Part I - Financial Information [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements and accompanying notes for the period ended March 31, 2025 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets slightly decreased to $3.61 billion, driven by lower net loans and investments Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total cash & cash equivalents | $159,711 | $100,664 | +$59,047 | | Net loans | $2,279,613 | $2,306,604 | -$26,991 | | Total investment securities | $922,411 | $961,481 | -$39,070 | | **Total assets** | **$3,606,183** | **$3,614,271** | **-$8,088** | | Total deposits | $2,849,884 | $2,891,668 | -$41,784 | | **Total liabilities** | **$3,254,427** | **$3,256,969** | **-$2,542** | | **Total shareholders' equity** | **$351,756** | **$357,302** | **-$5,546** | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Net income slightly decreased to $9.1 million due to a higher credit loss provision and lower noninterest income Q1 2025 vs. Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net interest income | $30,112 | $28,717 | +$1,395 | | Credit loss expense - loans | $1,961 | $97 | +$1,864 | | Total noninterest income | $6,642 | $8,589 | -$1,947 | | Total noninterest expense | $22,417 | $24,526 | -$2,109 | | **Net income** | **$9,101** | **$9,330** | **-$229** | | **Earnings per share diluted** | **$0.65** | **$0.64** | **+$0.01** | | Cash dividends per share | $0.25 | $0.23 | +$0.02 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased by $59.0 million, driven by strong operating and investing cash flows Cash Flow Summary for Three Months Ended March 31 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $40,625 | $6,981 | | Net cash provided by investing activities | $67,635 | $220,496 | | Net cash used in financing activities | ($49,213) | ($186,835) | | **Increase in cash and cash equivalents** | **$59,047** | **$40,642** | [Notes to Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail accounting policies, portfolio compositions, and a subsequent loan repayment event - The company operates as a single community banking segment with **total assets of $3.6 billion** and **total deposits of $2.8 billion** at March 31, 2025[21](index=21&type=chunk) - Off-balance-sheet commitments to extend credit **increased to $749.2 million** from $636.4 million at year-end 2024, mainly from unused mortgage warehouse lines[43](index=43&type=chunk) - Subsequent to quarter-end, the company received a **full payment of $6.5 million** on a nonaccrual commercial real estate loan with a carrying amount of $5.9 million[132](index=132&type=chunk) [Management's Discussion & Analysis of Financial Condition & Results of Operations](index=52&type=section&id=Item%202.%20Management's%20Discussion%20%26%20Analysis%20of%20Financial%20Condition%20%26%20Results%20of%20Operations) Management analyzes Q1 2025 performance, balance sheet changes, liquidity, market risk, and capital resources - **Q1 2025 net income was $9.1 million**, a 2% decrease from Q1 2024, driven by higher net interest income offset by a higher provision for credit losses[143](index=143&type=chunk) - **Total assets decreased by $8.1 million (0.2%)** from year-end 2024, due to decreases in gross loans and deposits[146](index=146&type=chunk)[150](index=150&type=chunk) [Earnings Performance](index=56&type=section&id=Earnings%20Performance) Performance was marked by higher net interest income and lower expenses, offset by credit provisions and noninterest income decline [Balance Sheet Analysis](index=67&type=section&id=Balance%20Sheet%20Analysis) The balance sheet saw a slight contraction with decreases in investment securities, loans, and deposits [Liquidity and Market Risk Management](index=80&type=section&id=Liquidity%20and%20Market%20Risk%20Management) The company maintains a strong liquidity position and an asset-sensitive balance sheet Primary and Secondary Liquidity Sources (in thousands) | Source | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $159,711 | $100,664 | | Unpledged investment securities | $522,332 | $552,098 | | FHLB borrowing availability | $633,368 | $629,134 | | Unsecured & Secured lines of credit | $504,785 | $504,785 | | Funds available through fed discount window | $258,130 | $298,296 | | **Total** | **$2,259,374** | **$2,327,496** | Net Interest Income Sensitivity (1-Year Horizon) | Immediate Rate Change (bps) | % Change in NII (Mar 31, 2025) | | :--- | :--- | | +400 | 8.7% | | +200 | 4.5% | | +100 | 2.4% | | -100 | (5.3)% | | -200 | (10.8)% | [Capital Resources](index=85&type=section&id=Capital%20Resources) Shareholders' equity decreased due to share repurchases, though the company remains well-capitalized - The company **repurchased 476,770 shares for $14.2 million** during Q1 2025[146](index=146&type=chunk)[257](index=257&type=chunk) Regulatory Capital Ratios | Ratio | March 31, 2025 | Minimum to be Well Capitalized | | :--- | :--- | :--- | | **Bank of the Sierra** | | | | Tier 1 Leverage Ratio | 12.11% | 9.00% | | **Sierra Bancorp** | | | | Tier 1 Leverage Ratio | 10.84% | N/A | [Quantitative & Qualitative Disclosures about Market Risk](index=87&type=section&id=Item%203.