Our total deposits increased during the fourth quarter due to a combination of increased balances from long-time clients as well as continued activity bringing in new relationships. The rate environment remains competitive, and clients do remain rate sensitive. However, they continue to bank with us for our service levels, accessibility, and commitment to our communities, allowing us to continue reducing our cost of deposits by 10 basis points while growing our deposit base. Proactive credit management led ...

Financial Data and Key Metrics Changes - The company reported a net loss of $39.5 million in Q4, translating to $2.49 per share, primarily due to a $69 million loss from securities portfolio repositioning [9] - On a non-GAAP basis, net income was $9.4 million or $0.59 per share, with non-GAAP pre-tax, pre-provision net income increasing by 31% quarter-over-quarter and 51% year-over-year [9] - Net interest income rose to $31.2 million, driven by balance sheet growth, higher investment security yields, and reduced deposit costs [9] Business Line Data and Key Metrics Changes - Total loan originations for the quarter were $141 million, with $106 million funded, marking one of the strongest quarters in the past decade [4] - For the full year, the company originated $374 million in new loans, including $274 million funded, which was 79% higher than the previous year [4] - Total deposits increased in Q4 due to higher balances from existing clients and new relationships, with a reduction in deposit costs by 10 basis points [6] Market Data and Key Metrics Changes - The company experienced a 35% decline in classified loans quarter-over-quarter, reducing to 1.5% of total loans from 2.4% in the prior quarter [7] - Non-accrual loans improved, decreasing by 14% to 1.3% of total loans compared to 1.5% in the prior quarter [7] Company Strategy and Development Direction - The company executed a balance sheet restructuring that improved net interest margin and net interest income while maintaining strong capital levels [3][8] - The focus remains on attracting new client relationships and expanding existing ones, particularly in growth markets like Greater Sacramento [5][6] - The company aims to continue loan growth in 2026 while managing seasonal outflows typically experienced in the first half of the year [12] Management's Comments on Operating Environment and Future Outlook - Management noted healthy economic conditions in their markets and an expectation for solid loan growth in 2026 [12] - The company is prepared for potential Fed funds rate cuts in 2026, which may allow for targeted deposit cost reductions contributing to margin expansion [10] - Management expressed confidence in the continued improvement of credit quality trends and proactive credit management [7][12] Other Important Information - The allowance for credit losses remains strong at 1.42% of total loans, with only a minor provision for credit losses in Q4 [11] - The board declared a cash dividend of $0.25 per share, marking the 83rd consecutive quarterly dividend [11] Q&A Session Summary Question: Loan production and recent hires - Management indicated that a significant portion of loan production came from recent hires, contributing to a diverse pipeline [16] Question: Deposit cost trends - The average deposit cost was reported at 2.08% in December, with expectations for further reductions in January [17][19] Question: Increase in special mention loans - The increase was attributed to a downgrade in a wine industry credit and upgrades from substandard loans [20][22] Question: Opportunities for new hires - Management sees opportunities across the footprint and plans to continue hiring in various regions [28][31] Question: Client receptivity to deposit rate reductions - Clients have been somewhat receptive, with attrition mainly from rate shoppers seeking higher returns elsewhere [36][37] Question: Margin expansion expectations - Management expects continued margin expansion, supported by targeted deposit cost reductions and back book repricing [39][42] Question: Credit trends and special mention loans - Positive trends in credit quality were noted, with improvements in real estate markets contributing to upgrades [60][62] Question: Expense run rate and capital deployment - Management anticipates a slight increase in expenses due to investments in growth initiatives, while capital levels are deemed adequate [71][73]

Financial Data and Key Metrics Changes - The company reported a net loss of $39.5 million in the fourth quarter, translating to $2.49 per share, primarily due to a $69 million loss from securities portfolio repositioning [9] - On a non-GAAP basis, net income was $9.4 million, or $0.59 per share, with non-GAAP pre-tax, pre-provision net income increasing by 31% quarter-over-quarter and 51% year-over-year [9] - Net interest income rose to $31.2 million, driven by balance sheet growth, higher investment security yields, and reduced deposit costs [9] Business Line Data and Key Metrics Changes - Total loan originations for the quarter were $141 million, with $106 million funded, marking one of the strongest quarters in the past decade [4] - For the full year, the company originated $374 million in new loans, including $274 million funded, which was 79% higher than the previous year [4] - Total deposits increased in the fourth quarter due to higher balances from existing clients and new relationships, with a reduction in deposit costs by 10 basis points [6] Market Data and Key Metrics Changes - The company experienced a 35% decline in classified loans quarter-over-quarter, reducing to 1.5% of total loans from 2.4% in the prior quarter [7] - Non-accrual loans improved, decreasing by 14% to 1.3% of total loans compared to 1.5% in the prior quarter [7] - The loan pipeline remains strong amid healthy demand, with expectations for solid loan growth in 2026 [12] Company Strategy and Development Direction - The company successfully executed a balance sheet restructuring that improved net interest margin and net interest income while maintaining strong capital levels [3][8] - The focus remains on attracting new client relationships and expanding existing ones, particularly in growth markets like Greater Sacramento [5] - The company aims to continue investing in people and initiatives to support profitable growth [12] Management's Comments on Operating Environment and Future Outlook - Management noted relatively healthy economic conditions in their markets, with continued improvements in credit quality [12] - The company anticipates seasonal outflows in the first half of the year but expects to generate solid loan growth and deposit growth through new and existing relationships [12] - Management expressed confidence in achieving targeted mid-single-digit net loan growth for the year, contingent on managing payoffs effectively [55] Other Important Information - The board declared a cash dividend of $0.25 per share, marking the 83rd consecutive quarterly dividend [11] - The company is prepared for potential Fed funds rate cuts in 2026, which may contribute to margin expansion [10] Q&A Session Summary Question: Loan production and recent hires - Management indicated that a significant portion of loan production came from recent hires, contributing to a more diverse pipeline [16] Question: Deposit cost trends - The average deposit cost was reported at 2.08% in December, with expectations for further reductions in January [17][19] Question: Special Mention increase - The increase was attributed to a downgrade in a wine industry credit and upgrades from substandard loans, reflecting a conservative approach [20][22] Question: Opportunities for new hires - Management sees opportunities across the footprint and plans to continue hiring talent to enhance loan originations [28][31] Question: Client receptivity to deposit rate reductions - Clients have been receptive to targeted deposit rate reductions, with some attrition expected from rate-sensitive customers [36][37] Question: Margin expansion outlook - Management discussed the potential for margin expansion, emphasizing the importance of managing deposit costs and loan repricing [39][48]

