its subsidiary banks and must commit resources as necessary to support such subsidiaries.
The following items are defined as core capital elements: (i) common shareholders’ equity; (ii) qualifying non-cumulative 7 Table of Contents perpetual preferred stock and related surplus (and, in the case of holding companies, senior perpetual preferred stock issued to the U.S.
The following items are defined as core capital elements: (i) common shareholders’ equity; (ii) qualifying non-cumulative perpetual preferred stock and related surplus (and, in the case of holding companies, senior perpetual preferred stock issued to the U.S.
These and other laws require disclosures including the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit unfair, deceptive and abusive practices, restrict the Company’s ability to raise interest rates and otherwise subject the Company to substantial regulatory oversight.
These and other laws require disclosures including the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit unfair, deceptive and abusive practices, restrict the Bank’s ability to raise interest rates and otherwise subject the Bank to substantial regulatory oversight.
In general, the BHC Act limits the business of bank holding companies to banking, managing or controlling banks and other activities that the Federal Reserve has determined to be so closely related to banking as to be a proper incident thereto, including securities brokerage services, investment advisory services, fiduciary services, and management advisory and data processing services, among others.
In general, the BHC Act limits the business of bank holding companies to banking, managing or controlling banks, and other activities the FRB has determined to be so closely related to banking as to be a proper incident thereto, including securities brokerage services, investment advisory services, fiduciary services, and management advisory and data processing services, among others.
Because of the size of our 17 Table of Contents fixed income bond portfolio relative to total assets, a relatively large increase in market interest rates, in particular, could result in a material drop in fair values and, by extension, our capital.
Because of the size of our fixed income bond portfolio relative to total assets, a relatively large increase in market interest rates, in particular, could result in a material drop in fair values and, by extension, our capital.
The Company also increased the discretionary overdraft privilege amount for both commercial and consumer customers, but limited the number of daily overdraft fees to four per day (previously five per day) and no longer charged a fee for continuous overdrafts (previously a $35 charge after the 10 th consecutive day an account is in an overdraft position).
The Bank also increased the discretionary overdraft privilege amount for both commercial and consumer customers but limited the number of daily overdraft fees to four per day (previously five per day) and no longer charges a fee for continuous overdrafts (previously a $35 charge after the 10 th consecutive day an account is in an overdraft position).
The bank offers accounts to customers that provide multi-million-dollar FDIC insurance using the IntraFi network of banks to offer reciprocal fully FDIC insured accounts through the Insured Cash Sweep (“ICS”) or Certificate of Deposit Account Registry System (“CDARS”). At December 31, 2023, the Bank estimates it had uninsured deposits of $816 million.
The bank offers accounts to customers that provide multi-million-dollar FDIC insurance using the IntraFi network of banks to offer reciprocal fully FDIC insured accounts through the Insured Cash Sweep (“ICS”) or Certificate of Deposit Account Registry System (“CDARS”). At December 31, 2024, the Bank estimates it had uninsured deposits of $816 million, or 28% of total deposits.
Congress enacted section 1071 for the purpose of facilitating enforcement of fair lending laws and enabling communities, governmental entities, and creditors to identify business and community development needs and opportunities for women-owned, minority-owned, and small businesses.
Congress enacted section 1071 for the purpose of facilitating enforcement of fair lending laws and enabling communities, 9 Table of Contents governmental entities, and creditors to identify business and community development needs and opportunities for women-owned, minority-owned, and small businesses.
Consumer Financial Protection and Financial Privacy Dodd-Frank created the Consumer Financial Protection Bureau (the “CFPB”) as an independent entity with broad rulemaking, supervisory and enforcement authority over consumer financial products and services including deposit products, residential mortgages, home-equity loans and credit cards.
Consumer Financial Protection and Financial Privacy Dodd-Frank created the CFPB as an independent entity with broad rulemaking, supervisory and enforcement authority over consumer financial products and services including deposit products, residential mortgages, home-equity loans, and credit cards.
Unauthorized disclosure of sensitive or confidential customer information, whether through a cyber-attack, other breach of our computer systems or any other means, could severely harm our business. In the normal course of business we collect, process and retain sensitive and confidential customer information.
Unauthorized disclosure of sensitive or confidential customer information, whether through a cyberattack, other breach of our computer systems or any other means, could severely harm our business. In the normal course of business we collect, process, and retain sensitive and confidential customer information.
In addition, as is the case with all financial institutions, the Bank is required to maintain the privacy of its customers’ non-public, personal information.
As is the case with all financial institutions, the Bank is required to maintain the privacy of its customers’ non-public, personal information.
Changes in interest rates could adversely affect our profitability, business and prospects. Net interest income, and therefore earnings, can be adversely affected by differences or changes in the interest rates on, or the repricing frequency of, our financial instruments.
Changes in interest rates could adversely affect our profitability, business, and prospects. Net interest income, and therefore earnings, can be adversely affected by differences or changes in the interest rates on, or the repricing frequency 15 Table of Contents of, our financial instruments.
The Bank is also subject to laws and regulations requiring that all extensions of credit to our executive officers, directors, principal shareholders and related parties must, among 6 Table of Contents other things, be made on substantially the same terms and follow credit underwriting procedures no less stringent than those prevailing at the time for comparable transactions with persons not related to the Bank.
The Bank is also subject to laws and regulations requiring all extensions of credit to our executive officers, directors, principal shareholders and related parties be, among other things, made on substantially the same terms and follow credit underwriting procedures no less stringent than those prevailing at the time for comparable transactions with persons not related to the Bank.
There also may be business disruptions that cause us to lose customers or cause customers to remove their accounts from 21 Table of Contents us and move their business to competing financial institutions. In addition, our ability to grow may be limited if we cannot make acquisitions. We compete with other financial institutions with respect to potential acquisitions.
There also may be business disruptions that cause us to lose customers or cause customers to remove their accounts from us and move their business to competing financial institutions. In addition, our ability to grow may be limited if we cannot make acquisitions. We compete with other financial institutions with respect to potential acquisitions.
Despite our efforts to identify, contain and mitigate these threats through detection and response mechanisms, product improvement, the use of encryption and authentication technology, and customer and employee education, such attempted fraudulent activities directed against us, our customers, and third party service providers remain a serious issue.
Despite our efforts to identify, contain and mitigate these threats through detection and response mechanisms, product improvement, the use of encryption and authentication technology, and customer and employee education, fraudulent attempts directed against us, our customers, and third party service providers remain a serious issue.
The regulatory agencies will review, as part of their regular risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Company, that are not “large, complex banking organizations.” Where appropriate, the regulatory agencies will take supervisory or enforcement action to address perceived deficiencies in an institution’s 13 Table of Contents incentive compensation arrangements or related risk-management, control, and governance processes.
The regulatory agencies will review, as part of their regular risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Company, which are not “large, complex banking organizations.” Where appropriate, the regulatory agencies will take supervisory or enforcement action to address perceived deficiencies in an institution’s incentive compensation arrangements or related risk-management, control, and governance processes.
Similarly, the occurrence of more natural disasters like those California has experienced recently, including fires, flooding, and earthquakes, could impair the value of the collateral we hold for real estate secured loans and negatively impact our results of operations. Our concentration of commercial real estate, construction and land development, and commercial and industrial loans exposes us to increased lending risks.
Similarly, the occurrence of more natural disasters like those California has experienced recently, including fires, flooding, and earthquakes, could impair the value of the collateral we hold for real estate secured loans and negatively impact our results of operations. 18 Table of Contents Our commercial real estate, including construction and land development exposes us to increased lending risks.
The Company’s common stock is listed on the Nasdaq Global Select market (“Nasdaq”) with “BSRR” as its trading symbol, and the Company is subject to the rules of Nasdaq for listed companies. The Company is a bank holding company within the meaning of the BHC Act and is registered as such with the Federal Reserve Board.
The Company’s common stock is listed on the Nasdaq Global Select market (“Nasdaq”) with “BSRR” as its trading symbol, and the Company is subject to the rules of Nasdaq for listed companies. The Company is a bank holding company within the meaning of the BHC Act and is registered as such with the FRB.
Regulation of the Bank Generally As a state chartered bank, the Bank is subject to broad federal regulation and oversight extending to all its operations by the FDIC and to state regulation by the DFPI. The Bank is also subject to certain regulations of the Federal Reserve Board.
Regulation of the Bank Generally As a state-chartered bank, the Bank is subject to broad federal regulation and oversight extending to all its operations by the FDIC and to state regulation by the DFPI. The Bank is also subject to certain regulations of the FRB.
Hanford: Hanford Office 427 West Lacey Boulevard ​ ​ Lindsay: Lindsay Office 142 South Mirage Avenue ​ ​ Lompoc: Lompoc Office 705 West Central Avenue ​ ​ Ojai: Ojai Office 402 West Ojai Avenue ​ ​ Paso Robles: Paso Robles Office 1207 Spring Street ​ ​ Pismo Beach: Pismo Beach Office 1401 Dolliver Street ​ ​ Roseville: ​ Loan Production Office 915 Highland Point Dr., Ste. 160 ​ ​ Reedley: Reedley Office 1095 West Manning Ave. ​ ​ San Luis Obispo: San Luis Obispo Office 500 Marsh Street ​ ​ Santa Barbara: Santa Barbara Office 21 East Carrillo Street ​ ​ Santa Paula: Santa Paula Office 901 East Main Street ​ ​ Selma: Selma Office 2450 McCall Avenue ​ ​ Tehachapi: Tehachapi Downtown Office 224 West “F” Street ​ ​ ​ 2 Table of Contents Templeton: ​ ​ Three Rivers: ​ Commercial Credit Center 613 South Main Street ​ Three Rivers Office 40884 Sierra Drive ​ Templeton Regional Office 624 South Main Street ​ ​ Tulare: Tulare Office 246 East Tulare Avenue Tulare Prosperity Office 1430 East Prosperity Avenue ​ Ventura: Ventura Office 89 South California Street ​ ​ Visalia: Visalia Mooney Office 2515 South Mooney Blvd.
Hanford: Hanford Office 427 West Lacey Boulevard ​ ​ Lindsay: Lindsay Office 142 South Mirage Avenue ​ ​ Lompoc: Lompoc Office 705 West Central Avenue ​ ​ Ojai: Ojai Office 402 West Ojai Avenue ​ ​ Paso Robles: Paso Robles Office 1207 Spring Street ​ ​ Pismo Beach: Pismo Beach Office 1401 Dolliver Street ​ ​ Reedley: Reedley Office 1095 West Manning Ave. ​ ​ San Luis Obispo: San Luis Obispo Office 500 Marsh Street ​ ​ Santa Barbara: Santa Barbara Office 21 East Carrillo Street ​ ​ Santa Paula: Santa Paula Office 901 East Main Street ​ ​ Selma: Selma Office 2450 McCall Avenue ​ ​ Tehachapi: Tehachapi Downtown Office 224 West “F” Street ​ ​ ​ 2 Table of Contents Templeton: ​ ​ Three Rivers: ​ Commercial Credit Center 613 South Main Street ​ Three Rivers Office 40884 Sierra Drive ​ Templeton Regional Office 624 South Main Street ​ ​ Tulare: Tulare Office 246 East Tulare Avenue Tulare Prosperity Office 1430 East Prosperity Avenue ​ Ventura: Ventura Office 89 South California Street ​ ​ Visalia: Visalia Mooney Office 2515 South Mooney Blvd.
A qualifying community banking organization that opts into the community bank leverage ratio framework and maintains a leverage ratio greater than nine percent will be considered to have met the minimum capital requirements for the well capitalized category under the Prompt Corrective Action framework, and any other capital or leverage requirements to which the qualifying banking organization is subject (see below for further discussion of the requirements for well capitalized and the Prompt Corrective Action framework).
A qualifying community banking organization that opts into the community bank leverage ratio framework and maintains a leverage ratio greater than nine percent will be considered to have met the minimum capital requirements for the well capitalized category under the Prompt Corrective Action framework, and any other capital or leverage requirements to which the qualifying banking organization is subject.
Even if the transactions are collateralized, credit risk could exist if the collateral held by us cannot be liquidated at prices sufficient to recover the full amount of the credit or derivative exposure due to us. Any such losses could adversely affect our business, financial condition or results of operations. ​ ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. ​
Even if the transactions are collateralized, credit risk could exist if the collateral held by us cannot be liquidated at prices sufficient to recover the full amount of the credit or derivative exposure due to us. Any such losses could adversely affect our business, financial condition, or results of operations. ​ ITEM 1B.
The Federal Reserve may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the holding company’s payment of dividends to the shareholders in such circumstances.
The FRB may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the holding company’s payment of dividends to the shareholders in such circumstances.
There has been increased scrutiny of certain fees, including overdrafts, charged to consumers in recent years. Changes to the Company’s overdraft practices due to changes in regulations or rules impact the collection of overdraft or insufficient fund fees could negatively impact the Company’s earnings.
There has been increased scrutiny of certain fees, including overdrafts, late fees, and interchange fees, charged to consumers and/or businesses in recent years. Changes to the Company’s overdraft practices due to changes in regulations or rules impact the collection of overdraft or insufficient fund fees could negatively impact the Company’s earnings.
At the same date there were an additional 292,581 shares available to grant under our 2023 Stock Incentive Plan, which replaced the Company’s 2017 Stock Incentive Plan. The holders of our debentures have rights that are senior to those of our shareholders.
At the same date there were an additional 306,374 shares available to grant under our 2023 Stock Incentive Plan, which replaced the Company’s 2017 Stock Incentive Plan. The holders of our debentures have rights that are senior to those of our shareholders.
We also offer our customers community-oriented, personalized service, and rely on local promotional activity and personal contact by our employees. As noted above, layered onto our traditional personal-contact banking philosophy are technology-driven initiatives to improve customer access and convenience. Human Capital As of December 31, 2023, the Company had 491 full-time and 41 part-time employees.
We also offer our customers community-oriented, personalized service, and rely on local promotional activity and personal contact by our employees. As noted above, layered onto our traditional personal-contact banking philosophy are technology-driven initiatives to improve customer access and convenience. Human Capital As of December 31, 2024, the Company had 446 full-time and 42 part-time employees.
At December 31, 2023, the Bank’s total construction, land development and other land loans represented 1% of Tier 1 risk-based capital plus allowance for credit losses on loans. At December 31, 2023, the Bank’s total CRE loans as defined in the regulatory guidelines represented 243% of Tier 1 risk-based capital plus allowance for credit losses on loans.
At December 31, 2024, the Bank’s total construction, land development and other land loans represented 1% of Tier 1 risk-based capital plus allowance for credit losses on loans. At December 31, 2024, the Bank’s total CRE loans as defined in the regulatory guidelines represented 236% of Tier 1 risk-based capital plus allowance for credit losses on loans.