%20Quantitative%20%26%20Qualitative%20Disclosures%20about%20Market%20Risk) This section cross-references market risk disclosures found within the Management's Discussion and Analysis - Information regarding market risk is located in Part I, Item 2, under the 'Liquidity and Market Risk Management' section[264](index=264&type=chunk) [Controls and Procedures](index=87&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed the effectiveness of disclosure controls and procedures with no significant changes in internal controls - The CEO and CFO concluded that the Company's **disclosure controls and procedures were adequate and effective** as of the report date[265](index=265&type=chunk) - **No significant changes** occurred in the Company's internal controls over financial reporting during the first quarter of 2025[267](index=267&type=chunk) Part II - Other Information [Legal Proceedings](index=87&type=section&id=Item%201.%20-%20Legal%20Proceedings) Current legal proceedings are not expected to have a material adverse effect on the company's financial condition - Management does not believe that current legal actions will have a **material adverse effect** on the Company's financial statements[269](index=269&type=chunk) [Risk Factors](index=89&type=section&id=Item%201A.%20-%20Risk%20Factors) No material changes to risk factors were reported since the last annual report - **No material changes** from the risk factors disclosed in the Company's Form 10-K for the fiscal year ended December 31, 2024, were reported[271](index=271&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=89&type=section&id=Item%202.%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its Q1 2025 share repurchase activities under its publicly announced plan Stock Repurchases - Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Plan | | :--- | :--- | :--- | :--- | | Jan 2025 | 157,740 | $29.26 | 154,461 | | Feb 2025 | 183,169 | $30.79 | 183,169 | | Mar 2025 | 145,466 | $28.95 | 139,140 | | **Total** | **486,375** | | **476,770** | - As of March 31, 2025, **325,983 shares remained available for repurchase** under the 2024 Share Repurchase Plan, which expires on October 31, 2025[258](index=258&type=chunk)[273](index=273&type=chunk) [Exhibits](index=90&type=section&id=Item%206.%20-%20Exhibits) This section lists all exhibits filed with the report, including required CEO and CFO certifications - Key exhibits filed include **CEO and CFO certifications** (Exhibits 31.1, 31.2, 32) and various employment and compensation plan documents[275](index=275&type=chunk)

Group 1 - Sierra Bancorp reported quarterly earnings of $0.65 per share, missing the Zacks Consensus Estimate of $0.66 per share, and showing a slight increase from $0.64 per share a year ago, resulting in an earnings surprise of -1.52% [1] - The company posted revenues of $36.75 million for the quarter ended March 2025, which was below the Zacks Consensus Estimate by 1.33% and a decrease from $37.31 million year-over-year [2] - Sierra Bancorp shares have declined approximately 9.2% since the beginning of the year, compared to a decline of 6.1% for the S&P 500 [3] Group 2 - The earnings outlook for Sierra Bancorp is uncertain, with current consensus EPS estimates for the upcoming quarter at $0.70 on revenues of $38.15 million, and for the current fiscal year at $2.88 on revenues of $154.15 million [7] - The estimate revisions trend for Sierra Bancorp is currently unfavorable, leading to a Zacks Rank of 4 (Sell), indicating expected underperformance in the near future [6] - The Zacks Industry Rank for Banks - West is in the bottom 33% of over 250 Zacks industries, suggesting that the industry outlook may negatively impact the stock's performance [8]

