Sierra Bancorp Reports Year End 2024 Results and Quarterly Earnings

PORTERVILLE, Calif.--(BUSINESS WIRE)--Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced unaudited financial results for the three-and twelve-month periods ended December 31, 2024. Sierra Bancorp reported consolidated net income in the fourth quarter of 2024 of $10.4 million, or $0.72 per diluted share, compared to net income of $6.3 million, or $0.43 per diluted share, in the fourth quarter of 2023, and $10.6 million, or $0.74 per diluted share, in the third quarter of 2024. Highlights for the fourth quarter of 2024 (unless otherwise stated): Strong Quarterly Earnings Metrics Return on average assets improved to 1.13%, as compared to 0.67% for the same period in 2023. Return on average equity increased to 11.49%, as compared to 8.03% for the same period in 2023. Net interest margin rose to 3.65%, as compared to 3.31% for the same period in 2023. Efficiency ratio improved to 59.7% as compared to 67.1% for the same period in 2023. Diluted earnings per share of $0.72 increased 68% compared to $0.43 for the same period in 2023. Balance Sheet Growth Loan growth of $11.3 million, or 2% annualized, during the quarter. For the full year 2024, loans grew 12%, or $242.7 million to $2.3 billion. For the full year 2024, total deposits increased $130.4 million, or 5%, to $2.9 billion. Noninterest-bearing deposits of $1.0 billion at December 31, 2024, represent 35% of total deposits. Solid Capital and Liquidity Increased Tangible Book Value (non-GAAP) per share, during the quarter, to $23.15 per share. Repurchased 229,850 shares of common stock during the quarter at an average price of $29.38, with an additional 112,896 shares repurchased through January 23, 2025. In January 2025, increased dividend by one cent to $0.25 per share, our 104th consecutive quarterly dividend. Regulatory Community Bank Leverage Ratio increased to 11.80% at December 31, 2024, for our subsidiary Bank. Consolidated Tangible Common Equity Ratio (non-GAAP) increased to 9.18% at December 31, 2024. Overall primary and secondary liquidity sources of $2.3 billion at December 31, 2024. For the year ended 2024, the Company recognized net income of $40.6 million, or $2.82 per diluted share, as compared to $34.8 million, or $2.36 per diluted share, for the same period in 2023. The Company’s return on average assets and return on average equity for the year ended 2024 was 1.12% and 11.62%, respectively, as compared to 0.94% and 11.30%, respectively, for the same comparative period in 2023. “Confidence doesn’t come out of nowhere. It’s a result of something…hours and days and weeks and years of constant work and dedication.” – Roger Staubach “We are proud to announce strong net income growth of over 16% in 2024, accompanied by solid improvements in net interest margin, efficiency ratio, return on average assets, and tangible book value per share!” expressed Kevin McPhaill, CEO and President. “We overcame a number of obstacles, including a challenging interest rate environment, to cap off one of our best years. Loans continued to grow and deposit relationships were strengthened as our bankers worked hard to focus on retaining and attracting customers. We are very excited about 2025 and will continue to find opportunities to improve our bank and provide consistently strong results,” concluded Mr. McPhaill. Financial Highlights Quarterly Changes (comparisons to the fourth quarter of 2023) Quarterly net income at $10.4 million, a 65% increase, primarily attributable to $2.5 million in higher net interest income, a $1.1 million decrease in the provision for credit losses, and a $1.3 million decline in noninterest expenses. The $2.5 million net interest income increase was primarily driven by a 34 basis point increase in net interest margin partially offset by lower earning assets due to a strategic balance sheet restructuring in early 2024. Although average assets were down during 2024, the mix shifted favorably with a $237 million increase in loan balances during 2024 due primarily to mortgage warehouse loan growth. The favorable increase in interest income was enhanced by a $1.8 million decline in overall interest expense in the fourth quarter of compared to the same quarter in 2023, due to the reduction in other borrowings facilitated by the balance sheet restructuring in the fourth quarter of 2023. Noninterest income for the fourth quarter of 2024 declined by $0.5 million or 7%. This was primarily due to a net $0.8 million increase from the combination of a nonrecurring fourth quarter 2023 gain on a sale/leaseback on Bank-owned branch buildings, and a realized loss on a securities restructuring strategy. Noninterest expense experienced a $1.3 million positive variance in the fourth quarter over the same quarter in 2023. While salary and benefit costs decreased due to a strategic internal reorganization in the fourth quarter of 2023, this favorable variance was offset by an increase in occupancy costs, due to the sale/leaseback of certain branches, also in the fourth quarter of 2023. Improved expenses in nearly every category of noninterest expense were due to operational efficiencies gained from various initiatives implemented in 2024. Year to-Date Changes (comparisons to the year ended 2023) Net income increased $5.7 million, or 16%, to $40.6 million. This robust net income growth was primarily driven by an increase of $7.6 million, or 7% in net interest income, due mostly to an overall increase in interest rates on earning assets partially offset by a $1.1 million increase in the provision for credit losses and higher interest expense. In addition, there were positive variances related to an increase in service charge income, partially offset by a rise in occupancy expenses from the sale/leaseback