What changed in this filing

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Item 1. Financial Statements

2026-05-01 compared with 2025-10-31 · 196 added, 320 removed, 752 unchanged (41% of the section changed)

3 unchanged sentences

(dollars in thousands)

September 30, 2025

March 31, 2026

December 31, 2025

4 unchanged sentences

Available-for-sale, net of zero allowance for credit losses

Held-to-maturity, net of allowance for credit losses of $ 15

Held-to-maturity, net of allowance for credit losses of $ 14 and $ 15

Total investment securities

5 unchanged sentences

Bank-owned life insurance

Operating right-of-use asset

LIABILITIES AND SHAREHOLDERS' EQUITY

7 unchanged sentences

Allowance for credit losses on unfunded loan commitments

Operating lease liability

Other liabilities

4 unchanged sentences

24,000,000 shares authorized;

13,482,458 and 14,223,046 shares issued and outstanding at September 30, 2025, and December 31, 2024, respectively

13,093,184 and 13,273,788 shares issued and outstanding at March 31, 2026, and December 31, 2025, respectively

Additional paid-in capital

6 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025, and 2024

FOR THE THREE MONTHS ENDED MARCH 31, 2026, and 2025

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Interest and dividend income

17 unchanged sentences

Service charges and fees on deposit accounts

Net gain (loss) on sale of securities available-for-sale

Net (loss) gain on sale of fixed assets

Net gain on sale of securities available-for-sale

Net gain (loss) on sale of fixed assets

Increase in cash surrender value of life insurance

3 unchanged sentences

Salaries and benefits

Occupancy and equipment costs

Occupancy and equipment

Total noninterest expense

2 unchanged sentences

PER SHARE DATA

Cash dividends

Earnings per share basic

2 unchanged sentences

Average shares outstanding, diluted

Total shareholders' equity (in thousands)

Shares outstanding

Dividends paid (in thousands)

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025, and 2024

FOR THE THREE MONTHS ENDED MARCH 31, 2026, and 2025

(dollars in thousands, unaudited)

Three months ended September 30,

Nine months ended September 30,

Other comprehensive income, net of tax:

Unrealized gain on securities:

Unrealized holding gain arising during period

reclassification adjustment for (gains) losses included in net income (1)

Three months ended March 31,

Other comprehensive income, net of tax:

Unrealized (loss) gain on securities:

Unrealized holding (loss) gain arising during period (2)

reclassification adjustment for gains included in net income (1)

Other comprehensive (loss) income, net of tax

Comprehensive income

(1) Amounts are included in net gains on investment securities available-for-sale on the Consolidated Statements of Income in noninterest income.

There were no income tax expenses associated with the reclassification adjustment for the three months ended September 30, 2025, and 2024.

Income tax expenses (benefits) associated with the reclassification adjustment for the nine months ended September 30, 2025, and 2024 were $ 37 thousand and $( 831 ) thousand, respectively.

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

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2025, and 2024

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

Comprehensive

Shareholders'

(Loss) Income

Balance, June 30, 2024

Other comprehensive income, net of tax

Stock options exercised, net of shares surrendered for cashless exercises

Restricted shares withheld for taxes

Restricted stock forfeited / cancelled

Restricted stock vested in period

Stock based compensation - restricted stock

Stock repurchase

Excise tax on stock repurchase

Cash dividends - $ 0.24 per share

Balance, September 30, 2024

Balance, June 30, 2025

Other comprehensive income, net of tax

Stock options exercised, net of shares surrendered for cashless exercises

Restricted shares withheld for taxes

Restricted stock forfeited / cancelled

Restricted stock vested in period

Stock based compensation - restricted stock

Stock repurchase

Excise tax on stock repurchased

Cash dividends - $ 0.25 per share

Balance, September 30, 2025

There were income tax expenses of zero and ($ 36 ) associated with the reclassification adjustment for the three months ended March 31, 2026, and 2025, respectively.

(2) Included in the unrealized holding gain arising during the period is the accretion of the net unrealized loss on debt securities transferred to held-to-maturity from available-for-sale of $ 0.5 million for both of the three months ended March 31, 2026, and 2025.

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025, and 2024

FOR THE THREE MONTHS ENDED MARCH 31, 2026, and 2025

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

14 unchanged sentences

Cash dividends - $ 0.25 per share

Balance, September 30, 2024

Balance, March 31, 2025

Balance, December 31, 2025

Other comprehensive income, net of tax

Other comprehensive (loss), net of tax

Stock options exercised, net of shares surrendered for cashless exercises

3 unchanged sentences

Restricted stock vested in period

Stock based compensation - stock options

Stock based compensation - restricted stock

Stock repurchase

Excise tax on stock repurchase

Excise tax on stock repurchased

Cash dividends - $ 0.26 per share

Balance, September 30, 2025

Balance, March 31, 2026

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025, AND 2024

FOR THE THREE MONTHS ENDED MARCH 31, 2026, AND 2025

(dollars in thousands, unaudited)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

(Gain) loss on sales of securities

Realized gain on securities transaction

Loss (gain) on disposal of fixed assets

Gain on sales of securities

(Gain) loss on disposal of fixed assets

Stock based compensation expense

1 unchanged sentence

(Benefit) provision for credit losses on held-to-maturity securities

Provision for credit losses on unfunded commitments

(Benefit) provision for credit losses on unfunded commitments

Depreciation and amortization

Net (accretion) amortization on securities premiums and discounts

Net accretion on securities premiums and discounts

Net accretion of premiums/discounts for loans acquired

Increase in cash surrender value of life insurance policies

(Increase) decrease in cash surrender value of life insurance policies

Amortization of core deposit intangible

1 unchanged sentence

(Decrease) increase in other liabilities

Deferred income tax benefit (provision)

Decrease in value of restricted bank equity securities

Excise tax on stock repurchases

Deferred income tax benefit

Increase in value of restricted bank equity securities

Amortization of debt issuance costs

2 unchanged sentences

Cash flows from investing activities:

Maturities and calls of securities available for sale

Proceeds from sales of securities available for sale

Purchases of securities available for sale

Principal pay downs on securities available for sale

Maturities and calls of debt securities available-for-sale

Purchases of debt securities available-for-sale

Principal paydowns on debt securities available-for-sale

Principal paydowns on debt securities held-to-maturity

Loan (originations) and payments, net

3 unchanged sentences

Purchase of bank-owned life insurance

Purchase of split dollar life insurance policies

Investments in variable interest entities

Liquidation of bank-owned life insurance

Proceeds from BOLI death benefit

Net cash (used in) provided by investing activities

Net cash provided by investing activities

Cash flows from financing activities:

Increase in deposits

Increase (decrease) in Fed funds purchased

Increase (decrease) in short-term Federal Home Loan Bank advances

Increase in customer repurchase agreements

Increase (decrease) in deposits

Decrease in Fed funds purchased

Decrease in short-term Federal Home Loan Bank advances

Repayments on Federal Home Loan Bank advances and other debt

(Decrease) increase in customer repurchase agreements

Cash dividends paid

1 unchanged sentence

Stock options exercised

Net cash provided by (used in) financing activities

(Decrease) increase in cash and cash equivalents

Net cash used in financing activities

Increase in cash and cash equivalents

Cash and cash equivalents

3 unchanged sentences

Interest paid

Income taxes paid

Supplemental schedule of noncash investing and financing activities:

Real estate acquired through foreclosure

Loans provided for sales of real estate owned

Right-of-use assets obtained in exchange for new lease liabilities

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

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2025

March 31, 2026

Note 1 – The Business of Sierra Bancorp

2 unchanged sentences

The Company exists primarily for the purpose of holding the stock of the Bank and of such other subsidiaries it may acquire or establish.