[Q1 2025 Financial Performance Overview](index=1&type=section&id=SIERRA%20BANCORP%20REPORTS%20FIRST%20QUARTER%202025%20RESULTS) Sierra Bancorp reported solid Q1 2025 results with consolidated net income of $9.1 million, marked by a stable balance sheet, strong capital, and improved operational metrics [First Quarter 2025 Highlights](index=1&type=section&id=Highlights%20for%20the%20First%20Quarter%20of%202025) Sierra Bancorp achieved solid Q1 2025 results, including improved net interest margin and efficiency, growth in customer deposits and organic loans, and continued capital returns Key Financial Highlights | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net Income** | $9.1 million | $9.3 million | | **Diluted EPS** | $0.65 | $0.64 | - The net interest margin improved to **3.74%**, compared to 3.65% in the prior quarter and 3.62% in Q1 2024[6](index=6&type=chunk) - The efficiency ratio improved significantly to **60.62%** from 65.97% in the same quarter of 2024[6](index=6&type=chunk) - The company strategically reduced higher-cost brokered deposits by **$85.0 million** while growing all other customer deposits by **$43.2 million**[6](index=6&type=chunk) - Returned capital to shareholders by repurchasing **476,770 shares** at an average price of **$29.71** and declaring a dividend of **$0.25 per share**[6](index=6&type=chunk) [Key Financial Metrics Summary](index=4&type=section&id=FINANCIAL%20HIGHLIGHTS) This section presents a comparative overview of key financial metrics for Q1 2025, highlighting diluted EPS growth and improved net interest margin Comparative Financial Metrics | Financial Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net income (in thousands) | $9,101 | $10,364 | $9,330 | | Diluted earnings per share | $0.65 | $0.72 | $0.64 | | Return on average assets | 1.02% | 1.13% | 1.06% | | Return on average equity | 10.44% | 11.49% | 11.09% | | Net interest margin (tax-equivalent) | 3.74% | 3.65% | 3.62% | | Efficiency ratio (tax-equivalent) | 60.62% | 59.74% | 65.97% | | Total assets (in thousands) | $3,606,183 | $3,614,271 | $3,553,072 | | Tangible book value per share | $23.44 | $23.15 | $21.61 | [Detailed Financial Analysis](index=3&type=section&id=Detailed%20Financial%20Analysis) This section provides an in-depth analysis of the company's income statement, balance sheet, and asset quality for the quarter [Income Statement Analysis](index=4&type=section&id=INCOME%20STATEMENT%20HIGHLIGHTS) The income statement analysis shows a 5% YoY increase in net interest income, offset by a 23% YoY decrease in noninterest income, leading to stable net income [Net Interest Income](index=4&type=section&id=Net%20Interest%20Income) Net interest income increased 5% YoY to $30.1 million, driven by higher loan balances and yields, with the net interest margin expanding to 3.74% - Net interest income was **$30.1 million**, up **$1.4 million (5%)** from Q1 2024[14](index=14&type=chunk) - The YoY increase was driven by a **$232.2 million** rise in average loan balances and a **37 basis point** increase in loan yield[15](index=15&type=chunk) - Net interest margin expanded to **3.74%** in Q1 2025, up from 3.62% in Q1 2024 and 3.65% in Q4 2024[16](index=16&type=chunk) [Provision for Credit Losses](index=5&type=section&id=Provision%20for%20Credit%20Losses) The company recorded a $2.0 million provision for credit losses in Q1 2025, a significant increase YoY due to higher specific reserves on evaluated loans Provision for Credit Losses on Loans | Period | Provision for Credit Losses (Loans) | | :--- | :--- | | Q1 2025 | $2.0 million | | Q4 2024 | $2.3 million | | Q1 2024 | $0.1 million | - The YoY increase in provision was mainly due to higher specific reserves on individually evaluated loans[18](index=18&type=chunk) [Noninterest Income](index=5&type=section&id=Noninterest%20Income) Noninterest income decreased 23% YoY to $6.6 million, primarily due to unfavorable BOLI changes and the non-recurrence of prior year gains - Noninterest income decreased by **$1.9 million (23%)** YoY and **$0.9 million (12%)** QoQ to **$6.6 million**[21](index=21&type=chunk) - The YoY decrease was primarily caused by a **$1.5 million** unfavorable change in BOLI and the non-recurrence of gains from a Q1 2024 strategic balance sheet restructure[22](index=22&type=chunk) [Noninterest Expense](index=5&type=section&id=Noninterest%20Expense) Total noninterest expense decreased 9% YoY to $22.4 million, mainly driven by lower deferred directors' fees, with employee count at 489 - Noninterest expense decreased by **$2.1 million (9%)** YoY and **$0.4 million (2%)** QoQ[25](index=25&type=chunk) - The main driver of the decrease was lower deferred directors' fees, which are economically offset by lower BOLI income recorded in noninterest income[25](index=25&type=chunk)[28](index=28&type=chunk) - Full-time equivalent employees stood at **489**, down from 492 a year ago but up from 485 at the end of 2024[26](index=26&type=chunk) [Balance Sheet Analysis](index=7&type=section&id=Balance%20Sheet%20Summary) The balance sheet remained stable at $3.6 billion, with active management of funding mix, positive organic loan growth, and strong liquidity and capital levels [Asset and Loan Portfolio](index=7&type=section&id=Asset%20and%20Loan%20Portfolio) Total assets slightly decreased to $3.6 billion, with gross loans down due to mortgage warehouse paydowns, masking positive organic loan growth - Gross loans decreased by **$24.6 million**, or **1%**, during Q1 2025, primarily