of branch buildings in late 2023. The provision for credit losses was $4.8 million, an increase of $1.1 million, primarily due to an increase in individual reserves, partially offset by a decrease in net charge-offs for the year ending 2024. Noninterest income increased by $1.1 million, or 4%. In addition to the net gain from the sale/leaseback mostly offset by a loss on securities sale as described above, service charge income on deposit accounts was $1.1 million higher, due to increases in the following categories: ATM Visa income, analysis fees, and other transaction-based fees. Noninterest expense increased 0.2%, or $0.2 million during 2024. The $2.2 million increase in occupancy costs, due to higher rent and property tax payments following the sale/leaseback transaction of Bank owned branch buildings in late 2023, was partially offset by efficiencies elsewhere. Among the expense declines was $0.6 million in salaries and benefits, mostly from an operational reorganization in 2023. Other noninterest expense improved favorably by $1.3 million overall due mostly to lower costs for most categories. Balance Sheet Changes (comparisons to December 31, 2023) Total assets decreased by $115.5 million, or 3%, to $3.6 billion during 2024, due primarily to the strategic restructuring of our lower-yielding bond portfolio in the first quarter of 2024, partially offset by increases in loan balances. Gross loans increased $241.3 million, or 12%, due to a $210.4 million increase in mortgage warehouse line utilization, a $32.2 million increase in commercial real estate loans, a $10.1 million increase in farmland loans, and a $20.7 million increase in other commercial loans. This favorable growth was partially offset by a $30.6 million decrease in residential real estate loans, and smaller declines in construction and consumer loans. Deposits totaled $2.9 billion at December 31, 2024, representing a year-to-date increase of $130.4 million, or 5%. The growth in deposits came mostly from a $140.0 million increase in brokered deposits to fund growth in mortgage warehouse lines, and a $40.2 million increase in transaction accounts offset by smaller declines in customer non-transaction accounts. Other interest-bearing liabilities decreased $278.8 million from a reduction in overnight borrowings facilitated by the strategic balance sheet restructuring in the first quarter of 2024, and a drop in FHLB advances, as we utilized brokered deposits not only to fund mortgage warehouse lines, but to pay down more costly FHLB lines of credit. Other financial highlights are reflected in the following table. FINANCIAL HIGHLIGHTS (Dollars in Thousands, Except per Share Data, Unaudited) At or For the At or For the Three Months Ended Twelve Months Ended 12/31/2024 9/30/2024 12/31/2023 12/31/2024 12/31/2023 Net income $ 10,364 $ 10,603 $ 6,290 $ 40,560 $ 34,844 Diluted earnings per share $ 0.72 $ 0.74 $ 0.43 $ 2.82 $ 2.36 Return on average assets 1.13 % 1.14 % 0.67 % 1.12 % 0.94 % Return on average equity 11.49 % 11.95 % 8.03 % 11.62 % 11.30 % Net interest margin (tax-equivalent) (1) 3.65 % 3.66 % 3.31 % 3.66 % 3.37 % Yield on average loans 5.20 % 5.25 % 4.78 % 5.13 % 4.69 % Yield on investments 5.03 % 5.42 % 5.35 % 5.40 % 5.09 % Cost of average total deposits 1.46 % 1.62 % 1.24 % 1.50 % 1.09 % Cost of funds 1.59 % 1.72 % 1.73 % 1.64 % 1.52 % Efficiency ratio (tax-equivalent) (1)(2) 59.74 % 58.38 % 67.10 % 60.76 % 63.90 % Total assets $ 3,614,271 $ 3,696,154 $ 3,729,799 $ 3,614,271 $ 3,729,799 Loans & leases net of deferred fees $ 2,331,434 $ 2,321,025 $ 2,090,384 $ 2,331,434 $ 2,090,384 Noninterest demand deposits $ 1,007,208 $ 1,013,743 $ 1,020,772 $ 1,007,208 $ 1,020,772 Total deposits $ 2,891,668 $ 2,962,159 $ 2,761,223 $ 2,891,668 $ 2,761,223 Noninterest-bearing deposits over total deposits 34.8 % 34.2 % 37.0 % 34.8 % 37.0 % Shareholders' equity / total assets 9.89 % 9.70 % 9.06 % 9.89 % 9.06 % Tangible Common equity ratio (2) 9.18 % 9.01 % 8.36 % 9.18 % 8.36 % Book value per share $ 25.12 $ 24.88 $ 22.85 $ 25.12 $ 22.85 Tangible book value per share (2) $ 23.15 $ 22.93 $ 20.91 $ 23.15 $ 20.91 Community bank leverage ratio (subsidiary bank) 11.80 % 11.70 % 11.29 % 11.80 % 11.29 % Tangible common equity ratio (subsidiary bank) (2) 11.07 % 10.90 % 10.30 % 11.07 % 10.30 % (1) Computed on a tax equivalent basis utilizing a federal income tax rate of 21%. (2) See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures." INCOME STATEMENT HIGHLIGHTS Net Interest Income Net interest income was $30.4 million for the fourth quarter of 2024, a $2.5 million increase, or 9% over the fourth quarter of 2023, and increased $7.6 million, or 7%, to $120.0 million for the year ended 2024, relative to the same period in 2023. For the fourth quarter of 2024, the yield on earning assets was 16 basis points higher as compared to the same period in 2023, which more than offset the lower average interest-earning assets of $66.6 million. The increase in yield was mostly due to an increase in real estate loan yields, combined with an increase in higher-yielding mortgage warehouse loans overall and as a percentage of loans. Further, there was a favorable 22 basis point decrease in the cost of our interest-bearing liabilities for the same period. The favorable decline in funding costs was due to a significant reduction in short-term borrowings as a result of the strategic balance sheet restructuring in late 2023, and early 2024. Net interest income for the comparative year-to-date periods increased $7.6 million, or 7%, due to the sale of lower-yielding investments in the first quarter of 2024, as part of the overall strategic balance sheet restructuring. This sale allowed the Company to also reduce higher cost funding. There was a $161.5 million, or 8%, increase in average