As of September 30, 2025, the Company’s only other subsidiaries were Sierra Statutory Trust II, Sierra Capital Trust III, and Coast Bancorp Statutory Trust II, which were formed solely to facilitate the issuance of capital trust pass-through securities (“TRUPS”).

As of March 31, 2026, the Company’s only other subsidiaries were Sierra Statutory Trust II, Sierra Capital Trust III, and Coast Bancorp Statutory Trust II, which were formed solely to facilitate the issuance of capital trust pass-through securities (“TRUPS”).

Pursuant to the Financial Accounting Standards Board (“FASB”) standard on the consolidation of variable interest entities, these trusts are not reflected on a consolidated basis in the Company’s financial statements.

References herein to the “Company” include Sierra Bancorp and its consolidated subsidiary, the Bank, unless the context indicates otherwise.

Bank of the Sierra, a California state-chartered bank headquartered in Porterville, California, offers a wide range of retail and commercial banking services via branch offices located throughout California’s South San Joaquin Valley, the Central Coast, Ventura County, the Sacramento area, and neighboring communities.

The Bank was incorporated in September 1977 and opened for business in January 1978 as a one -branch bank with $ 1.5 million in capital.

1 unchanged sentence

Sierra National Bank in 2000, Santa Clara Valley Bank in 2014, Coast National Bank in 2016, and Ojai Community Bank in October 2017.

As of the filing date of this report the Bank operates 35 full-service branches and an online branch and maintains ATMs at all but one branch location as well as at seven non-branch locations.

As of the filing date of this report the Bank operates 34 full-service branches and an online branch and maintains ATMs at all but one branch location as well as at six non-branch locations.

Moreover, the Bank has specialized lending units which focus on commercial and industrial, commercial real estate, and mortgage warehouse borrowers.

To support organic growth in the commercial lending sectors the Bank opened a loan production office in Templeton, CA in April 2022.

The Company had total assets of $ 3.7 billion at September 30, 2025.

The Company’s deposit accounts, which totaled $ 2.9 billion at September 30, 2025, are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to maximum insurable amounts.

The Company had total assets of $ 3.8 billion at March 31, 2026.

The Company’s deposit accounts, which totaled $ 2.9 billion at March 31, 2026, are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to maximum insurable amounts.

Note 2 – Basis of Presentation

4 unchanged sentences

Such adjustments can generally be considered as normal and recurring unless otherwise disclosed in this Form 10-Q.

In preparing the accompanying financial statements, Management has taken subsequent events into consideration, through October 31, 2025, and recognized them where appropriate.

In preparing the accompanying financial statements, Management has taken subsequent events into consideration, through April 30, 2026, and recognized them where appropriate.

The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter, or for the full year.

5 unchanged sentences

The chief operating decision maker makes operating decisions and assesses performance based on an ongoing review of the Company’s community banking activities (loan and deposit products), which constitutes the Company’s only operating segment for financial reporting purposes.

The Company’s single segment is managed on a consolidated basis by the chief operating decision maker, which is the Executive Committee, consisting of the chief executive officer, chief financial officer, chief risk officer, chief credit officer, chief operating officer, and chief banking officer.

The Company’s single segment is managed on a consolidated basis by the chief operating decision maker, which is the Executive Committee, consisting of the chief executive officer, chief financial officer/chief operations officer, chief risk officer, chief credit officer, and chief banking officer.

The accounting policies of the community banking segment are the same as those described in the summary of significant accounting policies of the Company.

7 unchanged sentences

The Company does not have intra-entity revenues or transfers.

Revisions of Previously Issued Financial Statements

Certain immaterial prior period amounts in the Consolidated Statement of Cash Flows have been revised and are reflected below.

Specifically, cash flows from investing activities related to available-for-sale and held-to-maturity debt securities were combined on the Consolidated Statement of Cash Flows.

These have been disaggregated and presented gross by classification.

The changes were presentation only and had no impact on previously reported net income, total assets, total liabilities, or shareholders’ equity.

The changes also had no impact on net cash provided by (used in) investing activities or total change in cash and cash equivalents.

The effect of the above revision on previously reported financial statements is presented below (dollars in thousands, unaudited):

As previously reported

Impact of Revision

Consolidated statement of cash flows for the quarter ended March 31, 2025

Cash flows from investing activities:

Principal paydowns on debt securities available-for-sale

Principal paydowns on debt securities held-to-maturity

Note 3 – Current Accounting Developments

6 unchanged sentences

Note that some of the amendments introduced by the ASU are technical corrections or clarifications of the FASB’s current disclosure or presentation requirements.

The effective date for each amendment of ASU 2023-06 will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The effective date for each amendment of ASU 2023-06 will be the date on which the SEC’s removal of that related disclosure

requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The Company will apply the amendments in ASU 2023-06 prospectively after the effective dates.

The adoption of this standard is not expected to have a significant effect on the Company’s financial statements.

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” ASU 2023-07 expands segment disclosure requirements for public entities to require disclosure of significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

ASU 2023-07 was adopted by the Company on January 1, 2024, and did not have a significant impact on the financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” ASU 2023-09 requires public business entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold.

ASU 2023-09 also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state, and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things.

ASU 2023-09 is effective for the Company for annual periods beginning after December 15, 2024, though early adoption is permitted.

ASU 2023-09 is not expected to have a significant impact on the financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40).” ASU 2024-03 requires public business entities to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods.

8 unchanged sentences

The 2023 Plan replaced the Company’s 2017 Stock Incentive Plan (the “2017 Plan”).

Options to purchase 157,400 shares granted under the 2017 Plan and options to purchase 52,000 shares that were granted under the 2007 Plan were still outstanding as of September 30, 2025, and remain unaffected by that plan’s expiration.

Options to purchase 120,200 shares granted under the 2017 Plan and options to purchase 28,000 shares that were granted under the 2007 Plan were still outstanding as of March 31, 2026, and remain unaffected by that plan’s expiration.

The 2023 Plan provides for the issuance of various types of equity awards, including options, stock appreciation rights, restricted stock awards, restricted share units, performance share awards, dividend equivalents, or any combination thereof.

Such awards may be granted to officers and employees as well as non-employee directors, which may be granted on such terms and conditions as are established by the Board of Directors or the Compensation Committee in its discretion.

The total number of shares of the Company’s authorized but unissued stock reserved for issuance pursuant to awards under the 2023 Plan was initially 360,000 shares, and the number remaining available for grant as of September 30, 2025 was 269,857 .

Any unexercised, unvested, or undistributed portion of any expired, cancelled, terminated, or forfeited awards under the Company’s 2017 Plan are added to the number of shares available to grant under the 2023 Plan.

