Sierra Bancorp (the "Company") is a California corporation headquartered in Porterville, California, and is a registered bank holding company under federal banking laws. The Company was formed to serve as the holding company for Bank of the Sierra (the "Bank") and it's subsidiaries, two special purpose entities organized to facilitate repossessed assets. The Company has been the Bank's sole shareholder since August 2001. The Company exists primarily for the purpose of holding the stock of the Bank and of su ...

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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |-----------------------------------------------------------------------------------------------------------------------------------------------|------------------------- ...

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Part I [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) The unaudited consolidated financial statements for the period ended June 30, 2021, show an increase in total assets to $3.3 billion from $3.2 billion at year-end 2020, driven by a significant rise in cash and cash equivalents, with net income for Q2 2021 at $11.7 million [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2021, total assets increased to $3.27 billion from $3.22 billion at December 31, 2020, primarily driven by a substantial increase in cash and cash equivalents to $373.9 million Consolidated Balance Sheet Highlights | Account | June 30, 2021 (Unaudited) ($ thousands) | December 31, 2020 (Audited) ($ thousands) | | :--- | :--- | :--- | | **Total Assets** | **$3,272,048** | **$3,220,742** | | Total cash & cash equivalents | $373,902 | $71,417 | | Net loans and leases | $2,124,540 | $2,442,226 | | **Total Liabilities** | **$2,914,319** | **$2,876,846** | | Total deposits | $2,775,914 | $2,624,606 | | Short-term borrowings | $0 | $142,900 | | **Total Shareholders' Equity** | **$357,729** | **$343,896** | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) For the second quarter ended June 30, 2021, net income was $11.7 million, a 41% increase from $8.3 million in the same period of 2020, driven by a $2.1 million benefit for loan losses and a 12.6% increase in net interest income Income Statement Summary | Metric | Q2 2021 ($ thousands) | Q2 2020 ($ thousands) | H1 2021 ($ thousands) | H1 2020 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $27,189 | $24,142 | $55,744 | $47,929 | | (Benefit) Provision for Loan Losses | $(2,100) | $2,200 | $(1,850) | $4,000 | | **Net Income** | **$11,708** | **$8,303** | **$22,786** | **$16,110** | | Earnings per share diluted | $0.76 | $0.54 | $1.48 | $1.05 | | Cash dividends per share | $0.21 | $0.20 | $0.42 | $0.40 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash provided by operating activities was $21.3 million, with a significant increase in cash and cash equivalents of $302.5 million due to investing and financing activities Cash Flow Summary for Six Months Ended June 30 | Cash Flow Category | 2021 ($ thousands) | 2020 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $21,301 | $21,765 | | Net cash provided by (used in) investing activities | $247,793 | $(433,905) | | Net cash provided by financing activities | $33,391 | $488,674 | | **Increase in cash and cash equivalents** | **$302,485** | **$76,534** | | Cash and cash equivalents, end of period | $373,902 | $156,611 | [Notes to Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20%28Unaudited%29) The notes provide critical details on accounting policies and financial statement components, including the deferred implementation of CECL, loan deferrals under the CARES Act, and the allowance for loan and lease losses totaling $16.4 million - The Company elected to defer the implementation of the Current Expected Credit Losses (CECL) methodology to January 1, 2022, under the provisions of the CARES Act and subsequent extensions, to better assess the impact of the COVID-19 pandemic[30](index=30&type=chunk) - As of June 30, 2021, the company had **$10.4 million** in loans with payment deferrals under CARES Act provisions, which are not classified as Troubled Debt Restructurings (TDRs)[90](index=90&type=chunk) - The allowance for loan and lease losses was **$16.4 million** at June 30, 2021, comprised of a **$1.3 million** specific reserve for impaired loans and a **$15.1 million** general reserve for unimpaired loans[131](index=131&type=chunk)[126](index=126&type=chunk) [Item 2. Management's Discussion & Analysis of Financial Condition & Results of Operations](index=46&type=section&id=Item%202.%20Management%27s%20Discussion%20%26%20Analysis%20of%20Financial%20Condition%20%26%20Results%20of%20Operations) Management's discussion highlights strong earnings for Q2 and H1 2021, driven by a significant negative provision for loan losses and increased net interest income, alongside strategic balance sheet shifts and ongoing COVID-19 impact management [Overview of the Results of Operations and Financial Condition](index=48&type=section&id=Overview%20of%20the%20Results%20of%20Operations%20and%20Financial%20Condition) Q2 2021 net income rose to $11.7 million, driven by a $2.1 million negative provision for loan losses and increased net interest income, while total assets grew to $3.3 billion and loan balances declined by $318.3 million - Q2 2021 net income increased to **$11.7 million**, primarily due to a **$2.1 million** negative provision for loan losses and a **$3.0 million** increase in net interest income[150](index=150&type=chunk) - Loan balances declined by **$318.3 million** (13%) in H1 2021, mainly due to decreases in mortgage warehouse lines (**$157.3 million**), real estate loans (**$100.0 million**), and SBA PPP loans (**$49.0 million**)[155](index=155&type=chunk) - The company deferred CECL implementation to January 1, 2022, to better assess the impact of the COVID-19 pandemic on lifetime credit losses[178](index=178&type=chunk) - In June 2021, the company permanently closed five branch locations due to changing customer behaviors, projecting annual noninterest expense savings of **$0.8 to $1.0 million**[182](index=182&type=chunk)[184](index=184&type=chunk) [Earnings Performance](index=58&type=section&id=Earnings%20Performance) Earnings performance improved significantly, with net interest income increasing by 13% in Q2 2021 and 16% in H1 2021 year-over-year, primarily due to a $2.1 million negative provision for loan losses Net Interest Income and Margin | Period | Net Interest Income ($ millions) | Net Interest Margin | | :--- | :--- | :--- | | Q2 2021 | $27.2 | 3.60% | | Q2 2020 | $24.1 | 3.81% | | H1 2021 | $55.7 | 3.76% | | H1 2020 | $47.9 | 3.97% | - The company recorded a net benefit (negative provision) for loan losses of **$2.1 million** in Q2 2021 and **$1.9 million** in H1 2021, compared to provisions of **$2.2 million** and **$4.0 million** in the respective 2020 periods, reflecting improved economic conditions[219](index=219&type=chunk) - Noninterest expense increased by **$2.2 million** (12%) in Q2 2021, primarily due to a **$1.2 million** rise in salaries and benefits (from lower loan origination cost deferrals) and a **$0.5 million** increase in data processing costs[234](index=234&type=chunk)[235](index=235&type=chunk)[238](index=238&type=chunk) [Balance Sheet Analysis](index=51&type=section&id=Balance%20Sheet%20Analysis) The balance sheet analysis reveals a strategic shift in asset composition, with the loan portfolio decreasing by $318.3 million to $2.1 billion, while deposits grew by $151.3 million and nonperforming assets remained low - Gross loans and leases decreased by **$318.3 million** (13%) in H1 2021, primarily from a **$157.3 million** drop in mortgage warehouse lines and forgiveness of SBA PPP loans[254](index=254&type=chunk)[255](index=255&type=chunk) - The regulatory commercial real estate (CRE) concentration ratio was strategically lowered from 378% at year-end 2020 to **335%** at June 30, 2021[257](index=257&type=chunk) Asset Quality Ratios | Metric | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Nonperforming loans to gross loans | 0.34% | 0.31% | | Nonperforming assets to total assets | 0.38% | 0.35% | | Allowance for loan losses to gross loans | 0.77% | 0.72% | - Deposits grew by **$151.3 million** in H1 2021, with non-maturity deposits increasing by **$283.4 million** while time deposits declined by **$117.1 million**[288](index=288&type=chunk) [Liquidity and Market Risk Management](index=58&type=section&id=Liquidity%20and%20Market%20Risk%20Management) The company maintains a strong liquidity position, with primary and secondary sources totaling $1.93 billion at June 30, 2021, and is asset-sensitive to interest rate changes, projecting a 4.1% NII increase from a 100 bps rate rise Primary and Secondary Liquidity Sources | Source | June 30, 2021 ($ thousands) | December 31, 2020 ($ thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $373,902 | $71,417 | | Unpledged investment securities | $482,039 | $311,983 | | FHLB borrowing availability | $662,641 | $535,404 | | **Total Sources** | **$1,930,741** | **$1,259,823** | Net Interest Income Sensitivity (1-Year Projection) | Rate Shock (bps) | % Change in NII (June 30, 2021) | | :--- | :--- | | +200 | +6.9% | | +100 | +4.1% | | -100 | (8.1)% | [Capital Resources](index=61&type=section&id=Capital%20Resources) Total shareholders' equity increased to $357.7 million at June 30, 2021, driven by net income, and the company's leverage ratio of 10.43% comfortably exceeds the 'well capitalized' threshold under the CBLR framework - Total shareholders' equity increased by **$13.8 million** in H1 2021 to **$357.7 million**, primarily due to **$22.8 million** in net income, partially offset by dividends and an unfavorable change in AOCI[160](index=160&type=chunk)[323](index=323&type=chunk) Bank of the Sierra - Leverage Ratio | Date | Leverage Ratio | Minimum to be Well Capitalized | | :--- | :--- | :--- | | June 30, 2021 | 10.43% | 8.50% | - The Company has elected to measure capital adequacy under the Community Bank Leverage Ratio (CBLR) framework, which simplifies capital requirements for qualifying institutions[328](index=328&type=chunk) [Item 3. Qualitative & Quantitative Disclosures about Market Risk](index=62&type=section&id=Item%203.%20Qualitative%20%26%20Quantitative%20Disclosures%20about%20Market%20Risk) This section cross-references the detailed discussion on market risk provided in Item 2, under the heading 'Liquidity and Market Risk Management', identifying interest rate risk as the company's primary market risk exposure - The report directs readers to the 'Liquidity and Market Risk Management' section within Item 2 (MD&A) for all qualitative and quantitative disclosures about market risk[329](index=329&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's CEO and CFO have evaluated the disclosure controls and procedures and concluded they were adequate and effective as of June 30, 2021, with no significant changes in internal controls over financial reporting during the first half of 2021 - The CEO and CFO certified that the Company's disclosure controls and procedures were effective as of the end of the reporting period[331](index=331&type=chunk) - No significant changes to internal controls over financial reporting were identified during the first six months of 2021[333](index=333&type=chunk) Part II - Other Information [Item 1. - Legal Proceedings](index=64&type=section&id=Item%201.%20-%20Legal%20Proceedings) The company is involved in various legal proceedings in the normal course of business, with management believing that any resulting liability will not have a material adverse effect on its financial condition or results of operations - Management does not expect any legal proceedings to have a material adverse effect on the Company's financial condition or operations[336](index=336&type=chunk) [Item 1A. - Risk Factors](index=64&type=section&id=Item%201A.%20-%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 - No material changes to risk factors were reported compared to the Form 10-K for the year ended December 31, 2020[337](index=337&type=chunk) [Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's stock repurchase program remains suspended as of June 30, 2021, with no repurchases made since March 2020, and 268,301 shares remaining authorized for purchase - The stock repurchase program has been suspended since March 2020[338](index=338&type=chunk) - As of June 30, 2021, **268,301 shares** remained authorized for repurchase under the existing plan[338](index=338&type=chunk) [Item 5. - Other Information](index=64&type=section&id=Item%205.%20-%20Other%20Information) Items 3 (Defaults upon Senior Securities), 4 (Mine Safety Disclosures), and 5 (Other Information) are reported as 'Not applicable' for this reporting period - Items concerning Defaults upon Senior Securities, Mine Safety Disclosures, and Other Information were not applicable[339](index=339&type=chunk) [Item 6. - Exhibits](index=65&type=section&id=Item%206.%20-%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, descriptions of securities, various agreements, and CEO/CFO certifications, along with XBRL interactive data files - A list of **24 exhibits** and various XBRL files are included or incorporated by reference, covering governance, agreements, and required certifications[342](index=342&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021 Commission file number: 000-33063 SIERRA BANCORP (Exact name of Registrant as specified in its charter) California 33-0937517 (State of Incorporation) (IRS Employer Identification No) 86 North Main Street, Porterville, California 93257 (Address of principal executive offices) ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-33063 SIERRA BANCORP (Exact name of registrant as specified in its charter) California 33-0937517 (State of incorporation) (I.R.S. Employer Identification No.) 86 ...

Financial Performance - Net income for Q3 2020 was $10.4 million, or $0.68 per diluted share, compared to $9.0 million, or $0.58 per diluted share in Q3 2019, reflecting a 15.6% increase in net income year-over-year [161]. - The company's annualized return on average equity was 10.90% for the first nine months of 2020, down from 12.33% in the same period of 2019 [164]. - Total shareholders' equity increased by $27.0 million, or 9%, to $336.2 million at September 30, 2020, due to net income and favorable changes in accumulated other comprehensive income [173]. - Total noninterest income increased by $1.2 million, or 21%, for the quarterly comparison and $2.5 million, or 14%, for the year-to-date comparison [224]. - The efficiency ratio improved to 53.74% in Q3 2020 from 55.64% in Q3 2019, and was 56.64% for the first nine months of 2020 compared to 57.51% for the same period in 2019 [233]. Loan and Deposit Growth - Year-to-date 2020 loan growth was $611.8 million, or 35%, driven by a $435.7 million increase in non-agricultural real estate loans and $123.6 million in Paycheck Protection Program (PPP) loans [170]. - Deposits increased by $423.3 million, or 20%, primarily from noninterest bearing or low-cost transaction and savings accounts [171]. - Total loans and leases amounted to $1,956,380 thousand, with a net interest income of $69,538 thousand and a margin of 4.75% [205]. - The loan-to-deposit ratio increased from 82% at September 30, 2019, to over 91% at September 30, 2020, indicating a greater level of high-earning assets [308]. Asset Management - Total assets reached $3.2 billion at September 30, 2020, up from $2.6 billion at December 31, 2019, indicating significant growth in the company's financial position [169]. - The Company maintained strong primary and secondary liquidity sources, with no adverse impact on capital or financial resources due to COVID-19 as of September 30, 2020 [188]. - The Company had cash and due from banks totaling $88.9 million and unpledged investment securities of $339.1 million as of September 30, 2020 [297]. - The Company’s net loans to assets ratio was 74.3% at September 30, 2020, remaining within internal policy guidelines [302]. Credit Quality and Loan Loss Provisions - The provision for loan and lease losses was $6.4 million in the first nine months of 2020, up from $2.1 million in the same period of 2019, reflecting increased uncertainty due to the COVID-19 pandemic [165]. - The allowance for loan and lease losses was $15.6 million at September 30, 2020, an increase of $5.7 million, or 57%, compared to December 31, 2019, primarily due to a $6.4 million loan loss provision recorded during the first nine months of 2020 [270]. - The Company provided $123.6 million in loans under the "Paycheck Protection Program," which carries a full guarantee by the SBA, mitigating the need for an increase in the provision for loan and lease losses [220]. - The Company has taken actions to mitigate credit losses, including permitting payment deferrals and providing bridge loans and SBA PPP loans [220]. Interest Income and Expense - Net interest income increased by $3.7 million to $28.1 million for Q3 2020 compared to Q3 2019, and increased by $3.5 million to $76.0 million for the first nine months of 2020 relative to the same period in 2019 [199]. - The net interest margin for the nine months ended September 30, 2020, was 3.97%, down from 4.20% for the same period in 2019, reflecting pressure from FOMC's emergency rate cuts [187]. - Interest expense for Q3 2020 was $1.0 million, a decline of $2.6 million, or 73%, compared to Q3 2019, attributed to a favorable shift in deposit mix [216]. - A decline of 100 basis points in interest rates could result in a decrease of $5.9 million, or 5.8%, in net interest income for the period ending September 30, 2020 [311]. Operational Efficiency - Noninterest expense increased by $2.6 million, or 5%, primarily due to higher salaries and foreclosed asset expenses [167]. - The Company continues to explore operational efficiency opportunities amid rising costs [232]. - The Company has not experienced any challenges in implementing its business continuity plans during the pandemic [191]. - Approximately 75% of back-office and corporate employees are working remotely, with no adverse effects on operations [190]. Regulatory and Compliance - The Company has deferred the implementation of the CECL accounting method until the end of the national emergency or December 31, 2020, to better assess the impact of COVID-19 on expected lifetime credit losses [220]. - The CARES Act temporarily lowered the required community bank leverage ratio to 8% until the end of 2020 or the end of the national emergency [323]. - The company's regulatory capital ratios as of September 30, 2020, are not applicable due to the adoption of the Community Bank Leverage Ratio Framework [322]. - The company’s disclosure controls and procedures were deemed adequate and effective as of the evaluation date [326].