Sierra Bancorp Reports Financial Results for Third Quarter and First Nine Months of 2025

PORTERVILLE, Calif.--( BUSINESS WIRE)--Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the three- and nine-month periods ended September 30, 2025. Sierra Bancorp reported consolidated net income of $9.7 million, or $0.72 per diluted share, for the third quarter of 2025, a decrease of $0.9 million, or 9%, as compared to the second quarter of 2025. In addition, the Company reported consolidated net income of $29.4 million for the first nine months of 2025, a decrease of $0.8 million, or 3%, as compared to the same period in 2024. Diluted earnings per share for the nine-month period ended September 30, 2025, increased to $2.15 from $2.09 for the same period in 2024, an increase of 3%, due mostly to continued stock repurchases through 2025.

Highlights for the third quarter of 2025:

“Success is the sum of small efforts, repeated day in and day out.” – Robert Collier

“Through the first three quarters of 2025, we have taken advantage of several opportunities and risen to meet many challenges,” noted Kevin McPhaill, President and Chief Executive Officer. “Our loan portfolio and strong customer base have continued to grow, despite a difficult interest rate environment, certain episodic credit issues, persisting inflation concerns, and an uncertain employment outlook. For the first nine months of 2025, we increased earnings per share over the same period in 2024 while improving both margin and efficiency. We also continue to have a high level of noninterest income relative to peers. I am immensely proud of our team and their commitment to consistent and strong earnings. As we move into the final quarter of 2025, we are excited about the remainder of the year and believe our team and our balance sheet give us reasons to look forward to 2026 and beyond!”

For the first nine months of 2025, the Company recorded net income of $29.4 million, or $2.15 earnings per diluted share, as compared to $30.2 million, or $2.09 earnings per diluted share, for the same period in 2024. The increase in diluted earnings per share is due mostly to the repurchase of 802,753 shares during the past nine months. The year-over-year decrease in net income was due primarily to a provision for credit losses of $7.0 million, an increase of $4.6 million compared to the prior year-to-date period, and a $0.8 million decrease in noninterest income. These unfavorable variances were partially offset by an increase of $3.1 million in net interest income and a $0.2 million decrease in noninterest expense. The Company’s financial performance metrics for the first nine months of 2025 include an annualized return on average assets and a return on average equity of 1.07% and 11.11%, respectively, compared to 1.11% and 11.67%, respectively, for the same period in 2024.

Financial Highlights

Quarterly Changes (comparisons to the third quarter of 2024)

Linked Quarter Income Changes (comparisons to the three months ended June 30, 2025)

Year-to-Date Income Changes (comparisons to the first nine months of 2024)

Statement of Condition Changes (comparisons to December 31, 2024)

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

nine months ended

9/30/2025

6/30/2025

9/30/2024

9/30/2025

9/30/2024

Net income

9,699

10,633

10,603

29,433

30,196

Diluted earnings per share

0.72

0.78

0.74

2.15

2.09

Return on average assets

1.04

1.16

1.14

1.07

1.11

Return on average equity

10.81

12.08

11.95

11.11

11.67

Net interest margin (tax-equivalent) (1)

3.78

3.68

3.66

3.73

3.66

Yield on average loans

5.36

5.27

5.25

5.30

5.11

Yield on investments

4.73

4.68

5.42

4.74

5.52

Cost of average total deposits (3)

1.30

1.62

1.31

1.51

Cost of funds (3)

1.45

1.49

1.72

1.47

1.66

Efficiency ratio (tax-equivalent) (1) (2)

58.05

59.43

58.38

59.32

61.07

Total assets

3,709,377

3,770,302

3,696,154

3,709,377

3,696,154

Loans net of deferred fees

2,491,788

2,434,609

2,321,025

2,491,788

2,321,025

Noninterest demand deposits

1,072,927

1,065,742

1,013,743

1,072,927

1,013,743

Total deposits

2,932,760

2,974,469

2,962,159

2,932,760

2,962,159

Noninterest-bearing deposits over total deposits

36.6

35.8

34.2

36.6

34.2

Shareholders' equity / total assets

9.71

9.43

9.70

9.71

9.70

Tangible common equity ratio (2)

9.03

8.77

9.01

9.03

9.01

Book value per share

26.70

26.00

24.88

26.70

24.88

Tangible book value per share (2)

24.66

23.98

22.93

24.66

22.93

Community bank leverage ratio (subsidiary bank)

11.73

11.75

11.70

11.73

11.70

Tangible common equity ratio (subsidiary bank) (2)

11.08

10.77

10.90

11.08

10.90

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 $32.0 million for the third quarter of 2025, a $1.2 million increase, or 4%, over the third quarter of 2024, and increased $3.1 million, or 3%, to $92.7 million for the first nine months of 2025 relative to the same period in 2024.

For the third quarter of 2025, there was a 35 basis point decrease in the cost of our interest-bearing liabilities combined with a $17.9 million decrease in the average balance of interest-bearing liabilities. Although the balance of average interest-earning assets was $7.2 million higher, the yield was 13 basis points lower as compared to the same period in 2024, which partially offset the favorable variances on the liability side.

