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Sierra Bancorp to place $10M loan on non-accrual status

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Sierra Bancorp to place $10M loan on non-accrual status

Sierra Bancorp on Aug. 9 determined that a certain loan participation bought for approximately $10 million will be placed on non-accrual status, and a loss allowance of about $2 million will be established for the credit.

A portion of the loan balance will likely be charged off against the allowance before the end of the third quarter. The exact loss amount cannot be confirmed until Sierra Bancorp receives its own independent appraisal of the project.

The loan is secured by a non-owner-occupied retail property in the Sacramento area.

The decision to downgrade the loan and establish a specific loan loss allowance was made due to a recent notification to the company from the syndicate's lead bank. The borrower, according to the notification, intends to discontinue servicing payments on the loan, and the property's appraised value has reduced significantly as a result of a drop in retail activity, deferred maintenance and occupancy issues.