Sierra Bancorp Reports First Quarter 2026 Results
PORTERVILLE, Calif.--( BUSINESS WIRE)--Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the quarter ended March 31, 2026. Sierra Bancorp reported consolidated net income of $12.5 million, or $0.96 per diluted share, for the first quarter of 2026 compared to $9.1 million, or $0.65 per diluted share, in the first quarter of 2025.
Highlights for the First Quarter of 2026 (unless otherwise stated):
See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures."
“Discipline is the bridge between goals and accomplishment.” – Jim Rohn
“I am extremely proud to report a strong start to 2026!” stated Kevin McPhaill, CEO and President. “Profitability remains our top strategic priority as shown by our consistently high ROAA of 1.39%. Furthermore, this was our fifth consecutive quarter of improvement to our efficiency ratio, which is directly attributable to ongoing expense management discipline. We have redoubled our community banking efforts within our branch network, resulting in an increase of 2% in core customer deposits during the first quarter. We are extremely proud of these continued strong results, and I believe the remainder of 2026 will further demonstrate our discipline, drive, and commitment to excellence!” concluded Mr. McPhaill.
Quarterly Changes (comparisons to the first quarter of 2025)
Linked Quarter Changes (comparisons to the three months ended December 31, 2025)
Balance Sheet Quarterly Changes (comparisons to December 31, 2025)
(1)
See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures."
Other financial highlights are reflected in the following table.
FINANCIAL HIGHLIGHTS
(Dollars in Thousands, Except Per Share Data, Unaudited)
As of or for the
three months ended
3/31/2026
12/31/2025
3/31/2025
Net income
$
12,520
$
12,894
$
9,101
Diluted earnings per share
$
0.96
$
0.97
$
0.65
Return on average assets
1.39
%
1.39
%
1.02
%
Return on average equity
13.88
%
14.09
%
10.44
%
Net interest margin (tax-equivalent) (1)
3.75
%
3.79
%
3.74
%
Yield on average loans
5.26
%
5.34
%
5.26
%
Yield on investments
4.44
%
4.52
%
4.81
%
Cost of average total deposits (3)
1.17
%
1.14
%
1.33
%
Cost of funds (3)
1.33
%
1.38
%
1.46
%
Efficiency ratio (tax-equivalent) (1) (2)
56.45
%
57.69
%
60.62
%
Total assets
$
3,754,462
$
3,829,279
$
3,606,183
Gross loans, amortized cost
$
2,466,794
$
2,546,845
$
2,306,663
Noninterest demand deposits
$
1,028,678
$
995,623
$
1,037,990
Total deposits
$
2,925,806
$
2,876,436
$
2,849,884
Noninterest-bearing deposits over total deposits
35.2
%
34.6
%
36.4
%
Shareholders' equity / total assets
9.69
%
9.53
%
9.75
%
Tangible common equity ratio (2)
9.02
%
8.88
%
9.05
%
Book value per share
$
27.78
$
27.49
$
25.45
Tangible book value per share (2)
$
25.69
$
25.42
$
23.44
Community bank leverage ratio (subsidiary bank)
12.05
%
11.94
%
12.11
%
Tangible common equity ratio (subsidiary bank) (2)
11.07
%
10.92
%
11.32
%
Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.
See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".
Includes noninterest bearing deposits.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income was $30.6 million for the first quarter of 2026, a decrease of $1.3 million, or 4%, compared to the fourth quarter of 2025, and an increase of $0.5 million, or 2%, compared to the first quarter of 2025.
The linked‑quarter decrease was driven primarily by lower interest income, partially offset by reduced interest expense. Interest income declined by $2.1 million compared to the linked quarter, due mostly to a $1.9 million decrease in loan interest income, driven in part by two fewer days in the current quarter compared to the prior linked quarter, a $0.8 million decline in mortgage warehouse interest due to seasonality, as well as lower commercial loan utilization, and a decline in average balances of real estate loans. The decline in loan interest was partially offset by a favorable decline in interest expense of $0.7 million in the linked quarter comparison, due to lower rates.
Compared to the first quarter of 2025, interest income decreased modestly due to lower yields on investments and changes in balance sheet mix, while interest expense declined primarily due to lower rates on interest‑bearing liabilities, reflecting repricing and improved funding mix, despite a modest increase in average interest‑bearing liability balances.
Net interest margin was 3.75% for the first quarter of 2026, compared to 3.79% for the linked quarter and 3.74% for the first quarter of 2025.
Compared to the fourth quarter of 2025, the net interest margin declined four basis points, reflecting lower yields on interest‑earning assets, partially offset by continued improvement in funding costs. The yield on average interest‑earning assets declined to 5.04% from 5.12%, driven primarily by lower yields on mortgage warehouse and investments.
The cost of interest‑bearing liabilities declined to 1.94%, from 2.03% in the prior quarter, reflecting lower average balances of borrowed funds and proactive management of deposit pricing. Average interest‑earning assets declined $34.7 million from the prior linked quarter, while average interest‑bearing liabilities declined $2.1 million, contributing to the modest compression in margin.
Compared to the first quarter of 2025, the net interest margin increased by one basis point, reflecting the benefit of lower funding costs, partially offset by modest pressure on asset yields. The cost of average total deposits declined to 1.17%, from 1.33% in the first quarter of 2025, while the cost of interest‑bearing liabilities declined to 1.94%, from 2.15%, reflecting an improved funding mix, lower average balances of higher‑cost deposits and borrowings, and reduced overall funding costs resulting from the rate cuts in the second half of 2025.