loan and lease balances with yields 44 basis points higher for the same period, while average investment balances decreased $254.9 million, or 19%, with yields 31 basis points higher for the same period. Average interest-bearing liabilities decreased $86.7 million, or 4%, mostly in borrowed funds. The cost of interest-bearing liabilities was 72 basis points higher for the comparative periods, due to an increase in higher cost brokered deposits used to fund the growth in mortgage warehouse utilization. The favorable net impact of the mix and rate change was a 29 basis point increase in our net interest margin for the year ended December 31, 2024, as compared to the same period in 2023. Our net interest margin was 3.65% for the fourth quarter of 2024, one basis point lower than the linked quarter, and 34 basis points higher than the fourth quarter of 2023. The yield of interest-earning assets increased 16 basis points for the fourth quarter of 2024, as compared to the same quarter for 2023, and the cost of interest-bearing liabilities decreased 22 basis points compared to the same period in 2023. Favorable shifts in both yields and costs led to an overall 34 basis point increase in net interest margin in the fourth quarter of 2024, compared to the same period in 2023. Compared to the prior linked quarter, the yield on taxable investments declined as a portion of these investments are floating rate and the index rate declined during the quarter. This unfavorable decline in yield on investments was mostly offset by a 23 basis point decline in deposit costs as certificates of deposits rolled into lower rates throughout the quarter. Credit Loss Expense The Company recorded a $2.3 million and $4.6 million credit loss expense related to loans in the fourth quarter and year-to-date 2024, as compared to $3.6 million and $4.1 million, respectively, for the same periods in 2023. For the prior linked quarter, the credit loss expense related to loans increased $1.1 million. The impact of net lower charge-offs, along with a favorable improvement in underlying economic forecasts used as part of our allowance for credit losses model, and offset by an unfavorable increase in the allowance for credit losses on loans individually evaluated, accounts for the changes in all periods presented. Credit loss expense on unfunded commitments was $0.1 million in the fourth quarter of 2024, as compared to a benefit of $0.1 million in the same quarter in 2023. For the full year 2024, the Company recorded $0.2 million in credit loss expense on unfunded commitments compared to a $0.3 million benefit for 2023. The reason for the increase in both the quarterly and year-to-date comparisons is due to an increase in the balance of unfunded commitments combined with an increase in the reserve rate utilized in the calculation of the reserves. All debt securities in an unrealized loss position were primarily attributable to changes in interest rates and volatility in the financial markets and not a result of an expected credit loss. Noninterest Income Total noninterest income reflects a $0.5 million decline, or 7%, for the quarter ended December 31, 2024, as compared to the same quarter in 2023. Such decline is mostly due to a net benefit recorded in the fourth quarter of 2023 related to the combination of the sale/leaseback of Bank owned buildings, mostly offset by a realized loss related to securities for a net favorable benefit recorded of $0.8 million. Having the favorable net gain in 2023, with no similar transaction in 2024, resulted in a $0.8 million decline for the comparable periods. This was partially offset by favorable increases in service charges and other areas of noninterest income. For the full year 2024, noninterest income increased $1.1 million, or 4%, compared to 2023. Similar to the change in fourth quarter noninterest income described above, there was a $0.8 million net favorable difference between sale/leaseback gain net of investment portfolio realized losses in 2023 as compared to a $1.1 million net favorable difference for a second sale/leaseback transaction in early 2024. This resulted in a $0.3 million increase overall year-over-year for these two combined items. This was supplemented by a $1.1 million increase in service charges and a $0.9 million increase in bank-owned life income. These two favorable improvements were partially offset by a $0.8 million decline in other noninterest income items. The favorable year-to-date change in Bank Owned Life Insurance (BOLI) income is offset by similar increases to the Company’s deferred compensation plan. Service charge income increases are due mostly to favorable improvements in analysis fee income, greater ATM fees, an increase in overdraft income and higher income related to money-service business customers. Noninterest Expense There was a favorable variance of total noninterest expense of $1.3 million, or 5%, in the fourth quarter of 2024, relative to the fourth quarter of 2023. For the full year of 2024, noninterest expense increased by $0.2 million, or 0.2%, for the year ended 2024, as compared to the same period in 2023. Salaries and Benefits were $0.7 million, or 5%, lower in the fourth quarter of 2024, as compared to the fourth quarter of 2023, and $0.6 million, or 1%, lower for the year ended 2024, compared to the same period in 2023. The Company made strategic decisions in 2023 that created operational efficiencies and reduced noninterest expenses. Full-time equivalent employees decreased by four to 485 full-time equivalent employees at December 31, 2024, as compared to 489 at December 31, 2023. Occupancy expenses were $0.3 million higher for the fourth quarter of 2024, and $2.2 million higher year-to-date as compared to the same periods in 2023. The reason for the increases in