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, 2022

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 May 1, 2022, the registrant had 15,086,012 shares of common stock outstanding, including 161,529 shares of unvested restricted stock.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

SIERRA BANCORP

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)


	March 31, 2022		December 31, 2021
ASSETS	(unaudited)		(audited)
Cash and due from banks	$	66,039	$	63,147
Interest bearing deposits in banks		187,495		194,381
Total cash & cash equivalents		253,534		257,528
Investment securities available-for-sale, at fair value (net of zero allowance for credit losses at March 31, 2022 and December 31, 2021)		1,025,032		973,314
Loans and leases:
Gross loans and leases		1,983,331		1,989,726
Deferred loan and lease fees, net		(1,200)		(1,865)
Allowance for credit losses on loans and leases		(22,530)		(14,256)
Net loans and leases		1,959,601		1,973,605
Foreclosed assets		93		93
Premises and equipment, net		23,239		23,571
Goodwill		27,357		27,357
Other intangible assets, net		3,022		3,275
Bank-owned life insurance		53,594		54,242
Other assets		73,382		58,029
Total assets	$	3,418,854	$	3,371,014

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing	$	1,104,691	$	1,084,544
Interest bearing		1,760,252		1,697,028
Total deposits		2,864,943		2,781,572
Repurchase agreements		107,760		106,937
Long-term debt		49,151		49,141
Subordinated debentures		35,347		35,302
Allowance for credit losses on unfunded loan commitments		1,040		203
Other liabilities		34,922		35,365
Total liabilities		3,093,163		3,008,520

Commitments and contingent liabilities (Note 7)

Shareholders' equity
Common stock, no par value; 24,000,000 shares authorized; 15,086,032 and 15,270,010 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		111,673		113,007
Additional paid-in capital		4,281		3,910
Retained earnings		227,445		234,410
Accumulated other comprehensive (loss) income, net		(17,708)		11,167
Total shareholders' equity		325,691		362,494
Total liabilities and shareholders' equity	$	3,418,854	$	3,371,014

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

Table of Contents

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

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


	Three months ended March 31,
	2022		2021
Interest and dividend income
Loans and leases, including fees	$	20,772	$	26,412
Taxable securities		3,490		1,578
Tax-exempt securities		1,726		1,449
Federal funds sold and other		93		19
Total interest income		26,081		29,458
Interest expense
Deposits		560		608
Short-term borrowings		82		48
Subordinated debentures		683		247
Total interest expense		1,325		903
Net interest income		24,756		28,555
Provision for credit losses on loans and leases		600		250
Benefit for credit losses on unfunded loan commitments		(94)		—
Net interest income after provision for credit losses		24,250		28,305
Noninterest income
Service charges on deposits		3,040		2,767
Other income		3,023		4,063
Total noninterest income		6,063		6,830
Noninterest expense
Salaries and employee benefits		11,805		11,151
Occupancy		2,294		2,486
Other		6,074		6,634
Total noninterest expense		20,173		20,271
Income before taxes		10,140		14,864
Provision for income taxes		2,733		3,786
Net income	$	7,407	$	11,078

PER SHARE DATA
Book value	$	21.59	$	22.58
Cash dividends	$	0.23	$	0.21
Earnings per share basic	$	0.49	$	0.73
Earnings per share diluted	$	0.49	$	0.72
Average shares outstanding, basic		15,021,138		15,241,190
Average shares outstanding, diluted		15,120,990		15,355,890

Total shareholders' equity (in thousands)	$	325,691	$	347,981
Shares outstanding		15,086,032		15,410,763
Dividends paid (in thousands)	$	3,508	$	3,231

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

Table of Contents

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(dollars in thousands, unaudited)


	Three months ended March 31,
	2022		2021
Net income	$	7,407	$	11,078
Other comprehensive loss, before tax:
Unrealized gains on securities:
Unrealized holding loss arising during period		(39,962)		(5,759)
Less: reclassification adjustment for gains included in net income ⁽¹⁾		(1,032)		—
Other comprehensive loss, before tax		(40,994)		(5,759)
Income tax benefit related to items of other comprehensive loss, net of tax		12,119		1,703
Other comprehensive loss		(28,875)		(4,056)
Comprehensive (loss) income	$	(21,468)	$	7,022

(1)	Amounts are included in net gains on investment securities available-for-sale on the Consolidated Statements of Income in noninterest income. Income tax expense associated with the reclassification adjustment for the three months ended March 31, 2022 and 2021 was $305 thousand and $0 respectively.