These favorable funding cost trends were partially offset by lower yields on investment securities, as assets repriced in a lower rate environment, resulting in overall margin stability year over year.
Overall, the Company continues to benefit from improving funding costs, which have largely offset pressure on asset yields, resulting in a stable net interest margin compared to the prior year and only modest compression as compared to the linked quarter. Management expects net interest margin performance to remain influenced by balance sheet mix, investment security reinvestment rates, and the timing of deposit repricing.
Credit Loss Expense
The Company recorded a provision for credit losses on loans of $0.1 million for the first quarter of 2026, compared to a reserve release of $0.8 million in the fourth quarter of 2025 and a provision of $2.0 million in the first quarter of 2025. The $0.8 million release in allowance for credit losses during the fourth quarter of 2025 was due mostly to the $1.5 million release of specific reserve on loans individually evaluated, partially offset by higher reserve on loans collectively evaluated. The provision recorded during the first quarter of 2026 reflects normal portfolio activity and estimated credit losses, partially offset by net loan charge-offs.
Credit loss expense on unfunded loan commitments was a benefit of $0.05 million in the first quarter of 2026, compared to a benefit of $0.08 million in the linked quarter and expense of $0.1 million in the first quarter of 2025, reflecting changes in the level and composition of unfunded commitments. The reason for the decrease in the first quarter of 2026 is due to a decrease in the balance of unfunded commitments in most loan categories and a decline in combined funding and loss rates.
The unrealized loss position on the Company’s investment portfolio was attributable to changes in interest rates and volatility in the financial markets and not reflective of expected credit loss.
Noninterest Income
Noninterest income increased $0.6 million, or 9%, to $8.0 million in the first quarter of 2026, compared to the fourth quarter of 2025. Noninterest income increased $1.3 million, or 20%, compared to the first quarter of 2025.
The $1.3 million increase in noninterest income in the first quarter of 2026, as compared to the same quarter in 2025, was due to higher service charge and fee income, an increase in cash surrender value of life insurance due to purchases of additional life insurance in the second quarter of 2025, and other increases related to higher FHLB dividend income and an increase in the fair value of bank stocks. The $0.6 million increase in noninterest income as compared to the fourth quarter of 2025 was driven primarily by a $1.0 million increase in the other noninterest income category, including a $0.4 million special dividend from the FHLB and an increase in value of bank stocks of $0.6 million. These favorable variances were partially offset by a decrease in separate account life insurance income of $0.5 million which is designed to offset deferred compensation, and lower service charges and fees on deposit accounts, which declined $0.3 million, reflecting seasonal trends in business analysis fees and other deposit‑related charges. Although overall service charges and fees on deposit account income declined on a linked-quarter basis, there was a positive increase in the second half of the quarter related to interchange income on debit cards.
The Company maintains a non‑qualified deferred compensation plan for officers and directors, under which participants may defer a portion of their earnings and select from various hypothetical investment alternatives to determine their individual returns. The Company economically offsets this liability with separate account life insurance policies that are invested in similar underlying fund types within the life insurance policy. Because the deferred compensation liability and the separate account life insurance asset are not contractually linked, differences in balances, fund performance, and insurance costs can result in temporary timing mismatches between changes in separate account life insurance income and the related deferred compensation expense.
During the first quarter of 2026, declines in market values of investments inside the life insurance policy to offset employee and director deferred compensation plan elections resulted in a $0.4 million net loss related to separate account life insurance, while the related deferred compensation liability experienced a $0.6 million benefit as the funds that the plan participants elected declined in value. These offsetting movements reflect market‑driven changes in the underlying investment alternatives and do not represent credit‑ or performance‑related deterioration.
The majority of the deferred compensation expense/(benefit) is reported within professional fees, under deferred directors’ fees, as it primarily relates to the deferral of directors’ compensation. Specifically, $0.6 million of deferred compensation benefit was recorded as deferred directors’ fees during the first quarter of 2026. The related tax shortfall associated with the loss connected with separate account life insurance and taxable deferred compensation expense/(benefit) totaled $0.3 million for the quarter.
Noninterest Expense
Total noninterest expense decreased $1.2 million, or 5%, to $21.8 million in the first quarter of 2026, compared to the fourth quarter of 2025, and decreased $0.6 million, or 3%, compared to the first quarter of 2025. The primary driver of lower noninterest expense in both comparisons was lower deferred compensation expense, reflecting market‑driven changes in the related deferred compensation liability. Excluding the change in deferred compensation, total noninterest expense declined $1.0 million in the first quarter of 2026 as compared to the fourth quarter of 2025.
The decrease in deferred compensation expense was mostly offset by lower separate account life insurance income, as declines in market values during the quarter resulted in a loss related to separate account life insurance policies, consistent with the discussion above. These offsetting movements reflect normal market‑related volatility between the separate account life insurance asset and the deferred compensation liability.
Salaries and benefits were relatively stable compared to both the linked quarter and the same period last year, with modest period‑to‑period changes primarily related to normal compensation timing and benefit costs. Occupancy expense declined modestly compared to the linked quarter and remained relatively consistent year over year, reflecting disciplined expense management.