There were 28,920 unvested Restricted Stock Awards issued under the 2017 Plan and 137,904 unvested Restricted Stock Awards issued under the 2023 Equity Compensation Plan at September 30, 2025, and are included in shares outstanding.

There were 187,482 unvested Restricted Stock Awards issued under the 2023 Equity Compensation Plan at March 31, 2026, and are included in shares outstanding.

The potential dilutive impact of unexercised stock options and unvested restricted stock is discussed below in Note 5, Earnings per Share.

2 unchanged sentences

Forfeitures are reflected in compensation costs as they occur for both types of awards.

A pre-tax charge of $ 0.4 million was reflected in the Company’s income statement during the third quarters of 2025 and 2024, as expense related to stock options and restricted stock awards.

For the first nine months of 2025 and 2024, the charges totaled $ 1.5 million and $ 1.4 million, respectively.

A pre-tax charge of $ 0.5 million was reflected in the Company’s income statement during the first quarter of 2026 and $ 0.4 million during the first quarter of 2025, as expense related to stock options and restricted stock awards.

Restricted Stock Grants

4 unchanged sentences

These awards are expensed on a straight-line basis over the vesting period and consider the probability of meeting the performance criteria.

There were 62,692 shares granted to employees of the Company during the first nine months of 2025.

As of September 30, 2025, there was $ 2.3 million of unamortized compensation cost related to unvested Restricted Stock Awards granted under the 2017 and 2023 plans.

There were 55,006 shares granted to employees of the Company during the first three months of 2026.

As of March 31, 2026, there was $ 4.1 million of unamortized compensation cost related to unvested Restricted Stock Awards granted under the 2017 and 2023 plans.

That cost is expected to be amortized over a weighted average period of 2.6 years.

The Company’s restricted stock award activity for the nine months ended September 30, 2025, and 2024 is summarized below (unaudited):

Nine months ended September 30,

The Company’s restricted stock award activity for the three months ended March 31, 2026 and 2025, is summarized below (unaudited):

Three months ended March 31,

Weighted Average Grant-Date Fair Value

1 unchanged sentence

Unvested shares, January 1,

Unvested shares, September 30,

Unvested shares, March 31,

Stock Option Grants

2 unchanged sentences

The exercise price of each stock option is determined at the time of the grant and may be no less than 100 % of the fair market value of such stock at the time the option is granted.

The Company’s stock option activity during the nine months ended September 30, 2025, and 2024 are summarized below (dollars in thousands, except per share data, unaudited):

Nine months ended September 30,

The Company’s stock option activity during the three months ended March 31, 2026 and 2025, are summarized below (dollars in thousands, except per share data, unaudited):

Three months ended March 31,

Weighted Average

6 unchanged sentences

Forfeited/Expired

Outstanding at September 30,

Exercisable at September 30,

Outstanding at March 31,

Exercisable at March 31,

(1) The aggregate intrinsic value of stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option that would have been received by the option holders had all option holders exercised their options on the last day of the period.

2 unchanged sentences

The computation of earnings per share, as presented in the Consolidated Statements of Income, is based on the weighted average number of shares outstanding during each period, excluding unvested restricted stock awards.

There were 13,361,594 weighted average shares outstanding during the third quarter of 2025 and 14,188,051 during the third quarter of 2024, while there were 13,582,194 weighted average shares outstanding during the first nine months of 2025 and 14,331,032 during the first nine months of 2024.

There were 12,988,932 weighted average shares outstanding during the first three months of 2026 and 13,820,008 during the first three months of 2025.

Diluted earnings per share calculations include the effect of the potential issuance of common shares, which for the Company is limited to shares that would be issued on the exercise of “in-the-money” stock options, and unvested restricted stock awards.

For the third quarter of 2025, calculations under the treasury stock method resulted in the equivalent of 109,064 shares being added to basic weighted average shares outstanding for purposes of determining diluted earnings per share, while 83 shares were excluded from the calculation due to being underwater and thus anti-dilutive.

For the third quarter of 2024 the equivalent of 147,655 shares were added in calculating diluted earnings per share, while zero shares were excluded from the calculation due to being underwater and thus anti-dilutive.

Likewise, for the first nine months of

2025 the equivalent of 92,740 shares were added to basic weighted average shares outstanding in calculating diluted earnings per share and a weighted average of no options that were anti-dilutive for the period, compared to the addition of the equivalent of 106,754 shares and non-inclusion of 255,414 anti-dilutive options in calculating diluted earnings per share for first nine months of 2024.

For the first quarter of 2026, calculations under the treasury stock method resulted in the equivalent of 108,244 shares being added to basic weighted average shares outstanding for purposes of determining diluted earnings per share, while 29,383 shares were excluded from the calculation due to being underwater and thus anti-dilutive.

For the first quarter of 2025, the equivalent of 96,333 shares was added in calculating diluted earnings per share, while 32,739 shares were excluded from the calculation due to being underwater and thus anti-dilutive.

Note 6 – Comprehensive Income

As presented in the Consolidated Statements of Comprehensive Income, comprehensive income includes net income and other comprehensive income.

The Company’s only source of other comprehensive income is unrealized gains and losses derived from available-for-sale investment securities, including those securities that were transferred to held-to-maturity.

As presented in the Consolidated Statements of Comprehensive Income, comprehensive (loss) income includes net income and other comprehensive (loss) income.

The Company’s only source of other comprehensive (loss) income is unrealized gains and losses derived from available-for-sale investment securities, including those securities that were transferred to held-to-maturity.

See Note 9 for additional details.

Investment gains or losses that were realized and reflected in net income of the current period, which had previously been included in other comprehensive income as unrealized holding gains or losses in the period in which they arose, are considered to be reclassification adjustments that are excluded from other comprehensive income in the current period.

Investment gains or losses that were realized and reflected in net income of the current period, which had previously been included in other comprehensive (loss) income as unrealized holding gains or losses in the period in which they arose, are considered to be reclassification adjustments that are excluded from other comprehensive (loss) income in the current period.

Note 7 – Commitments and Contingent Liabilities

5 unchanged sentences

The following financial instruments represent off-balance-sheet credit risk (dollars in thousands):

September 30, 2025

March 31, 2026

December 31, 2025

12 unchanged sentences

Included in unused commitments are mortgage warehouse lines which are in the form of repo lines and are unconditionally cancellable.

Unused commitments on mortgage warehouse lines were $ 308.8 million at September 30, 2025, and $ 311.6 million at December 31, 2024.

Unused commitments on mortgage warehouse lines were $ 319.5 million at March 31, 2026, and $ 247.7 million at December 31, 2025.

The allowance for credit losses (ACL) on unfunded commitments is estimated using the same reserve or coverage rates calculated on collectively evaluated loans following the application of a funding rate to the amount of the unfunded commitment.

1 unchanged sentence

The ACL on unfunded loan commitments is located within liabilities on the consolidated balance sheet while any related provision (benefit) expense is recorded as a provision (benefit) for credit losses.

At September 30, 2025, the Company was also utilizing a letter of credit in the amount of $ 127.9 million issued by the Federal Home Loan Bank (“FHLB”) on the Company’s behalf as security for certain deposits and to facilitate certain credit arrangements with the Company’s customers.