both comparisons was due to increased rent expense from the sale/leaseback transactions in the fourth quarter of 2023 and first quarter of 2024. Other noninterest expense decreased $0.9 million for the fourth quarter 2024, and $1.3 million for the year ended 2024, as compared to the same periods in 2023. The positive variances for the fourth quarter of 2024, compared to the same period in 2023, were in marketing costs, due to a change in the Company marketing strategy, and in travel and legal expenses. For the year-over-year comparison, the categories of variance were the same as with the quarterly comparison, except for an unfavorable variance in directors’ deferred compensation expense and loan origination software, to better serve our customers and create operational efficiencies in the near term. This was partially offset by favorable variances in debit card processing and ATM network costs, from a branding change to VISA from Mastercard last year, and the subsequent costs in 2023 related to that change. The Company's provision for income taxes was 17.7% of pre-tax income in the fourth quarter of 2024, relative to 23.8% in the fourth quarter of 2023, and 24.7% of pre-tax income for the year ended December 31, 2024, as compared to 25.0% for the year ended 2023. The decrease in effective tax rate in the fourth quarter was due to an increase in the net benefit from low-income housing tax credit investments. Balance Sheet Summary The $115.5 million, or 3%, decrease in total assets during the year ended 2024, was mostly a result of the strategic balance sheet restructuring, mostly offset by loan growth in 2024. Investment securities declined $377.8 million, primarily from the sale of bonds from the strategic securities transaction, as well as other maturities and calls of investment securities. The decreases in investment securities were partially offset by a $241.3 million increase in gross loans, and a $22.1 million increase in cash on hand. The $241.3 million increase in gross loan balances, as compared to December 31, 2023, was a result of organic growth led by $210.4 million of growth of mortgage warehouse outstandings. The remaining growth came from a $32.2 million increase in commercial real estate loans, a $20.7 million increase in other commercial loans, and a $10.1 million increase in farmland loans, partially offset by a $30.6 million decline in residential real estate loans. Despite the uncertainty in the direction of market interest rates during 2025, the Company plans to expand its customer base in the mortgage warehouse sector to facilitate growth in 2025. As indicated in the loan roll forward below, new credit extended (excluding mortgage warehouse) for the fourth quarter of 2024 of $79.9 million represented an $18.7 million increase compared to the prior linked quarter, and $53.2 million relative to the same period in 2023. New credit extended (excluding mortgage warehouse) increased $31.1 million in 2024 as compared to 2023. This increase in organic loan growth was attributable to new loan teams hired in recent years that are now gaining momentum. LOAN ROLLFORWARD (Dollars in Thousands, Unaudited) For the three months ended: For the twelve months ended: December 31, 2024 September 30, 2024 December 31, 2023 December 31, 2024 December 31, 2023 Gross loans beginning balance $ 2,320,629 $ 2,234,528 $ 2,100,810 $ 2,090,075 $ 2,052,940 New credit extended 79,934 61,239 26,704 216,452 185,323 Changes in line of credit utilization (19,664 ) 11,572 4,377 (43,432 ) (37,308 ) Change in mortgage warehouse (9,376 ) 61,718 8,415 210,402 50,561 Pay-downs, maturities, charge-offs and amortization (40,182 ) (48,428 ) (50,231 ) (142,156 ) (161,441 ) Gross loans ending balance $ 2,331,341 $ 2,320,629 $ 2,090,075 $ 2,331,341 $ 2,090,075 Unused commitments, excluding mortgage warehouse and overdraft lines, were $256.9 million at December 31, 2024, compared to $203.6 million at December 31, 2023. Total line utilization, excluding mortgage warehouse and overdraft lines, was 57% at December 31, 2024, and 62% at December 31, 2023. Including mortgage warehouse utilization, overall utilization was 51% at December 31, 2024, as compared to 53% at December 31, 2023. Mortgage warehouse utilization increased to 51% at December 31, 2024, as compared to 36% at December 31, 2023. Due to new customer growth, total mortgage warehouse availability increased to $311.6 million at December 31, 2024, as compared to $204.5 million at December 31, 2023. The Bank increased the number of mortgage warehouse customers by 60% in 2024. This has facilitated an increase in outstanding balances in 2024 by $210.4 million, or 181%, to $324.6 million at December 31, 2024. Deposit balances reflect growth of $130.4 million, or 5%, during the year ended 2024. Core non-maturity deposits increased by $12.0 million, or 1%, while customer time deposits decreased by $21.5 million, or 4%. Wholesale brokered deposits increased by $140.0 million, or 104%. As stated previously, the increase in brokered deposits was primarily to fund increases in mortgage warehouse lines. Overall noninterest-bearing deposits as a percent of total deposits at December 31, 2024, decreased to 34.8%, as compared to 37.0% at December 31, 2023. Other interest-bearing liabilities of $188.9 million on December 31, 2024, consist of $108.9 million in customer repurchase agreements and $80.0 million of term FHLB borrowings, as compared to $107.1 million in customer repurchase agreements, and $205.0 million of term FHLB borrowings on December 31, 2023. Overall uninsured deposits are estimated to be approximately $815.5 million, or 28% of total deposit balances, excluding public agency deposits that are subject to collateralization through a letter of credit issued by the FHLB. In addition, uninsured