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 JUNE 30, 2024

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 August 1, 2024, the registrant had 14,456,695 shares of common stock outstanding, including 262,163 shares of unvested restricted stock.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

SIERRA BANCORP

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)


	June 30, 2024		December 31, 2023
ASSETS	(unaudited)		(audited)
Cash and due from banks	$	96,048	$	73,721
Interest-bearing deposits in banks		87,942		4,881
Total cash & cash equivalents		183,990		78,602
Investment securities
Available-for-sale, net of allowance for credit losses of $0 and $0		716,787		1,019,201
Held-to-maturity, net of allowance for credit losses of $16 at both periods		312,879		320,057
Total investment securities		1,029,666		1,339,258
Loans:
Gross loans		2,234,528		2,090,075
Deferred loan costs, net		288		309
Allowance for credit losses on loans		(21,640)		(23,500)
Net loans		2,213,176		2,066,884
Premises and equipment, net		16,007		16,907
Goodwill		27,357		27,357
Other intangible assets, net		961		1,399
Bank-owned life insurance		53,431		51,572
Other assets		156,614		147,820
Total assets	$	3,681,202	$	3,729,799

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	986,927	$	1,020,772
Interest-bearing		1,955,483		1,740,451
Total deposits		2,942,410		2,761,223
Repurchase agreements		148,003		107,121
Other borrowings		80,000		360,500
Long-term debt		49,348		49,304
Subordinated debentures		35,749		35,660
Allowance for credit losses on unfunded loan commitments		520		510
Other liabilities		75,152		77,384
Total liabilities		3,331,182		3,391,702

Commitments and contingent liabilities (Note 7)

Shareholders' equity
Common stock, no par value; 24,000,000 shares authorized; 14,466,873 and 15,170,372 shares issued and outstanding at June 30, 2024 unaudited, and December 31, 2023, respectively		107,929		110,446
Additional paid-in capital		5,336		4,581
Retained earnings		267,478		259,050
Accumulated other comprehensive loss, net		(30,723)		(35,980)
Total shareholders' equity		350,020		338,097
Total liabilities and shareholders' equity	$	3,681,202	$	3,729,799

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

Table of Contents

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024, and 2023

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


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Interest and dividend income
Loans, including fees	$	28,518	$	24,270	$	53,945	$	46,821
Taxable securities		12,787		13,488		26,090		25,472
Tax-exempt securities		1,592		2,741		3,581		5,555
Federal funds sold and other		598		376		839		446
Total interest income		43,495		40,875		84,455		78,294
Interest expense
Deposits		11,032		7,943		20,676		13,943
Federal funds purchased and repurchase agreements		68		959		354		2,518
Federal Home Loan Bank advances		1,040		2,536		2,167		3,169
Long-term debt		430		429		861		857
Subordinated debentures		755		691		1,510		1,358
Total interest expense		13,325		12,558		25,568		21,845
Net interest income		30,170		28,317		58,887		56,449
Credit loss expense - loans		921		77		1,018		327
Credit loss (benefit) expense - unfunded commitments		(20)		(100)		10		(137)
Credit loss benefit - debt securities held-to-maturity		—		(47)		—		—
Net interest income after provision for credit losses		29,269		28,387		57,859		56,259
Noninterest income
Service charges and fees on deposit accounts		6,184		5,691		11,909		11,071
Net gain (loss) on sale of securities available-for-sale		—		351		(2,883)		396
Net gain on sale of fixed assets		—		—		3,799
Increase in cash surrender value of life insurance		523		658		1,738		830
Other income		923		1,313		1,656		2,296
Total noninterest income		7,630		8,013		16,219		14,593
Noninterest expense
Salaries and employee benefits		12,029		12,129		25,226		24,944
Occupancy and equipment costs		3,152		2,438		6,177		4,769
Other		7,511		8,401		15,815		16,247
Total noninterest expense		22,692		22,968		47,218		45,960
Income before taxes		14,207		13,432		26,860		24,892
Provision for income taxes		3,944		3,513		7,267		6,222
Net income	$	10,263	$	9,919	$	19,593	$	18,670

