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 SEPTEMBER 30, 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)                  (Zip Code)

(559) 782-4900

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	BSRR	The NASDAQ Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒    No  ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).  Yes  ☒    No  ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer:	☒
Non-accelerated Filer:	☐	Smaller Reporting Company:	☐
Emerging Growth Company:	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 1, 2021, the registrant had 15,410,784 shares of common stock outstanding, including 109,839 shares of unvested restricted stock.

FORM 10-Q

Table of Contents

					Page
Part I - Financial Information					1
	Item 1. Financial Statements (Unaudited)				1
		Consolidated Balance Sheets			1
		Consolidated Statements of Income			2
		Consolidated Statements of Comprehensive Income			3
		Consolidated Statements of Changes In Shareholders’ Equity			4
		Consolidated Statements of Cash Flows			6
		Notes to Consolidated Financial Statements (Unaudited)			7
	Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations				34
		Forward-Looking Statements			34
		Critical Accounting Policies			35
		Overview of the Results of Operations and Financial Condition			35
		Earnings Performance			40
			Net Interest Income and Net Interest Margin		41
			Provision for Loan and Lease Losses		46
			Noninterest Income and Noninterest Expense		48
			Provision for Income Taxes		50
		Balance Sheet Analysis			50
			Earning Assets		50
				Investments	50
				Loan and Lease Portfolio	52
				Nonperforming Assets	53
				Allowance for Loan and Lease Losses	55
				Off-Balance Sheet Arrangements	57
			Other Assets		57
			Deposits and Interest Bearing Liabilities		57
				Deposits	57
				Other Interest Bearing Liabilities	58
			Noninterest Bearing Liabilities		59
		Liquidity and Market Risk Management			59
		Capital Resources			63
	Item 3. Qualitative & Quantitative Disclosures about Market Risk				64
	Item 4. Controls and Procedures				64
Part II - Other Information					65
	Item 1. - Legal Proceedings				65
	Item 1A. - Risk Factors				65
	Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds				65
	Item 3. - Defaults upon Senior Securities				65
	Item 4. - Mine Safety Disclosures				65
	Item 5. - Other Information				66
	Item 6. - Exhibits				67
Signatures					68

PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

SIERRA BANCORP

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

	September 30, 2021		December 31, 2020
ASSETS	(unaudited)		(audited)
Cash and due from banks	$	66,178	$	67,908
Interest bearing deposits in banks		356,172		3,509
Total cash & cash equivalents		422,350		71,417
Securities available-for-sale		732,312		543,974
Loans and leases:
Gross loans and leases		2,139,826		2,463,111
Deferred loan and lease fees, net		(2,612)		(3,147)
Allowance for loan and lease losses		(15,617)		(17,738)
Net loans and leases		2,121,597		2,442,226
Foreclosed assets		93		971
Premises and equipment, net		24,490		27,505
Goodwill		27,357		27,357
Other intangible assets, net		3,527		4,307
Bank-owned life insurance		55,023		52,539
Other assets		55,990		50,446
Total assets	$	3,442,739	$	3,220,742
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing	$	1,111,411	$	943,664
Interest bearing		1,709,235		1,680,942
Total deposits		2,820,646		2,624,606
Repurchase agreements		92,553		39,138
Short-term borrowings		—		142,900
Long-term debt		49,221		—
Subordinated debentures		35,258		35,124
Other liabilities		80,554		35,078
Total liabilities		3,078,232		2,876,846
Commitments and contingent liabilities (Note 7)
Shareholders' equity
Common stock, no par value; 24,000,000 shares authorized; 15,382,518 and 15,388,423 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		114,096		113,384
Additional paid-in capital		3,710		3,736
Retained earnings		231,717		208,371
Accumulated other comprehensive income, net		14,984		18,405
Total shareholders' equity		364,507		343,896
Total liabilities and shareholders' equity	$	3,442,739	$	3,220,742

The accompanying notes are an integral part of these consolidated financial statements

1

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(dollars in thousands, except per share data, unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2021		2020		2021		2020
Interest and dividend income
Loans and leases, including fees	$	24,226	$	25,742	$	75,555	$	69,538
Taxable securities		1,679		1,832		4,835		6,542
Tax-exempt securities		1,578		1,467		4,539		4,246
Federal funds sold and other		146		2		250		155
Total interest income		27,629		29,043		85,179		80,481
Interest expense
Deposits		591		641		1,818		3,368
Short-term borrowings		41		70		127		145
Subordinated debentures		281		258