deposits of the Bank’s customers are eligible for FDIC pass-through insurance if the customer opens an IntraFi Insured Cash Sweep (ICS) account or a reciprocal time deposit through the Certificate of Deposit Account Registry System (CDARS). IntraFi allows for up to $265 million per customer of pass-through FDIC insurance, which would more than cover each of the Bank’s deposit customers if such customer desired to have such pass-through insurance. The Bank maintains a diversified deposit base with no significant customer concentrations and does not bank any cryptocurrency companies. At December 31, 2024, the Company had approximately 119,000 accounts, and the 25 largest deposit balance customers had balances of approximately 10% of overall deposits. During the fourth quarter of 2024, except for seasonality fluctuations in the normal course of business, there has been no material change in the composition of our 25 largest deposit balance customers. The Company continues to have substantial liquidity. At December 31, 2024, and December 31, 2023, the Company had the following sources of primary and secondary liquidity (dollars in thousands, unaudited): Primary and Secondary Liquidity Sources December 31, 2024 December 31, 2023 Cash and cash equivalents $ 100,664 $ 78,602 Unpledged investment securities 552,098 792,965 Excess pledged securities 242,519 382,965 FHLB borrowing availability 629,134 586,726 Unsecured lines of credit 504,785 374,785 Funds available through fed discount window 298,296 392,034 Totals $ 2,327,496 $ 2,608,077 Total capital of $357.3 million at December 31, 2024, reflects an increase of $19.2 million, or 6%, relative to year-end 2023. The increase in equity during the year ended December 31, 2024, was primarily due $40.6 million in net income and a $4.7 million favorable swing in accumulated other comprehensive income (loss) partially offset by $13.6 million in dividends paid, and $15.0 million in share repurchases. The remaining difference was related to stock options exercised and restricted stock activity during the year. Asset Quality Total nonperforming assets, comprised of nonaccrual loans, increased by $11.7 million to $19.7 million for the year ended December 31, 2024. The Company's ratio of nonperforming loans to gross loans increased to 0.84% at December 31, 2024, from 0.38% at December 31, 2023. This unfavorable change in asset quality resulted from an increase in non-accrual loan balances, primarily as a result of one agricultural loan relationship. All the Company's nonperforming assets are individually evaluated for credit loss quarterly and management believes the established allowance for credit loss on such loans was appropriate. The nonaccrual loans at December 31, 2024, are mostly due to an operating line of credit collateralized with receivables from wine grape production and other assets with a balance of $16.3 million at December 31, 2024, and a current balance of $14.1 million, due to principal paydowns made by the customer during the month of January 2025. The Company's allowance for credit losses on loans was $24.8 million at December 31, 2024, as compared to a balance of $23.5 million at December 31, 2023. The allowance was 1.07% of total loans at December 31, 2024, and 1.12% of total loans at December 31, 2023. The Company experienced fewer net charge offs during the year, offset by a specific allowance on a single agricultural credit relationship. Management's detailed analysis indicates that the Company's allowance for credit losses on loans should be sufficient to cover credit losses inherent in loan portfolio balances outstanding as of December 31, 2024, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the credit loss allowance on loans. Based upon the Company’s preliminary analysis we have identified approximately five residential real estate secured loans in the Los Angeles wildfire area and are unaware of any property damage at the date of this release. The total allowance for credit losses on loans of $24.8 million at December 31, 2024, included $0.4 million of allowance related to $326.4 million of mortgage warehouse lines. About Sierra Bancorp Sierra Bancorp is the holding Company for Bank of the Sierra (www.bankofthesierra.com), which is in its 48th year of operations and is the largest independent bank headquartered in the South San Joaquin Valley. Bank of the Sierra is a community-centric regional bank, which offers a broad range of retail and commercial banking services through full-service branches located within the counties of Tulare, Kern, Kings, Fresno, Ventura, San Luis Obispo, and Santa Barbara. The Bank also maintains an online branch and provides specialized lending services through an agricultural credit center in Templeton, California. In 2024, Bank of the Sierra was recognized as one of the strongest and top-performing community banks in the country, with a 5-star rating from Bauer Financial. Forward-Looking Statements The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties including but not limited to the health of the national and local economies, loan portfolio performance, the Company's ability to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully deploy new technology, the success of acquisitions and branch expansion, changes in interest rates, and other factors detailed in the Company's SEC filings, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Form 10‑K and Form 10‑Q. STATEMENT OF CONDITION (Dollars in Thousands, Unaudited) ASSETS 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Cash and due from banks $ 100,664 $ 132,797 $ 183,990 $ 119,244 $ 78,602 Investment securities Available-for-sale, at fair value 655,967 706,310 716,787 741,789 1,019,201 Held-to-maturity, at amortized cost, net of allowance for credit losses 