due to a **$43.2 million** decrease in mortgage warehouse line utilization[31](index=31&type=chunk) - Organic loan growth was positive, led by a **$22.5 million** increase in commercial real estate loans[31](index=31&type=chunk) Loan Rollforward | Loan Rollforward (in thousands) | Q1 2025 | | :--- | :--- | | Beginning Balance | $2,331,341 | | New credit extended | $66,370 | | Change in mortgage warehouse | ($46,139) | | Pay-downs, maturities, etc. | ($32,681) | | **Ending Balance** | **$2,306,762** | [Deposits and Liquidity](index=8&type=section&id=Deposits%20and%20Liquidity) Total deposits decreased by $41.8 million due to planned brokered deposit reduction, offset by core non-maturity deposit growth, maintaining substantial liquidity - Total deposits decreased by **$41.8 million**, reflecting a planned **$85.0 million** reduction in brokered deposits[35](index=35&type=chunk) - Core non-maturity deposits increased by **$52.6 million**, and noninterest-bearing deposits rose to **36.4%** of total deposits, up from 34.8% in Q4 2024[35](index=35&type=chunk) Liquidity Sources | Liquidity Sources (in thousands) | March 31, 2025 | | :--- | :--- | | Cash and cash equivalents | $159,711 | | Unpledged investment securities | $522,332 | | FHLB borrowing availability | $633,368 | | Unsecured lines of credit | $479,785 | | **Total Sources** | **$2,259,374** | [Capital Position](index=10&type=section&id=Capital%20Position) Total capital decreased by $5.5 million to $351.8 million due to capital returns, yet capital ratios remain strong with tangible book value per share increasing - Total capital decreased by **$5.5 million** to **$351.8 million**, driven by capital returns to shareholders[38](index=38&type=chunk) - The decrease reflects **$9.1 million** net income offset by **$14.2 million** in share repurchases and a **$3.5 million** dividend[38](index=38&type=chunk) - The tangible book value per share increased by **1%** during the quarter to **$23.44**[6](index=6&type=chunk) [Asset Quality](index=10&type=section&id=Asset%20Quality) Asset quality improved in Q1 2025, with nonperforming assets decreasing to $18.2 million and the allowance for credit losses increasing to 1.17% of total loans - Total nonperforming assets decreased by **$1.5 million (7%)** to **$18.2 million** during the quarter[39](index=39&type=chunk) - The ratio of nonperforming assets to loans plus foreclosed assets improved to **0.79%** from 0.84% at the end of 2024[39](index=39&type=chunk) - The allowance for credit losses on loans increased to **$27.1 million**, or **1.17%** of total loans, up from 1.07% at year-end 2024[41](index=41&type=chunk) - Subsequent to quarter-end, a **$6.5 million** non-accrual loan relationship was paid in full, further reducing non-accrual loans[40](index=40&type=chunk) [Financial Statements and Supplementary Data](index=11&type=section&id=Financial%20Statements%20and%20Supplementary%20Data) This section provides detailed unaudited financial statements and supplementary data, offering a comprehensive view of the company's financial position and performance [Consolidated Financial Statements](index=11&type=section&id=STATEMENT%20OF%20CONDITION) This section presents the unaudited Statement of Condition and Consolidated Income Statement for Q1 2025, with comparative prior period data - The detailed Statement of Condition (Balance Sheet) is provided, showing assets, liabilities, and capital as of March 31, 2025, compared to the four preceding quarters[44](index=44&type=chunk) - The detailed Consolidated Income Statement is provided for the three months ended March 31, 2025, compared to Q4 2024 and Q1 2024[48](index=48&type=chunk) [Credit Quality and Key Ratios](index=12&type=section&id=CREDIT%20QUALITY) This section provides detailed tables on credit quality metrics, including nonperforming loans and charge-offs, and key financial ratios for profitability and efficiency - A detailed table on Credit Quality metrics is presented, including nonperforming loans, net charge-offs, and allowance ratios for the last five quarters[46](index=46&type=chunk) - A table of Key Financial Ratios is provided, including Return on Equity, Return on Assets, Net Interest Margin, and Efficiency Ratio for Q1 2025 and prior periods[50](index=50&type=chunk) [Per Share Data](index=14&type=section&id=PER%20SHARE%20DATA) This table details per-share metrics, including basic and diluted EPS, dividends, book value, and tangible book value, along with share counts - A detailed table of Per Share Data is provided, showing EPS, dividends, book value, and share counts for Q1 2025, Q4 2024, and Q1 2024[49](index=49&type=chunk) [Non-GAAP Financial Measures](index=15&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section provides reconciliations for non-GAAP