Net interest income for the comparative year-to-date periods increased $3.1 million, or 3%, due primarily to a decrease of 25 basis points in the cost of funds of average interest-bearing liabilities combined with an increase in the average balance of interest-earnings assets of $43.5 million. There was a $193.8 million, or 9%, increase in average loan balances, yielding 19 basis points higher for the same period, while average investment balances decreased $150.3 million, yielding 78 basis points lower for the same period. The decline in average investment balances was mostly due to calls of collateralized loan obligations in 2025. Average interest-bearing liabilities decreased $4.9 million, mostly in higher cost customer time deposits and brokered deposits, offset by an increase in interest-bearing demand deposits and borrowed funds. The cost of interest-bearing liabilities was 25 basis points lower for the comparative periods. The favorable net impact of the mix and rate change was a 7 basis point increase in our net interest margin for the nine months ending September 30, 2025, as compared to the same period in 2024.

Interest expense was $12.0 million for the third quarter of 2025, a decrease of $2.0 million, relative to the third quarter of 2024. For the first nine months of 2025, compared to the same period in 2024, interest expense decreased $4.2 million to $35.4 million. The decrease in interest expense for the first nine months of 2025, as compared to the same period in 2024, was attributable to a decrease in higher cost customer time deposits and brokered deposits, along with a net overall interest rate decrease in customer deposit account balances. These decreases were partially offset by increases in other borrowed funds. For the first nine months of 2025, compared to the same period in 2024, the average balance of higher cost customer time deposits and brokered deposits decreased $78.6 million, while low to no cost transaction account balances increased $93.6 million and borrowed funds increased $16.3 million.

Net interest margin was 3.78% for the third quarter of 2025, as compared to 3.68% for the linked quarter, and 3.66% for the third quarter of 2024. While the yield of interest-earning assets increased eight basis points for the third quarter of 2025 as compared to the linked quarter, the cost of interest-bearing liabilities decreased five basis points for the same comparative period. The average balance of interest-earning assets increased $5.6 million for the linked quarter, while the increase in interest-bearing liabilities was $2.1 million for the same period.

Provision for Credit Losses

The provision for credit losses on loans was $3.7 million for the third quarter of 2025, as compared to $1.2 million in the third quarter of 2024. The year-to-date provision for credit losses on loans was $6.9 million in 2025, as compared to $2.3 million for the same period in 2024. The $2.5 million increase in the provision for credit losses on loans in the third quarter of 2025, as compared to the third quarter of 2024, and the $4.6 million year-to-date increase in the provision for credit losses on loans, compared to the same period in 2024, was primarily due to the third quarter of 2025 addition of $3.5 million in individual reserves, mostly related to a single agricultural production loan. At September 30, 2025, this agricultural production loan had a remaining book balance of $3.5 million with an associated individual reserve of $3.5 million fully offsetting such loan.

There was a benefit for credit losses on unfunded commitments of $20,000 in the third quarter of 2025, and a provision for credit losses on unfunded commitments of $0.1 million for the first nine months of 2025, as compared to a provision for credit losses of $0.1 million in both the third quarter and first nine months of 2024, respectively.

Noninterest Income

Total noninterest income increased $0.3 million, or 3%, for the quarter ended September 30, 2025, as compared to the same quarter in 2024, and decreased $0.8 million, or 3%, for the year-to-date period ended September 30, 2025, as compared to the same period in 2024. The year-to-date decline was impacted by a decrease in service charge income on deposit accounts, unfavorable fluctuations in income on Bank-Owned Life Insurance (BOLI) with underlying investments mapped directly to the Company’s deferred compensation plan, and a net gain on the balance sheet restructure in early 2024 with no similar transaction in 2025. Offsetting these unfavorable variances was an increase in other income which was related to life insurance proceeds received in 2025 with no like proceeds in 2024.

The Company maintains a non-qualified deferred compensation plan for officers and directors, which allows the participant to defer a portion of their earnings tax-free. Participants are allowed to choose different hypothetical investment alternatives to determine their individualized return on their deferred compensation. The Company has chosen to offset the cost of this liability with a BOLI Policy, which is funded based on deferral elections from the participants. Although the BOLI is not directly tied to the deferred compensation plan, the BOLI is invested in similar fund types as those selected by the participants. There is some inefficiency in net earnings of the BOLI asset as compared to the deferred compensation liability created by the cost of insurance, differences in balances, and differences in individual fund performance. During the third quarter, and first nine months of 2025, earnings from the BOLI were $0.6 million, and $1.1 million, respectively, while additional expense from the related deferred compensation liability was $0.5 million, and $1.2 million, respectively. The majority of this expense is reported as professional fees under directors’ fees as it is related to deferral of past directors’ fees. Specifically, $0.4 million for the quarterly comparison, and $0.9 million for the year-to-date comparison, respectively, is reflected as directors’ fees as part of the overall professional fees expense line item. The tax benefit of having tax-free earnings with tax-deductible expense was $0.3 million during the third quarter of 2025, and $0.7 million for the first nine months of 2025.

Noninterest Expense

Total noninterest expense increased by $0.8 million, or 4%, in the third quarter of 2025, relative to the third quarter of 2024, and decreased by $0.2 million for the first nine months of 2025, as compared to the same period in 2024.