Financial Data and Key Metrics Changes - The company reported a net loss of $39.5 million in Q4 2025, or $2.49 per share, primarily due to a $69 million loss from securities portfolio repositioning [9] - On a non-GAAP basis, net income was $9.4 million, or $0.59 per share, with a 31% increase in non-GAAP pre-tax, pre-provision net income quarter-over-quarter and a 51% increase year-over-year [9] - Net interest income rose to $31.2 million, driven by balance sheet growth, higher investment security yields, and reduced deposit costs [9] Business Line Data and Key Metrics Changes - Total loan originations for the quarter were $141 million, with $106 million funded, marking one of the strongest quarters in the past decade [4] - For the full year, the company originated $374 million in new loans, including $274 million funded, which was 79% higher than the previous year [4] - Total deposits increased in Q4 due to higher balances from long-term clients and new relationships, with a 10 basis point reduction in the cost of deposits [5] Market Data and Key Metrics Changes - The company experienced a 35% quarter-over-quarter decline in classified loans, reducing them to 1.5% of total loans from 2.4% in the prior quarter [6] - Non-accrual loans improved, declining 14% to 1.3% of total loans compared to 1.5% in the prior quarter [6] - The overall economic conditions in the company's markets remain relatively healthy, contributing to improved credit quality [12] Company Strategy and Development Direction - The company successfully executed a balance sheet restructuring that improved net interest margin and net interest income while maintaining strong capital levels [3][8] - The focus remains on attracting new client relationships and expanding existing ones, particularly in growth markets like Greater Sacramento [5] - The company aims to continue growing deposits and loan origination while managing seasonal outflows typically experienced in the first half of the year [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about solid loan growth in 2026, supported by a strong loan pipeline and healthy demand [12] - The company anticipates continued margin expansion due to targeted deposit cost reductions and favorable market conditions [10][41] - Management noted that proactive credit management has led to improved asset quality trends, with expectations for continued improvement in credit quality [11][60] Other Important Information - The board declared a cash dividend of $0.25 per share, marking the 83rd consecutive quarterly dividend [11] - The company is exploring options for capital deployment, including share repurchase and potential M&A opportunities, while maintaining adequate capital ratios [72] Q&A Session Summary Question: Loan production and recent hires - Management indicated that a significant portion of loan production came from recent hires, contributing to a more diverse pipeline [16] Question: Deposit cost trends - The average deposit cost was reported at 2.08% in December, with expectations for further reductions in January [18][19] Question: Special mention increase - The increase in special mention loans was attributed to a downgrade in the wine industry and upgrades from substandard loans [20][22] Question: Loan growth expectations - Management targets consistent mid-single-digit net loan growth for the year, with potential for higher figures depending on payoffs [56] Question: Credit trends - Management noted ongoing recovery in the real estate market, contributing to improved credit quality, while specific industries like wine are facing challenges [60][61] Question: Expense run rate - The company anticipates a 4.5% expense growth in 2025, with additional investments planned to drive revenue growth [70] Question: Capital levels and deployment - Current capital levels are deemed adequate, with no immediate plans for additional capital raising, but options for share repurchase and M&A are being considered [72]

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Company Overview - Sierra Bancorp's market capitalization is $409 million as of March 5, 2025 [8] - The company repurchased 378,230 shares at an average price of $30 per share YTD in 2025 [8] - The bank has reached $3.6 billion in assets, with 35 offices [12] Financial Performance - The company's Return on Average Assets (ROAA) is 1.12% YTD [19, 28] - Net interest margin improved from 3.31% in Q4 2023 to 3.65% in Q4 2024 [28] - YTD diluted EPS increased from $2.36 in 2023 to $2.82 in 2024 [28] Balance Sheet Repositioning - A sale/leaseback in December 2023 generated a $19.1 million gain [28] - The company sold $250.5 million of low-yielding bonds at a $17.3 million loss [28] Loan Portfolio - Gross loans reached $2.331 billion as of December 31, 2024 [30, 40] - Loan growth YTD was $241.05 million, representing an 11.5% increase [40] - Mortgage warehouse lines totaled $326.4 million, representing 14% of the loan portfolio [40] Deposit Base - Noninterest-bearing deposits represent 33.57% of total deposits, amounting to $1.007 billion as of December 31, 2024 [19, 55]