We operate in a highly regulated environment and are subject to supervision and regulation by a number of governmental regulatory agencies, including the Federal Reserve, the DFPI and the FDIC.
We operate in a highly regulated environment and are subject to supervision and regulation by a number of governmental regulatory agencies, including the FRB, the DFPI and the FDIC.
Community Reinvestment Act The Bank is subject to certain requirements and reporting obligations involving Community Reinvestment Act (“CRA”) activities. The CRA generally requires federal banking agencies to evaluate the record of a financial institution in meeting the credit needs of its local communities, including low-and moderate-income (“LMI”) neighborhoods.
Community Reinvestment Act The Bank is subject to the Community Reinvestment Act (“CRA”), which imposescertain requirements and reporting obligations.. The CRA generally requires federal banking agencies to evaluate the record of a financial institution in meeting the credit needs of its local communities, including low-and moderate-income (“LMI”) neighborhoods.
The Company and the Bank met the criteria outlined in the final rule and opted into the community bank leverage ratio framework in the first quarter 2020. Capital Adequacy Requirements The Company and the Bank are subject to the regulations of the Federal Reserve Board and the FDIC, respectively, governing capital adequacy.
The Company and the Bank met the criteria outlined in the final rule and opted into the community bank leverage ratio framework in the first quarter 2020. Capital Adequacy Requirements The Company and the Bank are subject to the regulations of the FRB and the FDIC, respectively, governing capital adequacy.
A bank holding company is required to file annual reports and other information with the Federal Reserve regarding its business operations and those of its subsidiaries.
A bank holding company is required to file annual reports and other information with the FRB regarding its business operations and those of its subsidiaries.
In connection with its assessment of CRA performance, the FDIC assigns a rating of “outstanding,” “satisfactory,” “needs to improve” or “substantial noncompliance.” The Bank most recently received a “satisfactory” CRA assessment rating in August 2022. On October 24, 2023, the Federal Reserve Board along with the FDIC and OCC issued a final rule amending the three-decade-old CRA regulations.
In connection with its assessment of CRA performance, the FDIC assigns a rating of “outstanding,” “satisfactory,” “needs to improve” or “substantial noncompliance.” The Bank most recently received a “satisfactory” CRA assessment rating in August 2022. On October 24, 2023, the FRB along with the FDIC and OCC issued a final rule amending the three-decade-old CRA regulation.
As noted above, gross loans totaled $2.1 billion at December 31, 2023 and the percentage of our total loan portfolio for each of the principal types of credit we extend was as follows: (i) loans secured by real estate (86.7%); (ii)other commercial loans, including agricultural production and SBA loans (7.5%); (iii) mortgage warehouse loans (5.6%); and (iv) consumer loans (0.2%).
As noted above, gross loans totaled $2.3 billion at December 31, 2024 and the percentage of our total loan portfolio for each of the principal types of credit we extend was as follows: (i) loans secured by real estate (78.2%); (ii) mortgage warehouse loans (14.0%); other commercial loans, including agricultural production and SBA loans (7.6%); (iii) other commercial loans, including agricultural production and SBA loans (7.6%); ; and (iv) consumer loans (0.1%).
Recent negative developments affecting the banking industry, and resulting media coverage, have eroded customer and investor confidence in the banking system . The recent high-profile bank failures involving Silicon Valley Bank, Signature Bank, and sale of First Republic Bank have generated significant market volatility among publicly traded bank holding companies and, in particular, regional and community banks like the Company.
Negative developments affecting the banking industry, and resulting media coverage, could erode customer and investor confidence in the banking system . The high-profile bank failures involving Silicon Valley Bank, Signature Bank, and sale of First Republic Bank in 2023 generated significant market volatility among publicly traded bank holding companies and, in particular, regional and community banks like the Company.
Decreases in deposits may adversely affect our funding costs and net income. Ultimately, competition can and does increase our cost of funds, reduce loan yields and drive down our net interest margin, thereby reducing profitability.
Decreases in deposits may adversely affect our funding costs and net income. Ultimately, competition can and does increase our cost of funds, reduces loan yields and drives down our net interest margin, thereby reducing profitability.
If personal, non-public, confidential or proprietary customer information in our possession were to be mishandled or misused, we could suffer significant regulatory consequences, reputational damage and financial loss.
If personal, non-public, confidential, or proprietary customer information in our possession were to be mishandled or misused, we could suffer significant regulatory consequences, reputational 26 Table of Contents damage, and financial loss.
The Company is also subject to certain provisions of the California Financial Code which are applicable to bank holding companies. In addition, the Company is under the jurisdiction of the SEC and is subject to the disclosure and regulatory requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934, each administered by the SEC.
The Company is also subject to certain provisions of the California Financial Code which are applicable to bank holding companies. In addition, the Company is under the jurisdiction of the SEC and is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended (“Securities Act”), and the Exchange Act, each administered by the SEC.
Our efforts to comply with government and regulatory mandates on consumer protection and privacy, anti-money laundering, and other initiatives have resulted in significant ongoing expense to the Bank, including compliance staffing costs and other expenses associated with compliance-related software.
Our efforts to comply with government and regulatory mandates related to consumer protection and privacy, anti-money laundering, and other areas of focus have resulted in significant ongoing expense to the Bank, including compliance staffing costs and other expenses associated with compliance-related software.
Moreover, banking regulators closely scrutinize commercial real estate (“CRE”) loans due to risks relating to the cyclical nature of the real estate market and risks for lenders with high concentrations of such loans. The regulators require banks with relatively high levels of CRE loans to implement enhanced underwriting standards, internal controls, risk management policies and portfolio stress testing.
Moreover, banking regulators generally scrutinize concentrations of commercial real estate loans due to risks relating to the cyclical nature of the real estate market. The regulators require banks with relatively high levels of CRE loans to implement enhanced underwriting standards, internal controls, risk management policies and portfolio stress testing.
We are authorized to issue up to 24,000,000 shares of common stock, and as of December 31, 2023, we had 14,793,832 shares of common stock outstanding. Except for certain limitations imposed by Nasdaq, nothing restricts our ability to offer additional shares of stock for fair value to others in the future.
We are authorized to issue up to 24,000,000 shares of common stock, and as of December 31, 2024, we had 14,223,046 shares of common stock outstanding. Except for certain limitations imposed by Nasdaq, nothing restricts our ability to offer additional shares of stock for fair value to others in the future.
In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including the Nasdaq, to implement listing standards that require public companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error was either corrected or left uncorrected in the current period.
The Company believes it is in full compliance with the regulatory guidance on incentive compensation policies. 13 Table of Contents In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including the Nasdaq, to implement listing standards that require public companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error was either corrected or left uncorrected in the current period.
Additionally, these recent events have, and could continue to, adversely impact the market price and volatility of the Company’s common stock independent from the Company’s actual underlying financial performance. We may not be able to continue to attract and retain banking customers, and our efforts to compete may reduce our profitability.
Events similar to this could adversely impact the market price and volatility of the Company’s common stock independent from the Company’s actual underlying financial performance. We may not be able to continue to attract and retain banking customers, and our efforts to compete may reduce our profitability.
There can be no assurance that the FDIC will not further increase assessment rates in the future or that the Bank will not be subject to higher assessment rates due to a change in its risk category, either of which could have an adverse effect on the Bank’s earnings.
For the year ended 2024 there were no increases in rates; however, there can be no assurance that the FDIC will not further increase assessment rates in the future or that the Bank will not be subject to higher assessment rates due to a change in its risk category, either of which could have an adverse effect on the Bank’s earnings.
In addition, the Company is named as a defendant in lawsuits from time-to-time. Even if the case has no basis, there are costs to defend, and the Company may determine that it should settle certain suits even if there is no liability. The costs of lawsuits, whether merited or not, have a negative impact on the Company’s expenses.
Even if the case has no basis, there are costs to defend, and the Company may determine that it should settle certain suits even if there is no liability. The costs of lawsuits, whether merited or not, have a negative impact on the Company’s expenses.
We are exposed to the risk of environmental liabilities with respect to properties to which we obtain title . Approximately 86.7% of our loan portfolio at December 31, 2023, consisted of real estate loans.
We are exposed to the risk of environmental liabilities with respect to properties to which we obtain title . Approximately 78% of our loan portfolio at December 31, 2024, consisted of real estate loans.
To the extent we issue capital stock in connection with additional transactions, if any, these transactions and related stock issuances may have a dilutive effect on earnings per share and share ownership.
To the extent we issue capital stock in connection with additional transactions, if any, these transactions and related stock issuances may have a dilutive effect on tangible book value per share.
Repayment of our commercial loans is often dependent on the cash flows of the borrowers, which may be unpredictable, and the collateral securing these loans may fluctuate in value. At December 31, 2023, we had $157.8 million, or 7.5% of total loans, in commercial loans (including SBA loans and agricultural production loans but excluding mortgage warehouse loans).
Repayment of our commercial loans is often dependent on the cash flows of the borrowers, which may be unpredictable, and the collateral securing these loans may fluctuate in value. At December 31, 2024, we had $178.3 million, or 7.6% of total loans, in commercial loans (including SBA loans and agricultural production loans but excluding mortgage warehouse loans).

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Factors, section 1.08 “Unauthorized disclosure of sensitive or confidential information, whether through a cyber-attack, or breach of our computer systems or any other means, severely harm our business.” 28 Table of Contents Governance The Senior Information Security Officer, Director of Information Technology (IT), and Director of Information Services are responsible for managing our cybersecurity risk program.
Biggest changeGovernance The Senior Information Security Officer (ISO), along with both the Director of Information Technology (IT), and Director of Information Services are responsible for managing our cybersecurity risk program.
The Senior Information Security Officer (ISO) reports to the Chief Risk Officer and provides guidance, oversight, monitoring, and challenge of first line activities. The ISO is responsible for the development and management of our information security program, which includes cybersecurity risk assessments, incident response, third-party risk management, and testing of first line activities.
The ISO reports to the Chief Risk Officer and provides guidance, oversight, monitoring, and challenge of first line activities. The ISO is responsible for the development and management of our information security program, which includes cybersecurity risk assessments, incident response, third-party risk management, and testing of first line activities.
The Director of IT and Director of Information Services report to the Chief Administrative Officer and are responsible for designing and maintaining the company’s network security architecture, as well as the day-to-day management of key components of our cybersecurity risk program, including identity access management, vulnerability and patch management, intrusion prevention systems, and threat intelligence.
The Director of IT and Director of Information Services report to the Chief Financial Officer and are responsible for designing and maintaining the company’s network security architecture, as well as the day-to-day management of key components of our cybersecurity risk program, including identity access management, vulnerability and patch management, intrusion prevention systems, and threat intelligence.
Our Board of Directors and Executive Officer Committee have delegated oversight authority to a management-level IT/Operations Committee, which is comprised of executive and senior management leadership with cybersecurity technical and/or regulatory expertise. The IT/Operations Committee meets quarterly and has primary responsibility and oversight for risk management strategies related to technology, information security, cybersecurity, fraud, privacy, business continuity, and resilience.
Our Board of Directors and Board Risk Committee have delegated oversight authority to a management-level Risk Committee, which is comprised of executive and senior management leadership with cybersecurity technical and/or regulatory expertise. The Risk Committee meets quarterly and has primary responsibility and oversight for risk management strategies related to technology, information security, cybersecurity, fraud, privacy, business continuity, and resilience.
The Board Risk Committee also has oversight of and establishment of risk appetite guidance through the approval of Policies and Programs including the information security and cybersecurity programs. Annual independent assessments of the Company’s cybersecurity program which are completed by external parties with the required expertise are also presented to the Board Risk Committee.
The Board Risk Committee 28 Table of Contents also has oversight of and establishment of risk appetite guidance through the approval of Policies and Programs including the information security and cybersecurity programs. Annual independent assessments of the Company’s cybersecurity program which are completed by external parties with the required expertise are also presented to the Board Risk Committee.
Senior officers from IT or Information Security discuss cybersecurity matters that arise between Committee and Board meetings with the Chief Administrative Officer and/or the Chief Risk Officer, who will share these with the Company’s Executive Officers and Board members, as appropriate. ​
The Chief Risk Officer and ISO report to the Board and/or Board Risk Committee on cybersecurity risks. Senior officers from IT or Information Security discuss cybersecurity matters that arise between Committee and Board meetings with the Chief Financial Officer and/or the Chief Risk Officer, who will share these with the Company’s Executive Officers and Board members, as appropriate. ​
Additionally, management conducts both bottom-up and top-down enterprise risk assessments, which include cyber security risk, and continuously monitors industry and government threat intelligence to identify emerging risks and ensure continued program effectiveness. For additional discussion, on cybersecurity risk, see Item 1A.
Additionally, management conducts both bottom-up and top-down enterprise risk assessments, which include cyber security risk, and continuously monitors industry and government threat intelligence to identify emerging risks and ensure continued program effectiveness.
Removed
The Chief Administrative Officer and Chief Risk Officer report to the Board and/or Board Risk Committee on cybersecurity risks and other matters reviewed by the IT/Operations Committee.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe remaining branches, as well as our technology center, loan production offices in Roseville and Templeton, and remote ATM locations, are leased from unrelated parties. Management believes that existing back-office facilities are adequate to accommodate the Company’s operations for the immediately foreseeable future. ​ ITEM 3.
Biggest changeThe administrative headquarters, as well as five other branch offices, namely California City, Farmersville, Lompoc, San Luis Obispo, and Tulare are situated on unencumbered property owned by the Company. The remaining branches, as well as our technology center, loan production offices in Templeton, and remote ATM locations, are leased from unrelated parties.
LEGAL PROCEEDINGS For information on litigation matters, see Note 14, Commitments and Contingencies, in Item 8 of this report. ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 29 Table of Contents PART II
Management believes that existing back-office facilities are adequate to accommodate the Company’s operations for the foreseeable future. ​ ITEM 3. LEGAL PROCEEDINGS For information on litigation matters, see Note 14, Commitments and Contingencies, in Item 8 of this report. ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 29 Table of Contents PART II
Removed
Both of those buildings are situated on unencumbered property owned by the Company. In December 2023 the Company sold and leased back 11 branch locations.
Removed
Subsequent to the close of this transaction, the Company now owns unencumbered property on which six of our other offices are located, namely the following branches: California City, Farmersville, Lompoc, San Luis Obispo, Tulare, and Visalia Mooney.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table summarizes trades of the Company’s Common Stock, setting forth the approximate high and low sales prices and volume of trading for the periods indicated, based upon information available via public sources: ​ ​ ​ ​ ​ ​ ​ ​ ​ Sale Price of the Company's ​ Approximate Trading Calendar ​ Common Stock ​ Volumes Quarter End High Low Shares March 31, 2023 ​ 22.48 ​ 17.03 ​ 2,101,200 June 30, 2023 ​ 18.35 ​ 15.01 ​ 3,174,700 September 30, 2023 ​ 22.32 ​ 16.30 ​ 1,959,800 December 31, 2023 ​ 20.29 ​ 16.75 ​ 1,499,100 ​ (b) Holders As of January 31, 2024 there were an estimated 8,403 shareholders of the Company’s Common Stock.