Other noninterest expense declined compared to both the linked quarter and the prior year, driven primarily by lower deferred directors’ compensation expense/(benefit) and continued cost control across operating expense categories.
The Company's effective tax rate was 25.2% in the first quarter of 2026 relative to 24.8% in the fourth quarter of 2025, and 25.8% for the first quarter of 2025. The variances in the effective tax rates are due to fluctuations in tax credits and related amortization, benefits related to employee stock compensation, and tax-exempt income as a percentage of total taxable income.
Balance Sheet Summary
The $74.8 million decrease in total assets during the first quarter of 2026 was a result of a $13.2 million decrease in investment securities and an $80.1 million decrease in gross loans, partially offset by a $20.8 million increase in cash and due from balances.
Investment securities decreased $13.2 million, or 1%, to $903.0 million primarily due to paydowns in the portfolio, which were partially used to pay down other interest-bearing liabilities.
Gross loan balances decreased $80.1 million, or 3%, during the first quarter of 2026, reflecting lower mortgage warehouse line utilization, portfolio runoff, changes in commercial line utilization, and lower volumes of new credit extended. Mortgage warehouse balances declined $39.9 million, driven by seasonal activity and early‑quarter paydowns. Excluding mortgage warehouse activity, loan balances declined modestly across several portfolios, including decreases of $9.1 million in commercial real estate loans, $19.9 million in other commercial loans, $9.7 million in residential real estate loans, $2.1 million in farmland loans, and $0.2 million in consumer loans. Other construction loans increased $0.8 million during the quarter.
As indicated in the loan rollforward below, new credit extended for the first quarter of 2026 decreased $19.0 million over the linked quarter comparison and $58.6 million over the same period in 2025. For the first three months ended 2026, we had $25.3 million in loan paydowns and maturities, along with a $22.6 million decrease in line of credit utilization, and a $39.9 million decrease in mortgage warehouse utilization. The reduction in new credit extended is primarily due to a strategic shift in our target customer base with a change to increase granularity within the portfolio by focusing more on serving our local communities, as well as expanded commercial real estate lending. It is taking time to refresh the pipeline, but such pipeline had returned to prior quarter levels by the end of March 2026.
LOAN ROLLFORWARD
(Dollars in Thousands, Unaudited)
For the three months ended:
3/31/2026
12/31/2025
3/31/2025
Gross loans beginning balance
$
2,546,880
$
2,491,779
$
2,331,341
New credit extended
7,811
26,794
66,370
Changes in line of credit utilization (1)
(22,592
)
6,230
(12,129
)
Change in mortgage warehouse
(39,880
)
65,651
(46,139
)
Pay-downs, maturities, charge-offs and amortization
(25,328
)
(43,574
)
(32,681
)
Gross loans ending balance
2,466,891
2,546,880
2,306,762
Deferred costs and (fees), net
(97
)
(35
)
(99
)
Gross loans, amortized cost
$
2,466,794
$
2,546,845
$
2,306,663
Change does not include new balances on lines of credit extended during the respective periods as such balances are included as part of “New credit extended” line above.
A summary of the Company’s unfunded commitments and utilization is presented below (dollars in thousands, unaudited):
March 31, 2026
December 31, 2025
March 31, 2025
Line Available (2)
Utilization %
Line Available (2)
Utilization %
Line Available (2)
Utilization %
Real estate:
Residential real estate
$
14,393
44.37
%
$
15,726
44.50
%
$
19,311
42.17
%
Commercial real estate
20,132
88.38
%
23,203
86.93
%
33,129
82.79
%
Other construction/land
1,740
86.22
%
2,634
79.10
%
7,161
27.67
%
Farmland
2,544
82.45
%
3,126
80.20
%
5,639
63.73
%
Total real estate
38,809
82.85
%
44,689
80.92
%
65,240
74.05
%
Other commercial
193,442
45.07
%
187,084
48.81
%
197,259
44.36
%
Consumer
4,538
23.11
%
4,580
24.29
%
4,879
23.33
%
Subtotal (1)
236,789
59.48
%
236,353
61.00
%
267,378
56.33
%
Mortgage warehouse lines
319,546
59.96
%
247,667
67.67
%
414,769
40.58
%
Overdrafts - Commercial and Consumer
68,188
1.43
%
69,112
1.40
%
72,238
1.08
%
Total
$
624,523
56.98
%
$
553,132
61.64
%
$
754,385
45.49
%
Unused commitment as a percent of gross loans, amortized cost
25.32
%
21.72
%
32.70
%
Unused mortgage warehouse commitments as percent of gross loans, amortized cost
12.95
%
9.72
%
17.98
%
Excludes mortgage warehouse lines and overdraft lines.
Represents unfunded loan commitments available to customers.
Deposit balances increased $49.4 million, or 2%, during the first quarter of 2026, to $2.9 billion at March 31, 2026. Core non‑maturity deposits increased $56.8 million for the first three months of 2026, reflecting continued growth in customer transaction accounts, while higher-cost customer time deposits declined $7.7 million during the quarter. Noninterest‑bearing deposits totaled $1.03 billion at March 31, 2026, representing 35.2% of total deposits, compared to 34.6% at December 31, 2025, and 36.4% at March 31, 2025. Other interest‑bearing liabilities totaled $185.0 million at March 31, 2026, compared to $302.7 million at December 31, 2025, reflecting a reduction in short‑term borrowings during the quarter. These balances consisted of overnight borrowings of $130.0 million and $55.0 million of term Federal Home Loan Bank advances.
