Sierra Bancorp Reports Record Quarterly Earnings and 2025 Results

PORTERVILLE, Calif.--( BUSINESS WIRE)--Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced unaudited financial results for the three-and twelve-month periods ended December 31, 2025. Sierra Bancorp reported consolidated net income in the fourth quarter of 2025 of $12.9 million, or $0.97 per diluted share, compared to net income of $10.4 million, or $0.72 per diluted share, in the fourth quarter of 2024, and $9.7 million, or $0.72 per diluted share, in the third quarter of 2025.

Highlights for the fourth quarter of 2025 (unless otherwise stated):

For the year ended 2025, the Company recognized net income of $42.3 million, or $3.11 per diluted share, as compared to $40.6 million, or $2.82 per diluted share, for the same period in 2024. The Company’s return on average assets and return on average equity for the year ended 2025 was 1.15% and 11.88%, respectively, as compared to 1.12% and 11.62%, respectively, for the same comparative period in 2024.

“Good is the enemy of great.” – Jim Collins

“I am proud to announce the strongest quarterly earnings in our history!” stated Kevin McPhaill, CEO and President. “Thanks to the dedication of our banking teams and a laser focus on expense control, we are delivering impressive results, as demonstrated by a 10 percent earnings per share growth in 2025. I am even more optimistic about our 2026 strategy to deepen lending and deposit connections with businesses and individuals in our communities, enhance processes and technology, and maintain overall expenses. Our commitment to make every community we serve better starts with our exceptional team working together toward a common purpose. I am excited about our opportunities for improvement not only in 2026, but well into the future!” concluded Mr. McPhaill.

Financial Highlights

Quarterly Changes (comparisons to the fourth quarter of 2024)

Full-Year of 2025 Changes (comparisons to the year ended 2024)

Balance Sheet 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)

At or For the

Three Months Ended

Twelve Months Ended

12/31/2025

9/30/2025

12/31/2024

12/31/2025

12/31/2024

Net income

12,894

9,699

10,364

42,327

40,560

Diluted earnings per share

0.97

0.72

3.11

2.82

Return on average assets

1.39

1.04

1.13

1.15

1.12

Return on average equity

14.09

10.81

11.49

11.88

11.62

Net interest margin (tax-equivalent) (1)

3.79

3.78

3.65

3.75

3.66

Yield on average loans

5.34

5.36

5.20

5.31

5.13

Yield on investments

4.52

4.73

5.03

4.69

5.40

Cost of average total deposits

1.14

1.30

1.46

1.27

1.50

Cost of funds

1.38

1.45

1.59

1.45

1.64

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

57.69

58.05

59.74

58.91

60.76

Total assets

3,829,279

3,709,377

3,614,271

3,829,279

3,614,271

Loans net of deferred fees

2,546,845

2,491,788

2,331,434

2,546,845

2,331,434

Noninterest demand deposits

995,623

1,072,927

1,007,208

995,623

1,007,208

Total deposits

2,876,436

2,932,760

2,891,668

2,876,436

2,891,668

Noninterest-bearing deposits over total deposits

34.6

36.6

34.8

34.6

34.8

Shareholders' equity / total assets

9.53

9.71

9.89

9.53

9.89

Tangible common equity ratio (2)

8.88

9.03

9.18

8.88

9.18

Book value per share

27.49

26.71

25.12

27.49

25.12

Tangible book value per share (2)

25.42

24.67

23.15

25.42

23.15

Community bank leverage ratio (subsidiary bank)

11.94

11.73

11.80

11.94

11.80

Tangible common equity ratio (subsidiary bank) (2)

10.92

11.08

11.07

10.92

11.07

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".

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income was $32.0 million for the fourth quarter of 2025, a $1.6 million increase, or 5%, over the fourth quarter of 2024. For the year ended December 31, 2025, net interest income increased $4.7 million, or 4%, to $124.7 million, relative to the same period in 2024. Net interest income remained relatively unchanged compared to the prior linked quarter.

For the fourth quarter of 2025, the yield on earning assets was 4 basis points lower as compared to the same period in 2024, which offset the increase in average interest-earning assets of $33.1 million. The decrease in yield was mostly due to the decrease in both yields and balances on variable rate collateralized loan obligations (CLOs) due to the 75 basis points in fed funds rate cuts from September through December 2025. This was partially offset by an increase of 14 basis points in loan yields, primarily due to increases in real estate and commercial and industrial yields.

Further, there was a favorable 26 basis point decrease in the cost of our interest-bearing liabilities for the same period. The favorable decline in funding costs was due to a significant reduction in the cost of customer time deposits and brokered deposits, compounded by a decrease of $138.8 million in the average balance of those accounts. Lower‑cost deposit categories, including savings accounts, NOW, and money market accounts, experienced modest net increases in average balances and little change in funding costs, resulting in an immaterial impact on net interest income.