Biggest changeThe following table summarizes trades of the Company’s Common Stock, setting forth the approximate high and low sales prices and volume of trading for the periods indicated, based upon information available via public sources: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sale Price of the Company's ​ Approximate Trading Calendar ​ Common Stock ​ Volumes Quarter End ​ High ​ Low Shares March 31, 2024 ​ $ 22.91 ​ $ 17.69 ​ 1,693,800 June 30, 2024 ​ $ 22.66 ​ $ 17.70 ​ 1,678,800 September 30, 2024 ​ $ 31.85 ​ $ 21.32 ​ 2,595,000 December 31, 2024 ​ $ 35.13 ​ $ 27.00 ​ 2,477,900 ​ (b) Holders As of January 31, 2025 there were an estimated 8,621 shareholders of the Company’s Common Stock.
However, with the prior approval of the California Commissioner of Department of Financial Protection and Innovation, the Bank may declare a larger dividend, in an amount not exceeding the greatest of (i) the retained earnings of the Bank, (ii) the net income of the Bank for its last fiscal year, or (iii) the net income of the Bank for its current fiscal year. 30 Table of Contents The Company’s ability to pay dividends is also limited by state law.
However, with the prior approval of the Commissioner of the California Department of Financial Protection and Innovation, the Bank may declare a larger dividend, in an amount not exceeding the greatest of (i) the retained earnings of the Bank, (ii) the net income of the Bank for its last fiscal year, or (iii) the net income of the Bank for its current fiscal year. 30 Table of Contents The Company’s ability to pay dividends is also limited by state law.
There were 685 registered holders of record on that date; and per Broadridge, an investor communication company, there were 7,733 beneficial holders with shares held under a street name, including “objecting beneficial owners” whose names and addresses are unavailable. Since some holders maintain multiple accounts, it is likely that the above numbers overstate the actual number of the Company’s shareholders.
There were 639 registered holders of record on that date; and per Broadridge, an investor communication company, there were 8,209 beneficial holders with shares held under a street name, including “objecting beneficial owners” whose names and addresses are unavailable. Since some holders maintain multiple accounts, it is likely that the above numbers overstate the actual number of the Company’s shareholders.
(c) Dividends The Company paid cash dividends totaling $13.7 million, or $0.92 per share in 2023 and $13.9 million, or $0.92 per share in 2022, which represents 39% of annual net earnings for 2023 and 41% for 2022.
(c) Dividends The Company paid cash dividends totaling $13.6 million, or $0.94 per share in 2024 and $13.7 million, or $0.92 per share in 2023, which represents 34% of annual net earnings for 2024 and 39% for 2023.
(d) Securities Authorized for Issuance under Equity Compensation Plans The following table provides information as of December 31, 2023 with respect to stock options and restricted stock units outstanding, and available under our 2023 Equity Compensation Plan and the now-terminated 2017 and 2007 Stock Incentive Plans, which are our only equity compensation plans other than an employee benefit plan meeting the qualification requirements of Section 401(a) of the Internal Revenue Code: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Plan Category Number of Securities to be Issued Upon Vesting of Restricted Stock Units ​ Number of Securities to be Issued Upon Exercise of Outstanding Options Weighted-Average Exercise Price of Outstanding Options Number of Securities Remaining Available for Future Issuance Equity compensation plans approved by security holders ​ 238,179 ​ 343,449 ​ $ 25.02 ​ 292,581 ​ 31 Table of Contents (e) Performance Graph Below is a five-year performance graph comparing the cumulative total return on the Company’s common stock to the cumulative total returns of the Nasdaq Composite Index (a broad equity market index), the S&P Bank Index, and the S&P $1 billion to $5 billion Bank Index (the latter two qualifying as peer bank indices), assuming a $100 investment on December 31, 2018 and the reinvestment of dividends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Sierra Bancorp ​ 100.00 ​ 124.58 ​ 106.27 ​ 124.92 ​ 101.71 ​ 113.35 Nasdaq Composite Index ​ 100.00 ​ 136.69 ​ 198.10 ​ 242.03 ​ 163.28 ​ 236.17 S&P U.S.
(d) Securities Authorized for Issuance under Equity Compensation Plans The following table provides information as of December 31, 2024 with respect to stock options and restricted stock units outstanding, and available under our 2023 Equity Compensation Plan and the now-terminated 2017 and 2007 Stock Incentive Plans, which are our only equity compensation plans other than an employee benefit plan meeting the qualification requirements of Section 401(a) of the Internal Revenue Code: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Plan Category Number of Securities to be Issued Upon Vesting of Restricted Stock Awards ​ Number of Securities to be Issued Upon Exercise of Outstanding Options Weighted-Average Exercise Price of Outstanding Options Number of Securities Remaining Available for Future Issuance Equity compensation plans approved by security holders ​ 173,970 ​ 239,600 ​ $ 26.50 ​ 306,374 ​ 31 Table of Contents (e) Performance Graph Below is a five-year performance graph comparing the cumulative total return on the Company’s common stock to the cumulative total returns of the Nasdaq Composite Index (a broad equity market index), the S&P Bank Index, and the S&P $1 billion to $5 billion Bank Index (the latter two qualifying as peer bank indices), assuming a $100 investment on December 31, 2018 and the reinvestment of dividends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Sierra Bancorp ​ 100.00 ​ 85.30 ​ 100.27 ​ 81.64 ​ 90.98 ​ 121.25 Nasdaq Composite Index ​ 100.00 ​ 144.92 ​ 177.06 ​ 119.45 ​ 172.77 ​ 223.87 S&P U.S.
BMI Banks Index ​ 100.00 ​ 137.36 ​ 119.83 ​ 162.92 ​ 135.13 ​ 147.41 ​ Source: S&P Global Market Intelligence (f) Stock Repurchases In October 2023, the Board approved the 2023 Share Repurchase Plan by authorizing 1,000,000 shares of common stock for repurchase beginning at the end of the expiration of the current share repurchase program on October 31, 2023 and expiring on October 31, 2024.
BMI Banks Index ​ 100.00 ​ 87.24 ​ 118.61 ​ 98.38 ​ 107.32 ​ 143.68 ​ Source: S&P Global Market Intelligence (f) Stock Repurchases In October 2023, the Board approved the 2023 Share Repurchase Plan by authorizing 1,000,000 shares of common stock for repurchase beginning at the end of the expiration of the then current share repurchase program on October 31, 2023 and expiring on October 31, 2024.
Removed
SmallCap Banks Index ​ 100.00 ​ 125.46 ​ 113.94 ​ 158.62 ​ 139.85 ​ 140.55 S&P U.S.
Added
SmallCap Banks Index ​ 100.00 ​ 90.82 ​ 126.43 ​ 111.47 ​ 112.03 ​ 132.44 S&P U.S.
Removed
There were no stock repurchase transactions during the fourth quarter of 2023. 1,000,000 shares of common stock authorized under the 2023 Share Repurchase Plan were available for repurchase at the end of 2023. ​ 32 Table of Contents ITEM 6. [RESERVED] ​ ​
Added
A new Share Repurchase Program was approved in October 2024 authorizing 1,000,000 shares of common stock for repurchase beginning at the end of the expiration of the share repurchase program on October 31, 2024, and expiring on October 31, 2025. ​ 32 Table of Contents During the fourth quarter of 2024 the Company purchased shares of its common stock as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total Number of Shares Purchased (1) ​ ​ Weighted Average Price Paid per Share ​ Total Number of Shares Purchased as Part of a Publicly Announced Plan ​ Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plan at the End of the Period October 1 - October 31, 2024 ​ 32,603 ​ $ 28.88 ​ 32,603 ​ 560,588 November 1 - November 30, 2024 ​ 72,779 ​ $ 29.25 ​ 58,327 ​ 941,673 December 1 - December 31, 2024 ​ 138,920 ​ $ 29.75 ​ 138,920 ​ 802,753 Total ​ 244,302 ​ ​ ​ ​ 229,850 ​ ​ (1) The total number of shares purchased during the periods indicated includes shares purchased as part of a publicly announced programs and/or shares received from employees upon the vesting of restricted stock awards in satisfaction of applicable tax withholding obligations, as is permitted under the Company’s equity compensation plans. ​ ITEM 6. [RES ERVED] ​

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. Reserved 33 ​ ​ ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 ​ ​ ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures about Market Risk 62 ​ ​ ​ ​ ​ Item 8. Financial Statements and Supplementary Data 63 ​ ​ ​ ​ ​
Biggest changeItem 6. Reserved 33 ​ ​ ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 ​ ​ ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures about Market Risk 61 ​ ​ ​ ​ ​ Item 8. Financial Statements and Supplementary Data 62 ​ ​ ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe table also displays calculated yields on each major component of the Company’s investment and loan portfolios, average rates paid on each key segment of the Company’s interest-bearing liabilities, and our net interest margin for the noted periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVERAGE BALANCES AND RATES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands, unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ ​ 2021 ​ ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning due from banks ​ $ 19,527 ​ $ 1,054 ​ 5.40% ​ $ 91,420 ​ $ 519 ​ 0.57% ​ $ 269,932 ​ $ 370 ​ 0.14% Taxable ​ ​ 992,187 ​ ​ 54,367 ​ 5.48% ​ ​ 808,750 ​ ​ 25,789 ​ 3.19% ​ ​ 406,790 ​ ​ 7,239 ​ 1.78% Non-taxable ​ ​ 348,551 ​ ​ 10,909 ​ 3.96% ​ ​ 319,682 ​ ​ 8,805 ​ 3.49% ​ ​ 258,472 ​ ​ 6,218 ​ 3.05% Total investments ​ ​ 1,360,265 ​ ​ 66,330 ​ 5.09% ​ ​ 1,219,852 ​ ​ 35,113 ​ 3.07% ​ ​ 935,194 ​ ​ 13,827 ​ 1.66% Loans: (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate ​ ​ 1,854,300 ​ ​ 82,174 ​ 4.43% ​ ​ 1,831,874 ​ ​ 77,708 ​ 4.24% ​ ​ 1,818,362 ​ ​ 84,074 ​ 4.62% Agricultural ​ ​ 35,724 ​ ​ 2,438 ​ 6.82% ​ ​ 31,565 ​ ​ 1,176 ​ 3.73% ​ ​ 42,866 ​ ​ 1,598 ​ 3.73% Commercial ​ ​ 85,572 ​ ​ 5,096 ​ 5.96% ​ ​ 81,798 ​ ​ 4,383 ​ 5.36% ​ ​ 153,880 ​ ​ 7,828 ​ 5.09% Consumer ​ ​ 4,249 ​ ​ 348 ​ 8.19% ​ ​ 4,301 ​ ​ 638 ​ 14.83% ​ ​ 4,993 ​ ​ 831 ​ 16.64% Mortgage warehouse ​ ​ 81,675 ​ ​ 6,658 ​ 8.15% ​ ​ 54,606 ​ ​ 2,695 ​ 4.94% ​ ​ 147,996 ​ ​ 4,807 ​ 3.25% Other ​ ​ 2,415 ​ ​ 77 ​ 3.19% ​ ​ 2,139 ​ ​ 106 ​ 4.96% ​ ​ 1,485 ​ ​ 111 ​ 7.47% Total loans ​ ​ 2,063,935 ​ ​ 96,791 ​ 4.69% ​ ​ 2,006,283 ​ ​ 86,706 ​ 4.32% ​ ​ 2,169,582 ​ ​ 99,249 ​ 4.57% Total interest earning assets (4) ​ ​ 3,424,200 ​ ​ 163,121 ​ 4.85% ​ ​ 3,226,135 ​ ​ 121,819 ​ 3.85% ​ ​ 3,104,776 ​ ​ 113,076 ​ 3.70% Other earning assets ​ ​ 16,850 ​ ​ ​ ​ ​ ​ ​ 15,685 ​ ​ ​ ​ ​ ​ ​ 15,043 ​ ​ ​ ​ ​ Non-earning assets ​ ​ 272,930 ​ ​ ​ ​ ​ ​ ​ 243,340 ​ ​ ​ ​ ​ ​ ​ 208,665 ​ ​ ​ ​ ​ Total assets ​ $ 3,713,980 ​ ​ ​ ​ ​ ​ $ 3,485,160 ​ ​ ​ ​ ​ ​ $ 3,328,484 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and shareholders' equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand deposits ​ $ 143,428 ​ $ 1,429 ​ 1.00% ​ $ 195,192 ​ $ 485 ​ 0.25% ​ $ 143,171 ​ $ 331 ​ 0.23% NOW ​ ​ 442,819 ​ ​ 289 ​ 0.07% ​ ​ 532,692 ​ ​ 322 ​ 0.06% ​ ​ 597,992 ​ ​ 444 ​ 0.07% Savings accounts ​ ​ 419,834 ​ ​ 269 ​ 0.06% ​ ​ 476,128 ​ ​ 278 ​ 0.06% ​ ​ 427,803 ​ ​ 240 ​ 0.06% Money market ​ ​ 132,748 ​ ​ 710 ​ 0.53% ​ ​ 150,378 ​ ​ 95 ​ 0.06% ​ ​ 140,365 ​ ​ 111 ​ 0.08% Time deposits ​ ​ 527,965 ​ ​ 23,214 ​ 4.40% ​ ​ 317,806 ​ ​ 4,914 ​ 1.55% ​ ​ 333,204 ​ ​ 1,039 ​ 0.31% Brokered deposits ​ ​ 163,382 ​ ​ 5,643 ​ 3.45% ​ ​ 74,917 ​ ​ 725 ​ 0.97% ​ ​ 81,041 ​ ​ 225 ​ 0.28% Total interest bearing deposits ​ ​ 1,830,176 ​ ​ 31,554 ​ 1.72% ​ ​ 1,747,113 ​ ​ 6,819 ​ 0.39% ​ ​ 1,723,576 ​ ​ 2,390 ​ 0.14% Borrowed funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal funds purchased ​ ​ 94,815 ​ ​ 4,975 ​ 5.25% ​ ​ 16,980 ​ ​ 693 ​ 4.08% ​ ​ 1,561 ​ ​ 1 ​ 0.06% Repurchase agreements ​ ​ 90,294 ​ ​ 245 ​ 0.27% ​ ​ 110,387 ​ ​ 319 ​ 0.29% ​ ​ 70,443 ​ ​ 210 ​ 0.30% Short term borrowings ​ ​ 130,622 ​ ​ 7,059 ​ 5.40% ​ ​ 30,728 ​ ​ 1,057 ​ 3.44% ​ ​ 3,625 ​ ​ 2 ​ 0.06% Long term FHLB Advances ​ ​ 58,411 ​ ​ 2,282 ​ 3.91% ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ — Long term debt ​ ​ 49,257 ​ ​ 1,715 ​ 3.48% ​ ​ 49,172 ​ ​ 1,713 ​ 3.48% ​ ​ 13,351 ​ ​ 468 ​ 3.51% Subordinated debentures ​ ​ 35,567 ​ ​ 2,886 ​ 8.11% ​ ​ 35,387 ​ ​ 1,603 ​ 4.53% ​ ​ 35,208 ​ ​ 979 ​ 2.78% Total borrowed funds ​ ​ 458,966 ​ ​ 19,162 ​ 4.18% ​ ​ 242,654 ​ ​ 5,385 ​ 2.22% ​ ​ 124,188 ​ ​ 1,660 ​ 1.34% Total interest bearing liabilities ​ ​ 2,289,142 ​ ​ 50,716 ​ 2.22% ​ ​ 1,989,767 ​ ​ 12,204 ​ 0.61% ​ ​ 1,847,764 ​ ​ 4,050 ​ 0.22% Noninterest bearing demand deposits ​ ​ 1,057,041 ​ ​ ​ ​ ​ ​ ​ 1,121,060 ​ ​ ​ ​ ​ ​ ​ 1,064,119 ​ ​ ​ ​ ​ Other liabilities ​ ​ 59,317 ​ ​ ​ ​ ​ ​ ​ 58,538 ​ ​ ​ ​ ​ ​ ​ 59,723 ​ ​ ​ ​ ​ Shareholders' equity ​ ​ 308,480 ​ ​ ​ ​ ​ ​ ​ 315,795 ​ ​ ​ ​ ​ ​ ​ 356,878 ​ ​ ​ ​ ​ Total liabilities and shareholders' equity ​ $ 3,713,980 ​ ​ ​ ​ ​ ​ $ 3,485,160 ​ ​ ​ ​ ​ ​ $ 3,328,484 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income/interest earning assets ​ ​ ​ ​ ​ ​ ​ 4.85% ​ ​ ​ ​ ​ ​ ​ 3.85% ​ ​ ​ ​ ​ ​ ​ 3.70% Interest expense/interest earning assets ​ ​ ​ ​ ​ ​ ​ 1.48% ​ ​ ​ ​ ​ ​ ​ 0.38% ​ ​ ​ ​ ​ ​ ​ 0.14% Net interest income and margin (5) ​ ​ ​ ​ $ 112,405 ​ 3.37% ​ ​ ​ ​ $ 109,615 ​ 3.47% ​ ​ ​ ​ $ 109,026 ​ 3.56% (1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.