financial measures like tangible common equity and tax-equivalent efficiency ratio to their GAAP equivalents - Reconciliations of GAAP to non-GAAP measures are provided for Tangible Common Equity, Tangible Assets, Tangible Book Value per Share, and the tax-equivalent Efficiency Ratio[52](index=52&type=chunk) [Other Supplementary Data](index=12&type=section&id=Other%20Supplementary%20Data) This section includes supplementary tables for Goodwill and Intangible Assets, Noninterest Income and Expense breakdowns, and Average Balances and Rates - A table detailing Goodwill and Intangible Assets is provided for the last five quarters[45](index=45&type=chunk) - A detailed breakdown of Noninterest Income and Noninterest Expense components is presented for Q1 2025 and comparative quarters[53](index=53&type=chunk) - A comprehensive table of Average Balances, Income/Expense, and Yields/Rates for all major asset and liability categories is included[55](index=55&type=chunk)

Company Overview - Sierra Bancorp (BSRR) is headquartered in Porterville and operates in the Finance sector, with a year-to-date price change of 0.14% [3] - The company currently pays a dividend of $0.25 per share, resulting in a dividend yield of 3.45%, which is higher than the Banks - West industry's yield of 2.84% and the S&P 500's yield of 1.57% [3] Dividend Performance - The annualized dividend of Sierra Bancorp is $1, reflecting a 6.4% increase from the previous year [4] - Over the past five years, the company has raised its dividend four times, achieving an average annual increase of 3.93% [4] - The current payout ratio stands at 34%, indicating that the company distributes 34% of its trailing 12-month earnings per share as dividends [4] Earnings Outlook - Sierra Bancorp is projected to experience earnings growth this fiscal year, with the Zacks Consensus Estimate for 2025 at $2.95 per share, representing a year-over-year growth rate of 4.61% [5] Investment Appeal - The company is recognized as an attractive dividend investment, supported by a Zacks Rank of 1 (Strong Buy), indicating a compelling investment opportunity [7]

Regulatory Compliance - As of December 31, 2024 and 2023, both the Company and the Bank qualified as well capitalized for regulatory capital purposes, utilizing the Capital Simplification for Qualifying Community Bank Organization[55]. - The community bank leverage ratio (CBLR) minimum requirement is 9% for calendar year 2022 and beyond[54]. - The Dodd-Frank Act provisions are now fully implemented, impacting most institutions in the banking sector[59]. - The Bank received a "satisfactory" CRA assessment rating in August 2022, indicating compliance with community credit needs[65]. - The final rule for the Community Reinvestment Act (CRA) aims to encourage banks to expand access to credit in low-and moderate-income communities[66]. - The Company continues to monitor challenges to the CRA regulations by various trade groups and other interested parties[67]. - The federal banking agencies issued a final rule requiring banking organizations to notify regulators of significant computer-security incidents within 36 hours[70]. - The Bank actively monitors compliance with the USA Patriot Act and Anti-Money Laundering Act to ensure adequate resources for suspicious activity monitoring[84]. - The Bank is committed to maintaining compliance with incentive compensation policies as per regulatory guidance issued by the FRB and FDIC[85]. - The Company is subject to numerous federal and state consumer protection laws, which require extensive disclosures and prohibit unfair practices[79]. Financial Performance - Net income for 2024 was $40,560 million, compared to $34,844 million in 2023, reflecting a year-over-year increase of 16%[385]. - Total deposits increased to $2,891,668 million in 2024, up from $2,761,223 million in 2023, which is a growth of 5%[383]. - Net interest income after credit loss expense was $115,237 million in 2024, compared to $108,724 million in 2023, an increase of 6%[385]. - Noninterest income totaled $31,521 million in 2024, slightly up from $30,400 million in 2023, indicating a growth of 4%[385]. - Earnings per share (diluted) increased to $2.82 in 2024 from $2.36 in 2023, representing a growth of 19%[385]. - The Company reported total net other comprehensive gains of $4.7 million, net of tax, primarily due to a decline in unrealized losses in its securities portfolio for the year ended December 31, 2024[113]. - Total cash and cash equivalents increased to $100,664 million in 2024 from $78,602 million in 2023, representing a growth of 28%[383]. - Gross loans rose to $2,331,341 million in 2024, up from $2,090,075 million in 2023, marking an increase of 12%[385]. - Shareholders' equity rose to $357,302 million in 2024 from $338,097 