Net interest income for the comparative annual periods increased $4.7 million, or 4%, due mostly to a decrease in interest expense of $5.6 million, driven by a decrease in cost of interest-bearing liabilities of 26 basis points. Consistent with the quarterly comparison, the primary drivers were lower rates paid on customer time deposits and brokered deposits, along with a $93.8 million decline in average balances in those accounts. This was partially offset by an increase of $42.2 million in borrowed funds average balances with little change in the overall funding costs.

Investment securities average balances declined by $123.0 million during the comparative annual period, primarily due to an increase in paydowns and early calls of CLOs, while loan balances grew by $183.9 million driven by strong production in mortgage warehouse, commercial real estate, and commercial and industrial lending. The yield on interest‑earning assets declined 10 basis points, and while the higher level of interest‑earning assets partially offset the lower yield, the net effect had a moderate impact on interest income.

Our net interest margin was 3.79% for the fourth quarter of 2025 which was 14 basis points higher than the fourth quarter of 2024. The yield of interest-earning assets decreased 4 basis points for the fourth quarter of 2025, as compared to the same quarter for 2024, and the cost of interest-bearing liabilities decreased 26 basis points. The favorable shift in costs led to an overall 14 basis point increase in net interest margin in the fourth quarter of 2025, compared to the same period in 2024. Compared to the prior annual period, the yield on interest earning assets declined 10 basis points while the cost of interest-bearing liabilities decreased by 26 basis points for an overall increase in net interest margin of 9 basis points to 3.75%.

Credit Loss Expense

The Company recorded a reversal of $0.8 million in credit loss expense related to loans in the fourth quarter of 2025 and recognized $6.1 million of credit loss expense related to loans for the full year of 2025, compared to credit loss expense of $2.3 million and $4.6 million, respectively, for the same periods in 2024. 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 higher credit loss expense in 2025 was due mostly to increased provision related to a single agricultural lending relationship.

Compared to the prior linked quarter, the credit loss expense related to loans decreased by $4.5 million due mostly to the establishment of a $3.5 million specific reserve for a single agricultural relationship in the third quarter of 2025, followed by a net $0.8 million release of allowance in the fourth quarter of 2025. During the fourth quarter of 2025, $2.3 million of the $3.5 million specific reserve established in the third quarter of 2025 was charged off and $1.2 million was released, along with the release of an additional $0.3 million in specific reserves on two separate relationships. The fourth quarter of 2025 release of reserves related to loans individually evaluated were partially offset by higher reserves on loans collectively evaluated.

The net unrealized loss position on the Bank’s investment securities was attributable to changes in interest rates and volatility in the financial markets and not a result of an expected credit loss.

Noninterest Income

Total noninterest income reflects a $0.2 million decline, or 2%, for the quarter ended December 31, 2025, as compared to the same quarter in 2024, and a $0.9 million, or 3%, decrease for the full year 2025 as compared to the same period in 2024. The decrease in the quarterly comparison was primarily driven by a decrease in gains recorded on life insurance proceeds and on the sale of investment securities. This decrease was due to a small gain on life insurance proceeds recorded in the fourth quarter of 2024 with no like transactions in the fourth quarter of 2025. The full year decrease was driven by an unfavorable change in nonrecurring gains and a decrease in service charges on deposit accounts of $0.7 million. These decreases were partially offset by an increase in gains recorded on life insurance proceeds during 2025.

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 Bank-Owned Life Insurance (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 fourth quarter and full year of 2025, earnings from the BOLI were $0.1 million and $1.2 million, respectively, while additional expense from the related deferred compensation liability was $0.2 million and $1.4 million, respectively.

The majority of this deferred compensation expense is reported as professional fees under directors’ fees as it is related to deferral of past directors’ fees. Specifically, $0.1 million for the fourth quarter of 2025 and $1.0 million for the full year of 2025 were recorded as directors’ fees within the professional fees expense line item. The related tax benefit associated with tax-free earnings with tax-deductible expense totaled $0.1 million during the fourth quarter of 2025 and $0.8 million for the full year 2025.

Noninterest Expense

Total noninterest expense remained relatively flat for the annual comparison with a 0.1% decline overall due to a strategic initiative to manage expenses. While noninterest expense increased by $0.2 million in the fourth quarter of 2025 as compared to the fourth quarter of 2024, the change was due mostly to higher legal fees associated with workout loans.

Salaries and Benefits expense declined by $0.1 million, or 1%, in the fourth quarter of 2025, as compared to the fourth quarter of 2024, and was $0.7 million higher, or 1%, for the year ended 2025, compared to the same period in 2024. For the full year of 2025, overall base salary and incentives were relatively unchanged. The increase in costs was mostly due to higher employee benefits, driven mostly by higher insurance costs. Full-time equivalent employees decreased by 20 to 465 full-time equivalent employees at December 31, 2025, as compared to 485 at December 31, 2024. The reduction in staff mostly occurred in the fourth quarter of 2025 and is expected to have a positive impact on overall compensation expense in 2026.