Biggest changeThe table also displays calculated yields on each major component of the Company’s investment and loan portfolios, average rates paid on each key segment of the Company’s interest-bearing liabilities, and our net interest margin for the noted periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVERAGE BALANCES AND RATES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands, unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ 2023 ​ ​ 2022 ​ ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning due from banks ​ $ 49,754 ​ $ 2,659 ​ 5.34% ​ $ 19,527 ​ $ 1,054 ​ 5.40% ​ $ 91,420 ​ $ 519 ​ 0.57% Taxable ​ ​ 845,018 ​ ​ 48,682 ​ 5.76% ​ ​ 992,187 ​ ​ 54,367 ​ 5.48% ​ ​ 808,750 ​ ​ 25,789 ​ 3.19% Non-taxable ​ ​ 210,636 ​ ​ 6,743 ​ 4.05% ​ ​ 348,551 ​ ​ 10,909 ​ 3.96% ​ ​ 319,682 ​ ​ 8,805 ​ 3.49% Total investments ​ ​ 1,105,408 ​ ​ 58,084 ​ 5.40% ​ ​ 1,360,265 ​ ​ 66,330 ​ 5.09% ​ ​ 1,219,852 ​ ​ 35,113 ​ 3.07% Loans: (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate ​ ​ 1,806,114 ​ ​ 83,120 ​ 4.60% ​ ​ 1,854,300 ​ ​ 82,174 ​ 4.43% ​ ​ 1,831,874 ​ ​ 77,708 ​ 4.24% Agricultural ​ ​ 75,309 ​ ​ 5,390 ​ 7.16% ​ ​ 35,724 ​ ​ 2,438 ​ 6.82% ​ ​ 31,565 ​ ​ 1,176 ​ 3.73% Commercial ​ ​ 79,719 ​ ​ 4,702 ​ 5.90% ​ ​ 85,572 ​ ​ 5,096 ​ 5.96% ​ ​ 81,798 ​ ​ 4,383 ​ 5.36% Consumer ​ ​ 3,654 ​ ​ 326 ​ 8.92% ​ ​ 4,249 ​ ​ 348 ​ 8.19% ​ ​ 4,301 ​ ​ 638 ​ 14.83% Mortgage warehouse ​ ​ 258,191 ​ ​ 20,658 ​ 8.00% ​ ​ 81,675 ​ ​ 6,658 ​ 8.15% ​ ​ 54,606 ​ ​ 2,695 ​ 4.94% Other ​ ​ 2,415 ​ ​ 68 ​ 2.82% ​ ​ 2,415 ​ ​ 77 ​ 3.19% ​ ​ 2,139 ​ ​ 106 ​ 4.96% Total loans ​ ​ 2,225,402 ​ ​ 114,264 ​ 5.13% ​ ​ 2,063,935 ​ ​ 96,791 ​ 4.69% ​ ​ 2,006,283 ​ ​ 86,706 ​ 4.32% Total interest earning assets (4) ​ ​ 3,330,810 ​ ​ 172,348 ​ 5.23% ​ ​ 3,424,200 ​ ​ 163,121 ​ 4.85% ​ ​ 3,226,135 ​ ​ 121,819 ​ 3.85% Other earning assets ​ ​ 17,131 ​ ​ ​ ​ ​ ​ ​ 16,850 ​ ​ ​ ​ ​ ​ ​ 15,685 ​ ​ ​ ​ ​ Non-earning assets ​ ​ 283,111 ​ ​ ​ ​ ​ ​ ​ 272,930 ​ ​ ​ ​ ​ ​ ​ 243,340 ​ ​ ​ ​ ​ Total assets ​ $ 3,631,052 ​ ​ ​ ​ ​ ​ $ 3,713,980 ​ ​ ​ ​ ​ ​ $ 3,485,160 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and shareholders' equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand deposits ​ $ 160,644 ​ $ 3,950 ​ 2.46% ​ $ 143,428 ​ $ 1,429 ​ 1.00% ​ $ 195,192 ​ $ 485 ​ 0.25% NOW ​ ​ 393,126 ​ ​ 512 ​ 0.13% ​ ​ 442,819 ​ ​ 289 ​ 0.07% ​ ​ 532,692 ​ ​ 322 ​ 0.06% Savings accounts ​ ​ 365,459 ​ ​ 336 ​ 0.09% ​ ​ 419,834 ​ ​ 269 ​ 0.06% ​ ​ 476,128 ​ ​ 278 ​ 0.06% Money market ​ ​ 138,703 ​ ​ 2,071 ​ 1.49% ​ ​ 132,748 ​ ​ 710 ​ 0.53% ​ ​ 150,378 ​ ​ 95 ​ 0.06% Time deposits ​ ​ 556,506 ​ ​ 23,229 ​ 4.17% ​ ​ 527,965 ​ ​ 23,214 ​ 4.40% ​ ​ 317,806 ​ ​ 4,914 ​ 1.55% Brokered deposits ​ ​ 282,618 ​ ​ 13,257 ​ 4.69% ​ ​ 163,382 ​ ​ 5,643 ​ 3.45% ​ ​ 74,917 ​ ​ 725 ​ 0.97% Total interest bearing deposits ​ ​ 1,897,056 ​ ​ 43,355 ​ 2.29% ​ ​ 1,830,176 ​ ​ 31,554 ​ 1.72% ​ ​ 1,747,113 ​ ​ 6,819 ​ 0.39% Borrowed funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal funds purchased ​ ​ 3,840 ​ ​ 252 ​ 6.56% ​ ​ 94,815 ​ ​ 4,975 ​ 5.25% ​ ​ 16,980 ​ ​ 693 ​ 4.08% Repurchase agreements ​ ​ 123,878 ​ ​ 211 ​ 0.17% ​ ​ 90,294 ​ ​ 245 ​ 0.27% ​ ​ 110,387 ​ ​ 319 ​ 0.29% Short term borrowings ​ ​ 12,535 ​ ​ 685 ​ 5.46% ​ ​ 130,622 ​ ​ 7,059 ​ 5.40% ​ ​ 30,728 ​ ​ 1,057 ​ 3.44% Long term FHLB Advances ​ ​ 80,000 ​ ​ 3,126 ​ 3.91% ​ ​ 58,411 ​ ​ 2,282 ​ 3.91% ​ ​ — ​ ​ — ​ — Long term debt ​ ​ 49,346 ​ ​ 1,721 ​ 3.49% ​ ​ 49,257 ​ ​ 1,715 ​ 3.48% ​ ​ 49,172 ​ ​ 1,713 ​ 3.48% Subordinated debentures ​ ​ 35,745 ​ ​ 2,969 ​ 8.31% ​ ​ 35,567 ​ ​ 2,886 ​ 8.11% ​ ​ 35,387 ​ ​ 1,603 ​ 4.53% Total borrowed funds ​ ​ 305,344 ​ ​ 8,964 ​ 2.94% ​ ​ 458,966 ​ ​ 19,162 ​ 4.18% ​ ​ 242,654 ​ ​ 5,385 ​ 2.22% Total interest bearing liabilities ​ ​ 2,202,400 ​ ​ 52,319 ​ 2.38% ​ ​ 2,289,142 ​ ​ 50,716 ​ 2.22% ​ ​ 1,989,767 ​ ​ 12,204 ​ 0.61% Noninterest bearing demand deposits ​ ​ 989,561 ​ ​ ​ ​ ​ ​ ​ 1,057,041 ​ ​ ​ ​ ​ ​ ​ 1,121,060 ​ ​ ​ ​ ​ Other liabilities ​ ​ 90,142 ​ ​ ​ ​ ​ ​ ​ 59,317 ​ ​ ​ ​ ​ ​ ​ 58,538 ​ ​ ​ ​ ​ Shareholders' equity ​ ​ 348,949 ​ ​ ​ ​ ​ ​ ​ 308,480 ​ ​ ​ ​ ​ ​ ​ 315,795 ​ ​ ​ ​ ​ Total liabilities and shareholders' equity ​ $ 3,631,052 ​ ​ ​ ​ ​ ​ $ 3,713,980 ​ ​ ​ ​ ​ ​ $ 3,485,160 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income/interest earning assets ​ ​ ​ ​ ​ ​ ​ 5.23% ​ ​ ​ ​ ​ ​ ​ 4.85% ​ ​ ​ ​ ​ ​ ​ 3.85% Interest expense/interest earning assets ​ ​ ​ ​ ​ ​ ​ 1.57% ​ ​ ​ ​ ​ ​ ​ 1.48% ​ ​ ​ ​ ​ ​ ​ 0.38% Net interest income and margin (5) ​ ​ ​ ​ $ 120,029 ​ 3.66% ​ ​ ​ ​ $ 112,405 ​ 3.37% ​ ​ ​ ​ $ 109,615 ​ 3.47% (1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.
When the Company has foreclosed asset, they are periodically evaluated and written down to their fair value less expected disposition costs, if lower than the then-current carrying value. Allowance for Credit Losses/Allowance for Loan Losses The allowance for credit losses on loans, a contra-asset, is established through a provision for credit losses on loans.
When the Company has foreclosed assets, they are periodically evaluated and written down to their fair value less expected disposition costs, if lower than the then-current carrying value. Allowance for Credit Losses/Allowance for Loan Losses The allowance for credit losses on loans, a contra-asset, is established through a provision for credit losses on loans.
At December 31, 2023, the Company had $155.0 million in overnight borrowings as compared to $219.0 million in overnight borrowings at December 31, 2022. The securities strategy mentioned earlier enabled most of the overnight borrowings to be paid off in early January.
At December 31, 2023, the Company had $155.0 million in overnight borrowings as compared to $219.0 million in overnight borrowings at December 31, 2022. The securities strategy enabled most of the overnight borrowings to be paid off in early January 2024, as mentioned earlier.
Following review of the financial metrics available for each of the underlying institutions as of December 31, 2022 and December 31, 2023 management concluded that the unrealized loss position of these securities related primarily to the fluctuation in market conditions, including interest rates and other factors, from the date of purchase, and were not reflective of any credit concerns with the issuing financial institution affecting the subordinated debt.
Following review of the financial metrics available for each of the underlying institutions as of December 31, 2024, and December 31, 2023 management concluded that the unrealized loss position of these securities related primarily to the fluctuation in market conditions, including interest rates and other factors, from the date of purchase, and were not reflective of any credit concerns with the issuing financial institution affecting the subordinated debt.
The Company has a higher level of actual balance sheet liquidity than might otherwise be the case since we utilize a letter of credit from the FHLB rather than investment securities for certain pledging requirements. That letter of credit, which is backed by loans pledged to the FHLB by the Company, totaled $127.9 million at December 31, 2023.
The Company has a higher level of actual balance sheet liquidity than might otherwise be the case since we utilize a letter of credit from the FHLB rather than investment securities for certain pledging requirements. That letter of credit, which is backed by loans pledged to the FHLB by the Company, totaled $127.9 million at December 31, 2024.
Critical Accounting Estimates The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States and prevailing practices within the banking industry. All significant intercompany balances and transactions have been eliminated. Certain reclassifications have been made to prior year’s balances to conform to classifications used in 2023.
Critical Accounting Estimates The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States and prevailing practices within the banking industry. All significant intercompany balances and transactions have been eliminated. Certain reclassifications have been made to prior year’s balances to conform to classifications used in 2024.
We plan to invest in additional tax credit funds in the future, but if the economics of such transactions do not justify continued investments, then the level of low-income housing tax credits will taper off in future years until they are substantially utilized by the end of 2037.
We plan to invest in additional tax credit funds in the future, but if the economics of such transactions do not justify continued investments, then the level of low-income housing tax credits will taper off in future years until they are substantially utilized by the end of 2036.
Pursuant to policy guidelines, we generally attempt to limit the projected decline in net interest income relative to the stable rate scenario to no more than 5% for a 100 basis point (bp) interest rate shock, 10% for a 200 bp shock, 15% for a 300 bp shock, and 20% for a 400 bp shock.
Pursuant to policy guidelines, we generally attempt to limit the projected decline in net interest income relative to the stable rate scenario to no more than 10% for a 100 basis point (bp) interest rate shock, 15% for a 200 bp shock, 20% for a 300 bp shock, and 25% for a 400 bp shock.