PER SHARE DATA
Book value	$	24.19	$	20.90	$	24.19	$	20.90
Cash dividends	$	0.23	$	0.23	$	0.46	$	0.46
Earnings per share basic	$	0.72	$	0.67	$	1.36	$	1.26
Earnings per share diluted	$	0.71	$	0.67	$	1.35	$	1.26
Average shares outstanding, basic		14,300,267		14,735,568		14,404,368		14,853,052
Average shares outstanding, diluted		14,381,426		14,754,764		14,467,477		14,875,508

Total shareholders' equity (in thousands)	$	350,020	$	309,592	$	350,020	$	309,592
Shares outstanding		14,466,873		14,811,736		14,466,873		14,811,736
Dividends paid (in thousands)	$	3,352	$	3,459	$	6,748	$	6,954

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

Table of Contents

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024, and 2023

(dollars in thousands, unaudited)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Net income	$	10,263	$	9,919	$	19,593	$	18,670
Other comprehensive gain (loss), before tax:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss) arising during period		1,703		(268)		4,580		488
Less: reclassification adjustment for (gains) losses included in net income ⁽¹⁾		—		(351)		2,883		(396)
Other comprehensive gain (loss), before tax		1,703		(619)		7,463		92
Income tax (expense) benefit related to items of other comprehensive gain		(504)		183		(2,206)		(27)
Other comprehensive gain (loss), net of tax:		1,199		(436)		5,257		65
Comprehensive income	$	11,462	$	9,483	$	24,850	$	18,735

(1)

Amounts are included in net gains on investment securities available-for-sale on the Consolidated Statements of Income in noninterest income. Income tax expenses associated with the reclassification adjustment for the three months ended June 30, 2024, and 2023, was $0 and $0.01 million, respectively. Income tax (benefits) expenses associated with the reclassification adjustment for the six months ended June 30, 2024 and 2023 were $(0.9) million and $0.1 million, 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 JUNE 30, 2024, and 2023

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


								Accumulated
				Additional				Other
	Common Stock			Paid In		Retained		Comprehensive		Shareholders'
	Shares	Amount		Capital		Earnings		Loss		Equity
Balance, March 31, 2023	15,050,740	$	111,801	$	4,561	$	246,723	$	(56,075)	$	307,010
Net income	—		—		—		9,919		—		9,919
Other comprehensive loss, net of tax	—		—		—		—		(436)		(436)
Restricted stock forfeited / cancelled	(3,856)		—		—		—		—		—
Restricted stock vested in period	—		80		(80)		—		—		—
Stock-based compensation - stock options	—		—		17		—		—		17
Stock-based compensation - restricted stock	—		—		389		—		—		389
Stock repurchased	(235,148)		(1,746)		—		(2,064)		—		(3,810)
Excise tax on stock repurchased	—		(38)		—		—		—		(38)
Cash dividends - $0.23 per share	—		—		—		(3,459)		—		(3,459)
Balance, June 30, 2023	14,811,736	$	110,097	$	4,887	$	251,119	$	(56,511)	$	309,592

Balance, March 31, 2024	14,645,298	$	109,295	$	4,815	$	262,906	$	(31,922)	$	345,094
Net income	—		—		—		10,263		—		10,263
Other comprehensive gain, net of tax	—		—		—		—		1,199		1,199
Restricted stock forfeited / cancelled	(257)		—		—		—		—		—
Stock-based compensation - stock options	—		—		11		—		—		11
Stock-based compensation - restricted stock	—		—		510		—		—		510
Stock repurchased	(178,168)		(1,329)		—		(2,339)		—		(3,668)
Excise tax on stock repurchased	—		(37)		—		—		—		(37)
Cash dividends - $0.23 per share	—		—		—		(3,352)		—		(3,352)
Balance, June 30, 2024	14,466,873	$	107,929	$	5,336	$	267,478	$	(30,723)	$	350,020