million in 2023, reflecting an increase of 6%[383]. Risk Management - The Company may incur significant losses due to ineffective risk management processes and strategies[129]. - The company relies on quantitative models to measure risks, which may not always accurately predict future outcomes[135]. - The company faces risks associated with acquisitions, including integration challenges and potential regulatory compliance issues[136]. - The company is subject to operational risks, including reputational risk and compliance risk, which may adversely affect its business and results[168]. - The Company is exposed to credit risk from transactions with various financial institutions, which could adversely affect its business and financial condition[175]. - Fraud risk has evolved, with check fraud and mobile banking fraud being significant concerns, necessitating additional resources and technologies for detection and prevention[171]. - The Company faces potential financial liability from lawsuits, which can negatively impact expenses, even if claims are unfounded[172]. - The Company’s financial stability may be adversely affected by the financial stability of other institutions, impacting routine transactions[175]. Loan Portfolio and Credit Losses - At December 31, 2024, 78.2% of the Company's loan portfolio consisted of real estate loans, with commercial buildings representing approximately 58.2% of all real estate loans[115]. - The Company estimates it had uninsured deposits of $816 million, or 28% of total deposits, as of December 31, 2024[109]. - The concentration of commercial real estate loans has declined from 376% to 236% since December 31, 2020[118]. - The Company had $178.3 million, or 7.6% of total loans, in commercial loans as of December 31, 2024[122]. - The Company's nonperforming assets totaled $19.7 million at December 31, 2024, primarily from one nonperforming operating line of credit[115]. - Nonperforming loans may increase, negatively impacting earnings, potentially in a material way depending on severity[123]. - As of December 31, 2024, the company established an allowance for estimated credit losses on loans, which can be affected by changes in economic forecasts and borrower performance[125]. - The Company's allowance for credit losses totaled $24.8 million as of December 31, 2024, representing the principal not expected to be collected over the contractual life of the loans[366]. - The allowance for credit losses is derived from a collective reserve evaluation for loans with similar risk characteristics and an individual reserve evaluation for loans without similar risk characteristics[367]. - The Company utilizes a four-quarter forecast period for expected default rates, which then revert to historical averages over a four-quarter reversion period[368]. - The estimation of the allowance for credit losses involves inputs such as national unemployment rates and housing price indices, which require management judgment and are subject to change[371]. Capital and Shareholder Information - The company is authorized to issue up to 24,000,000 shares of common stock, with 14,223,046 shares outstanding as of December 31, 2024[152]. - There are outstanding options to purchase 239,600 shares of common stock at an average exercise price of $26.50 per share as of December 31, 2024[152]. - Future acquisitions may dilute tangible book value per share, as they typically involve payment of a premium over book and market values[150]. - The company relies heavily on dividends from the Bank, which are subject to regulatory limitations and the Bank's financial condition[151]. - The company must make interest payments on debentures before any dividends can be paid on common stock, impacting dividend availability[155]. Economic and Market Conditions - Interest rates have flattened through 2024, with uncertainty remaining due to inflation and jobs data, potentially affecting local economies[94]. - Changes in interest rates could adversely affect the Bank's profitability, business, and prospects, impacting net interest income and loan demand[96]. - The Company recognizes that negative developments in the banking industry could erode customer and investor confidence, impacting liquidity and results of operations[107]. - The Company’s exposure to credit risk is significantly affected by economic changes in California, particularly in the Southern Central San Joaquin Valley and the Central Coast[427]. Technology and Innovation - The company is evaluating the implementation of AI technology, which poses legal and regulatory risks that could increase compliance costs[167]. - The company faces risks related to technological changes in the financial services industry, which could impact its ability to serve clients effectively[158].