305,514 308,971 312,879 316,406 320,057 Total investment securities 961,481 1,015,281 1,029,666 1,058,195 1,339,258 Real estate loans Residential real estate 381,438 388,169 396,819 406,443 412,063 Commercial real estate 1,360,374 1,338,793 1,316,754 1,327,482 1,328,224 Other construction/land 5,458 5,612 5,971 6,115 6,256 Farmland 77,388 80,589 80,807 66,133 67,276 Total real estate loans 1,824,658 1,813,163 1,800,351 1,806,173 1,813,819 Other commercial 177,013 168,236 156,650 143,448 156,272 Mortgage warehouse lines 326,400 335,777 274,059 203,561 116,000 Consumer loans 3,270 3,453 3,468 3,682 3,984 Gross loans 2,331,341 2,320,629 2,234,528 2,156,864 2,090,075 Deferred loan fees 93 396 288 214 309 Allowance for credit losses on loans (24,830 ) (22,710 ) (21,640 ) (23,140 ) (23,500 ) Net loans 2,306,604 2,298,315 2,213,176 2,133,938 2,066,884 Bank premises & equipment 15,431 15,647 16,007 16,067 16,907 Other assets 230,091 234,114 238,363 225,628 228,148 Total assets $ 3,614,271 $ 3,696,154 $ 3,681,202 $ 3,553,072 $ 3,729,799 LIABILITIES & CAPITAL Noninterest demand deposits $ 1,007,208 $ 1,013,743 $ 986,927 $ 968,996 $ 1,020,772 Interest-bearing transaction accounts 587,753 595,672 537,731 532,791 533,947 Savings deposits 347,387 356,725 368,169 378,057 370,806 Money market deposits 140,793 135,948 136,853 134,533 145,591 Customer time deposits 533,577 550,121 566,132 560,979 555,107 Wholesale brokered deposits 274,950 309,950 346,598 271,648 135,000 Total deposits 2,891,668 2,962,159 2,942,410 2,847,004 2,761,223 Long-term debt 49,393 49,371 49,348 49,326 49,304 Junior subordinated debentures 35,838 35,794 35,749 35,704 35,660 Other interest-bearing liabilities 188,860 205,534 228,003 201,851 467,621 Total deposits & interest-bearing liabilities 3,165,759 3,252,858 3,255,510 3,133,885 3,313,808 Allowance for credit losses on unfunded loan commitments 710 640 520 540 510 Other liabilities 90,500 83,958 75,152 73,553 77,384 Total capital 357,302 358,698 350,020 345,094 338,097 Total liabilities & capital $ 3,614,271 $ 3,696,154 $ 3,681,202 $ 3,553,072 $ 3,729,799 GOODWILL & INTANGIBLE ASSETS (Dollars in Thousands, Unaudited) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Goodwill $ 27,357 $ 27,357 $ 27,357 $ 27,357 $ 27,357 Core deposit intangible 618 780 961 1,180 1,399 Total intangible assets $ 27,975 $ 28,137 $ 28,318 $ 28,537 $ 28,756 CREDIT QUALITY (Dollars in Thousands, Unaudited) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Non-accruing loans $ 19,668 $ 10,348 $ 6,473 $ 14,188 $ 7,985 Foreclosed assets - - - - - Total nonperforming assets $ 19,668 $ 10,348 $ 6,473 $ 14,188 $ 7,985 Quarterly net charge offs $ 215 $ 170 $ 2,421 $ 457 $ 3,175 Past due & still accruing (30-89) $ 1,348 $ 211 $ 3,172 $ 1,563 $ 255 Classified loans $ 44,464 $ 29,148 $ 28,829 $ 34,100 $ 35,577 Non-performing loans to gross loans 0.84 % 0.45 % 0.29 % 0.66 % 0.38 % NPA's to loans plus foreclosed assets 0.84 % 0.45 % 0.29 % 0.66 % 0.38 % Allowance for credit losses on loans to gross loans 1.07 % 0.98 % 0.97 % 1.07 % 1.12 % SELECT PERIOD-END STATISTICS (Unaudited) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Shareholders equity / total assets 9.89 % 9.70 % 9.51 % 9.71 % 9.06 % Gross loans / deposits 80.62 % 78.34 % 75.94 % 75.76 % 75.69 % Noninterest-bearing deposits / total deposits 34.83 % 34.22 % 33.54 % 34.04 % 36.97 % Core non-maturity deposits 2,083,141 2,102,088 2,029,680 2,014,377 2,071,116 CONSOLIDATED INCOME STATEMENT (Dollars in Thousands, Unaudited) For the three months ended: For the year ended: 12/31/2024 9/30/2024 12/31/2023 12/31/2024 12/31/2023 Interest income $ 43,095 $ 44,798 $ 42,443 $ 172,348 $ 163,121 Interest expense 12,742 14,008 14,573 52,319 50,716 Net interest income 30,353 30,790 27,870 120,029 112,405 Credit loss (benefit) expense - loans 2,335 1,240 3,615 4,593 4,058 Credit loss expense (benefit) - unfunded commitments 70 120 (90 ) 200 (330 ) Credit loss benefit - debt securities held-to-maturity - (1 ) - (1 ) (47 ) Net interest income after credit loss expense 27,948 29,431 24,345 115,237 108,724 Service charges and fees on deposit accounts 6,059 6,205 5,977 24,173 23,103 Gain (loss) on sale of investments 129 73 - (2,681 ) 396 (Loss) gain on sale of fixed assets (16 ) - 15,255 3,783 15,270 BOLI income 372 540 379 2,650 1,767 Realized (loss) gain on available for sale securities - - (14,500 ) 66 (14,500 ) Other noninterest income 968 971 934 3,530 4,364 Total noninterest income 7,512 7,789 8,045 31,521 30,400 Salaries & benefits 12,749 12,363 13,410 50,338 50,977 Occupancy expense 3,201 2,995 2,909 12,374 10,160 Other noninterest expenses 6,912 7,452 7,817 30,178 31,523 Total noninterest expense 22,862 22,810 24,136 92,890 92,660 Income before taxes 12,598 14,410 8,254 53,868 46,464 Provision for income taxes 2,234 3,807 1,964 13,308 11,620 Net income $ 10,364 $ 10,603 $ 6,290 $ 40,560 $ 34,844 TAX DATA Tax-exempt municipal income $ 1,579 $ 1,584 $ 2,675 $ 6,743 $ 10,909 Interest income - fully tax equivalent $ 43,515 $ 45,219 $ 43,154 $ 174,140 $ 166,021 PER SHARE DATA (Unaudited) For the three months ended: For the year ended: 12/31/2024 9/30/2024 12/31/2023 12/31/2024 12/31/2023 Basic earnings per share $ 0.73 $ 0.75 $ 0.43 $ 2.84 $ 2.37 Diluted earnings per share $ 0.72 $ 0.74 $ 0.43 $ 2.82 $ 2.36 Common dividends $ 0.24 $ 0.24 $ 0.23 $ 0.94 $ 0.92 Weighted average shares outstanding 14,169,467 14,188,051 14,539,701 14,284,401 14,706,141 Weighted average diluted shares 14,299,618 14,335,706 14,588,027 14,396,021 14,737,870 Book value per basic share (EOP) $ 25.12 $ 24.88 $ 22.85 $ 25.12 $ 22.85 Tangible book value per share (EOP) $ 23.15 $ 22.93 $ 20.91 $ 23.15 $ 20.91 Common shares outstanding (EOP) 14,226,512 14,414,561 14,793,832 14,226,512 14,793,832 KEY FINANCIAL RATIOS (Unaudited) For the three months ended: For the year ended: 12/31/2024 9/30/2024 12/31/2023 12/31/2024 12/31/2023 Return on average equity 11.49 % 11.95 % 8.03 % 11.62 % 11.30 % Return on average assets 1.13 % 1.14 % 0.67 % 1.12 % 0.94 % Net interest margin (tax-equivalent) (1) 3.65 % 3.66 % 3.31 % 3.66 % 3.37 % Efficiency ratio (tax-equivalent) (1)(2) 59.74 % 58.38 % 67.10 % 60.76 % 63.90 % Net charge-offs to avg loans (not annualized) 0.01 % 0.01 % 0.15 % 0.15 % 0.18 % (1) Computed on a tax equivalent basis utilizing a federal income tax rate of 21%. (2) See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures." NON-GAAP FINANCIAL MEASURES (Unaudited) 12/31/2024 9/30/2024 12/31/2023 Total stockholders' equity $ 357,302 $ 358,698 $ 338,097 Less: goodwill and other intangible assets 27,975 28,137 28,756 Tangible common equity $ 329,327 $ 330,561 $ 309,341 Total assets $ 3,614,271 $ 3,696,154 $ 3,729,799 Less: goodwill and other intangible assets 27,975 28,137 28,756 Tangible assets $ 3,586,296 $ 3,668,017 $ 3,701,043 Total stockholders' equity (bank only) $ 424,363 $ 427,762 $ 409,862 Less: goodwill and other intangible assets (bank only) 27,975 28,137 28,756 Tangible common equity (bank only) $ 396,388 $ 399,625 $ 381,106 Total assets (bank only) $ 3,607,133 $ 3,693,553 $ 3,727,280 Less: goodwill and other intangible assets (bank only) 27,975 28,137 28,756 Tangible assets (bank only) $ 3,579,158 $ 3,665,416 $ 3,698,524 Common shares outstanding 14,226,512 14,414,561 14,793,832 Book value per common share $ 25.12 $ 24.88 $ 22.85 Tangible book value per common share $ 23.15 $ 22.93 $ 20.91 Equity ratio - GAAP (total stockholders' equity / total assets) 9.89 % 9.70 % 9.06 % Tangible common equity ratio (tangible common equity / tangible assets) 9.18 % 9.01 % 8.36 % Tangible common equity ratio (bank only) (tangible common equity / tangible assets) 11.07 % 10.90 % 10.30 % For the three months ended: For the year ended: Efficiency Ratio: 12/31/2024 9/30/2024 12/31/2023 12/31/2024 12/31/2023 Noninterest expense $ 22,862 $ 22,810 $ 24,136 $ 92,890 $ 92,660 Divided by: Net interest income 30,353 30,790 27,870 120,029 112,405 Tax-equivalent interest income adjustments 420 421 711 1,792 2,900 Net interest income, adjusted 30,773 31,211 28,581 121,821 115,305 Noninterest income 7,512 7,789 8,045 31,521 30,400 Less gain (loss) on sale of securities 129 73 - (2,681 ) 396 Less (loss) gain on sale of fixed assets (16 ) - 15,255 3,783 15,270 Less realized (loss) gain on available-for-sale securities - (14,500 ) 66 (14,500 ) Tax-equivalent noninterest income adjustments 99 144 101 704 470 Noninterest income, adjusted 7,498 7,860 7,391 31,057 29,704 Net interest income plus noninterest income, adjusted $ 38,271 $ 39,071 $ 35,972 $ 152,879 $ 145,009 Efficiency Ratio (tax-equivalent) 59.74 % 58.38 % 67.10 % 60.76 % 63.90 % NONINTEREST INCOME/EXPENSE (Dollars in Thousands, Unaudited) For three months ended: For twelve months ended: Noninterest income: 12/31/2024 9/30/2024 12/31/2023 12/31/2024 12/31/2023 Service charges on deposit accounts $ 6,059 6,205 5,977 $ 24,173 23,103 Gain (loss) on sale of securities 129 73 — (2,681 ) 396 (Loss) gain on sale of fixed assets (16 ) — 15,255 3,783 15,270 Bank-owned life insurance 372 540 379 2,650 1,767 Realized (loss) gain on available for sale securities — — (14,500 ) 66 (14,500 ) Other 968 971 934 3,530 4,364 Total noninterest income $ 7,512 $ 7,789 $ 8,045 $ 31,521 $ 30,400 As a % of average interest earning assets (1) 0.89 % 0.91 % 0.93 % 0.95 % 0.89 % Noninterest expense: Salaries and employee benefits $ 12,749 $ 12,363 $ 13,410 $ 50,338 $ 50,977 Occupancy costs 3,201 2,995 2,909 12,374 10,160 Advertising and marketing costs 361 381 569 1,422 2,215 Data processing costs 1,458 1,555 1,397 6,202 5,831 Deposit services costs 2,115 2,150 2,207 8,417 8,775 Loan services costs Loan processing 104 184 144 529 597 Foreclosed assets — — — — 665 Other operating costs 836 959 1,118 3,816 4,362 Professional services costs Legal & accounting 266 547 615 2,243 2,238 Director's costs 572 501 504 2,973 2,237 Other professional service 719 775 708 2,883 2,760 Stationery & supply costs 100 120 117 483 531 Sundry & tellers 381 280 438 1,210 1,312 Total noninterest expense $ 22,862 $ 22,810 $ 24,136 $ 92,890 $ 92,660 As a % of average interest earning assets (1) 2.71 % 2.68 % 2.80 % 2.79 % 2.71 % Efficiency ratio (2)(3) 59.74 % 58.38 % 67.10 % 60.76 % 63.90 % (1) Annualized. (2) Computed on a tax equivalent basis utilizing a federal income tax rate of 21%. (3) See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures.” AVERAGE BALANCES AND RATES (Dollars in Thousands, Unaudited) For the quarter ended For the quarter ended For the quarter ended December 31, 2024 September 30, 2024 December 31, 2023 Average Balance (1) Income/ Expense Yield/ Rate (2) Average Balance (1) Income/ Expense Yield/ Rate (2) Average Balance (1) Income/ Expense Yield/ Rate (2) Assets Investments: Interest-earning due from banks $ 49,680 $ 594 4.74 % $ 88,509 $ 1,225 5.51 % $ 13,661 $ 193 5.61 % Taxable 791,332 10,600 5.31 % 830,054 11,991 5.75 % 994,814 14,520 5.79 % Non-taxable 198,600 1,579 3.99 % 199,261 1,584 4.00 % 334,836 2,675 4.01 % Total investments 1,039,612 12,773 5.03 % 1,117,824 14,800 5.42 % 1,343,311 17,388 5.35 % Loans: (3) Real estate 1,811,939 21,413 4.69 % 1,804,099 21,054 4.64 % 1,835,890 20,683 4.47 % Agricultural Production 82,347 1,326 6.39 % 81,501 1,520 7.42 % 49,052 859 6.95 % Commercial 85,779 1,244 5.75 % 76,633 1,101 5.72 % 97,962 1,533 6.21 % Consumer 3,402 89 10.38 % 3,558 78 8.72 % 4,218 85 7.99 % Mortgage warehouse lines 328,838 6,227 7.51 % 303,463 6,227 8.16 % 88,316 1,878 8.44 % Other 2,595 22 3.36 % 2,438 18 2.94 % 2,331 17 2.89 % Total loans 2,314,900 30,321 5.20 % 2,271,692 29,998 5.25 % 2,077,769 25,055 