Other noninterest expense increased $0.2 million for the fourth quarter of 2025 and decreased $0.9 million for the year ended 2025, as compared to the same periods in 2024. For the year-over-year comparison, the favorable variance was the result of reductions in directors’ deferred compensation expense and overall fraud and debit card losses.

The Company's provision for income taxes was 24.8% of pre-tax income in the fourth quarter of 2025, compared to 17.7% in the fourth quarter of 2024, and 24.9% of pre-tax income for the year ended December 31, 2025, as compared to 24.7% for the year ended 2024. The lower effective tax rate in the fourth quarter of 2024 was due to an increase in the net benefit from low-income housing tax credit investments.

Balance Sheet Summary

The $215.8 million, or 6%, increase in total assets during the year ended 2025, was mostly a result of loan growth of $215.4 million during the year. Investment securities declined $45.3 million, primarily from runoff and calls of variable rate CLOs, offset by purchases of mortgage-backed securities and corporate bonds.

The $215.4 million increase in gross loans at amortized cost, as compared to December 31, 2024, was a result of organic growth led by a $191.9 million strategic increase in outstanding mortgage warehouse balances. The remaining increases came from $33.1 million in commercial real estate loans, $14.2 million in other commercial loans, and $8.9 million in other construction/land loans, partially offset by decreases of $23.0 million in residential real estate loans, $9.2 million in farmland loans, and $0.5 million in consumer loans.

As indicated in the loan roll forward below, new credit extended (excluding mortgage warehouse) for the fourth quarter of 2025 of $26.8 million represented a $21.3 million decrease compared to the prior linked quarter, and a $53.1 million decline relative to the same period in 2024. New credit extended (excluding mortgage warehouse) decreased $27.1 million for the full year of 2025 as compared to 2024, as a result of a shift in lending focus away from agricultural lending as well as a more competitive market for loans. Loan pay-downs, maturities, and amortization have remained stable over the quarterly and linked quarter comparisons.

LOAN ROLLFORWARD

For the three months ended:

For the twelve months ended:

December

31, 2025

September

30, 2025

December

31, 2024

December

31, 2025

December

31, 2024

Gross loans beginning balance

2,491,779

2,434,605

2,320,629

2,331,341

2,090,075

New credit extended

26,794

48,065

79,934

189,376

216,452

Changes in line of credit utilization (1)

6,230

2,628

(19,664

)

(684

)

(43,432

)

Change in mortgage warehouse

65,651

50,787

(9,376

)

191,934

210,402

Pay-downs, maturities, charge-offs and amortization

(43,574

)

(44,306

)

(40,182

)

(165,087

)

(142,156

)

Gross loans ending balance

2,546,880

2,491,779

2,331,341

2,546,880

2,331,341

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 $236.4 million at December 31, 2025, compared to $256.9 million at December 31, 2024. Total line utilization, excluding mortgage warehouse and overdraft lines, was 61% at December 31, 2025, and 57% at December 31, 2024. Including mortgage warehouse utilization, overall utilization was 62% at December 31, 2025, as compared to 51% at December 31, 2024. Mortgage warehouse utilization increased to 68% at December 31, 2025, as compared to 51% at December 31, 2024. Due to an increase in line utilization, offset by new customer growth, total mortgage warehouse availability decreased to $247.7 million at December 31, 2025, as compared to $311.6 million at December 31, 2024.

Deposit balances declined by $15.2 million, or 0.5%, during the year ended 2025 due primarily to a decline in customer time deposits. Core non-maturity deposits increased by $11.1 million, or 1%, while customer time deposits decreased by $71.4 million, or 13%. The decline in customer time deposits was due primarily to a strategic shift in our CD rate strategy in order to lower overall deposit costs. Brokered deposits increased by $45.1 million, or 16%. The increase in brokered deposits was primarily to fund increases in mortgage warehouse lines. As shorter term rates fell in the later part of the year, approximately $125 million of the $320 million of brokered deposits at December 31, 2025, were one-way buys through IntraFi in lieu of traditional brokered certificates of deposits. Overall noninterest-bearing deposits as a percentage of total deposits at December 31, 2025, remained steady at 34.6%, as compared to 34.8% at December 31, 2024. Other interest-bearing liabilities of $433.6 million at December 31, 2025, consist of $130.9 million in customer repurchase agreements, $222.7 million in overnight borrowings, and $80.0 million of term FHLB borrowings, as compared to $108.9 million in customer repurchase agreements, and $80.0 million of term FHLB borrowings at December 31, 2024.