Company Overview - Sierra Bancorp (BSRR) is headquartered in Porterville and operates in the Finance sector, with a stock price change of 6.4% since the beginning of the year [3]. Dividend Information - The company currently pays a dividend of $0.24 per share, resulting in a dividend yield of 3.12%, which is higher than the Banks - West industry's yield of 2.68% and the S&P 500's yield of 1.48% [3]. - Sierra Bancorp's annualized dividend of $0.96 has increased by 2.1% from the previous year, with an average annual increase of 3.93% over the past five years [4]. - The company's payout ratio stands at 38%, indicating that it pays out 38% of its trailing 12-month earnings per share as dividends [4]. Earnings Growth - The Zacks Consensus Estimate for Sierra Bancorp's earnings in 2025 is projected to be $2.95 per share, reflecting a year-over-year earnings growth rate of 4.61% [5]. Investment Appeal - Sierra Bancorp is considered an attractive dividend play and a compelling investment opportunity, currently holding a Zacks Rank of 1 (Strong Buy) [7].

Core Viewpoint - Sierra Bancorp reported a revenue of $37.87 million for the quarter ended December 2024, marking a year-over-year increase of 5.4% and an EPS of $0.72 compared to $0.43 a year ago, although it fell short of the Zacks Consensus Estimate of $38.75 million by -2.28% [1] Financial Performance Metrics - Net Interest Margin was reported at 3.7%, slightly above the estimated 3.6% by analysts [4] - The Efficiency Ratio (tax-equivalent) was 59.7%, compared to the estimated 59.2% [4] - Total Non-performing Loans amounted to $19.67 million, significantly higher than the average estimate of $11.18 million [4] - Net Charge-Offs as a percentage of Average Loans were reported at 0%, better than the estimated 0.2% [4] - Average Interest-Earning Assets were $3.35 billion, below the estimated $3.46 billion [4] - Total Nonperforming Assets were $19.67 million, again exceeding the average estimate of $11.18 million [4] - Total Non-interest Income was $7.51 million, slightly below the average estimate of $7.68 million [4] - Net Interest Income was reported at $30.35 million, lower than the estimated $31.10 million [4] Stock Performance - Shares of Sierra Bancorp have returned +2.5% over the past month, outperforming the Zacks S&P 500 composite's +1.1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Group 1: Earnings Performance - Sierra Bancorp reported quarterly earnings of $0.72 per share, matching the Zacks Consensus Estimate, and up from $0.43 per share a year ago [1] - The company had revenues of $37.87 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 2.28%, but up from $35.92 million year-over-year [2] - Over the last four quarters, Sierra Bancorp has surpassed consensus EPS estimates three times [1][2] Group 2: Stock Performance and Outlook - Sierra Bancorp shares have increased by approximately 2.9% since the beginning of the year, compared to a 3.7% gain for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.66 on revenues of $38.2 million, and for the current fiscal year, it is $2.81 on revenues of $156.3 million [7] - The estimate revisions trend for Sierra Bancorp is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Banks - West industry, to which Sierra Bancorp belongs, is currently in the top 36% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Consolidated net income for Q4 2024 was $10.4 million, a 65% increase from $6.3 million in Q4 2023[2] - Full year 2024 net income reached $40.6 million, up 16% from $34.8 million in 2023, with diluted earnings per share increasing to $2.82 from $2.36[6] - Basic earnings per share for Q4 2024 were $0.73, up from $0.43 in Q4 2023, representing a 69.77% increase[48] - The net income for the year ended December 31, 2024, was $40.6 million, compared to $34.8 million in 2023, representing a year-over-year increase of 16.0%[47] Asset and Loan Growth - Total loans grew by $242.7 million, or 12%, to $2.3 billion for the full year 2024, with a quarterly loan growth of $11.3 million, or 2% annualized[5][12] - Gross loans increased by $241.3 million, or 11.5%, compared to December 31, 2023, driven by organic growth in mortgage warehouse outstandings[31] - New credit extended (excluding mortgage warehouse) in Q4 2024 was $79.9 million, an increase of $18.7 million from the prior quarter and $53.2 million