At March 31, 2026, the Company was also utilizing a letter of credit in the amount of $ 127.9 million issued by the Federal Home Loan Bank (“FHLB”) on the Company’s behalf as security for certain deposits and to facilitate certain credit arrangements with the Company’s customers.

That letter of credit is backed by loans which are pledged to the FHLB by the Company.

The Company is subject to loss contingencies, including claims and legal actions arising in the ordinary course of business, which are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated.

Management does not believe there are such matters that will have a material effect on the financial statements.

Management does not believe there are such matters that will have a material effect on the consolidated financial statements.

Note 8 – Fair Value Disclosures and Reporting and Fair Value Measurements

16 unchanged sentences

(dollars in thousands, unaudited)

September 30, 2025

March 31, 2026

Fair Value Measurements

4 unchanged sentences

Cash and cash equivalents

Investment securities available-for-sale

Investment securities held-to-maturity

Securities available-for-sale

Securities held-to-maturity, net

Loans held for investment, net

2 unchanged sentences

Other borrowings

Long-term debt

Long-term debt, net

Subordinated debentures

7 unchanged sentences

Securities available-for-sale

Securities held-to-maturity

Securities held-to-maturity, net

Loans held for investment, net

2 unchanged sentences

Other borrowings

Long-term debt

Long-term debt, net

Subordinated debentures

For financial asset categories carried on the consolidated balance sheet at fair value and measured on a recurring basis as of September 30, 2025, and December 31, 2024, the Company used the following methods and significant assumptions:

For financial asset categories carried on the consolidated balance sheet at fair value and measured on a recurring basis as of March 31, 2026, and December 31, 2025, the Company used the following methods and significant assumptions:

● Investment securities :

6 unchanged sentences

(dollars in thousands, unaudited)

Fair Value Measurements at September 30, 2025, using

Fair Value Measurements at March 31, 2026, using

Quoted Prices in

17 unchanged sentences

Total available-for-sale securities

The following tables present quantitative information about recurring Level 3 fair value measurements at September 30, 2025, and December 31, 2024 (dollars in thousands):

September 30, 2025

The following tables present quantitative information about recurring Level 3 fair value measurements at March 31, 2026, and December 31, 2025 (dollars in thousands):

March 31, 2026

Corporate Bonds

3 unchanged sentences

Corporate Bonds

New issue pricing

Risk appetite

Secondary market pricing

Market volatility

Credit quality of issuer

Credit spread

Broker estimate

Discount rate

The significant unobservable inputs utilized in the fair value measurement of the Company’s corporate bonds included risk profile and market conditions, and are not quantifiable inputs.

Differing unobservable input assumptions, for example a change in market conditions, may have resulted in reduced or increased fair value.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2025, and 2024:

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2026 and 2025:

Fair Value Measurements - Level 3 Recurring

4 unchanged sentences

Included in other comprehensive income

Transfers out of Level 3

Balance of recurring Level 3 assets at September 30,

Transfers into Level 3

Balance of recurring Level 3 assets at March 31,

Corporate bonds with a fair value of $ 54.5 million as of December 31, 2024, were transferred from Level 3 to Level 2 in the third quarter of 2025 because observable market data became available for the securities.

For financial asset categories carried on the consolidated balance sheet at fair value and measured on a nonrecurring basis as of September 30, 2025, and December 31, 2024, the Company used the following methods and significant assumptions:

For financial asset categories carried on the consolidated balance sheet at fair value and measured on a nonrecurring basis as of March 31, 2026, and December 31, 2025, the Company used the following methods and significant assumptions:

● Individually evaluated collateral dependent loans :

Individually evaluated collateral dependent loans are measured based on the fair value of collateral when foreclosure is probable, or repayment is expected through the sale or operation of collateral and borrower is experiencing financial difficulty.

Measured based on the fair value of collateral when foreclosure is probable, or repayment is expected through the sale or operation of collateral and borrower is experiencing financial difficulty.

For real estate loans, fair value of the loan’s collateral is determined by third party appraisals, which are then adjusted for the estimated selling and closing costs related to liquidation of the collateral.

3 unchanged sentences

The Company reviews the third-party appraisal for appropriateness and adjusts the value downward to consider selling and closing costs, which typically range from 5 % to 10 % of the appraised value.

market conditions from the time of the valuation, and Management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.

Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on Management’s historical knowledge, changes in market conditions from the time of the valuation, and Management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.

Collateral-dependent loans are evaluated on a quarterly basis and adjusted in accordance with the allowance for credit losses policy.

1 unchanged sentence

(dollars in thousands, unaudited)

Fair Value Measurements at September 30, 2025, using

Quoted Prices in

Active Markets for

Identical Assets

Observable Inputs

Unobservable Inputs

Individually evaluated collateral dependent loans

Other commercial (1)

Total assets measured on a nonrecurring basis

(1) At September 30, 2025 the Company had one individually evaluated collateral dependent loan classified as other commercial with a fair value of zero within Level 3 of the fair value hierarchy.

Fair Value Measurements at December 31, 2025, using

5 unchanged sentences

Individually evaluated collateral dependent loans

Total real estate

Other commercial

Total collateral dependent loans

Foreclosed assets

Total assets measured on a nonrecurring basis

The table above includes collateral dependent loan balances for which a specific reserve has been established.

There were no collateral dependent loans for which a specific reserve had been established as of March 31, 2026.

Information on the Company’s total collateral dependent loan balances and specific loss reserves associated with those balances is included in Note 10 below.

8 unchanged sentences

(dollars in thousands, unaudited)

September 30, 2025

March 31, 2026

Allowance for Credit Losses

31 unchanged sentences

Total held-to-maturity securities

An unrealized loss of $ 24.7 million and $ 26.3 million on securities transferred from the available-for-sale to held-to-maturity categorization, remains as of September 30, 2025, and December 31, 2024, respectively, and is included in accumulated other comprehensive loss, net of tax.

An unrealized loss of $ 23.7 million and $ 24.2 million on securities transferred from the available-for-sale to held-to-maturity categorization, remains as of March 31, 2026, and December 31, 2025, respectively, and is included in accumulated other comprehensive loss, net of tax.

The remaining unrealized loss on the securities transferred from available-for-sale to held-to-maturity will be accreted over the remaining term of the securities, with the amortized-cost basis of these securities and accumulated comprehensive income (loss) each increasing over time.

The Company elected the practical expedient available under the current expected credit losses (“CECL”) accounting standard to exclude accrued interest receivable from the amortized cost basis of all categorizations of investment securities, and resultingly did not estimate reserves on accrued interest receivable balances, as any past due interest income is reversed on a timely basis.

Accrued interest receivable is included in other assets on the Company’s consolidated balance sheet and as of September 30, 2025, measured at $ 5.8 million and $ 1.6 million for available-for-sale securities and held-to-maturity securities, respectively.

Accrued interest receivable is included in other assets on the Company’s consolidated balance sheet and as of March 31, 2026, measured at $ 4.5 million and $ 1.6 million for available-for-sale securities and held-to-maturity securities, respectively.

Accrued interest receivable as of December 31, 2025, on these same classes of investment securities measured at $ 4.8 million and $ 2.4 million, respectively.