Overall uninsured deposits are estimated to be approximately $702.6 million, or 25% 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 December 31, 2025, the Company had approximately 117,000 accounts, and the 25 largest deposit balance customers had balances of approximately 9% of overall deposits. During the fourth quarter of 2025, 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 December 31, 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

December 31, 2025

December 31, 2024

Cash and cash equivalents

135,628

100,664

Unpledged investment securities

551,406

552,098

Excess pledged securities

192,275

242,519

FHLB borrowing availability

629,481

629,134

Unsecured lines of credit

250,785

479,785

Secured lines of credit

25,000

Funds available through fed discount window

254,908

298,296

Totals

2,039,483

2,327,496

Total capital of $364.9 million at December 31, 2025, reflects an increase of $7.6 million, or 2%, relative to year-end 2024. The increase in equity during the year ended December 31, 2025, was primarily due to $42.3 million in net income and a $8.1 million favorable swing in accumulated other comprehensive income (loss) partially offset by $13.7 million in dividends paid, and $30.8 million in share repurchases. The remaining difference was related to stock options exercised and restricted stock activity during the year.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, decreased by $4.9 million to $14.8 million for the year ended December 31, 2025, as compared to December 31, 2024. At December 31, 2025, nonaccrual assets were comprised primarily of two agricultural relationships totaling $13.0 million and a single other real estate owned property of $1.6 million. The Company's ratio of nonperforming loans to gross loans improved to 0.52% at December 31, 2025, from 0.84% at December 31, 2024. This favorable change in asset quality resulted from a decrease in nonaccrual loan balances, primarily as a result of the charge-off of $7.5 million from one agricultural loan relationship. Foreclosed assets increased to $1.6 million for the year ended December 31, 2025, due to the transfer of one commercial real estate loan previously classified as nonaccrual. All the Company's nonperforming loans are individually evaluated for credit loss quarterly and management believes the established nominal allowance for credit loss on such loans was appropriate at December 31, 2025.

Loans with payments past due 30 days or more and still accruing increased to $6.8 million at December 31, 2025, an increase of $6.6 million compared to the prior quarter end and an increase of $5.5 million compared to the prior year end. Of the $6.8 million past due and still accruing, $3.8 million is due to maturities in process of renewal, and another $2.0 million was related to a single agricultural real estate loan that was brought current on January 9, 2026.

The Company's allowance for credit losses on loans was $21.5 million at December 31, 2025, as compared to a balance of $24.8 million at December 31, 2024. The decline in the Company’s allowance in total dollar amount and as a percentage of total loans was primarily the result of the workout of the single, large agricultural loan relationship resulting in a $7.5 million charge-off. At December 31, 2024, the Company’s specific reserves were primarily comprised of a $3.0 million specific reserve on this same loan relationship. At December 31, 2025, there was an inconsequential specific reserve on this loan relationship. The allowance was 0.84% of total loans at December 31, 2025, and 1.07% of total loans at December 31, 2024. The Company experienced higher net charge offs during the year, offset by the release of $1.6 million in specific reserves on three separate other commercial loans in the fourth quarter of 2025. The following tables highlight the coverage ratios by loan category at December 31, 2025, September 30, 2025, and December 31, 2024:

ALLOWANCE FOR CREDIT LOSSES ON LOANS BY CATEGORY

(Dollars in Thousands, unaudited)

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

Total Loans

2,546,845

21,480

100.00

0.84

As of September 30, 2025

Balance

Total

Allowance

Percent of

Portfolio

Coverage

Ratio (1)

Real estate:

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 (2)

1,485,961

17,281

59.63

1.16

Other Commercial

185,958

5,880

7.46

3.16

Consumer loans (including overdrafts)

2,909

113

0.12

3.88

Subtotal (2) (3)

1,674,828

23,274

67.21

1.39

Residential real estate

364,277

1,400

14.62

0.38

Mortgage warehouse lines

452,683

506

18.17

0.11

Total Loans

2,491,788

25,180

100.00

1.01

As of December 31, 2024

Balance

Total

Allowance

Percent of

Portfolio

Coverage

Ratio (1)

Real estate:

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 (2)

1,440,852

17,423

61.80

1.21

Other Commercial

178,331

4,829

7.65

2.71

Consumer loans (including overdrafts)

3,344

372

0.14

11.12

Subtotal (2) (3)

1,622,527

22,624

69.59

1.39

Residential real estate

382,507

1,808

16.41

0.47

Mortgage warehouse lines

326,400

398

14.00

0.12

Total Loans

2,331,434

24,830

100.00

1.07

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

Does not include residential real estate.

Does not include mortgage warehouse lines.

The allowance for credit losses on loans and leases was 0.84% of gross loans at amortized cost at December 31, 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 0.13%. Mortgage warehouse lines historically have incurred nominal losses and, therefore, have a significantly lower reserve than the 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 December 31, 2025. The allowance as a percentage of gross loans, exclusive of mortgage warehouse lines and residential mortgage loans, was 1.16% at December 31, 2025, as compared to 1.39% at September 30, 2025, and 1.39% 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 decrease in the coverage ratio for other commercial loans was due to the $2.3 million partial charge-off and $1.2 million release of the remaining specific reserve on a single $3.5 million agricultural production loan relationship.