Salaries and Benefits were $0.5 million, or 4%, higher in the third quarter of 2025 as compared to the third quarter of 2024, and $0.8 million higher for the first nine months of 2025, as compared to the same period in 2024. The Company implemented a strategic reorganization at the end of the third quarter of 2025, which resulted in a reduction in force, accompanied by $0.2 million in severance payments. The remaining increase for both the quarter and year-over-year periods was mostly due to a change in composition in the workforce. There were 476 full-time equivalent employees at September 30, 2025, as compared to 494 at June 30, 2025, and 485 at December 31, 2024.

Occupancy expenses increased by $0.2 million for the third quarter and the first nine months of 2025 as compared to the same periods in 2024. The increases in both comparisons were primarily due to increased property taxes related to the updated assessed values of the properties involved in the sale/leaseback transaction in early 2024.

Other noninterest expense was relatively unchanged for the third quarter of 2025, as compared to the third quarter in 2024, and decreased $1.2 million, or 5%, for the first nine months of 2025, as compared to the same period in 2024. For the year-over-year comparison the decrease was primarily driven by decreases in directors’ deferred compensation expense and legal and accounting services of $0.5 million and $0.3 million, respectively. The remaining decrease was related to lower data processing costs and reduced debit card losses.

The Company's provision for income taxes was 23.6% of pre-tax income in the third quarter of 2025, relative to 26.4% in the third quarter of 2024, and 24.9% of pre-tax income for the first nine months of 2024, relative to 26.8% for the same period in 2024. The decrease in effective tax rate for both the quarterly and year-to-date comparisons is due to the tax credits, and tax-exempt income representing a larger percentage of total taxable income.

Balance Sheet Summary

The $95.1 million, or 3%, increase in total assets during the first nine months of 2025, was primarily a result of a $160.4 million increase in gross loans, partially offset by a $70.0 million decrease in investment securities.

The increase in gross loan balances, as compared to December 31, 2024, was mostly a result of organic growth; a $46.8 million increase in commercial real estate loans, a $7.9 million increase in other construction loans, a $7.6 million increase in other commercial loans, and a favorable change of $126.3 million in mortgage warehouse balances. Counterbalancing these positive loan variances were loan paydowns and maturities resulting in net declines in residential real estate loans, farmland loans, and consumer loans.

As indicated in the loan rollforward table below, new credit extended for the third quarter of 2025 remained flat on a linked-quarter basis, decreased $13.2 million over the same period in 2024, and increased $26.1 million for the year-to-date comparisons. The Company had $121.5 million in loan paydowns and maturities; however, an increase in mortgage warehouse lines of $126.3 million had a positive impact in the first nine months of 2025.

LOAN ROLLFORWARD

(Dollars in Thousands, Unaudited)

For the three months ended:

For the nine months ended:

9/30/2025

6/30/2025

9/30/2024

9/30/2025

9/30/2024

Gross loans beginning balance

2,434,605

2,306,762

2,234,528

2,331,341

2,090,075

New credit extended

48,065

48,147

61,239

162,582

136,518

Changes in line of credit utilization (1)

2,628

2,587

11,572

(6,914

)

(23,768

)

Change in mortgage warehouse

50,787

118,665

61,718

126,283

219,778

Pay-downs, maturities, charge-offs and amortization

(44,306

)

(41,556

)

(48,428

)

(121,513

)

(101,974

)

Gross loans ending balance

2,491,779

2,434,605

2,320,629

2,491,779

2,320,629

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.

Unused commitments, excluding mortgage warehouse and overdraft lines, were $263.1 million at September 30, 2025, compared to $256.9 million at December 31, 2024. Total line utilization, excluding mortgage warehouse and overdraft lines, was 57.9% at September 30, 2025, and 57.0% at December 31, 2024. Mortgage warehouse utilization increased to 59.4% at September 30, 2025, as compared to 51.2% at December 31, 2024.

Deposit balances reflect growth of $41.1 million, or 1%, during the first nine months of 2025. Core non-maturity deposits increased by $138.4 million, or 7%, while customer time deposits decreased by $57.3 million, or 11%. Wholesale brokered deposits decreased by $40.0 million, or 15%. Overall noninterest-bearing deposits as a percentage of total deposits at September 30, 2025, increased to 36.6%, as compared to 34.8% at December 31, 2024. Other interest-bearing liabilities of $260.7 million on September 30, 2025, consist of $125.7 million in customer repurchase agreements, $25.0 million in overnight fed funds purchased, and $110.0 million of FHLB borrowings.

Overall uninsured deposits are estimated to be approximately $748.1 million, or 26% 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 (ICS) account or a reciprocal time deposit through the Certificate of Deposit Account Registry System (CDARS). IntraFi allows for up to $285 million per customer of 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 September 30, 2025, the Company had approximately 117,000 accounts, and the 25 largest deposit balance customers had balances of approximately 11% of overall deposits. During the third quarter of 2025, except for seasonal fluctuations in the normal course of business, there has been no material change in the composition of our 25 largest deposit balance customers.