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

Table of Contents

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

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


								Accumulated
				Additional				Other
	Common Stock			Paid In		Retained		Comprehensive		Shareholders'
	Shares	Amount		Capital		Earnings		Income (Loss)		Equity
Balance, December 31 2020	15,388,423	$	113,384	$	3,736	$	208,371	$	18,405	$	343,896
Net income	—		—		—		11,078		—		11,078
Other comprehensive loss, net of tax	—		—		—		—		(4,056)		(4,056)
Stock options exercised, net of shares surrendered for cashless exercises	4,160		69		(15)		—		—		54
Stock compensation costs	18,180		—		240		—		—		240
Cash dividends - $0.21 per share	—		—		—		(3,231)		—		(3,231)
Balance, March 31, 2021	15,410,763	$	113,453	$	3,961	$	216,218	$	14,349	$	347,981

Balance, December 31, 2021	15,270,010	$	113,007	$	3,910	$	234,410	$	11,167	$	362,494
Cumulative effect of change in accounting principle (Note 3)	—		—		—		(7,315)		—		(7,315)
Net income	—		—		—		7,407		—		7,407
Other comprehensive loss, net of tax	—		—		—		—		(28,875)		(28,875)
Restricted stock surrendered due to employee tax liability	(1,196)		(9)		—		(23)		—		(32)
Restricted stock forfeited / cancelled	(220)		—		—		—		—		—
Stock based compensation - stock options	—		—		30		—		—		30
Stock based compensation - restricted stock	—		—		341		—		—		341
Stock repurchase	(182,562)		(1,325)		—		(3,526)		—		(4,851)
Cash dividends - $0.23 per share	—		—		—		(3,508)		—		(3,508)
Balance, March 31, 2022	15,086,032	$	111,673	$	4,281	$	227,445	$	(17,708)	$	325,691

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


					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 (Loss)			3
		Consolidated Statements of Changes In Shareholders’ Equity			4
		Consolidated Statements of Cash Flows			5
		Notes to Consolidated Financial Statements (Unaudited)			6

	Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations				35
		Forward-Looking Statements			35
		Critical Accounting Policies			36
		Overview of the Results of Operations and Financial Condition			36
		Earnings Performance			39
			Net Interest Income and Net Interest Margin		39
			Provision for Credit Losses on Loans and Leases		42
			Noninterest Income and Noninterest Expense		44
			Provision for Income Taxes		46
		Balance Sheet Analysis			46
			Earning Assets		46
				Investments	46
				Loan and Lease Portfolio	47
				Nonperforming Assets	49
				Allowance for Credit Losses on Loans and Leases	50
				Off-Balance Sheet Arrangements	52
			Other Assets		52
			Deposits and Interest Bearing Liabilities		53
				Deposits	53
				Other Interest Bearing Liabilities	53
			Noninterest Bearing Liabilities		54
		Liquidity and Market Risk Management			54
		Capital Resources			57

	Item 3. Qualitative & Quantitative Disclosures about Market Risk				59

	Item 4. Controls and Procedures				59

Part II - Other Information					60
	Item 1. - Legal Proceedings				60
	Item 1A. - Risk Factors				60
	Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds				60
	Item 3. - Defaults upon Senior Securities				61
	Item 4. - Mine Safety Disclosures				61
	Item 5. - Other Information				61
	Item 6. - Exhibits				62

Signatures					63