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 December 31, 2025, 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 is one of the largest independent banks 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

12/31/2025

9/30/2025

6/30/2025

3/31/2025

12/31/2024

Cash and due from banks

135,628

95,501

130,012

159,711

100,664

Investment securities

Available-for-sale, at fair value

625,330

596,933

668,834

620,288

655,967

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

290,811

294,511

298,484

302,123

305,514

Total investment securities

916,141

891,444

967,318

922,411

961,481

Real estate loans

Residential real estate

359,514

364,277

371,415

377,592

382,507

Commercial real estate

1,390,890

1,404,681

1,392,075

1,380,402

1,357,833

Other construction/land

14,414

13,420

11,662

7,633

5,472

Farmland

68,307

67,860

67,967

73,206

77,547

Total real estate loans

1,833,125

1,850,238

1,843,119

1,838,833

1,823,359

Other commercial

192,577

185,958

186,620

181,631

178,331

Mortgage warehouse lines

518,333

452,683

401,896

283,231

326,400

Consumer loans

2,810

2,909

2,974

2,968

3,344

Total loans

2,546,845

2,491,788

2,434,609

2,306,663

2,331,434

Allowance for credit losses on loans

(21,480

)

(25,180

)

(21,680

)

(27,050

)

(24,830

)

Net loans

2,525,365

2,466,608

2,412,929

2,279,613

2,306,604

Bank premises & equipment

14,974

15,056

15,285

15,338

15,431

Other assets

237,171

240,768

244,758

229,110

230,091

Total assets

3,829,279

3,709,377

3,770,302

3,606,183

3,614,271

LIABILITIES & CAPITAL

Noninterest demand deposits

995,623

1,072,927

1,065,742

1,037,990

1,007,208

Interest-bearing transaction accounts

581,746

635,279

603,294

598,924

587,753

Savings deposits

365,064

357,107

352,803

355,325

347,387

Money market deposits

151,760

156,255

148,084

143,522

140,793

Customer time deposits

462,153

476,242

514,596

524,173

533,577

Brokered deposits

320,090

234,950

289,950

189,950

274,950

Total deposits

2,876,436

2,932,760

2,974,469

2,849,884

2,891,668

Repurchase agreements

130,853

125,749

126,509

118,756

108,860

Long-term debt

49,483

49,461

49,438

49,416

49,393

Subordinated debentures

36,017

35,972

35,928

35,883

35,838

Other interest-bearing liabilities

302,700

135,000

154,400

80,000

Total deposits & interest-bearing liabilities

3,395,489

3,278,942

3,340,744

3,133,939

3,165,759

Allowance for credit losses on unfunded loan commitments

710

790

810

820

710

Other liabilities

68,217

69,562

73,041

119,668

90,500

Total capital

364,863

360,083

355,707

351,756

357,302

Total liabilities & capital

3,829,279

3,709,377

3,770,302

3,606,183

3,614,271

GOODWILL & INTANGIBLE ASSETS

(Dollars in Thousands, Unaudited)

12/31/2025

9/30/2025

6/30/2025

3/31/2025

12/31/2024

Goodwill

27,357

Core deposit intangible

132

294

456

618

Total intangible assets

27,409

27,489

27,651

27,813

27,975

CREDIT QUALITY

(Dollars in Thousands, Unaudited)

12/31/2025

9/30/2025

6/30/2025

3/31/2025

12/31/2024

Nonperforming loans

13,231

14,006

14,981

18,201

19,668

Foreclosed assets

1,565

1,839

Total nonperforming assets

14,796

15,845

14,981

18,201

19,668

Quarterly net charge offs (recoveries)

2,915

209

6,580

(259

)

215

Past due & still accruing (30-89)

6,835

187

3,033

3,057

1,348

Classified loans

31,433

32,111

35,700

37,265

44,464

Nonperforming loans / gross loans

0.52

0.56

0.62

0.79

0.84

NPA's / loans plus foreclosed assets

0.58

0.64

0.62

0.79

0.84

Allowance for credit losses on loans / gross loans

0.84

1.01

0.89

1.17

1.07

SELECT PERIOD-END STATISTICS

(Unaudited)

12/31/2025

9/30/2025

6/30/2025

3/31/2025

12/31/2024

Shareholders' equity / total assets

9.53

9.71

9.43

9.75

9.89

Gross loans / deposits

88.54

84.96

81.85

80.94

80.62

Noninterest-bearing deposits / total deposits

34.61

36.58

35.83

36.42

34.83

Core non-maturity deposits

2,094,193

2,221,568

2,169,923

2,135,761

2,083,141

CONSOLIDATED INCOME STATEMENT

(Dollars in Thousands, Unaudited)

For the three months ended:

For the year ended:

12/31/2025

9/30/2025

12/31/2024

12/31/2025

12/31/2024

Interest income

43,280

43,937

43,095

171,388

172,348

Interest expense

11,328

11,969

12,742

46,702

52,319

Net interest income

31,952

31,968

30,353

124,686

120,029

Credit loss (benefit) expense - loans

(785

)

3,709

2,335

6,095

4,593

Credit loss (benefit) expense - unfunded commitments

(80

)

(20

)

200

Credit loss benefit - debt securities held-to-maturity

)