While cash flows are normally predictable within limits, those limits are fairly broad and the Company manages its short-term cash position through the utilization of overnight loans to, and borrowings from, correspondent banks, including the Federal Reserve Bank and the Federal Home Loan Bank.
While cash flows are normally predictable within limits, those limits are fairly broad and the Company manages its short-term cash position through the utilization of overnight loans to, and borrowings from, correspondent banks, including the FRBSF and the Federal Home Loan Bank.
The increase in average earning assets in 2023 over 2022 was due primarily to purchases of investment securities, augmented with increases in the average balance of loans. The average balance of investment securities increased $213.3 million while average gross loan balances increased $57.7 million.
The increase in average earning assets in 2023 over 2022 was due primarily to purchases of investment securities, augmented with increases in the average balance of loans. The average balance of investment securities increased $212.3 million while average gross loan balances increased $57.7 million.
The 2023 decline in deposits came primarily from a $175.1 million decrease in transaction accounts, an $80.4 million decrease in savings and money market accounts offset by an increase in customer time deposit balances of $155.5 million as customers moved their funds to higher interest-bearing type accounts and a $15.0 million increase in wholesale brokered deposits.
The 2023 decline in deposits came primarily from a $175.1 million decrease in transaction accounts, an $80.4 million decrease in savings and money market accounts offset by an increase in 55 Table of Contents customer time deposit balances of $155.5 million as customers moved their funds to higher interest-bearing type accounts and a $15.0 million increase in wholesale brokered deposits.
While 59 Table of Contents those ratios are merely indicators and are not measures of actual liquidity, they are closely monitored, and we are committed to maintaining adequate liquidity resources to draw upon should unexpected needs arise. The Company, on occasion, experiences cash needs as the result of loan growth, deposit outflows, asset purchases or liability repayments.
While those ratios are merely indicators and are not measures of actual liquidity, they are closely monitored, and we are committed to maintaining adequate liquidity resources to draw upon should unexpected needs arise. The Company, on occasion, experiences cash needs as the result of loan growth, deposit outflows, asset purchases or liability repayments.
These guidelines were issued in response to the agencies’ concerns that rising CRE concentrations might expose institutions to unanticipated earnings and capital volatility in the event of adverse changes in the commercial real estate market. The guidelines identify certain concentration levels that, if exceeded, will expose the institution to additional supervisory analysis with regard to the institution’s CRE concentration risk.
These guidelines were issued in response to the agencies’ concerns that rising CRE concentrations might expose institutions to unanticipated earnings and capital volatility in the event of adverse changes in the commercial real estate market. The guidelines identify certain concentration levels that, if exceeded, will expose the institution to additional supervisory analysis regarding the institution’s CRE concentration risk.
Repurchase agreements represent “sweep accounts”, where commercial deposit balances above a specified threshold are transferred at the close of each business day into non-deposit accounts secured by investment securities.
Repurchase agreements represent “sweep accounts,” where commercial deposit balances above a specified threshold are transferred at the close of each business day into non-deposit accounts secured by investment securities.
The elevated net charge-offs were mostly due to two loan relationships; one dairy loan relationship with total charge-offs of $8.7 million and a single office building loan relationship that was sold at a $1.9 million discount due to an increased risk of default that would have likely led to a prolonged collection period. ● Noninterest income decreased by $0.4 million, or 1%, in 2023, and increased by $2.7 million or 10%, in 2022 over 2021.
The elevated net charge-offs were mostly due to two loan relationships; one dairy loan relationship with total charge-offs of $8.7 million and a single office building loan relationship that was sold at a $1.9 million discount due to an increased risk of default that would have likely led to a prolonged collection period. ● Noninterest income increased by $1.1 million, or 4%, in 2024 over 2023, and decreased by $0.4 million, or 1%, in 2023 over 2022.
Net interest income is also impacted by the acceleration of net deferred loan fees and costs for loans paid off early (including SBA PPP loans forgiven), reversal of interest for loans placed on non-accrual status, and the recovery of interest on loans that had been on non-accrual and were paid off, sold, or returned to accrual status. 37 Table of Contents The following table shows average balances for significant balance sheet categories and the amount of interest income or interest expense associated with each category for each of the past three years.
Net interest income is also impacted by the acceleration of net deferred loan fees and costs for loans paid off early, reversal of interest for loans placed on non-accrual status, and the recovery of interest on loans that had been on non-accrual and were paid off, sold, or returned to accrual status. 37 Table of Contents The following table shows average balances for significant balance sheet categories and the amount of interest income or interest expense associated with each category for each of the past three years.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion presents Management’s analysis of the Company’s financial condition as of December 31, 2023 and 2022, and the results of operations for each year in the three-year period ended December 31, 2023.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion presents Management’s analysis of the Company’s financial condition as of December 31, 2024 and 2023, and the results of operations for each year in the three-year period ended December 31, 2024.
Management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either January 1, 2022 or December 31, 2023. ● Management routinely monitors third party credit grades of the municipal issuers in the Company’s state and political subdivisions portfolio and as of both January 1, 2022 and December 31, 2023 noted that all municipal securities in an unrealized loss position were either investment grade rated or guaranteed.
Management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either December 31, 2024, or December 31, 2023. ● Management routinely monitors third party credit grades of the municipal issuers in the Company’s state and political subdivisions portfolio and as of both December 31, 2024, and December 31, 2023, noted that all municipal securities in an unrealized loss position were either investment grade rated or guaranteed.
Our net deferred tax asset is evaluated as of every reporting date pursuant to FASB guidance, and we have determined that no impairment exists. 55 Table of Contents Deposits Deposits represent another key balance sheet category impacting the Company’s net interest margin and profitability metrics.
Our net deferred tax asset is evaluated as of every reporting date pursuant to FASB guidance, and we have determined that no impairment exists. Deposits Deposits represent another key balance sheet category impacting the Company’s net interest margin and profitability metrics.
As of both January 1, 2022 and December 31, 2023 management concluded that no allowance for credit losses was warranted on any of the Company’s municipal securities and the unrealized loss position of each of the securities reflected fluctuations in market conditions, primarily interest rates, since the time of purchase. ● The Company has invested in corporate debt issuances of other financial institutions.
As of both December 31, 2024, and December 31, 2023, management concluded that no allowance for credit losses was warranted on any of the Company’s municipal securities and the unrealized loss position of each of the securities reflected fluctuations in market conditions, primarily interest rates, since the time of purchase. ● The Company has invested in corporate debt issuances of other financial institutions.
Federal Government and the management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either January 1, 2022 or December 31, 2023. ● Mortgage-backed securities issued by government sponsored entities (“GSEs”) carry an implicit guarantee by the U.S. Federal Government, as the GSEs can draw funds from the U.S.
Federal Government and the management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either December 31, 2024, or December 31, 2023. ● Mortgage-backed securities issued by government sponsored entities (“GSEs”) carry an implicit guarantee by the U.S. Federal Government, as the GSEs can draw funds from the U.S.
Following review of financial metrics as of both January 1, 2022 and December 31, 2023 management concluded that the unrealized loss position of these securities related exclusively to the fluctuation in market conditions, primarily interest rate spreads, from the date of purchase, and were not reflective of any credit concerns with the tranches comprising the Company’s investments.
Following review of financial metrics as of both December 31, 2024, and December 31, 2023 management concluded that the unrealized loss position of these securities related exclusively to the fluctuation in market conditions, primarily interest rate spreads, from the date of purchase, and were not reflective of any credit concerns with the tranches comprising the Company’s investments.
The Bank believes that it does not have a concentration in CRE loans at December 31, 2023, above the prudential regulatory guidelines note above.
The Bank believes that it does not have a concentration in CRE loans at December 31, 2024, above the prudential regulatory guidelines note above.
Actual results may differ from those estimates under divergent conditions. Critical accounting estimates are those that involve the most complex and subjective decisions and assessments and have the greatest potential impact on the Company’s stated results of operations.
Actual results may differ from those estimates under divergent conditions. 33 Table of Contents Critical accounting estimates are those that involve the most complex and subjective decisions and assessments and have the greatest potential impact on the Company’s stated results of operations.
Permanent differences include but are not limited to tax-exempt interest income, BOLI income or loss, and certain book expenses that are not allowed as tax deductions. The Company’s investments in state, county and municipal bonds provided $10.9 million of federal tax-exempt income in 2023, $8.8 million in 2022, and $6.2 million in 2021.
Permanent differences include but are not limited to tax-exempt interest income, BOLI income or loss, and certain book expenses that are not allowed as tax deductions. The Company’s investments in state, county and municipal bonds provided $6.7 million of federal tax-exempt income in 2024, $10.9 million in 2023, and $8.8 million in 2022.
The rate projections can be shocked (an immediate and parallel change in all base rates, up or down), ramped (an incremental increase or decrease in rates over a specified time period), economic (based on current trends and econometric models) or stable (unchanged from current actual levels).
The rate 59 Table of Contents projections can be shocked (an immediate and parallel change in all base rates, up or down), ramped (an incremental increase or decrease in rates over a specified time period), economic (based on current trends and econometric models) or stable (unchanged from current actual levels).
The Company’s books also reflect a net cash surrender value for general account BOLI of $41.7 million and $43.2 million, respectively for the years ending December 31, 2023 and 2022. General account BOLI produces income that is used to help offset expenses associated with executive salary continuation plans, director retirement plans and other employee benefits.
The Company’s books also reflect a net cash surrender value for general account BOLI of $41.3 million and $41.7 million, respectively for the years ending December 31, 2024 and 2023. General account BOLI produces income that is used to help offset expenses associated with executive salary continuation plans, director retirement plans and other employee benefits.
The Company had $9.9 million invested in separate account BOLI at December 31, 2023. This separate account BOLI closely matched participant-directed investment allocations that can include equity, bond, or real estate indices, and are thus subject to gains or losses which often contribute to significant fluctuations in income (and associated expense accruals).
The Company had $11.8 million invested in separate account BOLI at December 31, 2024. This separate account BOLI closely matched participant-directed investment allocations that can include equity, bond, or real estate indices, and are thus subject to gains or losses which often contribute to significant fluctuations in income (and associated expense accruals).
The remainder of other assets consists primarily of right-of-use assets tied to operating leases, accrued interest receivable, deferred taxes, investments in bank stocks, prepaid assets, investments in low-income housing credits, investments in SBA loan funds, and other miscellaneous assets. The total operating lease right-of-use asset recorded on the books is $30.5 million less accumulated amortization of $4.7 million.
The remainder of other assets consists primarily of right-of-use assets tied to operating leases, accrued interest receivable, deferred taxes, investments in bank stocks, prepaid assets, investments in low-income housing credits, investments in SBA loan funds, and other miscellaneous assets. The total operating lease right-of-use asset recorded on the books is $34.4 million less accumulated amortization of $6.6 million.
As of December 31, 2023, unpledged debt securities plus pledged securities in excess of current pledging requirements comprised $1.2 billion of the Company’s investment balances, as compared to $1.1 billion at December 31, 2022. Other sources of potential liquidity include but are not necessarily limited to any outstanding fed funds sold and vault cash.
As of December 31, 2024, unpledged debt securities plus pledged securities in excess of current pledging requirements comprised $794.3 million of the Company’s investment balances, as compared to $1.2 billion at December 31, 2023. Other sources of potential liquidity include but are not necessarily limited to any outstanding fed funds sold and vault cash.
Investments The Company’s investments may at any given time consist of debt securities and marketable equity securities (together, the “investment portfolio”), investments in the time deposits of other banks, surplus interest-earning balances in our Federal Reserve Bank (“FRB”) account, and overnight fed funds sold.
Investments The Company’s investments may at any given time consist of debt securities and marketable equity securities (together, the “investment portfolio”), investments in the time deposits of other banks, surplus interest-earning balances in our Federal Reserve Bank of San Francisco (“FRBSF”) account, and overnight fed funds sold.
Interest credit rates on general account BOLI do not change frequently so the income has typically been fairly consistent with $0.9 million of general account BOLI income recorded for the year ending December 31, 2023 and $1.0 million record for the two ending December 31, 2022 and 2021.
Interest credit rates on general account BOLI do not change frequently so the income has typically been fairly consistent with $1.0 million of general account BOLI income recorded for the year ending December 31, 2024, $0.9 million recorded for the year ending December 31, 2023, and $1.0 million recorded for the year ending December 31, 2022.
Surplus FRB balances and fed funds sold to correspondent banks typically represent the temporary investment of excess liquidity.
Surplus FRBSF balances and fed funds sold to correspondent banks typically represent the temporary investment of excess liquidity.
Our market risk 60 Table of Contents exposure is primarily that of interest rate risk, and we have established policies and procedures to monitor and limit our earnings and balance sheet exposure to changes in interest rates.
Our market risk exposure is primarily that of interest rate risk, and we have established policies and procedures to monitor and limit our earnings and balance sheet exposure to changes in interest rates.
(3) The efficiency ratio is a non-GAAP measure and is a calculation of 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. 34 Table of Contents Overview of the Results of Operations and Financial Condition Results of Operations Summary The Company recognized net income of $34.8 million in 2023 relative to $33.7 million in 2022 and $43.0 million in 2021.
(3) The efficiency ratio is a non-GAAP measure and is a calculation of 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. 34 Table of Contents Overview of the Results of Operations and Financial Condition Results of Operations Summary The Company recognized net income of $40.6 million in 2024 relative to $34.8 million in 2023 and $33.7 million in 2022.
This ratio was 246% at December 31, 2022 and declined to 243% at December 31, 2023. At December 31, 2023, the Bank’s total construction, land development and other land loans represented 1% of Tier 1 risk-based capital plus allowance for credit losses on loans.
This ratio was 243% at December 31, 2023, and declined to 236% at December 31, 2024. At December 31, 2024, the Bank’s total construction, land development and other land loans represented 1% of Tier 1 risk-based capital plus allowance for credit losses on loans.
The average balance of non-earning cash and due from banks, which can be used to determine trends, was $80.8 million for 2023, $79.3 million for 2022 and $75.7 million for 2021. Premises and Equipment Premises and equipment are stated on our books at cost, less accumulated depreciation, and amortization.
The average balance of non-earning cash and due from banks, which can be used to determine trends, was $49.8 million for 2024, $80.8 million for 2023 and $79.3 million for 2022. Premises and Equipment Premises and equipment are stated on our books at cost, less accumulated depreciation, and amortization.
Net loan fees (costs) and loan acquisition FMV amortization were $(0.3) million, $0.9 million, and $4.2 million for the years ended December 31, 2023, 2022, and 2021 respectively. (4) Non-accrual loans are slotted by loan type and have been included in total loans for purposes of total interest earning assets.
Net loan (costs) fees and loan acquisition FMV amortization were $(1.4) million, $(1.0) million, and $0.9 million for the years ended December 31, 2024, 2023, and 2022, respectively. (4) Non-accrual loans are slotted by loan type and have been included in total loans for purposes of total interest earning assets.
Our tax credits consist primarily of those generated by investments in low-income housing tax credit funds. We had a total of $14.4 million invested in low-income housing tax credit funds as of December 31, 2023 and $10.1 million as of December 31, 2022, which are included in other assets rather than in our investment portfolio.
Our tax credits consist primarily of those generated by investments in low-income housing tax credit funds. We had a total of $25.4 million invested in low-income housing tax credit funds as of December 31, 2024, and $14.4 million as of December 31, 2023, which are included in other assets rather than in our investment portfolio.
Financial Condition Summary The Company’s assets totaled $3.7 billion at December 31, 2023 as compared to $3.6 billion at December 31, 2022. Total liabilities were $3.4 billion at December 31, 2023 as compared to $3.3 billion at the end of 2022, and shareholders’ equity totaled $338.1 million at December 31, 2023 compared to $303.6 million at December 31, 2022.
Financial Condition Summary The Company’s assets totaled $3.6 billion at December 31, 2024, as compared to $3.7 billion at December 31, 2023. Total liabilities were $3.3 billion at December 31, 2024, as compared to $3.4 billion at the end of 2023, and shareholders’ equity totaled $357.3 million at December 31, 2024, as compared to $338.1 million at December 31, 2023.
To meet short-term needs, we can borrow overnight funds from other financial institutions, draw advances via Federal Home Loan Bank lines of credit, or solicit brokered deposits if customer deposits are not immediately obtainable from local sources. Availability on lines of credit from correspondent banks and the FHLB totaled $961.5 million at December 31, 2023.
To meet short-term needs, we can borrow overnight funds from other financial institutions, draw advances via Federal Home Loan Bank lines of credit, or solicit brokered deposits if customer deposits are not immediately obtainable from local sources. Availability on lines of credit from correspondent banks and the FHLB totaled $1.1 billion at December 31, 2024.
At December 31, 2023, nonaccrual loans totaled $8.0 million compared to $19.6 million at December 31, 2022. All of 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.
At December 31, 2024, nonaccrual loans totaled $19.7 million compared to $8.0 million at December 31, 2023. All of the Company’s nonperforming 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.
Loan processing costs, which include expenses for property appraisals and inspections, loan collections, demand and foreclosure activities, loan servicing, loan sales, and other miscellaneous lending costs, increased by $0.1 million or 9% in 2023 as compared to 2022 and increased by $0.1 million or 10% in 2022 as compared to 2021.
Loan processing costs, which include expenses for property appraisals and inspections, loan collections, demand and foreclosure activities, loan servicing, loan sales, and other miscellaneous lending costs, decreased by $0.1 million or 11%, in 2024 as compared to 2023, and increased by $0.1 million or 9%, in 2023 as compared to 2022.
Moreover, in addition to life insurance proceeds of $0.9 million in 2023 and $0.4 million in both 2022 and 2021, net increases in the cash surrender value of bank-owned life insurance added $1.8 million to tax-exempt income in 2023, and $2.6 million to tax-exempt income in 2021, but reduced tax-exempt income by $1.0 million in 2022.
Moreover, in addition to life insurance proceeds of $0.2 million in 2024, $0.9 million in 2023 and $0.4 million in 2022, net increases in the cash surrender value of bank-owned life insurance added $2.7 million to tax-exempt income in 2024, and $1.8 million to tax-exempt income in 2023, but reduced tax-exempt income by $1.0 million in 2022.
These branch buildings were subsequently leased back to the Company and are reflected in footnote 6 of the Financial Statements. Other Assets Goodwill totaled $27.4 million at December 31, 2023, unchanged for the year and other intangible assets were $1.4 million, a decrease of $0.9 million, or 39%, as a result of amortization expense recorded on core deposit intangibles.
These branch buildings were subsequently leased back to the Company and are reflected in footnote 6 of the Financial Statements. Other Assets Goodwill totaled $27.4 million at December 31, 2024, unchanged for the year and other intangible assets were $0.6 million, a decrease of $0.8 million, or 57%, as a result of amortization expense recorded on core deposit intangibles.
The number of full-time equivalent staff employed by the Company totaled 485 at the end of 2023, as compared to 491 at December 31, 2022 and 480 at December 31, 2021. The decrease for the year ending 2023 in FTE was due to the reduction in force as several management positions were eliminated due to operational efficiencies.
The number of full-time equivalent staff employed by the Company totaled 485 at the end of 2024, as compared to 489 at December 31, 2023, and 491 at December 31, 2022. The decrease for the years ending 2024, and 2023 in FTE was due to the reduction in force as several management positions were eliminated due to operational efficiencies.
The allocation presented should not be viewed as an indication that charges to the allowance will be incurred in these amounts or proportions, or that the portion of the allowance allocated to a particular loan category represents the total amount available for charge-offs that may occur within that category. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allocation of Allowance for Credit Losses on Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Amount %Total (1) Loans Amount %Total (1) Loans Amount %Total (1) Loans Amount %Total (1) Loans Amount %Total (1) Loans Real Estate ​ $ 21,505 ​ 86.71% ​ $ 21,274 ​ 91.44% ​ $ 11,586 ​ 87.47% ​ $ 11,766 ​ 76.98% ​ $ 5,635 ​ 79.46% Other commercial (2) ​ ​ 1,684 ​ 13.09% ​ ​ 1,468 ​ 8.35% ​ ​ 2,023 ​ 12.30% ​ ​ 5,203 ​ 22.79% ​ ​ 2,878 ​ 20.09% Consumer loans ​ ​ 311 ​ 0.20% ​ ​ 314 ​ 0.21% ​ ​ 510 ​ 0.23% ​ ​ 720 ​ 0.23% ​ ​ 1,278 ​ 0.45% Unallocated ​ ​ — ​ — ​ ​ 4 ​ — ​ ​ 137 ​ — ​ ​ 49 ​ — ​ ​ 132 ​ — Total ​ $ 23,500 ​ 100.00% ​ $ 23,060 ​ 100.00% ​ $ 14,256 ​ 100.00% ​ $ 17,738 ​ 100.00% ​ $ 9,923 ​ 100.00% (1) Represents percentage of loans in category to total loans (2) Includes mortgage warehouse lines The Company’s allowance for credit losses on loans at December 31, 2023 represents Management’s best estimate of expected losses over the remaining contractual life of loans in the loan portfolio as of that date, but no assurance can be given that the Company will not experience substantial losses relative to the size of the allowance.
The allocation presented should not be viewed as an indication that charges to the allowance will be incurred in these amounts or proportions, or that the portion of the allowance allocated to a particular loan category represents the total amount available for charge-offs that may occur within that category. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allocation of Allowance for Credit Losses on Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ Amount Percent of Loans in Category Amount Percent of Loans in Category Amount Percent of Loans in Category Amount Percent of Loans in Category Amount Percent of Loans in Category Real Estate ​ $ 19,231 ​ 78.22% ​ $ 21,505 ​ 86.71% ​ $ 21,274 ​ 91.44% ​ $ 11,586 ​ 87.47% ​ $ 11,766 ​ 76.98% Other commercial (1) ​ ​ 5,158 ​ 21.64% ​ ​ 1,684 ​ 13.09% ​ ​ 1,468 ​ 8.35% ​ ​ 2,023 ​ 12.30% ​ ​ 5,203 ​ 22.79% Consumer loans ​ ​ 372 ​ 0.14% ​ ​ 311 ​ 0.20% ​ ​ 314 ​ 0.21% ​ ​ 510 ​ 0.23% ​ ​ 720 ​ 0.23% Unallocated ​ ​ 69 ​ — ​ ​ — ​ — ​ ​ 4 ​ — ​ ​ 137 ​ — ​ ​ 49 ​ — Total ​ $ 24,830 ​ 100.00% ​ $ 23,500 ​ 100.00% ​ $ 23,060 ​ 100.00% ​ $ 14,256 ​ 100.00% ​ $ 17,738 ​ 100.00% (1) Includes mortgage warehouse lines The Company’s allowance for credit losses on loans at December 31, 2024 represents Management’s best estimate of expected losses over the remaining contractual life of loans in the loan portfolio as of that date, but no assurance can be given that the Company will not experience substantial losses relative to the size of the allowance.
The following is a summary of the major factors that impacted the Company’s results of operations for the years presented in the consolidated financial statements. ● Net interest income improved by 3% in 2023 over 2022, and by 1% in 2022 over 2021, due to both growth and mix of earning assets partially offset by an increase in the cost of interest-bearing liabilities.
The following is a summary of the major factors that impacted the Company’s results of operations for the years presented in the consolidated financial statements. ● Net interest income improved by 7% in 2024 over 2023, and by 3% in 2023 over 2022, due to a change in the mix of earning assets partially offset by an increase in the cost of interest-bearing liabilities.
The Company’s goodwill and other intangible assets are evaluated annually for potential impairment following FASB guidelines and based on those analytics Management has determined that no impairment exists as of December 31, 2023.
The 54 Table of Contents Company’s goodwill and other intangible assets are evaluated annually for potential impairment following FASB guidelines and based on those analytics Management has determined that no impairment exists as of December 31, 2024.
The ratio of the allowance to nonperforming loans was 294% at December 31, 2023, relative to 118% at December 31, 2022, and 315% at December 31, 2021. As described above, a separate allowance of $0.5 million for potential losses inherent in unused commitments is included in other liabilities at December 31, 2023.
The ratio of the allowance to nonperforming loans was 126% at December 31, 2024, relative to 294% at December 31, 2023, and 118% at December 31, 2022. As described above, a separate allowance of $0.7 million for potential losses inherent in unused commitments is included in other liabilities at December 31, 2024.
As demonstrated by the expansion of the lending teams both in 2023 and 2022, management remains focused on organic loan growth which totaled $185.3 million and $292.2 million, respectively during the years ending 2023 and 2022.
As demonstrated by the expansion of the lending teams both in 2023 and 2022, management remains focused on organic loan growth which totaled $216.5 million and $185.3 million, respectively during the years ending 2024 and 2023.
Securities that were pledged in excess of actual pledging needs and were thus available for liquidity purposes, if needed, totaled $383.0 million at December 31, 2023 and $43.1 million at December 31, 2022. 53 Table of Contents The table below groups the Company’s investment securities by their remaining time to maturity as of December 31, 2023, and provides weighted average yields for each segment.
Securities that were pledged in excess of actual pledging needs and were thus available for liquidity purposes, if needed, totaled $242.2 million at December 31, 2024, and $383.0 million at December 31, 2023. The table below groups the Company’s investment securities by their remaining time to maturity as of December 31, 2024, and provides weighted average yields for each segment.
The following table presents comparative data for the Company’s NPAs as of the dates noted: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2023 2022 ​ 2021 2020 2019 Real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ $ 414 ​ $ 688 ​ ​ $ 1,915 ​ $ 3,596 ​ $ 1,221 Commercial real estate ​ ​ 7,457 ​ ​ — ​ ​ ​ 1,234 ​ ​ 2,260 ​ ​ 3,545 Other construction/land ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ 31 Farmland ​ ​ — ​ ​ 15,812 ​ ​ ​ — ​ ​ 442 ​ ​ 258 TOTAL REAL ESTATE ​ ​ 7,871 ​ ​ 16,500 ​ ​ ​ 3,149 ​ ​ 6,298 ​ ​ 5,055 Other commercial ​ ​ 114 ​ ​ 3,072 ​ ​ ​ 1,351 ​ ​ 1,276 ​ ​ 651 Consumer loans ​ ​ — ​ ​ 7 ​ ​ ​ 22 ​ ​ 24 ​ ​ 31 TOTAL NONPERFORMING LOANS (1) ​ $ 7,985 ​ $ 19,579 ​ ​ $ 4,522 ​ $ 7,598 ​ $ 5,737 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreclosed assets ​ ​ — ​ ​ — ​ ​ ​ 93 ​ ​ 971 ​ ​ 800 Total nonperforming assets ​ $ 7,985 ​ $ 19,579 ​ ​ $ 4,615 ​ $ 8,569 ​ $ 6,537 Loans deferred under CARES Act (1) ​ $ — ​ $ — ​ ​ $ 10,411 ​ $ 29,500 ​ $ — Nonperforming loans as a % of total gross loans ​ ​ 0.38% ​ ​ 0.95% ​ ​ ​ 0.23% ​ ​ 0.31% ​ ​ 0.32% Nonperforming assets as a % of total gross loans and foreclosed assets ​ ​ 0.38% ​ ​ 0.95% ​ ​ ​ 0.23% ​ ​ 0.35% ​ ​ 0.37% (1) Loans deferred under the CARES act are not included in nonperforming loans above, nor are they included in the numerators used to calculate the ratios disclosed in the table.
The following table presents comparative data for the Company’s NPAs as of the dates noted: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2024 2023 2022 2021 2020 Real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ $ 23 ​ $ 414 ​ $ 688 ​ $ 1,915 ​ $ 3,596 Commercial real estate ​ ​ — ​ ​ 7,457 ​ ​ — ​ ​ 1,234 ​ ​ 2,260 Other construction/land ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Farmland ​ ​ 5,105 ​ ​ — ​ ​ 15,812 ​ ​ — ​ ​ 442 Total real estate ​ ​ 5,128 ​ ​ 7,871 ​ ​ 16,500 ​ ​ 3,149 ​ ​ 6,298 Other commercial ​ ​ 14,540 ​ ​ 114 ​ ​ 3,072 ​ ​ 1,351 ​ ​ 1,276 Consumer loans ​ ​ — ​ ​ — ​ ​ 7 ​ ​ 22 ​ ​ 24 Total nonperforming loans (1) ​ $ 19,668 ​ $ 7,985 ​ $ 19,579 ​ $ 4,522 ​ $ 7,598 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreclosed assets ​ ​ — ​ ​ — ​ ​ — ​ ​ 93 ​ ​ 971 Total nonperforming assets ​ $ 19,668 ​ $ 7,985 ​ $ 19,579 ​ $ 4,615 ​ $ 8,569 Loans deferred under CARES Act (1) ​ $ — ​ $ — ​ $ — ​ $ 10,411 ​ $ 29,500 Nonperforming loans as a % of total gross loans ​ ​ 0.84% ​ ​ 0.38% ​ ​ 0.95% ​ ​ 0.23% ​ ​ 0.31% Nonperforming assets as a % of total gross loans and foreclosed assets ​ ​ 0.84% ​ ​ 0.38% ​ ​ 0.95% ​ ​ 0.23% ​ ​ 0.35% (1) Loans deferred under the CARES act are not included in nonperforming loans above, nor are they included in the numerators used to calculate the ratios disclosed in the table.
Rates paid on non-maturity deposits increased 15 basis points in 2023 over the same period in 2022 as competition for deposits has increased with customers becoming more rate sensitive. Rates paid on non-maturity deposits were approximately the same in 2022 and 2021.
Rates paid on non-maturity deposits increased 41 basis points in 2024 over the same period in 2023, and increased 15 points in 2023 over the same period in 2022 as competition for deposits has increased with customers becoming more rate sensitive.
However, the separate-account BOLI used to offset deferred compensation fluctuates significantly from year-to-year as many of our deferred compensation participants are invested in equity-index style funds. In the comparative years ending 2023 over 2022, BOLI income increased $2.8 million; however, in 2022 over 2021, BOLI income decreased $3.6 million.
However, the separate-account BOLI used to offset deferred compensation fluctuates significantly from year-to-year as many of our deferred compensation participants are invested in equity-index style funds. In the comparative years ending 2024 over 2023, BOLI income increased $0.9 million; however, in 2023 over 2022, BOLI income increased $2.8 million.
The Company’s allowance 49 Table of Contents for credit losses on loans was $23.5 million, or 1.12% of gross loans at December 31, 2023, relative to $23.1 million, or 1.12% of gross loans at December 31, 2022.
The Company’s allowance 49 Table of Contents for credit losses on loans was $24.8 million, or 1.07% of gross loans at December 31, 2024, relative to $23.5 million, or 1.12% of gross loans at December 31, 2023.
Net income per diluted share was $2.36 in 2023, as compared to $2.24 in 2022 and $2.80 for 2021. The Company’s return on average assets and return on average equity were 0.94% and 11.30%, respectively, in 2023, as compared to 0.97% and 10.66%, respectively, in 2022 and 1.29% and 12.05%, respectively, for 2021.
Net income per diluted share was $2.82 in 2024, as compared to $2.36 in 2023 and $2.24 for 2022. The Company’s return on average assets and return on average equity were 1.12% and 11.62%, respectively, in 2024, as compared to 0.94% and 11.30%, respectively, in 2023 and 0.97% and 10.66%, respectively, for 2022.
The Company was also eligible to borrow approximately $392.0 million at the Federal Reserve Discount Window based on pledged assets at December 31, 2023. Furthermore, funds can be obtained by drawing down excess cash that might be available in the Company’s correspondent bank deposit accounts, or by liquidating unpledged investments or other readily saleable assets.
The Company was also eligible to borrow approximately $298.3 million at the Federal Reserve Discount Window based on pledged assets at December 31, 2024. Furthermore, funds can be obtained by drawing down excess cash that might be available in the Company’s correspondent bank deposit accounts, or by liquidating unpledged 58 Table of Contents investments or other readily saleable assets.
Its primary source of funds is dividends from the Bank since the holding company does not conduct regular banking operations. At December 31, 2023, the holding company maintained a cash balance of $10.4 million.
Its primary source of funds is dividends from the Bank since the holding company does not conduct regular banking operations. At December 31, 2024, the holding company maintained a cash balance of $13.1 million.
Management is of the opinion that a relatively high level of core customer deposits is one of the Company’s key strengths, and we continue to strive for core deposit retention and growth.
Management is of the opinion that a relatively high level of core customer deposits is one of the Company’s key strengths, and we continue to strive for core deposit retention and growth, with a focus on small business and consumer deposits.
The Company’s net interest margin, which is tax-equivalent net interest income as a percentage of average interest-earning assets, declined by 10 basis points to 3.37% in 2023 and declined by nine basis points to 3.47% in 2022 as compared to 2021.
The Company’s net interest margin, which is tax-equivalent net interest income as a percentage of average interest-earning assets, increased by 29 basis points to 3.66% in 2024 and declined by 10 basis points to 3.37% in 2023 as compared to 2022.
The increase in noninterest expense in 2023 was due mostly to a $3.9 million increase in salary and benefits expense for new lending teams and management staff along with reduction in force severance payments as discussed in the quarterly comparison, an unfavorable variance in director’s deferred compensation expense which is linked to the favorable changes in bank-owned life insurance income, mentioned above in the discussion of noninterest income, a $0.8 million increase in FDIC assessment costs and $0.5 million increase in fraud losses primarily due to our debit card conversion from Mastercard to VISA earlier in the year.
The increase in noninterest expense in 2023 was due mostly to a $3.9 million increase in salary and benefits expense for new lending teams and management staff along with reduction in force severance payments as discussed in the quarterly comparison, an unfavorable variance in director’s deferred compensation expense which is linked to the favorable changes in bank-owned life insurance income, mentioned above in the discussion of noninterest income, a $0.8 million increase in FDIC assessment costs and $0.5 million increase in fraud losses primarily due to our debit card conversion from Mastercard to VISA earlier in the year. ● The Company recorded income tax provisions of $13.3 million, $11.6 million, and $11.3 million for the years ending 2024, 2023 and 2022 respectively, or approximately 25% of pre-tax income each year.
The Company’s balance of noninterest earning cash and balances due from correspondent banks totaled $73.7 million, or 2% of total assets at December 31, 2023, and $72.8 million, or 2% of total assets at December 31, 2022.
The Company’s balance of noninterest earning cash and balances due from correspondent banks totaled $79.6 million, or 2% of total assets at December 31, 2024, and $73.7 million, or 2% of total assets at December 31, 2023.
Off-balance sheet obligations pose potential credit risk to the Company, and a $0.5 million reserve for unfunded commitments is reflected as a liability in our consolidated balance sheet at December 31, 2023, down $0.3 million from the previous year. The unused commitments related to mortgage warehouse are unconditionally cancellable at any time.
Off-balance sheet obligations pose potential credit risk to the Company, and a $0.7 million reserve for unfunded commitments is reflected as a liability in our consolidated balance sheet at December 31, 2024, an increase of $0.2 million from the previous year. The unused commitments related to mortgage warehouse are unconditionally cancellable at any time.
The 2022 provision for credit losses on loans loss benefit arose from the impact of $11.5 million in net charge-offs during the year ending 2022.
The 2022 credit loss expense on loans arose from the impact of $11.5 million in net charge-offs during the year ending 2022.
Although not reflected in the loan totals below and not currently comprising a material part of our lending activities, the Company also occasionally originates and sells, or participates out portions of, loans to non-affiliated investors. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loan Distribution ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2023 2022 2021 2020 2019 Real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ ​ 413,262 ​ ​ 438,731 ​ ​ 317,151 ​ ​ 178,752 ​ ​ 250,833 Commercial real estate ​ ​ 1,325,493 ​ ​ 1,308,328 ​ ​ 1,268,245 ​ ​ 1,465,126 ​ ​ 811,298 Other construction/land ​ ​ 6,267 ​ ​ 18,358 ​ ​ 46,556 ​ ​ 119,933 ​ ​ 196,725 Farmland ​ ​ 67,510 ​ ​ 113,594 ​ ​ 106,765 ​ ​ 129,968 ​ ​ 144,063 Total real estate ​ ​ 1,812,532 ​ ​ 1,879,011 ​ ​ 1,738,717 ​ ​ 1,893,779 ​ ​ 1,402,919 Other commercial ​ ​ 157,762 ​ ​ 104,135 ​ ​ 143,311 ​ ​ 252,785 ​ ​ 165,461 Mortgage warehouse lines ​ ​ 116,000 ​ ​ 65,439 ​ ​ 101,184 ​ ​ 307,679 ​ ​ 189,103 Consumer loans ​ ​ 4,090 ​ ​ 4,232 ​ ​ 4,649 ​ ​ 5,721 ​ ​ 7,978 Total loans ​ ​ 2,090,384 ​ ​ 2,052,817 ​ ​ 1,987,861 ​ ​ 2,459,964 ​ ​ 1,765,461 Allowance for credit losses on loans ​ ​ (23,500) ​ ​ (23,060) ​ ​ (14,256) ​ ​ (17,738) ​ ​ (9,923) Total loans, net ​ $ 2,066,884 ​ $ 2,029,757 ​ $ 1,973,605 ​ $ 2,442,226 ​ $ 1,755,538 Percentage of Total loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ ​ 19.77% ​ ​ 21.37% ​ ​ 15.95% ​ ​ 7.27% ​ ​ 14.21% Commercial real estate ​ ​ 63.41% ​ ​ 63.73% ​ ​ 63.81% ​ ​ 59.55% ​ ​ 45.95% Other construction/land ​ ​ 0.30% ​ ​ 0.89% ​ ​ 2.34% ​ ​ 4.88% ​ ​ 11.14% Farmland ​ ​ 3.23% ​ ​ 5.53% ​ ​ 5.37% ​ ​ 5.28% ​ ​ 8.16% Total real estate ​ ​ 86.71% ​ ​ 91.52% ​ ​ 87.47% ​ ​ 76.98% ​ ​ 79.46% Other commercial ​ ​ 7.54% ​ ​ 5.08% ​ ​ 7.21% ​ ​ 10.28% ​ ​ 9.37% Mortgage warehouse lines ​ ​ 5.55% ​ ​ 3.19% ​ ​ 5.09% ​ ​ 12.51% ​ ​ 10.72% Consumer loans ​ ​ 0.20% ​ ​ 0.21% ​ ​ 0.23% ​ ​ 0.23% ​ ​ 0.45% ​ ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ The Company’s loan balances increased $37.1 million or 2% in 2023.
Although not reflected in the loan totals below and not currently comprising a material part of our lending activities, the Company also occasionally originates and sells, or participates out portions of, loans to non-affiliated investors. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loan Distribution ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2024 2023 2022 2021 2020 Real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ $ 382,507 ​ $ 413,262 ​ $ 438,731 ​ $ 317,151 ​ $ 178,752 Commercial real estate ​ ​ 1,357,833 ​ ​ 1,325,493 ​ ​ 1,308,328 ​ ​ 1,268,245 ​ ​ 1,465,126 Other construction/land ​ ​ 5,472 ​ ​ 6,267 ​ ​ 18,358 ​ ​ 46,556 ​ ​ 119,933 Farmland ​ ​ 77,547 ​ ​ 67,510 ​ ​ 113,594 ​ ​ 106,765 ​ ​ 129,968 Total real estate ​ ​ 1,823,359 ​ ​ 1,812,532 ​ ​ 1,879,011 ​ ​ 1,738,717 ​ ​ 1,893,779 Other commercial ​ ​ 178,331 ​ ​ 157,762 ​ ​ 104,135 ​ ​ 143,311 ​ ​ 252,785 Mortgage warehouse lines ​ ​ 326,400 ​ ​ 116,000 ​ ​ 65,439 ​ ​ 101,184 ​ ​ 307,679 Consumer loans ​ ​ 3,344 ​ ​ 4,090 ​ ​ 4,232 ​ ​ 4,649 ​ ​ 5,721 Total loans ​ ​ 2,331,434 ​ ​ 2,090,384 ​ ​ 2,052,817 ​ ​ 1,987,861 ​ ​ 2,459,964 Allowance for credit losses on loans ​ ​ (24,830) ​ ​ (23,500) ​ ​ (23,060) ​ ​ (14,256) ​ ​ (17,738) Total loans, net ​ $ 2,306,604 ​ $ 2,066,884 ​ $ 2,029,757 ​ $ 1,973,605 ​ $ 2,442,226 Percentage of Total loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ ​ 16.41% ​ ​ 19.77% ​ ​ 21.37% ​ ​ 15.95% ​ ​ 7.27% Commercial real estate ​ ​ 58.25% ​ ​ 63.41% ​ ​ 63.73% ​ ​ 63.81% ​ ​ 59.55% Other construction/land ​ ​ 0.23% ​ ​ 0.30% ​ ​ 0.89% ​ ​ 2.34% ​ ​ 4.88% Farmland ​ ​ 3.33% ​ ​ 3.23% ​ ​ 5.53% ​ ​ 5.37% ​ ​ 5.28% Total real estate ​ ​ 78.22% ​ ​ 86.71% ​ ​ 91.52% ​ ​ 87.47% ​ ​ 76.98% Other commercial ​ ​ 7.64% ​ ​ 7.54% ​ ​ 5.08% ​ ​ 7.21% ​ ​ 10.28% Mortgage warehouse lines ​ ​ 14.00% ​ ​ 5.55% ​ ​ 3.19% ​ ​ 5.09% ​ ​ 12.51% Consumer loans ​ ​ 0.14% ​ ​ 0.20% ​ ​ 0.21% ​ ​ 0.23% ​ ​ 0.23% ​ ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ The Company’s loan balances increased $239.7 million, or 12% in 2024.
Government Agencies are supported by the full faith and credit-worthiness of the U.S.
Government Agencies are supported by the full faith and creditworthiness of the U.S.
In addition, the Company determined there was a $0.02 million credit loss expected on the held-to-maturity debt securities portfolio which was recorded as an allowance for credit losses on held-to-maturity securities.
In addition, the Company determined there was a $0.02 million credit loss expected on the held-to-maturity debt securities portfolio at both December 31, 2024, and December 31, 2023, which was recorded as an allowance for credit losses on held-to-maturity securities.
Information concerning average balances and rates paid by deposit type for the past three fiscal years is contained in the Distribution, Rate, and Yield table located in the previous section under “Results of Operations–Net Interest Income and Net Interest Margin.” A distribution of the Company’s deposits showing the period-end balance and percentage of total deposits by type is presented as of the dates noted in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposit Distribution ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 2020 2019 Interest bearing demand deposits ​ $ 128,784 ​ $ 150,875 ​ $ 129,783 ​ $ 109,938 ​ $ 91,212 Noninterest bearing demand deposits ​ ​ 1,020,772 ​ ​ 1,088,199 ​ ​ 1,084,544 ​ ​ 943,664 ​ ​ 690,950 NOW ​ ​ 405,163 ​ ​ 490,707 ​ ​ 614,770 ​ ​ 558,407 ​ ​ 458,600 Savings ​ ​ 370,806 ​ ​ 456,980 ​ ​ 450,785 ​ ​ 368,420 ​ ​ 294,317 Money market ​ ​ 145,591 ​ ​ 139,795 ​ ​ 147,793 ​ ​ 131,232 ​ ​ 118,933 Customer time deposits ​ ​ 555,107 ​ ​ 399,608 ​ ​ 293,897 ​ ​ 412,945 ​ ​ 464,362 Brokered deposits ​ ​ 135,000 ​ ​ 120,000 ​ ​ 60,000 ​ ​ 100,000 ​ ​ 50,000 Total deposits ​ $ 2,761,223 ​ $ 2,846,164 ​ $ 2,781,572 ​ $ 2,624,606 ​ $ 2,168,374 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of Total Deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing demand deposits ​ ​ 4.66% ​ ​ 5.30% ​ ​ 4.67% ​ ​ 4.19% ​ ​ 4.21% Noninterest bearing demand deposits ​ ​ 36.98% ​ ​ 38.23% ​ ​ 38.99% ​ ​ 35.95% ​ ​ 31.86% NOW ​ ​ 14.67% ​ ​ 17.24% ​ ​ 22.10% ​ ​ 21.28% ​ ​ 21.15% Savings ​ ​ 13.43% ​ ​ 16.06% ​ ​ 16.21% ​ ​ 14.04% ​ ​ 13.57% Money market ​ ​ 5.27% ​ ​ 4.91% ​ ​ 5.31% ​ ​ 5.00% ​ ​ 5.48% Customer time deposits ​ ​ 20.10% ​ ​ 14.04% ​ ​ 10.57% ​ ​ 15.73% ​ ​ 21.42% Brokered deposits ​ ​ 4.89% ​ ​ 4.22% ​ ​ 2.16% ​ ​ 3.81% ​ ​ 2.31% Total ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ Deposit balances reflected a decline of $84.9 million, or 3%, in 2023 and $64.6 million, or 2%, in 2022.
Information concerning average balances and rates paid by deposit type for the past three fiscal years is contained in the Distribution, Rate, and Yield table located in the previous section under “Results of Operations–Net Interest Income and Net Interest Margin.” A distribution of the Company’s deposits showing the period-end balance and percentage of total deposits by type is presented as of the dates noted in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposit Distribution ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 2021 2020 Interest bearing demand deposits ​ $ 206,766 ​ $ 128,784 ​ $ 150,875 ​ $ 129,783 ​ $ 109,938 Noninterest bearing demand deposits ​ ​ 1,007,208 ​ ​ 1,020,772 ​ ​ 1,088,199 ​ ​ 1,084,544 ​ ​ 943,664 NOW ​ ​ 380,987 ​ ​ 405,163 ​ ​ 490,707 ​ ​ 614,770 ​ ​ 558,407 Savings ​ ​ 347,387 ​ ​ 370,806 ​ ​ 456,980 ​ ​ 450,785 ​ ​ 368,420 Money market ​ ​ 140,793 ​ ​ 145,591 ​ ​ 139,795 ​ ​ 147,793 ​ ​ 131,232 Customer time deposits ​ ​ 533,577 ​ ​ 555,107 ​ ​ 399,608 ​ ​ 293,897 ​ ​ 412,945 Brokered deposits ​ ​ 274,950 ​ ​ 135,000 ​ ​ 120,000 ​ ​ 60,000 ​ ​ 100,000 Total deposits ​ $ 2,891,668 ​ $ 2,761,223 ​ $ 2,846,164 ​ $ 2,781,572 ​ $ 2,624,606 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of Total Deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing demand deposits ​ ​ 7.15% ​ ​ 4.66% ​ ​ 5.30% ​ ​ 4.67% ​ ​ 4.19% Noninterest bearing demand deposits ​ ​ 34.83% ​ ​ 36.98% ​ ​ 38.23% ​ ​ 38.99% ​ ​ 35.95% NOW ​ ​ 13.18% ​ ​ 14.67% ​ ​ 17.24% ​ ​ 22.10% ​ ​ 21.28% Savings ​ ​ 12.01% ​ ​ 13.43% ​ ​ 16.06% ​ ​ 16.21% ​ ​ 14.04% Money market ​ ​ 4.87% ​ ​ 5.27% ​ ​ 4.91% ​ ​ 5.31% ​ ​ 5.00% Customer time deposits ​ ​ 18.45% ​ ​ 20.10% ​ ​ 14.04% ​ ​ 10.57% ​ ​ 15.73% Brokered deposits ​ ​ 9.51% ​ ​ 4.89% ​ ​ 4.22% ​ ​ 2.16% ​ ​ 3.81% Total ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ ​ 100.00% ​ Deposit balances reflected an increase of $130.4 million, or 5%, in 2024 and a decline of $84.9 million, or 3%, in 2023.
Specifically identifiable and quantifiable credit losses on loans are immediately charged off 40 Table of Contents against the allowance. The Company experienced net loan charge offs of $3.6 million in 2023, $11.5 million in 2022 and net loan recoveries of $0.2 million in 2021.
Specifically identifiable and quantifiable credit losses on loans are immediately charged off against the allowance. The Company experienced net loan charge offs of $3.3 million in 2024, $3.6 million in 2023, and $11.5 million in 2022.
The elevated net charge-offs were mostly due to two loan relationships; one dairy loan relationship with total charge-offs of $8.7 million and a single office building loan relationship that was sold at a $1.9 million discount due to an increased risk of default that would have likely led to a prolonged collection period.
The provision for credit losses on loans for 2022 was elevated due to the impact of two loan relationships; one dairy loan relationship with total charge-offs of $8.7 million and a single office building loan relationship that was sold at a $1.9 million discount due to an increased risk of default that would have likely led to a prolonged collection period.
The following Investment Portfolio table reflects the carrying amount for each primary category of investment securities for the past three years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment Portfolio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ Carrying Amount Percent Carrying Amount Percent Carrying Amount Percent Available for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 102,749 ​ ​ 7.67% ​ $ 50,599 ​ ​ 3.98% ​ $ 1,574 ​ ​ 0.16% Mortgage-backed securities ​ ​ 99,544 ​ ​ 7.43% ​ ​ 122,532 ​ ​ 9.63% ​ ​ 306,727 ​ ​ 31.51% State and political subdivisions ​ ​ 194,206 ​ ​ 14.50% ​ ​ 205,980 ​ ​ 16.20% ​ ​ 304,268 ​ ​ 31.26% Corporate bonds ​ ​ 52,040 ​ ​ 3.89% ​ ​ 57,435 ​ ​ 4.52% ​ ​ 28,529 ​ ​ 2.93% Collateralized loan obligations ​ ​ 570,662 ​ ​ 42.61% ​ ​ 498,377 ​ ​ 39.18% ​ ​ 332,216 ​ ​ 34.13% Total available for sale ​ ​ 1,019,201 ​ ​ 76.10% ​ ​ 934,923 ​ ​ 73.51% ​ ​ 973,314 ​ ​ 100.00% Held to maturity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ ​ 5,522 ​ ​ 0.41% ​ ​ 6,047 ​ ​ 0.48% ​ ​ — ​ ​ — Mortgage-backed securities ​ ​ 142,295 ​ ​ 10.62% ​ ​ 157,473 ​ ​ 12.38% ​ ​ — ​ ​ — State and political subdivisions ​ ​ 172,240 ​ ​ 12.86% ​ ​ 173,361 ​ ​ 13.63% ​ ​ — ​ ​ — Total held to maturity ​ ​ 320,057 ​ ​ 23.90% ​ ​ 336,881 ​ ​ 26.49% ​ ​ — ​ ​ — Total securities ​ $ 1,339,258 ​ ​ 100.00% ​ $ 1,271,804 ​ ​ 100.00% ​ $ 973,314 ​ ​ 100.00% ​ Based on an analysis of its available for sale securities with unrealized losses as of December 31, 2023, the Company determined their decline in value was unrelated to credit loss and was primarily the result of interest rate changes and market spreads subsequent to acquisition.
The following Investment Portfolio table reflects the carrying amount for each primary category of investment securities for the past three years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment Portfolio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2024 ​ 2023 ​ 2022 ​ Carrying Amount Percent Carrying Amount Percent Carrying Amount Percent Available for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 50,153 ​ ​ 5.22% ​ $ 102,749 ​ ​ 7.67% ​ $ 50,599 ​ ​ 3.98% Mortgage-backed securities ​ ​ 93,503 ​ ​ 9.72% ​ ​ 99,544 ​ ​ 7.43% ​ ​ 122,532 ​ ​ 9.63% State and political subdivisions ​ ​ 40,803 ​ ​ 4.24% ​ ​ 194,206 ​ ​ 14.50% ​ ​ 205,980 ​ ​ 16.20% Corporate bonds ​ ​ 58,562 ​ ​ 6.09% ​ ​ 52,040 ​ ​ 3.89% ​ ​ 57,435 ​ ​ 4.52% Collateralized loan obligations ​ ​ 412,946 ​ ​ 42.95% ​ ​ 570,662 ​ ​ 42.61% ​ ​ 498,377 ​ ​ 39.18% Total available for sale ​ ​ 655,967 ​ ​ 68.22% ​ ​ 1,019,201 ​ ​ 76.10% ​ ​ 934,923 ​ ​ 73.51% Held to maturity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ ​ 4,819 ​ ​ 0.50% ​ ​ 5,522 ​ ​ 0.41% ​ ​ 6,047 ​ ​ 0.48% Mortgage-backed securities ​ ​ 128,974 ​ ​ 13.41% ​ ​ 142,295 ​ ​ 10.62% ​ ​ 157,473 ​ ​ 12.38% State and political subdivisions ​ ​ 171,721 ​ ​ 17.87% ​ ​ 172,240 ​ ​ 12.86% ​ ​ 173,361 ​ ​ 13.63% Total held to maturity ​ ​ 305,514 ​ ​ 31.78% ​ ​ 320,057 ​ ​ 23.90% ​ ​ 336,881 ​ ​ 26.49% Total securities ​ $ 961,481 ​ ​ 100.00% ​ $ 1,339,258 ​ ​ 100.00% ​ $ 1,271,804 ​ ​ 100.00% ​ Based on an analysis of its available for sale securities with unrealized losses as of December 31, 2024, and December 31, 2023, the Company determined their decline in value was unrelated to credit loss and was primarily the result of interest rate changes and market spreads subsequent to acquisition.
The Company generally maintains a double leverage ratio of under 125%. The double leverage ratio was 121.2% at December 31, 2023 as compared to 119.9% at December 31, 2022.
The Company generally maintains a double leverage ratio of under 125%. The double leverage ratio was 118.8% at December 31, 2024, as compared to 121.2% at December 31, 2023.
The following table presents the maturity distribution of the estimated uninsured time deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Uninsured Time Deposit Maturity Distribution ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ Three months or less Over three months through six months Over six months through twelve months Over twelve months Total Uninsured time deposits ​ $ 88,795 ​ $ 27,245 ​ $ 45,196 ​ $ 1,007 ​ $ 162,243 ​ See Liquidity and Market Risk Management below in this 10-K for a discussion on liquidity management the Company maintains to meet liquidity needs under unusual conditions such as uncommon deposit outflows of uninsured deposits. ​ Other Borrowings The Company’s non-deposit borrowings may, at any given time, include fed funds purchased from correspondent banks, borrowings from the Federal Home Loan Bank, advances from the FRB, securities sold under agreements to repurchase, and/or junior subordinated debentures.
The following table presents the maturity distribution of the estimated uninsured time deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated Uninsured Time Deposit Maturity Distribution ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024 ​ Three months or less Over three months through six months Over six months through twelve months Over twelve months Total Estimated uninsured time deposits ​ $ 94,054 ​ $ 23,615 ​ $ 30,359 ​ $ 221 ​ $ 148,249 ​ See Liquidity and Market Risk Management below in this 10-K for a discussion on liquidity management the Company maintains to meet liquidity needs under unusual conditions such as uncommon deposit outflows of uninsured deposits. ​ Other Borrowings The Company’s non-deposit other borrowings may, at any given time, include fed funds purchased from correspondent banks, borrowings from the Federal Home Loan Bank, advances from the FRB, and securities sold under agreements to repurchase.
The Company also realized a $0.4 million gain on the sale of securities during the year ending December 31, 2023, a $1.5 million gain for the same period in 2022 from a portfolio restructure to decrease effective duration, taking advance of slight rallies in the Treasury market in early and late 2022, as well as a nominal gain for the same period in 2021.
The Company also realized a $0.2 million and $0.4 million gain on the sale or call of securities during the years ending December 31, 2024 and 2023 respectively, and, a $1.5 million gain for the same period in 2022 from a portfolio restructure to decrease effective duration, taking advantage of slight rallies in the Treasury market in early and late 2022.
Loan origination salaries that were deferred from current expense for recognition over the life of related loans totaled $2.7 million in 2023, $2.3 million in 2022, and $1.1 million for 2021. Salaries and benefits were 55% of total operating expense in both 2023 and 2022 and were 51% in 2021.
Loan origination salaries that were deferred from current expense for recognition over the life of related loans totaled $3.0 million in 2024, $2.7 million in 2023, and $2.3 million in 2022. 43 Table of Contents Salaries and benefits were 56% of total operating expense in 2024, and 55% in 2023, and 2022.
If rates decrease, it would be expected that a significant portion of the unfunded mortgage warehouse lines would become funded and thereby, mitigate the impact of lower rates on the balance sheet through higher utilization.
The Company had approximately $311.6 million of unfunded mortgage warehouse lines at December 31, 2024. If rates decrease, it would be expected that a significant portion of the unfunded mortgage warehouse lines would become funded and thereby, mitigate the impact of lower rates on the balance sheet through higher utilization.
The increase of $34.5 million, or 11%, is due to $34.8 million in net income and a $20.6 million favorable swing in accumulated other comprehensive income partially offset by $13.7 million in dividends paid, and $8.5 million in share repurchases. The remaining difference is related to stock options exercised and restricted stock activity during the year.
The increase of $19.2 million, or 6%, is due to $40.6 million in net income and a $4.7 million favorable swing in accumulated other comprehensive income (loss) partially offset by $13.6 million in dividends paid, and $15.0 million in share repurchases. The remaining difference was related to stock options exercised and restricted stock activity during the year.
Gain on the sale of fixed assets for $15.3 million for the year ending 2023, was due to the sale of 11 Bank owned branch buildings that were subsequently leased back. This transaction and related gain was part of an overall balance sheet restructuring.
Gain on the sale of fixed assets for $3.8 million, and $15.3 million, for the years ending 2024, and 2023 respectively, was due to the sale of Bank owned branch buildings that were subsequently leased back. Both of these transactions and related gains were part of an overall balance sheet restructuring.
Nevertheless, management is closely watching all Company liquidity metrics and will take appropriate action if deemed necessary. The holding company’s primary uses of funds include operating expenses incurred in the normal course of business, debt servicing, shareholder dividends, and stock repurchases.
All ratios were within policy guidelines at December 31, 2024. Management closely watches all Company liquidity metrics and will take appropriate action if deemed necessary. The holding company’s primary uses of funds include operating expenses incurred in the normal course of business, debt servicing, shareholder dividends, and stock repurchases.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information concerning quantitative and qualitative disclosures of market risk called for by Item 305 of Regulation S-K is included as part of Item 7 above. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Market Risk Management”. ​ 62 Table of Contents
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information concerning quantitative and qualitative disclosures of market risk called for by Item 305 of Regulation S-K is included as part of Item 7 above. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Market Risk Management.” ​ 61 Table of Contents

Other BSRR 10-K year-over-year comparisons