from Q4 2023[32] - Net loans increased to $2,306.6 million as of December 31, 2024, compared to $2,066.9 million a year earlier, reflecting a growth of approximately 11.6%[42] Deposits and Capital - Total deposits increased by $130.4 million, or 5%, to $2.9 billion by the end of 2024, with noninterest-bearing deposits representing 35% of total deposits[5][12] - Deposit balances grew by $130.4 million, or 5%, during the year ended 2024, with wholesale brokered deposits increasing by $140.0 million, or 104%[34] - Total capital increased by $19.2 million, or 6%, to $357.3 million at December 31, 2024, primarily due to $40.6 million in net income[36] - Shareholders' equity rose to $358,760 thousand as of December 31, 2024, compared to $310,680 thousand a year earlier[54] Efficiency and Ratios - The efficiency ratio improved to 59.7% in Q4 2024, down from 67.1% in Q4 2023, reflecting operational efficiencies[5] - Return on average assets improved to 1.13% in Q4 2024, compared to 0.67% in Q4 2023, while return on average equity rose to 11.49% from 8.03%[5] - The community bank leverage ratio increased to 11.80% at December 31, 2024, compared to 11.29% a year earlier[5][13] - Efficiency ratio for Q4 2024 improved to 59.74%, down from 67.10% in Q4 2023, showing enhanced operational efficiency[49] Interest Income and Margin - Net interest margin increased to 3.65% in Q4 2024, up from 3.31% in Q4 2023, driven by a $2.5 million increase in net interest income[5][15] - Net interest income for the year ended December 31, 2024, was $120.0 million, an increase of 6.0% from $112.4 million in 2023[47] - The net interest margin for the quarter was 3.65%, with net interest income of $30,353 thousand[54] - The net interest margin for the twelve months was 3.66%, with net interest income of $120,029 thousand[57] Noninterest Income and Expenses - Noninterest income decreased by $0.5 million, or 7%, in Q4 2024 compared to Q4 2023, but increased by $1.1 million, or 4%, for the full year 2024 compared to 2023[23] - Total noninterest expense decreased by $1.3 million, or 5%, in Q4 2024 compared to Q4 2023, while for the full year, it increased by $0.2 million, or 0.2%[25] Credit Quality - Credit loss expense related to loans was $2.3 million for Q4 2024, down from $3.6 million in Q4 2023, while year-to-date credit loss expense was $4.6 million compared to $4.1 million in 2023[20] - The ratio of nonperforming loans to gross loans increased to 0.84% at December 31, 2024, from 0.38% at December 31, 2023, due to an increase in non-accrual loan balances[37] - The allowance for credit losses on loans was $24.8 million at December 31, 2024, representing 1.07% of total loans, compared to 1.12% at the end of 2023[38] - Net charge-offs to average loans for Q4 2024 were 0.01%, a decrease from 0.15% in Q4 2023, indicating improved credit quality[49] Stock and Dividends - The company repurchased 229,850 shares of common stock at an average price of $29.38 during Q4 2024[5] - Common dividends for Q4 2024 were $0.24 per share, compared to $0.23 per share in Q4 2023, marking a 4.35% increase[48] - Tangible book value per share at the end of Q4 2024 was $23.15, up from $20.91 at the end of Q4 2023, a 10.73% increase[51]

Group 1 - Sierra Bancorp (BSRR) is currently outperforming its peers in the Finance sector, with a year-to-date return of approximately 28.8%, compared to the sector average of 18.8% [4] - The Zacks Rank system indicates that Sierra Bancorp has a Zacks Rank of 2 (Buy), reflecting an improving earnings outlook, with the consensus estimate for full-year earnings having increased by 1.1% over the past quarter [3] - Sierra Bancorp belongs to the Banks - West industry, which includes 29 companies and has an average year-to-date return of 15.7%, further indicating that BSRR is performing better than its industry peers [6] Group 2 - Central Pacific Financial (CPF) is another stock in the Finance sector that has shown strong performance, with a year-to-date return of 44.8% and a Zacks Rank of 2 (Buy) [4][5] - The Finance group is ranked 1 within the Zacks Sector Rank, which evaluates the average Zacks Rank of individual stocks across 16 different groups [2] - Both Sierra Bancorp and Central Pacific Financial are expected to continue their solid performance, making them attractive options for investors interested in Finance stocks [7]