During the three-and-nine month periods ending September 30, 2025 and 2024, no interest receivable on available-for-sale or held-to-maturity securities was reversed against interest income and the Company did not have any held-to-maturity debt securities past due.

During the three-month periods ending March 31, 2026 and 2025, no interest receivable on available-for-sale or held-to-maturity securities was reversed against interest income and the Company did not have any held-to-maturity debt securities past due.

A discounted cash-flow reserve calculation is performed on securities designated as held-to-maturity on a quarterly basis.

As of September 30, 2025 and December 31, 2024, an allowance for credit losses of $ 15 thousand had been established on the Company’s held-to-maturity portfolio.

As of March 31, 2026, and December 31, 2025, an allowance for credit losses of $ 14 thousand and $ 15 thousand, respectively had been established on the Company’s held-to-maturity portfolio.

Because of the implicit and explicit guarantees of the U.S.

4 unchanged sentences

Held-To-Maturity

September 30, 2025

March 31, 2026

December 31, 2025

8 unchanged sentences

(dollars in thousands, unaudited)

September 30, 2025

March 31, 2026

Less than twelve months

21 unchanged sentences

(dollars in thousands, unaudited)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Proceeds from sales, calls and maturities of securities available for sale

2 unchanged sentences

Net gain (loss) on sale of securities available for sale

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at September 30, 2025, and December 31, 2024 (dollars in thousands), are shown below, grouped by the remaining time to contractual maturity dates.

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at March 31, 2026, and December 31, 2025 (dollars in thousands), are shown below, grouped by the remaining time to contractual maturity dates.

The expected life of investment securities may not be consistent with contractual maturity dates since the issuers of the securities might have the right to call or prepay obligations with or without penalties.

September 30, 2025

March 31, 2026

Available-for-Sale

21 unchanged sentences

Collateralized loan obligations

At September 30, 2025, the Company’s investment portfolio included 227 municipal bonds issued by 192 different government municipalities and agencies located within 28 different states, with an aggregate fair value of $ 216.0 million.

The largest exposure to any single municipality or agency was a combined $ 5.1 million (fair value) in general obligation bonds issued by the City of New York (NY).

In addition, the Company owned 92 subordinated debentures issued by bank-holding companies totaling $ 80.2 million (fair value).

At December 31, 2024, the Company’s investment portfolio included 223 municipal bonds issued by 188 different government municipalities and agencies located within 28 states, with an aggregate fair value of $ 212.6 million.

The largest exposure to any single municipality or agency was a combined $ 5.1 million (fair value) in general obligation bonds issued by the City of New York (NY).

In addition, the Company owned 56 subordinated debentures issued by bank-holding companies totaling $ 58.6 million (fair value).

The Company’s investments in bonds issued by corporations, states, municipalities, and political subdivisions are evaluated in accordance with Financial Institution Letter 48-2012, issued by the FDIC, “Revised Standards of Creditworthiness for Investment Securities,” and other regulatory guidance.

Credit ratings are considered in Management’s analysis only as a guide to the historical default rate associated with similarly rated bonds.

There have been no significant differences in internal analyses compared with the ratings assigned by the third-party credit rating agencies.

The following table summarizes the amortized cost and fair values of general obligation and revenue bonds in the Company’s investment securities portfolio at the indicated dates, identifying the state in which the issuing municipality or agency operates for the Company’s largest geographic concentrations:

Revenue and General Obligation Bonds by Location

(dollars in thousands, unaudited)

September 30, 2025

December 31, 2024

General obligation bonds

State of issuance

Other (22 & 20 states, respectively)

Total general obligation bonds

Revenue bonds

State of issuance

Other (13 & 11 states, respectively)

Total revenue bonds

Total obligations of states and political subdivisions

The revenue bonds in the Company’s investment securities portfolios were issued by government municipalities and agencies to fund public services such as utilities (water, sewer, and power), educational facilities, and general public and economic improvements.

The primary sources of revenue for these bonds are delineated in the table below, which shows the amortized cost and fair market values for the largest revenue concentrations as of the indicated dates.

Revenue Bonds by Type

(dollars in thousands, unaudited)

September 30, 2025

December 31, 2024

Revenue bonds

Revenue source:

Sales tax revenue

Local or GTD housing

Other (9 and 10 sources, respectively)

Total revenue bonds

Low-Income Housing Tax Credit (“LIHTC”) Fund Investments

The Company has the ability to invest in limited partnerships which own housing projects that qualify for federal and/or California state tax credits by mandating a specified percentage of low-income tenants for each project.

investment return comes from tax credits that flow through to investors.

The primary investment return comes from tax credits that flow through to investors.

Because rent levels are lower than standard market rents and the projects are generally highly leveraged, each project also typically generates tax-deductible operating losses allocated to the limited partners for tax purposes.

3 unchanged sentences

The income statement reflects tax credits and any other tax benefits from these investments “below the line” within income tax provision, while the initial book value of the investment is amortized on the proportional amortization method as a “below the line” expense, over the time period in which the tax credits and tax benefits are expected to be received.

As of September 30, 2025, the Company’s total LIHTC investment book balance was $ 23.2 million, which is included in “Other Assets” on the consolidated balance sheet.

As of March 31, 2026, the Company’s total LIHTC investment book balance was $ 21.9 million, which is included in “Other Assets” on the consolidated balance sheet.

This investment is offset by $ 5.8 million in remaining commitments for additional capital contributions, which is included in “Other Liabilities” on the consolidated balance sheet.

There were approximately $ 2.2 million in tax credits derived from the Company’s LIHTC investments that were recognized during the nine months ended September 30, 2025, and “below the line” amortization expense of $ 2.2 million associated with those investments was recorded for the same time period.

There were approximately $ 0.8 million in tax credits derived from the Company’s LIHTC investments that were recognized during the three months ended March 31, 2026, and “below the line” amortization expense of $ 0.7 million associated with those investments was recorded for the same time period.

LIHTC investments are evaluated annually for potential impairment, and the Company concluded the carrying value of the investments is stated fairly and is not impaired.

12 unchanged sentences

The Company elected the practical expedient available under CECL to exclude accrued interest receivable from the amortized cost basis of all categorizations of loans and, as a result, did not estimate reserves on accrued interest receivable balances, as any past due interest income is reversed on a timely basis.

Accrued interest receivable on loans of $ 7.7 million and $ 6.1 million at September 30, 2025, and December 31, 2024, respectively is included in other assets on the Company’s consolidated balance sheet.

Accrued interest receivable on loans of $ 7.4 million and $ 7.0 million at March 31, 2026, and December 31, 2025, respectively, is included in other assets on the Company’s consolidated balance sheet.

The majority of the disclosures in this footnote are prepared at the class level, which is equivalent to the call report or call code classification.

3 unchanged sentences

(dollars in thousands, unaudited)

September 30, 2025

March 31, 2026

December 31, 2025

5 unchanged sentences

Mortgage warehouse lines

Consumer loans

Net deferred loan costs

Net deferred loan (fees)

Loans, amortized cost basis

2 unchanged sentences

The Company may decide it is appropriate to continue to accrue interest on certain loans more than 90 days delinquent if they are well-secured by collateral and collection is in process.