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 SIX MONTHS ENDED JUNE 30, 2024 AND 2023

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


								Accumulated
				Additional				Other
	Common Stock			Paid In		Retained		Comprehensive		Shareholders'
	Shares	Amount		Capital		Earnings		Loss		Equity
Balance, December 31, 2022	15,170,372	$	112,928	$	4,148	$	243,082	$	(56,576)	$	303,582
Net income	—		—		—		18,670		—		18,670
Other comprehensive gain, net of tax	—		—		—		—		65		65
Restricted stock granted	29,064		—		—		—		—		—
Restricted stock surrendered due to employee tax liability	(1,764)		(13)		—		(23)		—		(36)
Restricted stock forfeited / cancelled	(4,370)		—		—		—		—		—
Restricted stock vested in period	—		80		(80)		—		—		—
Stock-based compensation - stock options	—		—		37		—		—		37
Stock-based compensation - restricted stock	—		—		782		—		—		782
Stock repurchased	(381,566)		(2,834)		—		(3,656)		—		(6,490)
Excise tax on stock repurchased	—		(64)		—		—		—		(64)
Cash dividends - $0.46 per share	—		—		—		(6,954)		—		(6,954)
Balance, June 30, 2023	14,811,736	$	110,097	$	4,887	$	251,119	$	(56,511)	$	309,592

Balance, December 31, 2023	14,793,832	$	110,446	$	4,581	$	259,050	$	(35,980)	$	338,097
Net income	—		—		—		19,593		—		19,593
Other comprehensive gain, net of tax	—		—		—		—		5,257		5,257
Restricted stock granted	36,114		—		—		—		—		—
Restricted shares withheld for taxes	(5,062)		(38)		—		(64)		—		(102)
Restricted stock forfeited / cancelled	(906)		—		—		—		—		—
Restricted stock vested in period	—		253		(253)		—		—		—
Stock-based compensation - stock options	—		—		25		—		—		25
Stock-based compensation - restricted stock	—		—		983		—		—		983
Stock repurchased	(357,105)		(2,663)		—		(4,353)		—		(7,016)
Excise tax on stock repurchased	—		(69)		—		—		—		(69)
Cash dividends - $0.46 per share	—		—		—		(6,748)		—		(6,748)
Balance, June 30, 2024	14,466,873	$	107,929	$	5,336	$	267,478	$	(30,723)	$	350,020

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			6
		Notes to Consolidated Financial Statements (Unaudited)			7

	Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations				36
		Forward-Looking Statements			36
		Critical Accounting Policies			37
		Overview of the Results of Operations and Financial Condition			37
		Earnings Performance			39
			Net Interest Income and Net Interest Margin		39
			Provision for Credit Losses on Loans		44
			Noninterest Income and Noninterest Expense		45
			Provision for Income Taxes		47
		Balance Sheet Analysis			47
			Earning Assets		47
				Investments	47
				Loan Portfolio	49
				Nonperforming Assets	51
				Allowance for Credit Losses on Loans	51
				Off-Balance Sheet Arrangements	52
			Other Assets		53
			Deposits and Interest-Bearing Liabilities		54
				Deposits	54
				Other Interest-Bearing Liabilities	54
			Noninterest-Bearing Liabilities		55
		Liquidity and Market Risk Management			55
		Capital Resources			58

	Item 3. Quantitative & Qualitative Disclosures about Market Risk				59

	Item 4. Controls and Procedures				59

Part II - Other Information					59
	Item 1. - Legal Proceedings				59
	Item 1A. - Risk Factors				59
	Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds				60
	Item 3. - Defaults upon Senior Securities				60
	Item 4. - Mine Safety Disclosures				60
	Item 5. - Other Information				60
	Item 6. - Exhibits				61

Signatures					63