4.78 % Total interest earning assets (4) 3,354,512 43,094 5.16 % 3,389,516 44,798 5.31 % 3,421,080 42,443 5.00 % Other earning assets 44,910 17,062 25,738 Non-earning assets 258,710 288,975 267,451 Total assets $ 3,658,132 $ 3,695,553 $ 3,714,269 Liabilities and shareholders' equity Interest bearing deposits: Demand deposits $ 202,940 $ 1,348 2.64 % $ 169,602 $ 1,170 2.74 % $ 137,827 $ 698 2.01 % NOW 382,649 118 0.12 % 393,328 161 0.16 % 406,970 74 0.07 % Savings accounts 353,807 90 0.10 % 359,921 93 0.10 % 386,275 73 0.07 % Money market 144,812 643 1.76 % 132,804 542 1.62 % 144,296 419 1.15 % Time Deposits 538,441 4,979 3.68 % 562,251 6,010 4.25 % 551,287 6,172 4.44 % Wholesale Brokered Deposits 289,678 3,520 4.82 % 327,141 4,004 4.87 % 150,326 1,407 3.71 % Total interest bearing deposits 1,912,327 10,698 2.22 % 1,945,047 11,980 2.45 % 1,776,981 8,843 1.97 % Borrowed funds: Federal funds purchased 165 2 4.81 % 168 2 4.74 % 133,339 1,840 5.47 % Repurchase agreements 118,327 45 0.15 % 133,280 60 0.18 % 95,005 46 0.19 % Short term borrowings 7,238 72 3.95 % 1 0 0.00 % 133,098 1,861 5.55 % Long term FHLB Advances 80,000 786 3.90 % 80,000 786 3.91 % 80,000 788 3.91 % Long term debt 49,380 430 3.45 % 49,357 429 3.46 % 49,290 429 3.45 % Subordinated debentures 35,812 708 7.84 % 35,767 751 8.35 % 35,632 766 8.53 % Total borrowed funds 290,922 2,043 2.79 % 298,573 2,028 2.70 % 526,364 5,730 4.32 % Total interest bearing liabilities 2,203,249 12,741 2.29 % 2,243,620 14,008 2.48 % 2,303,345 14,573 2.51 % Demand deposits - Noninterest bearing 993,827 995,326 1,041,989 Other liabilities 102,296 103,571 58,255 Shareholders' equity 358,760 353,036 310,680 Total liabilities and shareholders' equity $ 3,658,132 $ 3,695,553 $ 3,714,269 Interest income/interest earning assets 5.16 % 5.31 % 5.00 % Interest expense/interest earning assets 1.51 % 1.65 % 1.69 % Net interest income and margin (5) $ 30,353 3.65 % $ 30,790 3.66 % $ 27,870 3.31 % (1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs. (2) Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate. (3) Loans are gross of the allowance for possible credit losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(0.4) million and $(0.3) million for the quarters ended December 31, 2024 and 2023, respectively, and $(0.4) million for the quarter ended September 30, 2024. (4) Non-accrual loans have been included in total loans for purposes of computing total earning assets. (5) Net interest margin represents net interest income as a percentage of average interest-earning assets. AVERAGE BALANCES AND RATES (Dollars in Thousands, Unaudited) For the twelve months ended For the twelve months ended December 31, 2024 December 31, 2023 Average Balance (1) Income/ Expense Yield/ Rate (2) Average Balance (1) Income/ Expense Yield/ Rate (2) Assets Investments: Interest-earning due from banks $ 49,754 $ 2,659 5.33 % $ 19,527 $ 1,054 5.40 % Taxable 845,018 48,682 5.75 % 992,187 54,367 5.48 % Non-taxable 210,636 6,743 4.05 % 348,551 10,909 3.96 % Total investments 1,105,408 58,084 5.40 % 1,360,265 66,330 5.09 % Loans:(3) Real estate $ 1,806,114 $ 83,120 4.60 % $ 1,854,300 $ 82,174 4.43 % Agricultural 75,309 5,390 7.16 % 35,724 2,438 6.82 % Commercial 79,719 4,702 5.90 % 85,572 5,096 5.96 % Consumer 3,654 326 8.92 % 4,249 348 8.19 % Mortgage warehouse lines 258,191 20,658 8.00 % 81,675 6,658 8.15 % Other 2,415 68 2.82 % 2,415 77 3.19 % Total loans 2,225,402 114,264 5.13 % 2,063,935 96,791 4.69 % Total interest earning assets (4) 3,330,810 172,348 5.23 % 3,424,200 163,121 4.85 % Other earning assets 17,131 16,850 Non-earning assets 283,111 272,930 Total assets $ 3,631,052 $ 3,713,980 Liabilities and shareholders' equity Interest bearing deposits: Demand deposits $ 160,644 $ 3,950 2.46 % $ 143,428 $ 1,429 1.00 % NOW 393,126 512 0.13 % 442,819 289 0.07 % Savings accounts 365,459 336 0.09 % 419,834 269 0.06 % Money market 138,703 2,071 1.49 % 132,748 710 0.53 % Time deposits 556,506 23,229 4.17 % 527,965 23,214 4.40 % Brokered deposits 282,618 13,257 4.69 % 163,382 5,643 3.45 % Total interest bearing deposits 1,897,056 43,355 2.29 % 1,830,176 31,554 1.72 % Borrowed funds: Federal funds purchased 3,840 211 6.56 % 94,815 4,975 5.25 % Repurchase agreements 123,878 685 0.17 % 90,294 245 0.27 % Short term borrowings 12,535 3,126 5.46 % 130,622 7,059 5.40 % Long term FHLB Advances 80,000 1,721 3.91 % 58,411 2,282 3.91 % Long term debt 49,346 2,969 3.49 % 49,257 1,715 3.48 % Subordinated debentures 35,745 8,964 8.31 % 35,567 2,886 8.11 % Total borrowed funds 305,344 17,676 2.94 % 458,966 19,162 4.18 % Total interest bearing liabilities 2,202,400 61,031 2.38 % 2,289,142 50,716 2.22 % Demand deposits - noninterest bearing 989,561 1,057,041 Other liabilities 90,142 59,317 Shareholders' equity 348,949 308,480 Total liabilities and shareholders' equity $ 3,631,052 $ 3,713,980 Interest income/interest earning assets 5.23 % 4.85 % Interest expense/interest earning assets 1.57 % 1.48 % Net interest income and margin(5) $ 120,029 3.66 % $ 112,405 3.37 % (1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs. (2) Yields and net interest margin have been computed on a tax equivalent basis. (3) Loans are gross of the allowance for possible credit losses. Net loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $(1.4) million and $(1.0) million for the years ended December 31, 2024 and 2022, respectively. (4) Non-accrual loans are slotted by loan type and have been included in total loans for purposes of total interest earning assets. (5) Net interest margin represents net interest income as a percentage of average interest-earning assets (tax-equivalent). Category: Financial Source: Sierra Bancorp

Sierra Bancorp Reports Year End 2024 Results and Quarterly Earnings

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