When a loan is placed on nonaccrual status, any accrued but uncollected interest for the loan is reversed out of interest income in the period in which the loan’s status changed.

When a loan is placed on nonaccrual status,

any accrued but uncollected interest for the loan is reversed out of interest income in the period in which the loan’s status changed.

For loans with an interest reserve (i.e., loan proceeds are advanced to the borrower to make interest payments) all interest recognized from the inception of the loan is reversed when the loan is placed on nonaccrual.

3 unchanged sentences

(dollars in thousands, unaudited)

September 30, 2025

March 31, 2026

Nonaccrual Loans

13 unchanged sentences

Other commercial

The Company did not recognize any interest on nonaccrual loans during the three or nine months ended September 30, 2025, and 2024, and would have recognized an additional $ 0.9 million and $ 0.1 million in interest income on nonaccrual loans during the third quarter of 2025 and 2024, respectively, had those loans not been designated as nonaccrual.

For the year-to-date periods of 2025 and 2024, the Company would have recognized an additional $ 0.3 million and $ 0.4 million, respectively, in interest income on nonaccrual loans had those loans not been designated as nonaccrual.

Due to loans being placed on nonaccrual status, during the third quarter of 2025, $ 0.1 million of interest receivable on loans was reversed against interest income, as compared to an immaterial amount during the third quarter of 2024.

During the first nine months of 2025, and 2024, $ 0.3 million and $ 0.2 million, respectively, of interest receivable on loans was reversed against interest income.

The following table presents the amortized cost basis of collateral-dependent loans by class as of September 30, 2025, and December 31, 2024:

The Company did not recognize any interest on nonaccrual loans during the three months ended March 31, 2026 and 2025, and would have recognized an additional $ 0.02 million and $ 0.1 million in interest income on nonaccrual loans during the first quarter of 2026 and 2025, respectively, had those loans not been designated as nonaccrual.

Due to loans being placed on nonaccrual status, during the first quarter of 2026, $ 0.1 million of interest receivable on loans was reversed against interest income, as compared to an immaterial amount during the first quarter of 2025.

The following table presents the amortized cost basis of collateral-dependent loans by class as of March 31, 2026, and December 31, 2025:

Collateral Dependent Loans

(dollars in thousands, unaudited)

September 30, 2025

March 31, 2026

December 31, 2025

6 unchanged sentences

Other commercial (1)

During the first nine months of 2025 the amortized cost balance of collateral-dependent loans decreased by $ 6.0 million due primarily to a $ 5.3 million charge-off on agriculture production loan in the other commercial category, principal payments received on the same agricultural production loan, offset by a commercial real estate relationship secured by a

hotel property which was placed on nonaccrual status.

The weighted average loan-to-value ratio of collateral-dependent loans was 81.1 % at September 30, 2025.

There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of September 30, 2025, and December 31, 2024.

(1) The collateral type on this loan category is primarily agricultural assets.

During the first three months of 2026 the amortized cost balance of collateral-dependent loans decreased by $ 3.3 million due primarily to a $ 4.2 million paydown on one agricultural production loan during the first quarter of 2026.

The weighted average loan-to-value ratio of collateral-dependent loans was 63.8 % at March 31, 2026.

There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of March 31, 2026, and December 31, 2025.

Past Due Loans

(dollars in thousands, unaudited)

September 30, 2025

March 31, 2026

30-59 Days Past Due

9 unchanged sentences

Mortgage warehouse lines

Consumer loans

December 31, 2025

10 unchanged sentences

Mortgage warehouse lines

Consumer loans

Loan Modifications

7 unchanged sentences

principal forgiveness, rate reduction, payment deferral, and/or term extension.

There was an immaterial amount of term extensions for the three months ended September 30, 2025, and none for the three months ended September 30, 2024.

The following tables present the amortized cost basis of loans at September 30, 2025, and 2024, that were both experiencing financial difficulty and modified during the nine months ended September 30, 2025, and 2024, by class and by type of modification.

The following tables present the amortized cost basis of loans at March 31, 2026 and 2025, that were both experiencing financial difficulty by class and by type of modification.

The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below (dollars in thousands, unaudited):

Nine months ended September 30, 2025

Three months ended March 31, 2026

Principal Forgiveness

4 unchanged sentences

Other commercial

Nine months ended September 30, 2024

Three months ended March 31, 2025

Principal Forgiveness

3 unchanged sentences

Total Class of Financing Receivable

Other construction/land

Total real estate

Other commercial

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and nine months ended September 30, 2025, and 2024 (dollars in thousands, unaudited):

Three months ended September 30, 2025

Principal Forgiveness

Weighted-Average Interest Rate Reduction

Weighted-Average Term Extension (years)

Other commercial

Three months ended September 30, 2024

Principal Forgiveness

Weighted-Average Interest Rate Reduction

Weighted-Average Term Extension (years)

Nine months ended September 30, 2025

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended March 31, 2026, and 2025 (dollars in thousands, unaudited):

Three months ended March 31, 2026

Principal Forgiveness

2 unchanged sentences

Other commercial

Nine months ended September 30, 2024

Three months ended March 31, 2025

Principal Forgiveness

1 unchanged sentence

Weighted-Average Term Extension (years)

Other construction/land

Other commercial

There were no payment defaults on loans previously modified in the preceding 12 months for either of the periods ending September 30, 2025, and 2024.

There were no payment defaults on loans previously modified in the preceding 12 months for either of the periods ending March 31, 2026 and 2025.

For the purpose of this disclosure, the Company defines a payment default as 90 days past due.

The Company had $ 0.1 million in additional funds committed on loans which have been modified to borrowers experiencing financial difficulty as of September 30, 2025, and none as of September 30, 2024.

The Company had no additional funds committed on loans which have been modified to borrowers experiencing financial difficulty as of both March 31, 2026, and March 31, 2025.

The Company monitors the credit quality of loans on a continuous basis using the regulatory and accounting classifications of pass, special mention, and substandard to characterize and qualify the associated credit risk.

9 unchanged sentences

(dollars in thousands, unaudited)

September 30, 2025

March 31, 2026

Term Loans Amortized Cost Basis by Origination Year

8 unchanged sentences

Other construction/land

Special mention

Current period gross charge-offs

6 unchanged sentences

Current period gross charge-offs

Consumer loans

Special mention

Current period gross charge-offs (1)

(1) Consumer overdrafts are included in consumer loans and make up the majority of the gross charge-offs in the period for this loan class.

(1) Consumer overdrafts are included in consumer loans and commercial overdrafts are included in other commercial and make up the majority of the gross charge-offs of loans originated in the revolving loans category for these loan classes.

Loan Credit Quality by Vintage

11 unchanged sentences

Other construction/land

Special mention

Current period gross charge-offs

6 unchanged sentences

Current period gross charge-offs

Consumer loans

Special mention

Current period gross charge-offs (1)

(1) Consumer overdrafts are included in consumer loans and make up the majority of the gross charge-offs in the period for this loan class.

Purchased credit deteriorated (“PCD”) loans are loans acquired or purchased, which as of acquisition, had evidence of more than insignificant credit deterioration since origination.

