Sierra Bancorp

What they do

The company exists primarily to hold the stock of Bank of the Sierra, a California state-chartered bank incorporated in 1977 that opened in January 1978 as a one-branch bank with $1.5 million in capital. The Bank offers retail and commercial banking services through 34 full-service branches plus administrative and loan production offices, with ATMs at all but one branch and membership in the Allpoint and Pulse networks. At December 31, 2025, the Company had consolidated assets of $3.8 billion, including gross loans of $2.5 billion and deposits of $2.9 billion. Growth has been largely organic plus four whole-bank acquisitions: Sierra National Bank (2000), Santa Clara Valley Bank (2014), Coast National Bank (2016), and Ojai Community Bank (2017).

Revenue drivers

• Net interest income — The core earnings engine, generating $124.7 million in 2025 versus $120.0 million in 2024 and $112.4 million in 2023; this is interest earned on loans and securities less interest paid on deposits and borrowings.
• Noninterest income — Fee-based revenue totaled $30.6 million in 2025, $31.5 million in 2024, and $30.4 million in 2023, a smaller and roughly flat contributor relative to net interest income.
• Loan portfolio — Total loans, net, reached $2.53 billion at December 31, 2025, up from $2.31 billion in 2024 and $2.07 billion in 2023; net loans to total deposits rose to 87.79% from 79.77% and 74.85% in those years.
• Deposit franchise — Total deposits of $2.88 billion at December 31, 2025 fund the loan book; noninterest-bearing deposits were $1.03 billion, or 35.0% of total deposits, at June 30, 2026, and cost of total deposits declined to 1.11% in Q2 2026.

Recent performance

Sierra Bancorp reported consolidated net income of $9.9 million, or $0.77 per diluted share, for the second quarter of 2026, down from $10.6 million, or $0.78 per diluted share, in the second quarter of 2025. Second-quarter net interest income was essentially flat (down $0.2 million) while noninterest expense decreased $0.3 million, but credit loss expense rose $1.1 million on a $2.5 million specific reserve. For the first six months of 2026, net income was $22.4 million, or $1.72 per diluted share, versus $19.7 million, or $1.43 per diluted share, in the first half of 2025. First-half 2026 return on average assets was 1.24% and return on average equity 12.38%, with a net interest margin of 3.75% and an efficiency ratio of 57.70%. Total deposits increased $54.6 million, or 2%, from December 31, 2025.

Strategy

Management describes a focus on both loan and deposit growth, with the CEO stating the loan pipeline increased significantly and that net loan growth is expected in the second half of 2026. Expense management produced nearly a 2% reduction in year-to-date expenses compared to the same period last year. The company repurchased 396,429 shares during the first half of 2026 and declared a dividend of $0.27 per share payable August 10, 2026. Capital and liquidity remain priorities, with a Community Bank Leverage Ratio of 12.25% at the subsidiary bank and $1.9 billion of overall primary and secondary liquidity sources at June 30, 2026.

Risks

• Credit losses — Credit loss expense rose to $6.1 million in 2025 from $4.8 million in 2024 and $3.7 million in 2023, and Q2 2026 included a $2.5 million specific reserve.
• Interest rate volatility — The company cites fluctuations in interest rates as a risk affecting other comprehensive income, borrower repayment on floating and adjustable-rate loans, deposit costs and demand, collateral values, and the fair value of longer-term assets.
• Local economic concentration — The Bank's branches are concentrated in California's South San Joaquin Valley, Central Coast, and Ventura County, where management notes labor shortages, tariffs, natural disasters, and demand for locally produced products could affect local economies.
• Deposit and liquidity pressure — The company lists liquidity risk including potential loss of deposits, ability to maintain funding lines, and loss of value of unencumbered investment securities; uninsured deposits exclusive of public funds are approximately 25% of total deposit balances.

Outlook

Management expects the increased loan pipeline to result in net loan growth in the second half of 2026, per CEO Kevin McPhaill's statement in the July 27, 2026 earnings release. The company reported continued deposit growth during 2026 and nearly 2% lower year-to-date expenses versus the prior-year period. No specific numeric guidance for earnings or margins is provided in the excerpts.