The Company continues to have substantial liquidity. At September 30, 2025, and December 31, 2024, the Company had the following sources of primary and secondary liquidity (Dollars in Thousands, Unaudited):

Primary and secondary liquidity sources

9/30/2025

12/31/2024

Cash and cash equivalents

95,501

100,664

Unpledged investment securities

487,710

552,098

Excess pledged securities

230,581

242,519

FHLB borrowing availability

623,774

629,134

Unsecured lines of credit

460,785

479,785

Secured lines of credit

25,000

Funds available through fed discount window

266,419

298,296

Totals

2,189,770

2,327,496

Total capital of $360.1 million at September 30, 2025, reflects an increase of $2.8 million, or 1%, relative to year-end 2024. The increase in equity during the first nine months of 2025 was due to the addition of $29.4 million in net income, a $6.1 million favorable swing in accumulated other comprehensive income, due principally to changes in investment securities’ fair value, partially offset by $24.3 million in share repurchases, and $10.3 million in dividends paid. The remaining difference is related to the impact of equity compensation.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, improved with a decline of $3.8 million to $15.8 million for the first nine months of 2025. The Company's ratio of nonperforming loans to gross loans decreased to 0.56% at September 30, 2025, from 0.84% at December 31, 2024. This favorable year-to-date decline resulted from a decrease in non-accrual loan balances, due mostly to the partial charge-off of one agricultural production loan in the second quarter of 2025. All the Company's nonperforming assets are individually evaluated for credit loss quarterly, and management believes the established allowance for credit loss on such loans is appropriate.

During the third quarter of 2025, the Company transferred one commercial real estate loan to other real estate owned (OREO), resulting in a foreclosed asset totaling $1.8 million. While the Company had no OREO assets on its balance sheet prior to this transfer, it has experience managing such assets and maintains established procedures for their resolution.

The Company's allowance for credit losses on loans and leases was $25.2 million at September 30, 2025, as compared to $21.7 million at June 30, 2025, and $24.8 million at December 31, 2024. The increase in the third quarter of 2025 as compared to June 30, 2025, resulted from a $3.5 million increase in specific individual reserves on impaired loans related to a single agricultural production loan. Such agricultural production loan was in the wine grape industry and had a remaining book balance of $3.5 million at September 30, 2025, with a full individual reserve of $3.5 million offsetting such remaining balance. In addition to this loan, the Bank had $19.2 million in outstanding agricultural production loans in the winery and grape industry at September 30, 2025, of which $1.7 million were grapes. Although consumer demand for wine produced in the Central Valley of California has declined, none of the remaining $19.2 million in wine and grape production loans were classified as special mention or substandard.

Allowance for Credit Losses on Loans by Category

(Dollars in Thousands, Unaudited)

As of September 30, 2025

Balance

Total Allowance

Percent of Portfolio

Coverage Ratio (1)

Real estate:

Residential real estate

364,277

1,400

14.62

0.38

Commercial real estate

1,404,681

16,511

56.37

1.18

Other construction/land

13,420

282

0.54

2.10

Farmland

67,860

488

2.72

0.72

Total real estate

1,850,238

18,681

74.25

1.01

Other Commercial

185,958

5,880

7.46

3.16

Mortgage warehouse lines

452,683

506

18.17

0.11

Consumer loans

2,909

113

0.12

3.88

Total Loans

2,491,788

25,180

100.00

1.01

As of June 30, 2025

Balance

Total Allowance

Percent of Portfolio

Coverage Ratio (1)

Real estate:

Residential real estate

371,415

1,694

15.26

0.46

Commercial real estate

1,392,075

17,083

57.17

1.23

Other construction/land

11,662

252

0.48

2.16

Farmland

67,967

185

2.79

0.27

Total real estate

1,843,119

19,214

75.70

1.04

Other Commercial

186,620

1,907

7.67

1.02

Mortgage warehouse lines

401,896

451

16.51

0.11

Consumer loans

2,974

108

0.12

3.63

Total Loans

2,434,609

21,680

100.00

0.89

As of December 31, 2024

Balance

Total Allowance

Percent of Portfolio

Coverage Ratio (1)

Real estate:

Residential real estate

382,507

1,808

16.41

0.47

Commercial real estate

1,357,833

17,051

58.24

1.26

Other construction/land

5,472

0.23

1.68

Farmland

77,547

280

3.33

0.36

Total real estate

1,823,359

19,231

78.21

1.05

Other Commercial

178,331

4,829

7.65

2.71

Mortgage warehouse lines

326,400

398

14.00

0.12

Consumer loans

3,344

372

0.14

11.12

Total Loans

2,331,434

24,830

100.00

1.07

Coverage ratio equals allowance for credit losses on loans divided by amortized cost.

The allowance for credit losses on loans and leases was 1.01% of gross loans at September 30, 2025, and 1.07% of gross loans at December 31, 2024. The largest increase in loan balances was from mortgage warehouse lines, which has the lowest reserve rate in the allowance for credit losses at 0.11%. Mortgage warehouse lines historically have incurred nominal losses and, therefore, have a significantly lower reserve than the other categories of loans. As a result, at September 30, 2025, approximately $0.5 million of the allowance for credit losses was attributable to mortgage warehouse lines. The allowance as a percentage of gross loans exclusive of mortgage warehouse lines was 1.21% at September 30, 2025, as compared to 1.04% at June 30, 2025, and 1.22% at December 31, 2024.

The largest loan segment of commercial real estate continues to maintain a coverage ratio at or above 1.18%. As described above, the significant increase in the coverage ratio for other commercial loans was due to an individual reserve on a $3.5 million agricultural production loan.

Management's detailed analysis indicates that the Company's allowance for credit losses on loans and leases should be sufficient to cover credit losses for the life of the loans and leases outstanding as of September 30, 2025, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the loan and lease loss allowance. The Company calculates the allowance for credit losses using a combination of quantitative and qualitative factors applied to loans segmented by call report category.

About Sierra Bancorp

Sierra Bancorp is the holding Company for Bank of the Sierra ( www.bankofthesierra.com), which is in its 48 th year of operations.

Bank of the Sierra offers a broad range of retail and commercial banking services through its 35 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, including the impact to the Company and its customers resulting from changes to, and the level of tariffs, inflation, and interest rates; effects of government shutdowns; changes in laws, rules, regulations, or interpretations to which the Company is subject; the Company’s ability to maintain and grow its deposit base; loan demand and continued portfolio performance; the Company's ability to attract and retain skilled employees; customers' service expectations; cyber security risks; the Company's ability to successfully deploy new technology; the success of acquisitions and branch expansion; operational risks including the ability to detect and prevent errors and fraud; the effectiveness of the Company’s enterprise risk management framework; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks that could affect stock price; changes to valuations of the Company’s assets and liabilities, including the allowance for credit losses, earning assets, and intangible assets; changes to the availability of liquidity sources including borrowing lines and the ability to pledge or sell certain assets; costs related to litigation; the effects of severe weather events, pandemics, other public health crises, acts of war or terrorism, and other external events on our business; 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

9/30/2025

6/30/2025

3/31/2025

12/31/2024

9/30/2024

Cash and due from banks

95,501

130,012

159,711

100,664

132,797

Investment securities

Available-for-sale, at fair value

596,933

668,834

620,288

655,967

706,310

Held-to-maturity, at amortized cost, net of allowance for credit losses

294,511

298,484

302,123

305,514

308,971

Total investment securities

891,444

967,318

922,411

961,481

1,015,281

Real estate loans

Residential real estate

363,197

370,348

376,533

381,438

388,169

Commercial real estate

1,407,083

1,394,487

1,382,928

1,360,374

1,338,793

Other construction/land

13,503

11,746

7,717

5,458

5,612

Farmland

67,704

67,811

73,061

77,388

80,589

Total real estate loans

1,851,487

1,844,392

1,840,239

1,824,658

1,813,163

Other commercial

184,756

185,404

180,390

177,013

168,236

Mortgage warehouse lines

452,683

401,896

283,231

326,400

335,777

Consumer loans

2,853

2,913

2,902

3,270

3,453

Gross loans

2,491,779

2,434,605

2,306,762

2,331,341

2,320,629

Deferred loan costs (fees) , net

(99

)

396

Allowance for credit losses on loans

(25,180

)

(21,680

)

(27,050

)

(24,830

)

(22,710

)

Net loans

2,466,608

2,412,929

2,279,613

2,306,604

2,298,315

Bank premises and equipment

15,056

15,285

15,338

15,431

15,647

Other assets

240,768

244,758

229,110

230,091

234,114

Total assets

3,709,377

3,770,302

3,606,183

3,614,271

3,696,154

LIABILITIES AND CAPITAL

Noninterest demand deposits

1,072,927

1,065,742

1,037,990

1,007,208

1,013,743

Interest-bearing transaction accounts

635,279

603,294

598,924

587,753

595,672

Savings deposits

357,107

352,803

355,325

347,387

356,725

Money market deposits

156,255

148,084

143,522

140,793

135,948

Customer time deposits

476,242

514,596

524,173

533,577

550,121

Wholesale brokered deposits

234,950

289,950

189,950

274,950

309,950

Total deposits

2,932,760

2,974,469

2,849,884

2,891,668

2,962,159

Repurchase agreements

125,749

126,509

118,756

108,860

125,534

Long-term debt

49,461

49,438

49,416

49,393

49,371

Subordinated debentures

35,972

35,928

35,883

35,838

35,794

Other interest-bearing liabilities

135,000

154,400

80,000

Total deposits and interest-bearing liabilities

3,278,942

3,340,744

3,133,939

3,165,759

3,252,858

Allowance for credit losses on unfunded loan commitments

790

810

820

710

640

Other liabilities

69,562

73,041

119,668

90,500

83,958

Total capital

360,083

355,707

351,756

357,302

358,698

Total liabilities and capital

3,709,377

3,770,302

3,606,183

3,614,271

3,696,154

GOODWILL AND INTANGIBLE ASSETS

(Dollars in Thousands, Unaudited)

9/30/2025

6/30/2025

3/31/2025

12/31/2024

9/30/2024

Goodwill

27,357

Core deposit intangible

132

294

456

618

780

Total intangible assets

27,489

27,651

27,813

27,975

28,137

CREDIT QUALITY

(Dollars in Thousands, Unaudited)

9/30/2025

6/30/2025

3/31/2025

12/31/2024

9/30/2024

Nonperforming loans

14,006

14,981

18,201

19,668

10,348

Foreclosed assets

1,839

—

Total nonperforming assets

15,845

14,981

18,201

19,668

10,348

Quarterly net charge offs (recoveries)

209

6,580

(259

)

215

170

Past due and still accruing (30-89)

187

3,033

3,057

1,348

211

Classified loans

32,111

35,700

37,265

44,464

29,148

Nonperforming loans / gross loans

0.56

0.62

0.79

0.84

0.45

NPA's / loans plus foreclosed assets

0.64

0.62

0.79

0.84

0.45

Allowance for credit losses on loans / gross loans

1.01

0.89

1.17

1.07

0.98

SELECT PERIOD-END STATISTICS

(Unaudited)

9/30/2025

6/30/2025

3/31/2025

12/31/2024

9/30/2024

Shareholders' equity / total assets

9.71

9.43

9.75

9.89

9.70

Gross loans / deposits

84.96

81.85

80.94

80.62

78.34

Noninterest-bearing deposits / total deposits

36.58

35.83

36.42

34.83

34.22

CONSOLIDATED INCOME STATEMENT

(Dollars in Thousands, Unaudited)

For the three months ended:

For the nine months ended:

9/30/2025

6/30/2025

9/30/2024

9/30/2025

9/30/2024

Interest income

43,937

42,717

44,798

128,108

129,253

Interest expense

11,969

12,064

14,008

35,374

39,577

Net interest income

31,968

30,653

30,790

92,734

89,676

Credit loss expense - loans

3,709

1,210

1,240

6,880

2,258

Credit loss (benefit) expense - unfunded commitments

(20

)

(10

)

120

130

Credit loss benefit - debt securities held-to-maturity

)

Net interest income after provision

28,279

29,453

29,431

85,774

87,289

Service charges and fees on deposit accounts

6,065

5,855

6,205

17,501

18,114

Net gain (loss) on sale of securities available-for-sale

124

(2,810

)

Net (loss) gain on sale of fixed assets

(19

)

(22

)

3,799

Increase in cash surrender value of life insurance

410

343

252

991

733

Earnings on separate account life insurance

608

973

288

1,078

1,545

Other income

975

1,400

971

3,580

2,628

Total noninterest income

8,058

8,553

7,789

23,252

24,009

Salaries and benefits

12,827

12,544

12,363

38,375

37,589

Occupancy expense

3,234

3,142

2,995

9,354

9,173

Other noninterest expenses

7,574

8,081

7,452

22,090

23,266

Total noninterest expense

23,635

23,767

22,810

69,819

70,028

Income before taxes

12,702

14,239

14,410

39,207

41,270

Provision for income taxes

3,003

3,606

3,807

9,774

11,074

Net income

9,699

10,633

10,603

29,433

30,196

TAX DATA

Tax-exempt muni income

1,580

1,577

1,584

4,733

5,164

Interest income - fully tax equivalent

44,357

43,136

45,219

129,366

130,626

PER SHARE DATA

(Unaudited)

For the three months ended:

For the nine months ended:

9/30/2025

6/30/2025

9/30/2024

9/30/2025

9/30/2024

Basic earnings per share

0.73

0.78

0.75

2.17

2.11

Diluted earnings per share

0.72

0.78

0.74

2.15

2.09

Common dividends

0.25

0.24

0.75

0.70

Weighted average shares outstanding

13,361,594

13,563,910

14,188,051

13,582,194

14,331,032

Weighted average diluted shares

13,470,658

13,637,252

14,335,706

13,674,934

14,437,786

Book value per basic share (EOP)

26.70

26.00

24.88

26.70

24.88

Tangible book value per share (EOP) (1)

24.66

23.98

22.93

24.66

22.93

Common shares outstanding (EOP)

13,485,635

13,681,828

14,414,561

13,485,635

14,414,561

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:

For the nine months ended:

9/30/2025

6/30/2025

9/30/2024

9/30/2025

9/30/2024

Return on average equity

10.81

12.08

11.95

11.11

11.67

Return on average assets

1.04

1.16

1.14

1.07

1.11

Net interest margin (tax-equivalent) (1)

3.78

3.68

3.66

3.73

3.66

Efficiency ratio (tax-equivalent) (1) (2)

58.05

59.43

58.38

59.32

61.07

Net charge-offs / average loans (not annualized)

0.01

0.27

0.01

0.27

0.14

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:

9/30/2025

6/30/2025

9/30/2024

Total stockholders' equity

360,083

355,707

358,698

Less: goodwill and other intangible assets

27,489

27,651

28,137

Tangible common equity

332,594

328,056

330,561

Total assets

3,709,377

3,770,302

3,696,154

Less: goodwill and other intangible assets

27,489

27,651

28,137

Tangible assets

3,681,888

3,742,651

3,668,017

Total stockholders' equity (bank only)

435,186

430,250

427,762

Less: goodwill and other intangible assets (bank only)

27,489

27,651

28,137

Tangible common equity (bank only)

407,697

402,599

399,625

Total assets (bank only)

3,706,266

3,766,071

3,693,553

Less: goodwill and other intangible assets (bank only)

27,489

27,651

28,137

Tangible assets (bank only)

3,678,777

3,738,420

3,665,416

Common shares outstanding

13,485,635

13,681,828

14,414,561

Book value per common share (total stockholders' equity / shares outstanding)

26.70

26.00

24.88

Tangible book value per common share (tangible common equity / shares outstanding)

24.66

23.98

22.93

Equity ratio - GAAP (total stockholders' equity / total assets

9.71

9.43

9.70

Tangible common equity ratio (tangible common equity / tangible assets)

9.03

8.77

9.01

Tangible common equity ratio (bank only) (tangible common equity / tangible assets)

11.08

10.77

10.90

For the three months ended:

For the nine months ended:

Efficiency Ratio:

9/30/2025

6/30/2025

9/30/2024

9/30/2025

9/30/2024

Noninterest expense

23,635

23,767

22,810

69,819

70,028

Divided by:

Net interest income

31,968

30,653

30,790

92,734

89,676

Tax-equivalent interest income adjustments

420

419

421

1,258

1,373

Net interest income, adjusted

32,388

31,072

31,211

93,992

91,049

Noninterest income

8,058

8,553

7,789

23,252

24,009

Less gain (loss) on sale of securities

124

(2,810

)

Less (loss) gain on sale of fixed assets

(19

)

(22

)

3,799

Tax-equivalent noninterest income adjustments

271

350

144

550

606

Noninterest income, adjusted

8,329

8,921

7,860

23,700

23,626

Net interest income plus noninterest income, adjusted

40,717

39,993

39,071

117,692

114,675

Efficiency Ratio (tax-equivalent)

58.05

59.43

58.38

59.32

61.07

For the three months ended:

For the nine months ended:

9/30/2025

6/30/2025

9/30/2024

9/30/2025

9/30/2024

Net income

9,699

10,633

10,603

29,433

30,196

Add: Provision for income taxes

3,003

3,606

3,807

9,774

11,074

Add: Provision for credit losses

3,689

1,200

1,359

6,960

2,387

Pre-tax pre-provision income

16,391

15,439

15,769

46,167

43,657

NONINTEREST INCOME/EXPENSE

(Dollars in Thousands, Unaudited)

For the three months ended:

For the nine months ended:

Noninterest income:

9/30/2025

6/30/2025

9/30/2024

9/30/2025

9/30/2024

Service charges and fees on deposit accounts

6,065

5,855

6,205

17,501

18,114

Net gain (loss) on sale of securities available-for-sale

—

124

(2,810

)

(Loss) gain on sale of fixed assets

—

(19

)

—

(22

)

3,799

Increase in cash surrender value of life insurance

410

343

252

991

733

Earnings on separate account life insurance

608

973

288

1,078

1,545

Other

975

1,400

971

3,580

2,628

Total noninterest income

8,058

8,553

7,789

23,252

24,009

As a % of average interest-earning assets (1)

0.94

1.01

0.91

0.92

0.97

Noninterest expense:

Salaries and employee benefits

Salaries and benefits

12,728

12,416

12,286

38,132

37,264

Deferred compensation

128

243

325

Occupancy and equipment costs

3,234

3,142

2,995

9,354

9,173

Advertising and marketing costs

403

405

381

1,156

1,061

Data processing costs

1,518

1,566

1,555

4,582

4,744

Deposit services costs

2,134

2,118

2,150

6,243

6,302

Loan services costs

Loan processing

173

113

184

425

424

Foreclosed assets

)

—

Other operating costs

901

1,078

959

2,905

2,980

Professional services costs

Legal & accounting services

641

419

547

1,712

1,976

Director's costs

332

309

327

951

1,018

Deferred directors' fees

438

948

174

942

1,383

Other professional service

763

711

775

2,180

2,167

Stationery & supply costs

102

132

120

335

382

Sundry & tellers

168

284

280

656

829

Total noninterest expense

23,635

23,767

22,810

69,819

70,028

As a % of average interest-earning assets (1)

2.76

2.81

2.68

2.77

2.82

Efficiency ratio (tax-equivalent) (2)(3)

58.05

59.43

58.38

59.32

61.07

Annualized

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.”

AVERAGE BALANCES AND RATES

(Dollars in Thousands, Unaudited)

For the quarter ended

9/30/2025

6/30/2025

9/30/2024

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:

Federal funds sold/interest-earning due from accounts

31,672

329

4.12

18,122

211

4.67

88,509

1,225

5.51

Taxable

731,274

9,104

4.94

770,413

9,295

4.84

830,054

11,991

5.75

Non-taxable

196,550

1,580

4.04

196,364

1,577

4.08

199,261

1,584

4.00

Total investments

959,496

11,013

4.73

984,899

11,083

4.68

1,117,824

14,800

5.42

Loans: (3)

Real estate

1,849,065

22,997

4.93

1,849,725

22,589

4.90

1,804,099

21,054

4.64

Agricultural production

70,033

961

5.44

72,933

915

5.03

81,501

1,520

7.42

Commercial

116,855

1,824

6.19

109,407

1,612

5.91

76,633

1,101

5.72

Consumer

2,872

8.84

3,214

7.99

3,558

8.72

Mortgage warehouse lines

395,940

7,059

7.07

368,592

6,440

7.01

303,463

6,227

8.16

Other

2,453

3.07

2,351

2.39

2,438

2.94

Total loans

2,437,218

32,924

5.36

2,406,222

31,634

5.27

2,271,692

29,998

5.25

Total interest-earning assets (4)

3,396,714

43,937

5.18

3,391,121

42,717

5.10

3,389,516

44,798

5.31

Other earning assets

17,062

Non-earning assets

297,980

280,045

288,975

Total assets

3,711,756

3,688,228

3,695,553

Liabilities and shareholders' equity

Interest-bearing deposits:

Demand deposits

251,719

1,617

2.55

224,649

1,420

2.54

169,602

1,170

2.74

NOW

369,586

131

0.14

375,695

140

0.15

393,328

161

0.16

Savings accounts

356,172

106

0.12

354,798

0.11

359,921

0.10

Money market

156,347

745

1.89

146,193

608

1.67

132,804

542

1.62

Time deposits

496,155

4,078

3.26

516,970

4,283

3.32

562,251

6,010

4.25

Wholesale brokered deposits

259,624

2,929

4.48

244,401

2,778

4.56

327,141

4,004

4.87

Total interest-bearing deposits

1,889,603

9,606

2.02

1,862,706

9,326

2.01

1,945,047

11,980

2.45

Borrowed funds:

Federal funds purchased

30,545

353

4.59

46,214

517

4.49

168

4.74

Repurchase agreements

134,619

0.20

124,636

0.25

133,280

0.18

Short term borrowings

5,539

4.87

24,716

277

4.50

—

0.00

Long term FHLB Advances

80,000

788

3.91

80,000

780

3.91

80,000

786

3.91

Long-term debt

49,447

429

3.44

49,424

430

3.49

49,357

429

3.46

Subordinated debentures

35,945

657

7.25

35,899

655

7.32

35,767

751

8.35

Total borrowed funds

336,095

2,363

2.79

360,889

2,738

3.04

298,573

2,028

2.70

Total interest-bearing liabilities

2,225,698

11,969

2.13

2,223,595

12,064

2.18

2,243,620

14,008

2.48

Demand deposits - noninterest-bearing

1,048,639

1,020,374

995,326

Other liabilities

81,368

91,191

103,571

Shareholders' equity

356,051

353,068

353,036

Total liabilities and shareholders' equity

3,711,756

3,688,228

3,695,553

Interest income/interest-earning assets

5.18

5.10

5.31

Interest expense/interest-earning assets

1.40

1.42

1.65

Net interest income and margin (5)

31,968

3.78

30,653

3.68

30,790

3.66

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 tax rate.

Loans are gross of the allowance for credit losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(0.3) million and $(0.4) million for the quarters ended September 30, 2025, and 2024, respectively, and $(0.4) million for the quarter ended June 30, 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.

AVERAGE BALANCES AND RATES

(Dollars in Thousands, Unaudited)

For the nine months ended

9/30/2025

9/30/2024

Average

Balance (1)

Income/

Expense

Yield/ Rate (2)

Average

Balance (1)

Income/

Expense

Yield/ Rate (2)

Assets

Investments:

Interest-earning due from banks

34,728

1,128

4.34

49,779

2,065

5.53

Taxable

745,614

27,539

4.94

863,044

38,081

5.88

Non-taxable

196,820

4,733

4.07

214,677

5,164

4.06

Total investments

977,162

33,400

4.74

1,127,500

45,310

5.52

Loans:(3)

Real estate

1,841,163

67,576

4.91

1,804,159

61,706

4.57

Agricultural

73,071

2,906

5.32

72,946

4,064

7.44

Commercial

109,854

4,951

6.03

77,684

3,458

5.95

Consumer

3,123

196

8.39

3,739

238

8.50

Mortgage warehouse lines

359,564

19,029

7.08

234,470

14,431

8.22

Other

2,389

2.80

2,354

2.61

Total loans

2,389,164

94,708

5.30

2,195,352

83,943

5.11

Total interest-earning assets (4)

3,366,326

128,108

5.14

3,322,852

129,253

5.25

Other earning assets

17,062

17,155

Non-earning assets

284,071

281,952

Total assets

3,667,459

3,621,959

Liabilities and shareholders' equity

Interest-bearing deposits:

Demand deposits

228,208

4,329

2.54

146,443

2,601

2.37

NOW

374,508

390

0.14

396,644

393

0.13

Savings accounts

354,551

292

0.11

369,371

246

0.09

Money market

149,252

1,925

1.72

136,652

1,428

1.40

Time deposits

514,679

12,774

3.32

562,571

18,251

4.33

Brokered deposits

249,584

8,594

4.60

280,248

9,737

4.64

Total interest-bearing deposits

1,870,782

28,304

2.02

1,891,929

32,656

2.31

Borrowed funds:

Federal funds purchased

25,758

870

4.52

5,074

249

6.56

Repurchase agreements

123,954

216

0.23

125,742

166

0.18

Short term borrowings

11,439

391

4.57

14,314

613

5.72

Long term FHLB Advances

80,000

2,339

3.91

80,000

2,341

3.91

Long-term debt

49,424

1,289

3.49

49,335

1,291

3.50

Subordinated debentures

35,900

1,965

7.32

35,722

2,261

8.45

Total borrowed funds

326,475

7,070

2.90

310,187

6,921

2.98

Total interest-bearing liabilities

2,197,257

35,374

2.15

2,202,116

39,577

2.40

Demand deposits - noninterest-bearing

1,024,278

988,128

Other liabilities

91,709

86,061

Shareholders' equity

354,215

345,654

Total liabilities and shareholders' equity

3,667,459

3,621,959

Interest income/interest-earning assets

5.14

5.25

Interest expense/interest-earning assets

1.41

1.59

Net interest income and margin (5)

92,734

3.73

89,676

3.66

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 tax rate.

Loans are gross of the allowance for credit losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(0.9) million and $(1.1) million for the nine months ended September 30, 2025, and 2024, respectively.

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