As of September 30, 2025, the Company had no loans categorized as PCD.

The model used for calculating the Company’s ACL is reviewed and revised periodically, most recently a full review with modifications in the third quarter of 2024, with a partial review and minimal modifications completed in the third quarter of 2025.

CECL replaced the legacy accounting for loans designated as purchased credit impaired (“PCI”) with loans designated as purchased credit deteriorated (“PCD”).

PCD loans are loans acquired or purchased, which as of acquisition, had evidence of more than insignificant credit deterioration since origination.

Due to the immaterial balance in the Company’s PCI loans at the CECL implementation date, management elected not to transition these loans into the PCD designation.

As of March 31, 2026, the Company had no loans categorized as PCD.

Management calculates the quantitative portion of collectively evaluated reserves for all loan categories, with the exception of Farmland, Agricultural Production and Consumer loans, using a discounted cash flow (“DCF”) methodology.

For purposes of calculating the quantitative portion of collectively evaluated reserves on Farmland, Agricultural Production, and Consumer categories a Remaining Life methodology is utilized.

The model used for calculating the Company’s ACL is reviewed and revised periodically;

most recently a full review with modifications in the third quarter of 2024, with a partial review and minimal modifications completed in the third quarter of 2025.

In the most recent full review, the Company changed to a Multi-Factor Regression Model from a Single-Factor Regression Model used in previous periods.

3 unchanged sentences

however, Management has grouped loans in selected call codes together in determining portfolio segments, due to similar risk characteristics and reserve methodologies used for certain call code classifications.

For Farmland, Agricultural Production, and Consumer categories, a Remaining Life methodology is utilized.

The DCF quantitative reserve methodology incorporates the consideration of probability of default (“PD”) and loss given default (“LGD”) estimates to estimate periodic losses.

9 unchanged sentences

Economic forecasts are considered over a four-quarter forecast period, with reversion to mean occurring on a straight-line basis over four quarters.

The call code multiple factor regression models utilized as of September 30, 2025, for Residential Real Estate loans relied upon reasonable and supportable forecasts of the National Unemployment Rate and House Price Index (HPI).

The call code multiple factor regression models utilized as of September 30, 2025, for Commercial Real Estate and Other Construction loans relied upon reasonable and supportable forecasts of the National Unemployment Rate and Gross Domestic Product (GDP).

The call code multiple factor regression models utilized as of March 31, 2026, for Residential Real Estate loans relied upon reasonable and supportable forecasts of the National Unemployment Rate and House Price Index (HPI).

The call code multiple factor regression models utilized as of March 31, 2026, for Commercial Real Estate and Other Construction loans relied upon reasonable and supportable forecasts of the National Unemployment Rate and Gross Domestic Product (GDP).

Management selected the National Unemployment Rate, HPI, and GDP as the drivers of quantitative portion of collectively evaluated reserves on loan classes reliant upon the DCF methodology, primarily as a result of high correlation coefficients identified in regression modeling, the availability of forecasts including the quarterly Federal Open Market Committee (FOMC) forecast and given the widespread familiarity of stakeholders with these economic metrics.

1 unchanged sentence

The estimated remaining life is calculated using historical peer data.

For the Farmland, Agricultural Production and Consumer classes of loans, reasonable and supportable forecasts of the National Unemployment Rate, real GDP and the housing price index are considered through estimation of qualitative reserves.

For the Farmland,

Agricultural Production and Consumer classes of loans, reasonable and supportable forecasts of the National Unemployment Rate, real GDP and the housing price index are considered through estimation of qualitative reserves.

Management recognizes there are additional factors impacting risk of loss in the loan portfolio beyond what is captured in the quantitative portion of reserves on collectively evaluated loans.

As current and expected conditions may vary compared

with conditions over the historical lookback period, which is utilized in the calculation of quantitative reserves, Management considers whether additional or reduced reserve levels on collectively evaluated loans may be warranted given the consideration of a variety of qualitative factors.

Several of the following qualitative factors (“Q-factors”) considered by Management reflects the legacy regulatory guidance on Q-factors, whereas several others represent factors unique to the Company or unique to the current time period.

As current and expected conditions may vary compared with conditions over the historical lookback period, which is utilized in the calculation of quantitative reserves, Management considers whether additional or reduced reserve levels on collectively evaluated loans may be warranted given the consideration of a variety of qualitative factors.

Several of the following qualitative factors (“Q-factors”) considered by Management reflect the legacy regulatory guidance on Q-factors, whereas several others represent factors unique to the Company or unique to the current time period.

● Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices

10 unchanged sentences

Although collectively evaluated reserves are generally calculated separately at the call code or loan class level, Management has grouped loan classes with similar risk characteristics into the following portfolio segments:

● Residential Real Estate

● 1-4 Family Real Estate

● Commercial Real Estate

7 unchanged sentences

Commercial & Industrial loans are separated into a separate segment given the uniqueness of these loans, which are often revolving and secured by business assets other than real estate.

Mortgage Warehouse loans warrant presentation as an individual portfolio segment given the specific nature of these constantly

revolving lines to mortgage originators and due to a very limited loss history, even after consideration of peer data.

Mortgage Warehouse loans warrant presentation as an individual portfolio segment given the specific nature of these constantly revolving lines to mortgage originators and due to a very limited loss history, even after consideration of peer data.

Finally, Consumer loans are split out as a result of the small balance, homogeneous terms that characterize these loans.

Management individually evaluates loans that do not share risk characteristics with other loans when estimating reserves.

As of September 30, 2025 and 2024, the only loans Management considered to have different risk characteristics from other loans sharing the same call report code were loans designated as nonaccrual.

The following tables present the activity in the allowance for credit losses by portfolio segment for the quarters ended September 30, 2025, and 2024:

As of March 31, 2026 and 2025, the only loans Management considered to have different risk characteristics from other loans sharing the same call report code included loans designated as nonaccrual, as well as one loan that remained on accrual status and was individually evaluated due to its unique risk characteristics.

The following tables present the activity in the allowance for credit losses by portfolio segment for the quarter ended March 31, 2026 and 2025:

Allowance for Credit Losses

4 unchanged sentences

Commercial & Industrial

Mortgage Warehouse

Allowance for credit losses:

Balance June 30, 2025

(Benefit) provision for credit losses

Balance September 30, 2025

Residential Real Estate

Commercial Real Estate

Farmland & Agricultural Production

Commercial & Industrial

Mortgage Warehouse

Allowance for credit losses:

Balance June 30, 2024

(Benefit) provision for credit losses

Balance September 30, 2024

The following tables present the activity in the allowance for credit losses by portfolio segment for the nine months ended September 30, 2025, and 2024:

Residential Real Estate

Commercial Real Estate

Farmland & Agricultural Production

Commercial & Industrial

Mortgage Warehouse

Mortgage Warehouse Lines

Allowance for credit losses:

1 unchanged sentence

(Benefit) provision for credit losses

Balance September 30, 2025

Balance March 31, 2026

Residential Real Estate

2 unchanged sentences

Commercial & Industrial

Mortgage Warehouse

Mortgage Warehouse Lines

Allowance for credit losses:

1 unchanged sentence

(Benefit) provision for credit losses

Balance September 30, 2024

Balance March 31, 2025

Note 11 – Goodwill

The balance of goodwill at the three-and-nine months beginning and ended September 30, 2025, and 2024 was $ 27.4 million.