Overall uninsured deposits are estimated to be $710.0 million, or 24% of total deposit balances, excluding public agency deposits that are subject to collateralization through a letter of credit issued by the FHLB. In addition, uninsured deposits of the Bank’s customers are eligible for FDIC pass-through insurance if the customer opens an IntraFi Insured Cash Sweep account or a reciprocal time deposit through the Certificate of Deposit Account Registry System (CDARS). IntraFi allows for up to $285 million of combined pass-through FDIC insurance which would more than cover each of the Bank’s deposit customers if such customer desired to have such pass-through insurance. The Bank maintains a diversified deposit base with no significant customer concentrations and does not bank any cryptocurrency companies. At March 31, 2026, the Company had approximately 116,000 accounts and the 25 largest deposit balance customers had balances of approximately 10% of overall deposits. During the first quarter of 2026, except for seasonal fluctuations in the normal course of business, there have been no material changes in the composition of our 25 largest deposit balance customers.
The Company continues to have substantial liquidity. At March 31, 2026, and December 31, 2025, the Company had the following sources of primary and secondary liquidity (dollars in thousands, unaudited):
Primary and secondary liquidity sources
3/31/2026
12/31/2025
Cash and cash equivalents
$
156,372
$
135,628
Unpledged investment securities
539,347
551,406
Excess pledged securities
191,145
192,275
FHLB borrowing availability
657,040
629,481
Unsecured lines of credit
331,785
250,785
Secured lines of credit
25,000
25,000
Funds available through fed discount window
244,039
254,908
Totals
$
2,144,728
$
2,039,483
Total equity of $363.7 million at March 31, 2026, reflects a decrease of $1.1 million compared to December 31, 2025. The decrease in equity during the first quarter of 2026 was due to $9.5 million in share repurchases, a $3.4 million dividend paid to shareholders, and a $1.8 million unfavorable swing in other comprehensive income/loss due principally to the increase in treasury rates in March and the corresponding decline in our investment securities’ fair value. These changes were partially offset by $12.5 million in net income recorded during the quarter. The remaining difference was related to activity from stock options and restricted stock during the year.
Asset Quality
Total nonperforming assets, decreased by $4.4 million, or 30%, to $10.4 million, during the first quarter of 2026. The decrease in non-accrual loans was from the successful paydown of the Company’s largest nonaccrual loan. The Company's ratio of nonperforming assets to loans plus foreclosed assets decreased to 0.42% at March 31, 2026, from 0.58% at December 31, 2025.
The Company's allowance for credit losses on loans was $21.3 million at March 31, 2026, as compared to $21.5 million at December 31, 2025, and $27.1 million at March 31, 2025. The decrease was primarily attributable to a decrease in the quantitative reserves due to reduced loan balances, partially offset by a $0.5 million increase in the allowance for loans individually evaluated, specifically related to a single agricultural production loan relationship that moved to nonaccrual during the first quarter of 2026. The allowance was 0.86% of total loans at March 31, 2026, 0.84% of total loans at December 31, 2025, and 1.17% of total loans at March 31, 2025.
The following tables highlight the coverage ratios by loan category at March 31, 2026, December 31, 2025, and March 31, 2025:
Allowance for Credit Losses on Loans by Category
(Dollars in Thousands, Unaudited)
As of March 31, 2026
Balance
Total Allowance
Percent of Portfolio
Coverage Ratio (1)
Real estate:
Commercial real estate
$
1,381,770
$
15,977
56.01
%
1.16
%
Other construction/land
15,242
299
0.62
%
1.96
%
Farmland
66,218
542
2.68
%
0.82
%
Total real estate (2)
1,463,230
16,818
59.32
%
1.15
%
Other Commercial
172,653
2,351
7.00
%
1.36
%
Consumer loans (including overdrafts)
2,597
109
0.11
%
4.20
%
Subtotal (2) (3)
1,638,480
19,278
66.42
%
1.18
%
Residential real estate
349,860
1,368
14.18
%
0.39
%
Mortgage warehouse lines
478,454
604
19.40
%
0.13
%
Gross loans, amortized cost
$
2,466,794
$
21,250
100.00
%
0.86
%
As of December 31, 2025
Balance
Total Allowance
Percent of Portfolio
Coverage Ratio (1)
Real estate:
Commercial real estate
$
1,390,890
$
16,354
54.61
%
1.18
%
Other construction/land
14,414
296
0.57
%
2.05
%
Farmland
68,307
496
2.68
%
0.73
%
Total real estate (2)
1,473,611
17,146
57.86
%
1.16
%
Other Commercial
192,577
2,146
7.56
%
1.11
%
Consumer loans (including overdrafts)
2,810
112
0.11
%
3.99
%
Subtotal (2) (3)
1,668,998
19,404
65.53
%
1.16
%
Residential real estate
359,514
1,411
14.12
%
0.39
%
Mortgage warehouse lines
518,333
665
20.35
%
0.13
%
Gross loans, amortized cost
$
2,546,845
$
21,480
100.00
%
0.84
%
As of March 31, 2025
Balance
Total Allowance
Percent of Portfolio
Coverage Ratio (1)
Real estate:
Commercial real estate
$
1,380,402
$
17,143
59.84
%
1.24
%
Other construction/land
7,633
145
0.33
%
1.90
%
Farmland
73,206
282
3.17
%
0.39
%
Total real estate (2)
1,461,241
17,570
63.35
%
1.20
%
Other Commercial
181,631
7,255
7.87
%
3.99
%
Consumer loans (including overdrafts)
2,968
140
0.13
%
4.72
%
Subtotal (2) (3)
1,645,840
24,965
71.35
%
1.52
%
Residential real estate
377,592
1,746
16.37
%
0.46
%
Mortgage warehouse lines
283,231
339
12.28
%
0.12
%
Gross loans, amortized cost
$
2,306,663
$
27,050
100.00
%
1.17
%
Coverage ratio equals allowance for credit losses on loans divided by amortized cost.
Does not include residential real estate.
Does not include mortgage warehouse lines.
Mortgage warehouse made up 19.4% of the total loan balances and continues to have the lowest reserve rate in the allowance for credit losses at 0.13%. Mortgage warehouse lines historically have incurred nominal losses and, therefore, have a significantly lower reserve than the Bank’s other categories of loans. Further, our residential real estate loans are comprised primarily of jumbo residential loans purchased in 2021 and early 2022 with very strong underwriting. Given the underlying strength of this portfolio, the allowance associated with our residential real estate loans was 0.39% at March 31, 2026. The allowance as a percentage of gross loans, exclusive of mortgage warehouse lines and residential mortgage loans, was 1.18% at March 31, 2026, 1.16% at December 31, 2025, and 1.52% at March 31, 2025. The largest loan segment of commercial real estate continues to maintain a coverage ratio at or above 1.16%.
Management's detailed analysis indicates that the Company's allowance for credit losses on loans should be sufficient to cover life of loan credit losses on loan portfolio balances outstanding as of March 31, 2026, but no assurance can be given that the Company will not experience substantial future losses in excess of the current allowance for credit losses on loans.
About Sierra Bancorp
Sierra Bancorp is the holding Company for Bank of the Sierra ( www.bankofthesierra.com), which is in its 49 th year of operations and strives to be the preeminent bank headquartered in the South San Joaquin Valley.
Bank of the Sierra offers a broad range of retail and commercial banking services through its 34 full-service branches located within the counties of Tulare, Kern, Kings, Fresno, Ventura, San Luis Obispo, and Santa Barbara. The Bank also maintains an online branch and provides specialized lending services through its mortgage warehouse division. In 2025, Bank of the Sierra was recognized as one of the strongest and top-performing community banks in the country, with a 5-star rating from Bauer Financial.
Forward-Looking Statements
The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties including but not limited to the health of the national and local economies, loan portfolio performance, the Company's ability to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully deploy new technology, the success of acquisitions and branch expansion, changes in interest rates, and other factors detailed in the Company's SEC filings, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Form 10‑K and Form 10‑Q.
STATEMENT OF CONDITION
(Dollars in Thousands, Unaudited)
ASSETS
3/31/2026
12/31/2025
9/30/2025
6/30/2025
3/31/2025
Cash and due from banks
$
156,372
$
135,628
$
95,501
$
130,012
$
159,711
Investment securities
Available-for-sale, at fair value
615,401
625,330
596,933
668,834
620,288
Held-to-maturity, at amortized cost, net of allowance for credit losses
287,583
290,811
294,511
298,484
302,123
Total investment securities
902,984
916,141
891,444
967,318
922,411
Real estate loans
Residential real estate
349,860
359,514
364,277
371,415
377,592
Commercial real estate
1,381,770
1,390,890
1,404,681
1,392,075
1,380,402
Other construction/land
15,242
14,414
13,420
11,662
7,633
Farmland
66,218
68,307
67,860
67,967
73,206
Total real estate loans
1,813,090
1,833,125
1,850,238
1,843,119
1,838,833
Other commercial
172,653
192,577
185,958
186,620
181,631
Mortgage warehouse lines
478,454
518,333
452,683
401,896
283,231
Consumer loans
2,597
2,810
2,909
2,974
2,968
Gross loans, amortized cost
2,466,794
2,546,845
2,491,788
2,434,609
2,306,663
Allowance for credit losses on loans
(21,250
)
(21,480
)
(25,180
)
(21,680
)
(27,050
)
Net loans
2,445,544
2,525,365
2,466,608
2,412,929
2,279,613
Bank premises and equipment
14,447
14,974
15,056
15,285
15,338
Other assets
235,115
237,171
240,768
244,758
229,110
Total assets
$
3,754,462
$
3,829,279
$
3,709,377
$
3,770,302
$
3,606,183
LIABILITIES AND CAPITAL
Noninterest demand deposits
$
1,028,678
$
995,623
$
1,072,927
$
1,065,742
$
1,037,990
Interest-bearing transaction accounts
604,016
581,746
635,279
603,294
598,924
Savings deposits
364,830
365,064
357,107
352,803
355,325
Money market deposits
153,438
151,760
156,255
148,084
143,522
Customer time deposits
454,459
462,153
476,242
514,596
524,173
Brokered deposits
320,385
320,090
234,950
289,950
189,950
Total deposits
2,925,806
2,876,436
2,932,760
2,974,469
2,849,884
Repurchase agreements
127,811
130,853
125,749
126,509
118,756
Long-term debt
49,506
49,483
49,461
49,438
49,416
Subordinated debentures
36,061
36,017
35,972
35,928
35,883
Other interest-bearing liabilities
185,000
302,700
135,000
154,400
80,000
Total deposits and interest-bearing liabilities
3,324,184
3,395,489
3,278,942
3,340,744
3,133,939
Allowance for credit losses on unfunded loan commitments
660
710
790
810
820
Other liabilities
65,904
68,217
69,562
73,041
119,668
Total capital
363,714
364,863
360,083
355,707
351,756
Total liabilities and capital
$
3,754,462
$
3,829,279
$
3,709,377
$
3,770,302
$
3,606,183
GOODWILL AND INTANGIBLE ASSETS
(Dollars in Thousands, Unaudited)
3/31/2026
12/31/2025
9/30/2025
6/30/2025
3/31/2025
Goodwill
$
27,357
$
27,357
$
27,357
$
27,357
$
27,357
Core deposit intangible
13
52
132
294
456
Total intangible assets
$
27,370
$
27,409
$
27,489
$
27,651
$
27,813
CREDIT QUALITY
(Dollars in Thousands, Unaudited)
3/31/2026
12/31/2025
9/30/2025
6/30/2025
3/31/2025
Nonperforming loans
$
10,410
$
13,231
$
14,006
$
14,981
$
18,201
Foreclosed assets
—
1,565
1,839
—
—
Total nonperforming assets
$
10,410
$
14,796
$
15,845
$
14,981
$
18,201
Quarterly net charge offs (recoveries)
$
307
$
2,915
$
209
$
6,580
$
(259
)
Past due and still accruing (30-89)
$
907
$
6,835
$
187
$
3,033
$
3,057
Classified loans
$
31,595
$
31,433
$
32,111
$
35,700
$
37,265
Nonperforming loans / gross loans, amortized cost
0.42
%
0.52
%
0.56
%
0.62
%
0.79
%
NPA's / loans plus foreclosed assets
0.42
%
0.58
%
0.64
%
0.62
%
0.79
%
Allowance for credit losses on loans / gross loans, amortized cost
0.86
%
0.84
%
1.01
%
0.89
%
1.17
%
SELECT PERIOD-END STATISTICS
(Unaudited)
3/31/2026
12/31/2025
9/30/2025
6/30/2025
3/31/2025
Shareholders' equity / total assets
9.69
%
9.53
%
9.71
%
9.43
%
9.75
%
Gross loans, amortized cost / deposits
84.31
%
88.54
%
84.96
%
81.85
%
80.94
%
Noninterest-bearing deposits / total deposits
35.16
%
34.61
%
36.58
%
35.83
%
36.42
%
Core non-maturity deposits
$
2,150,962
$
2,094,193
$
2,221,568
$
2,169,923
$
2,135,761
Deferred loan (costs)/fees
$
(97
)
$
(35
)
$
9
$
4
$
(99
)
CONSOLIDATED INCOME STATEMENT
(Dollars in Thousands, Unaudited)
For the three months ended:
3/31/2026
12/31/2025
3/31/2025
Interest income
$
41,196
$
43,280
$
41,453
Interest expense
10,588
11,328
11,341
Net interest income
30,608
31,952
30,112
Credit loss expense (benefit) - loans
77
(785
)
1,961
Credit loss (benefit) expense - unfunded commitments
(50
)
(80
)
110
Credit loss (benefit) - debt securities held-to-maturity
(1
)
-
-
Net interest income after credit loss (benefit)
30,582
32,817
28,041
Service charges and fees on deposit accounts
5,673
5,986
5,581
Net (loss) gain on sale of securities available-for-sale
-
(4
)
122
Net gain (loss) on sale of fixed assets
360
(31
)
(2
)
Increase in cash surrender value of life insurance
419
412
237
(Loss) earning on separate account life insurance
(379
)
127
(502
)
Other income
1,896
847
1,206
Total noninterest income
7,969
7,337
6,642
Salaries and benefits
12,700
12,681
13,003
Occupancy expense
3,085
3,182
2,978
Other noninterest expenses
6,039
7,155
6,436
Total noninterest expense
21,824
23,018
22,417
Income before taxes
16,727
17,136
12,266
Provision for income taxes
4,207
4,242
3,165
Net income
$
12,520
$
12,894
$
9,101
TAX DATA
Tax-exempt muni income
$
1,624
$
1,626
$
1,576
Interest income - fully tax equivalent
$
41,628
$
43,712
$
41,872
PER SHARE DATA
(Unaudited)
For the three months ended:
3/31/2026
12/31/2025
3/31/2025
Basic earnings per share
$
0.96
$
0.97
$
0.66
Diluted earnings per share
$
0.96
$
0.97
$
0.65
Common dividends
$
0.26
$
0.25
$
0.25
Weighted average shares outstanding
12,988,932
13,251,040
13,820,008
Weighted average diluted shares
13,097,176
13,350,518
13,916,341
Book value per basic share (EOP)
$
27.78
$
27.49
$
25.45
Tangible book value per share (EOP) (1)
$
25.69
$
25.42
$
23.44
Common shares outstanding (EOP)
13,093,184
13,273,788
13,818,770
See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".
KEY FINANCIAL RATIOS
(Unaudited)
For the three months ended:
3/31/2026
12/31/2025
3/31/2025
Return on average equity
13.88
%
14.09
%
10.44
%
Return on average assets
1.39
%
1.39
%
1.02
%
Net interest margin (tax-equivalent) (1)
3.75
%
3.79
%
3.74
%
Efficiency ratio (tax-equivalent) (1) (2)
56.45
%
57.69
%
60.62
%
Net charge-offs (recoveries) / average loans (not annualized)
0.01
%
0.12
%
(0.01
)%
Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.
See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".
NON-GAAP FINANCIAL MEASURES
(Dollars in Thousands, Unaudited)
As of:
3/31/2026
12/31/2025
3/31/2025
Total stockholders' equity
$
363,714
$
364,863
$
351,756
Less: goodwill and other intangible assets
27,370
27,409
27,813
Tangible common equity
$
336,344
$
337,454
$
323,943
Total assets
$
3,754,462
$
3,829,279
$
3,606,183
Less: goodwill and other intangible assets
27,370
27,409
27,813
Tangible assets
$
3,727,092
$
3,801,870
$
3,578,370
Total stockholders' equity (bank only)
$
439,623
$
442,092
$
432,518
Less: goodwill and other intangible assets (bank only)
27,370
27,409
27,813
Tangible common equity (bank only)
$
412,253
$
414,683
$
404,705
Total assets (bank only)
$
3,751,904
$
3,826,215
$
3,603,679
Less: goodwill and other intangible assets (bank only)
27,370
27,409
27,813
Tangible assets (bank only)
$
3,724,534
$
3,798,806
$
3,575,866
Common shares outstanding
13,093,184
13,273,788
13,818,770
Book value per common share (total stockholders' equity / shares outstanding)
$
27.78
$
27.49
$
25.45
Tangible book value per common share (tangible common equity / shares outstanding)
$
25.69
$
25.42
$
23.44
Equity ratio - GAAP (total stockholders' equity / total assets
9.69
%
9.53
%
9.75
%
Tangible common equity ratio (tangible common equity / tangible assets)
9.02
%
8.88
%
9.05
%
Tangible common equity ratio (bank only) (tangible common equity / tangible assets)
11.07
%
10.92
%
11.32
%
For the three months ended:
Efficiency Ratio:
3/31/2026
12/31/2025
3/31/2025
Noninterest expense
$
21,824
$
23,018
$
22,417
Divided by:
Net interest income
30,608
31,952
30,112
Tax-equivalent interest income adjustments
432
432
419
Net interest income, adjusted
31,040
32,384
30,531
Noninterest income
7,969
7,337
6,642
Less gain (loss) on sale of securities
-
(4
)
122
Less (loss) gain on sale of fixed assets
360
(31
)
(2
)
Tax-equivalent noninterest income adjustments
11
143
(70
)
Noninterest income, adjusted
7,620
7,515
6,452
Net interest income plus noninterest income, adjusted
$
38,660
$
39,899
$
36,983
Efficiency Ratio (tax-equivalent)
56.45
%
57.69
%
60.62
%
For the three months ended:
Pre-tax pre-provision income:
3/31/2026
12/31/2025
3/31/2025
Net income
$
12,520
$
12,894
$
9,101
Add: Provision for income taxes
4,207
4,242
3,165
Add: Provision for credit losses
26
(865
)
2,071
Pre-tax pre-provision income
$
16,753
$
16,271
$
14,337
NONINTEREST INCOME/EXPENSE
(Dollars in Thousands, Unaudited)
For the three months ended:
Noninterest income:
3/31/2026
12/31/2025
3/31/2025
Service charges and fees on deposit accounts
Interchange income on debit cards
$
1,941
$
2,031
$
1,953
Business analysis fees
1,030
1,202
1,034
Overdraft fee income
1,324
1,376
1,245
Other service charges and fees
1,378
1,377
1,349
Net (loss) gain on sale of securities available-for-sale
—
(4
)
122
Gain (loss) on sale of fixed assets
360
(31
)
(2
)
Increase in cash surrender value of life insurance
419
412
237
(Loss) earning on separate account life insurance
(379
)
127
(502
)
Other
1,896
847
1,206
Total noninterest income
$
7,969
$
7,337
$
6,642
As a % of average interest-earning assets (1)
0.96
%
0.86
%
0.81
%
Noninterest expense:
Salaries and employee benefits
Salary and incentives
$
10,409
$
10,481
$
10,687
Employee benefits
2,288
2,134
2,300
Deferred compensation
3
66
16
Occupancy costs
3,085
3,182
2,978
Advertising and marketing costs
333
370
348
Data processing costs
1,583
1,545
1,498
Deposit services costs
1,948
2,077
1,991
Loan services costs
Loan processing
113
91
138
Foreclosed assets
17
3
4
Other operating costs
779
951
928
Professional services costs
Legal and accounting services
557
511
651
Director's costs
356
350
310
Deferred directors' fees cost/(benefit)
(572
)
99
(444
)
Other professional services
698
774
706
Stationery and supply costs
97
98
101
Sundry and tellers
130
286
205
Total noninterest expense
$
21,824
$
23,018
$
22,417
As a % of average interest-earning assets (1)
2.64
%
2.70
%
2.75
%
Efficiency ratio (tax-equivalent) (2)(3)
56.45
%
57.69
%
60.62
%
(1)
Annualized
(2)
Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.
(3)
See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".
AVERAGE BALANCES AND RATES
(Dollars in Thousands, Unaudited)
For the quarter ended
For the quarter ended
For the quarter ended
3/31/2026
12/31/2025
3/31/2025
Average Balance (1)
Income/ Expense
Yield/ Rate (2)
Average Balance (1)
Income/ Expense
Yield/ Rate (2)
Average Balance (1)
Income/ Expense
Yield/ Rate (2)
Assets
Investments:
Interest-earning due from banks
$
23,411
$
211
3.66
%
$
14,990
$
173
4.58
%
$
54,641
$
590
4.38
%
Taxable
709,417
7,993
4.57
%
700,921
8,233
4.66
%
735,197
9,138
5.04
%
Non-taxable
203,801
1,624
4.09
%
202,638
1,626
4.03
%
197,558
1,576
4.10
%
Total investments
936,629
9,828
4.44
%
918,549
10,032
4.52
%
987,396
11,304
4.81
%
Loans: (3)
Real estate
1,822,696
22,391
4.98
%
1,843,428
23,136
4.98
%
1,824,428
21,988
4.89
%
Agricultural production
62,795
724
4.68
%
66,833
822
4.88
%
76,316
1,030
5.47
%
Commercial
111,734
1,597
5.80
%
114,782
1,782
6.16
%
103,152
1,515
5.96
%
Consumer
2,601
55
8.58
%
2,771
74
10.59
%
3,286
69
8.52
%
Mortgage warehouse lines
414,272
6,589
6.45
%
438,892
7,418
6.71
%
313,251
5,529
7.16
%
Other
2,146
12
2.27
%
2,361
17
2.86
%
2,361
18
3.09
%
Total loans
2,416,244
31,368
5.26
%
2,469,067
33,249
5.34
%
2,322,794
30,149
5.26
%
Total interest-earning assets (4)
3,352,873
41,196
5.04
%
3,387,616
43,281
5.12
%
3,310,190
41,453
5.13
%
Other earning assets
17,069
43,768
17,062
Non-earning assets
283,935
260,567
273,926
Total assets
$
3,653,877
$
3,691,951
$
3,601,178
Liabilities and shareholders' equity
Interest-bearing deposits:
Demand deposits
$
224,131
$
1,104
2.00
%
$
234,450
$
1,282
2.17
%
$
207,774
$
1,292
2.52
%
NOW
356,648
75
0.09
%
362,791
93
0.10
%
378,338
119
0.13
%
Savings accounts
363,512
105
0.12
%
358,492
108
0.12
%
352,645
90
0.10
%
Money market
154,469
616
1.62
%
162,715
725
1.77
%
145,092
571
1.60
%
Time deposits
459,482
3,203
2.83
%
470,338
3,546
2.99
%
531,299
4,412
3.37
%
Brokered Deposits
319,199
3,219
4.09
%
218,985
2,439
4.42
%
244,561
2,888
4.79
%
Total interest bearing deposits
1,877,441
8,322
1.80
%
1,807,771
8,193
1.80
%
1,859,709
9,372
2.04
%
Borrowed funds:
Federal funds purchased
42,782
395
3.74
%
114,139
1,142
3.97
%
183
2
4.43
%
Repurchase agreements
128,430
63
0.20
%
121,857
46
0.15
%
112,361
69
0.25
%
Short term borrowings
3,988
38
3.86
%
8,802
94
4.24
%
4,043
45
4.51
%
Long term FHLB Advances
77,778
749
3.91
%
80,000
788
3.91
%
80,000
771
3.91
%
Long term debt
49,492
431
3.53
%
49,469
429
3.44
%
49,402
430
3.53
%
Subordinated debentures
36,034
590
6.64
%
35,989
637
7.02
%
35,855
652
7.37
%
Total borrowed funds
338,504
2,266
2.71
%
410,256
3,136
3.03
%
281,844
1,969
2.83
%
Total interest-bearing liabilities
2,215,945
10,588
1.94
%
2,218,027
11,329
2.03
%
2,141,553
11,341
2.15
%
Demand deposits - noninterest bearing
1,005,769
1,032,617
1,003,322
Other liabilities
66,346
78,323
102,806
Shareholders' equity
365,817
362,984
353,497
Total liabilities and shareholders' equity
$
3,653,877
$
3,691,951
$
3,601,178
Interest income/interest earning assets
5.04
%
5.12
%
5.13
%
Interest expense/interest earning assets
1.28
%
1.33
%
1.39
%
Net interest income and margin (5)
$
30,608
3.75
%
$
31,952
3.79
%
$
30,112
3.74
%
Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.
Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective federal tax rate.
Loans are gross of the allowance for expected credit losses. Loan fees have been included in the calculation of interest income. Net loan (costs) fees and loan acquisition FMV amortization were ($0.3) million and ($0.3) million for the quarters ended March 31, 2026 and 2025, respectively, and $(0.3) million for the quarter ended December 31, 2025.
Non-accrual loans have been included in total loans for purposes of computing total earning assets.
Net interest margin represents net interest income as a percentage of average interest-earning assets.
Category: Financial
Source: Sierra Bancorp