Net interest income after credit loss expense

32,817

28,279

27,948

118,591

115,237

Service charges and fees on deposit accounts

5,986

6,065

6,059

23,488

24,173

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

)

129

120

(2,615

)

Net (loss) gain on sale of fixed assets

(31

)

(16

)

(52

)

3,783

Increase in cash surrender value of life insurance

412

410

246

1,402

979

Earnings on separate account life insurance

127

608

126

1,206

1,671

Other income

847

975

968

4,425

3,530

Total noninterest income

7,337

8,058

7,512

30,589

31,521

Salaries & benefits

12,681

12,827

12,749

51,056

50,338

Occupancy expense

3,182

3,234

3,201

12,536

12,374

Other noninterest expenses

7,155

7,574

6,912

29,245

30,178

Total noninterest expense

23,018

23,635

22,862

92,837

92,890

Income before taxes

17,136

12,702

12,598

56,343

53,868

Provision for income taxes

4,242

3,003

2,234

14,016

13,308

Net income

12,894

9,699

10,364

42,327

40,560

TAX DATA

Tax-exempt municipal income

1,626

1,580

1,579

6,359

6,743

Interest income - fully tax equivalent

43,712

44,357

43,515

173,078

174,140

PER SHARE DATA

(Unaudited)

For the three months ended:

For the year ended:

12/31/2025

9/30/2025

12/31/2024

12/31/2025

12/31/2024

Basic earnings per share

0.97

0.73

3.14

2.84

Diluted earnings per share

0.97

0.72

3.11

2.82

Common dividends

0.25

0.24

1.00

0.94

Weighted average shares outstanding

13,251,040

13,361,594

14,169,467

13,496,560

14,284,401

Weighted average diluted shares

13,350,518

13,470,658

14,299,618

13,593,119

14,396,021

Book value per basic share (EOP)

27.49

26.71

25.12

27.49

25.12

Tangible book value per share (EOP)

25.42

24.67

23.15

25.42

23.15

Common shares outstanding (EOP)

13,273,788

13,482,458

14,223,046

13,273,788

14,223,046

KEY FINANCIAL RATIOS

(Unaudited)

For the three months ended:

For the year ended:

12/31/2025

9/30/2025

12/31/2024

12/31/2025

12/31/2024

Return on average equity

14.09

10.81

11.49

11.88

11.62

Return on average assets

1.39

1.04

1.13

1.15

1.12

Net interest margin (tax-equivalent) (1)

3.79

3.78

3.65

3.75

3.66

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

57.69

58.05

59.74

58.91

60.76

Net charge-offs to avg loans (not annualized)

0.12

0.01

0.39

0.15

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

(Unaudited)

12/31/2025

9/30/2025

12/31/2024

Total stockholders' equity

364,863

360,083

357,302

Less: goodwill and other intangible assets

27,409

27,489

27,975

Tangible common equity

337,454

332,594

329,327

Total assets

3,829,279

3,709,377

3,614,271

Less: goodwill and other intangible assets

27,409

27,489

27,975

Tangible assets

3,801,870

3,681,888

3,586,296

Total stockholders' equity (bank only)

442,092

435,186

424,363

Less: goodwill and other intangible assets (bank only)

27,409

27,489

27,975

Tangible common equity (bank only)

414,683

407,697

396,388

Total assets (bank only)

3,826,215

3,706,266

3,607,133

Less: goodwill and other intangible assets (bank only)

27,409

27,489

27,975

Tangible assets (bank only)

3,798,806

3,678,777

3,579,158

Common shares outstanding

13,273,788

13,482,458

14,223,046

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

27.49

26.71

25.12

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

25.42

24.67

23.15

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

9.53

9.71

9.89

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

8.88

9.03

9.18

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

10.92

11.08

11.07

For the three months ended:

For the year ended:

Efficiency Ratio:

12/31/2025

9/30/2025

12/31/2024

12/31/2025

12/31/2024

Noninterest expense

23,018

23,635

22,862

92,837

92,890

Divided by:

Net interest income

31,952

31,968

30,353

124,686

120,029

Tax-equivalent interest income adjustments

432

420

1,690

1,792

Net interest income, adjusted

32,384

32,388

30,773

126,376

121,821

Noninterest income

7,337

8,058

7,512

30,589

31,521

Less (loss) gain on sale of securities

)

129

120

(2,615

)

Less (loss) gain on sale of fixed assets

(31

)

(16

)

(52

)

3,783

Tax-equivalent noninterest income adjustments

143

271

693

704

Noninterest income, adjusted

7,515

8,329

7,498

31,214

31,057

Net interest income plus noninterest income, adjusted

39,899

40,717

38,271

157,590

152,878

Efficiency Ratio (tax-equivalent)

57.69

58.05

59.74

58.91

60.76

For the three months ended:

For the year ended:

Pre-tax pre-provision income:

12/31/2025

9/30/2025

12/31/2024

12/31/2025

12/31/2024

Net income

12,894

9,699

10,364

42,327

40,560

Add: Provision for income taxes

4,242

3,003

2,234

14,016

13,308

Add: Provision for credit losses

(865

)

3,689

2,405

6,095

4,792

Pre-tax pre-provision income

16,271

16,391

15,003

62,438

58,660

NONINTEREST INCOME/EXPENSE

(Dollars in Thousands, Unaudited)

For three months ended:

For twelve months ended:

Noninterest income:

12/31/2025

9/30/2025

12/31/2024

12/31/2025

12/31/2024

Service charges and fees on deposit accounts

Interchange income on debit cards

2,031

2,027

2,040

8,067

8,134

Business analysis fees

1,202

1,220

1,238

4,579

4,786

Overdraft fee income

1,376

1,357

1,377

5,232

5,512

Other service charges and fees

1,377

1,461

1,404

5,610

5,741

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

)

—

129

120

(2,615

)

(Loss) gain on sale of fixed assets

(31

)

—

(16

)

(52

)

3,783

Increase in cash surrender value of life insurance

412

410

246

1,403

979

Earnings on separate account life insurance

127

608

126

1,206

1,671

Other

847

975

968

4,424

3,530

Total noninterest income

7,337

8,058

7,512

30,589

31,521

As a % of average interest earning assets (1)

0.86

0.94

0.89

0.91

0.95

Noninterest expense:

Salaries and employee benefits

Salary and incentives

10,481

10,863

10,918

42,495

42,448

Employee benefits

2,134

1,865

1,781

8,252

7,515

Deferred compensation

309

375

Occupancy costs

3,182

3,234

3,201

12,536

12,374

Advertising and marketing costs

370

403

361

1,526

1,422

Data processing costs

1,545

1,518

1,458

6,127

6,202

Deposit services costs

2,077

2,134

2,115

8,319

8,417

Loan services costs

Loan processing

173

104

515

529

Foreclosed assets

—

Other operating costs

951

901

836

3,856

3,816

Professional services costs

Legal & accounting

511

641

266

2,224

2,243

Director's costs

350

332

358

1,302

1,376

Deferred directors' fees

438

214

1,041

1,597

Other professional service

774

763

719

2,952

2,883

Stationery & supply costs

102

100

433

483

Sundry & tellers

286

168

381

943

1,210

Total noninterest expense

23,018

23,635

22,862

92,837

92,890

As a % of average interest earning assets (1)

2.70

2.76

2.71

2.75

2.79

Efficiency ratio (2)(3)

57.69

58.05

59.74

58.91

60.76

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

December 31, 2025

September 30, 2025

December 31, 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:

Interest-earning due from banks

$ 14,990

$ 173

4.58%

$ 31,672

$ 329

4.12%

$ 49,680

$ 594

4.74%

Taxable

700,921

8,233

4.66%

731,274

9,104

4.94%

791,332

10,600

5.31%

Non-taxable

202,638

1,626

4.03%

196,550

1,580

4.04%

198,600

1,579

3.99%

Total investments

918,549

10,032

4.52%

959,496

11,013

4.73%

1,039,612

12,773

5.03%

Loans: (3)

Real estate

1,843,428

23,136

4.98%

1,849,065

22,997

4.93%

1,811,939

21,413

4.69%

Agricultural Production

66,833

822

4.88%

70,033

961

5.44%

82,347

1,326

6.39%

Commercial

114,782

1,782

6.16%

116,855

1,824

6.19%

85,779

1,244

5.75%

Consumer

2,771

10.59%

2,872

8.84%

3,402

10.38%

Mortgage warehouse lines

438,892

7,418

6.71%

395,940

7,059

7.07%

328,838

6,227

7.51%

Other

2,361

2.86%

2,453

3.07%

2,595

3.36%

Total loans

2,469,067

33,249

5.34%

2,437,218

32,924

5.36%

2,314,900

30,321

5.20%

Total interest earning assets (4)

3,387,616

43,281

5.12%

3,396,714

43,937

5.18%

3,354,512

43,094

5.16%

Other earning assets

43,768

17,062

44,910

Non-earning assets

260,567

297,980

258,710

Total assets

$ 3,691,951

$ 3,711,756

$ 3,658,132

Liabilities and shareholders' equity

Interest bearing deposits:

Demand deposits

$ 234,450

$ 1,282

2.17%

$ 251,719

$ 1,617

2.55%

$ 202,940

$ 1,348

2.64%

NOW

362,791

0.10%

369,586

131

0.14%

382,649

118

0.12%

Savings accounts

358,492

108

0.12%

356,172

106

0.12%

353,807

0.10%

Money market

162,715

725

1.77%

156,347

745

1.89%

144,812

643

1.76%

Time Deposits

470,338

3,546

2.99%

496,155

4,078

3.26%

538,441

4,979

3.68%

Brokered Deposits

218,985

2,439

4.42%

259,624

2,929

4.48%

289,678

3,520

4.82%

Total interest bearing deposits

1,807,771

8,193

1.80%

1,889,603

9,606

2.02%

1,912,327

10,698

2.22%

Borrowed funds:

Federal funds purchased

114,139

1,142

3.97%

30,545

353

4.59%

165

4.81%

Repurchase agreements

121,857

0.15%

134,619

0.20%

118,327

0.15%

Short term borrowings

8,802

4.24%

5,539

4.87%

7,238

3.95%

Long term FHLB Advances

80,000

788

3.91%

80,000

788

3.91%

80,000

786

3.90%

Long term debt

49,469

429

3.44%

49,447

429

3.44%

49,380

430

3.45%

Subordinated debentures

35,989

637

7.02%

35,945

657

7.25%

35,812

708

7.84%

Total borrowed funds

410,256

3,136

3.03%

336,095

2,363

2.79%

290,922

2,043

2.79%

Total interest bearing liabilities

2,218,027

11,329

2.03%

2,225,698

11,969

2.13%

2,203,249

12,741

2.29%

Demand deposits - Noninterest bearing

1,032,617

1,048,639

993,827

Other liabilities

78,323

81,368

102,296

Shareholders' equity

362,984

356,051

358,760

Total liabilities and shareholders' equity

$ 3,691,951

$ 3,711,756

$ 3,658,132

Interest income/interest earning assets

5.12%

5.18%

5.16%

Interest expense/interest earning assets

1.33%

1.40%

1.51%

Net interest income and margin (5)

$ 31,952

3.79%

$ 31,968

3.78%

$ 30,353

3.65%

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 possible 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 December 31, 2025 and 2024, respectively, and $(0.3) million for the quarter ended September 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 twelve months ended

December 31, 2025

December 31, 2024

Average

Balance (1)

Income/

Expense

Yield/

Rate (2)

Average

Balance (1)

Income/

Expense

Yield/

Rate (2)

Assets

Investments:

Interest-earning due from banks

29,753

1,301

4.37

49,754

2,659

5.33

Taxable

734,348

35,771

4.87

845,018

48,682

5.75

Non-taxable

198,287

6,359

4.06

210,636

6,743

4.05

Total investments

962,388

43,431

4.69

1,105,408

58,084

5.40

Loans: (3)

Real estate

1,841,734

90,713

4.93

1,806,114

83,120

4.60

Agricultural

71,498

3,727

5.21

75,309

5,390

7.16

Commercial

111,097

6,732

6.06

79,719

4,702

5.90

Consumer

3,034

271

8.93

3,654

326

8.92

Mortgage warehouse lines

379,559

26,447

6.97

258,191

20,658

8.00

Other

2,382

2.81

2,415

2.82

Total loans

2,409,304

127,957

5.31

2,225,402

114,264

5.13

Total interest earning assets (4)

3,371,692

171,388

5.13

3,330,810

172,348

5.23

Other earning assets

17,062

17,131

Non-earning assets

284,878

283,111

Total assets

3,673,632

3,631,052

Liabilities and shareholders' equity

Interest bearing deposits:

Demand deposits

229,782

5,611

2.44

160,644

3,950

2.46

NOW

371,554

482

0.13

393,126

512

0.13

Savings accounts

355,544

401

0.11

365,459

336

0.09

Money market

152,645

2,650

1.74

138,703

2,071

1.49

Time deposits

503,503

16,320

3.24

556,506

23,229

4.17

Brokered deposits

241,871

11,033

4.56

282,618

13,257

4.69

Total interest bearing deposits

1,854,899

36,497

1.97

1,897,056

43,355

2.29

Borrowed funds:

Federal funds purchased

48,035

2,013

4.19

3,840

252

6.56

Repurchase agreements

123,425

262

0.21

123,878

211

0.17

Short term borrowings

10,774

485

4.50

12,535

685

5.46

Long term FHLB Advances

80,000

3,126

3.91

80,000

3,126

3.91

Long term debt

49,436

1,718

3.48

49,346

1,721

3.49

Subordinated debentures

35,923

2,601

7.24

35,745

2,969

8.31

Total borrowed funds

347,593

10,205

2.94

305,344

8,964

2.94

Total interest bearing liabilities

2,202,492

46,702

2.12

2,202,400

52,319

2.38

Demand deposits - noninterest bearing

1,026,380

989,561

Other liabilities

88,335

90,142

Shareholders' equity

356,425

348,949

Total liabilities and shareholders' equity

3,673,632

3,631,052

Interest income/interest earning assets

5.13

5.23

Interest expense/interest earning assets

1.39

1.57

Net interest income and margin (5)

124,686

3.75

120,029

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.

Loans are gross of the allowance for possible credit losses. Net loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(1.2) million and $(1.4) million for the years ended December 31, 2024 and 2023, respectively.

Non-accrual loans are slotted by loan type and have been included in total loans for purposes of total interest earning assets.

Net interest margin represents net interest income as a percentage of average interest-earning assets (tax-equivalent).

Category: Financial

Source: Sierra Bancorp