There was no acquired goodwill for the three-and-nine months ended September 30, 2025, and 2024.

The balance of goodwill at the three months beginning and ended March 31, 2026 and 2025 was $ 27.4 million.

There was no acquired goodwill for the three months ended March 31, 2026 and 2025.

The Company performs its annual goodwill impairment tests annually, or more often if events or circumstances indicate the carrying value may not be recoverable.

The annual assessment date was changed to October 1 in 2023 to allow more time for evaluation of impairment.

The Company performed its annual Step 1 goodwill impairment assessment subsequent to the September 30, 2025 period end, effective as of October 1, 2025, using a market approach.

The Company performed its annual quantitative goodwill impairment assessment effective as of October 1, 2025, using a market approach.

Based on the results of the Company’s goodwill impairment assessment, the Company determined that the fair value of its reporting unit, which was at the consolidated level, exceeded the carrying value.

Management continues to evaluate whether or not a triggering event occurs, or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount before the next annual test in 2026 and has concluded no such events have occurred.

Therefore, goodwill was not impaired as of September 30, 2025, and there were no impairment charges related to the Company’s goodwill recorded during the three-and-nine months ended September 30, 2025, and 2024.

Therefore, goodwill was not impaired as of March 31, 2026, and there were no impairment charges related to the Company’s goodwill recorded during the three months ended March 31, 2026 and 2025.

Note 12 – Borrowings and Other Arrangements

1 unchanged sentence

Customers use balances of the non-deposit accounts to purchase government bonds from the Company daily, subject to an agreement from the Company to repurchase such securities the next business day.

Repurchase agreements totaled $ 125.7 million at September 30, 2025, relative to a balance of $ 108.9 million at December 31, 2024.

Repurchase agreements totaled $ 127.8 million at March 31, 2026, relative to a balance of $ 130.9 million at December 31, 2025.

Long-Term Debt – The Company has long-term debt in the form of fixed to floating rate subordinated debentures with a fixed rate of 3.25 % until September 30, 2026, then floating rate at 253.5 basis points over 3-month term Secured Overnight Financing Rate (“SOFR”) until maturity on October 1, 2031.

The balance of the Company’s long-term debt, net of unamortized issuance costs, was $ 49.5 million at September 30, 2025, and $ 49.4 million at December 31, 2024.

Subordinated Debentures – Sierra Statutory Trust II (“Trust II”), Sierra Capital Trust III (“Trust III”), and Coast Bancorp Statutory Trust II (“Trust IV”), (collectively, the “Trusts”) exist solely for the purpose of issuing trust preferred securities fully and unconditionally guaranteed by the Company.

The balance of the Company’s long-term debt, net of unamortized issuance costs, was $ 49.5 million at March 31, 2026, and $ 49.5 million at December 31, 2025.

For financial reporting purposes, the Trusts are not consolidated, and the Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Subordinated Debentures”) held by the Trusts and issued and guaranteed by the Company are reflected in the Company’s consolidated balance sheet in accordance with provisions of ASC Topic 810.

1 unchanged sentence

These instruments are benchmarked against the SOFR, effective June 30, 2023.

At September 30, 2025, and December 31, 2024, the Company’s trust preferred securities totaled $ 36.0 million and $ 35.8 million, respectively.

The following table summarizes the Company’s other borrowings as of September 30, 2025, and December 31, 2024:

September 30, 2025

At March 31, 2026, and December 31, 2025, the Company’s trust preferred securities totaled $ 36.1 million and $ 36.0 million, respectively.

The following table summarizes the Company’s other borrowings as of March 31, 2026, and December 31, 2025:

March 31, 2026

December 31, 2025

4 unchanged sentences

The Company has established secured and unsecured lines of credit under which it may borrow funds from time to time on a term or overnight basis from the FHLB, FRB, and other correspondent banks.

Federal Funds Purchased – The Company had lines of credit with its correspondent banks which, in the aggregate, amounted to $ 485.8 million unsecured and $ 25.0 million secured at September 30, 2025, and December 31, 2024, at fixed interest rates which vary with market conditions.

There was $ 25.0 million in outstanding overnight balances under these lines of credit at September 30, 2025, and no ne at December 31, 2024.

Secured FHLB Borrowings – At September 30, 2025, and December 31, 2024, the Company had secured available lines of credit with the FHLB totaling $ 623.8 million and $ 629.1 million, respectively, based on eligible collateral of certain loans and investment securities.

Federal Funds Purchased – The Company had lines of credit with its correspondent banks which, in the aggregate, amounted to $ 331.8 million unsecured and $ 25.0 million secured at March 31, 2026, and December 31, 2025, at fixed interest rates which vary with market conditions.

There was $ 130.0 million in outstanding overnight balances under these lines of credit at March 31, 2026, and $ 210.0 million at December 31, 2025.

Secured FHLB Borrowings – At March 31, 2026, and December 31, 2025, the Company had secured available lines of credit with the FHLB totaling $ 657.0 million and $ 629.5 million, respectively, based on eligible collateral of certain loans and investment securities.

Federal Reserve Line of Credit – The Company has an available line of credit with the FRB of San Francisco secured by certain loans and investments.

At September 30, 2025, and December 31, 2024, the Company had borrowing capacity under this line totaling $ 266.4 million and $ 298.3 million, respectively.

The Company had no outstanding borrowings on this line of credit as of September 30, 2025, and December 31, 2024.

At March 31, 2026, and December 31, 2025, the Company had borrowing capacity under this line totaling $ 244.0 million and $ 254.9 million, respectively.

The Company had outstanding borrowings of zero and $ 210.0 million on this line of credit as of March 31, 2026, and December 31, 2025.

Note 13 – Revenue Recognition

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The Company’s revenue streams that are within the scope of and accounted for under Topic 606 include service charges on deposit accounts, debit card interchange fees, and fees levied for other services the Company provides its customers.

The guidance does not apply to revenue associated with financial instruments such as

loans and investments, and other noninterest income such as loan servicing fees and earnings on bank-owned life insurance, which are accounted for on an accrual basis under other provisions of GAAP.

The guidance does not apply to revenue associated with financial instruments such as loans and investments, and other noninterest income such as loan servicing fees and earnings on bank-owned life insurance, which are accounted for on an accrual basis under other provisions of GAAP.

All of the Company’s revenue from contracts within the scope of ASC 606 is recognized as noninterest income.

Due to the short-term nature of the Company’s contracts with customers, an insignificant amount of receivables related to such revenue was recorded at September 30, 2025, September 30, 2024, and December 31, 2024.

Due to the short-term nature of the Company’s contracts with customers, an insignificant amount of receivables related to such revenue was recorded at March 31, 2026 and 2025.

The following table presents the Company’s sources of noninterest income.

Items outside the scope of ASC 606 are noted as such (dollars in thousands, unaudited).

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Noninterest income

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Unrealized losses recognized on equity investments (1)

Net gain (loss) on sale of securities (1)

Net gain on sale of securities (1)

Total noninterest income

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements