What changed in this filing

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Item 1. Financial Statements

2026-07-31 compared with 2026-05-01 · 233 added, 137 removed, 811 unchanged (31% of the section changed)

3 unchanged sentences

(dollars in thousands)

March 31, 2026

June 30, 2026

December 31, 2025

27 unchanged sentences

24,000,000 shares authorized;

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

12,963,397 and 13,273,788 shares issued and outstanding at June 30, 2026, and December 31, 2025, respectively

Additional paid-in capital

6 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

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

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 and 2025

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Interest and dividend income

36 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 and 2025

(dollars in thousands, unaudited)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Other comprehensive income, net of tax:

5 unchanged sentences

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

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.

There were no income tax expenses associated with the reclassification adjustment for the three months ended June 30, 2026, and 2025.

Income tax expenses associated with the reclassification adjustment for the six months ended June 30, 2026, and 2025 were zero and $ 37 thousand, respectively.

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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

FOR THE THREE MONTHS ENDED JUNE 30, 2026 and 2025

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

2 unchanged sentences

(Loss) Income

Balance, March 31, 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

Stock based compensation - restricted stock

Stock repurchase

Excise tax on stock repurchase

Cash dividends - $ 0.25 per share

Balance, June 30, 2025

Balance, March 31, 2026

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

Stock based compensation - restricted stock

Stock repurchase

Excise tax on stock repurchased

Cash dividends - $ 0.26 per share

Balance, June 30, 2026

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

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2026 and 2025

(dollars in thousands, except per share data, unaudited

Comprehensive

Shareholders'

(Loss) Income

Balance, December 31, 2024

10 unchanged sentences

Cash dividends - $ 0.50 per share

Balance, March 31, 2025

Balance, June 30, 2025

Balance, December 31, 2025

7 unchanged sentences

Stock repurchase

Excise tax on stock repurchased

Excise tax on stock repurchase

Cash dividends - $ 0.52 per share

Balance, March 31, 2026

Balance, June 30, 2026

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025

(dollars in thousands, unaudited)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

9 unchanged sentences

Net accretion of premiums/discounts for loans acquired

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

Increase in cash surrender value of life insurance policies

Amortization of core deposit intangible

Decrease (increase) in interest receivable and other assets

(Decrease) increase in other liabilities

Deferred income tax benefit

Increase in interest receivable and other assets

Decrease in other liabilities

Deferred income tax benefit (provision)

Increase in value of restricted bank equity securities

Excise tax on stock repurchases

Amortization of debt issuance costs

5 unchanged sentences

Principal paydowns on debt securities available-for-sale

Maturities and calls of debt securities held-to-maturity

Principal paydowns on debt securities held-to-maturity

Net purchases of FHLB stock

Loan (originations) and payments, net

3 unchanged sentences

Purchase of bank-owned life insurance

Purchase of split dollar life insurance policies

Liquidation of bank-owned life insurance

Capital contributions to partnership investments

Proceeds from BOLI death benefit

Net cash provided by investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Increase (decrease) in deposits

Decrease in Fed funds purchased

Decrease in short-term Federal Home Loan Bank advances

Increase in deposits

(Decrease) increase in Fed funds purchased

Decrease (increase) in short-term Federal Home Loan Bank advances

Repayments on Federal Home Loan Bank advances and other debt

3 unchanged sentences

Stock options exercised

Net cash used in financing activities

Net cash (used in) provided by financing activities

Increase in cash and cash equivalents

4 unchanged sentences

Interest paid

Income taxes paid

Supplemental schedule of noncash investing and financing activities:

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2026

June 30, 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 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”).

As of June 30, 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.

6 unchanged sentences

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 $ 3.8 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.

The Company had total assets of $ 3.7 billion at June 30, 2026.

The Company’s deposit accounts, which totaled $ 2.9 billion at June 30, 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 April 30, 2026, and recognized them where appropriate.

In preparing the accompanying financial statements, Management has taken subsequent events into consideration, through July 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.

4 unchanged sentences

As a community-oriented financial institution, substantially all of the Company’s operations involve the delivery of loan and deposit products to customers.

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.

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 operations officer, chief risk officer, chief credit officer, and chief banking officer.

17 unchanged sentences

Impact of Revision

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

Consolidated statement of cash flows for the quarter ended June 30, 2025

Cash flows from investing activities:

9 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.

10 unchanged sentences

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

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.

Options to purchase 108,200 shares granted under the 2017 Plan and options to purchase 23,000 shares that were granted under the 2007 Plan were still outstanding as of June 30, 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 March 31, 2026, was 215,498 .

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

There were 173,492 unvested Restricted Stock Awards issued under the 2023 Equity Compensation Plan at June 30, 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 $ 0.5 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.

A pre-tax charge of $ 1.0 million was reflected in the Company’s income statement during the first six months of 2026 and $ 1.0 million during the first six months 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 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.

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

As of June 30, 2026, there was $ 3.3 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 2.3 years.

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,

The Company’s restricted stock award activity for the six months ended June 30, 2026 and 2025, is summarized below (unaudited):

Six months ended June 30,

Weighted Average Grant-Date Fair Value

1 unchanged sentence

Unvested shares, January 1,

Unvested shares, March 31,

Unvested shares, June 30,

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 three months ended March 31, 2026 and 2025, are summarized below (dollars in thousands, except per share data, unaudited):

Three months ended March 31,

The Company’s stock option activity during the six months ended June 30, 2026 and 2025, are summarized below (dollars in thousands, except per share data, unaudited):

Six months ended June 30,

Weighted Average

6 unchanged sentences

Forfeited/Expired

Outstanding at March 31,

Exercisable at March 31,

Outstanding at June 30,

Exercisable at June 30,

(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 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 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.

The Company’s earnings per share activity for the three and six months ended June 30, 2026 and 2025, is summarized below (dollars in thousands, except per share data, unaudited):

Three months ended June 30,

Six months ended June 30,

Basic Earnings Per Share

Weighted average shares outstanding

Basic earnings per share

Diluted Earnings Per Share

Weighted average shares outstanding

Effect of dilutive equity awards

Weighted average shares outstanding

Diluted earnings per share

Anti-dilutive equity awards

Note 6 – Comprehensive Income

10 unchanged sentences

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

March 31, 2026

June 30, 2026

December 31, 2025

Commitments to extend credit

Commitments or facilities to extend credit

Standby letters of credit

Commitments to extend credit consist primarily of the unused or unfunded portions of the following:

mortgage warehouse lines;

mortgage warehouse facilities;

home equity lines of credit;

commercial real estate construction loans, where disbursements are made over the course of construction;

commercial real estate construction loans, where disbursements are made over the

course of construction;

commercial revolving lines of credit;

4 unchanged sentences

Standby letters of credit are issued by the Company to guarantee the performance of a customer to a third party, and the credit risk involved in issuing letters of credit is essentially the same as the risk involved in extending loans to customers.

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 $ 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.

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

Unused commitments on mortgage warehouse facilities were $ 336.5 million at June 30, 2026, and $ 247.7 million at December 31, 2025, with all but $ 5.0 million unconditionally cancellable.

The funding rate represents Management’s estimate of the amount of the current unfunded commitment that will be funded over the remaining contractual life of the commitment and is based on historical data.

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 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.

At June 30, 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.

19 unchanged sentences

(dollars in thousands, unaudited)

March 31, 2026

June 30, 2026

Fair Value Measurements

27 unchanged sentences

Subordinated debentures

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:

For financial asset categories carried on the consolidated balance sheet at fair value and measured on a recurring basis as of June 30, 2026, and December 31, 2025, the Company used the following methods and significant assumptions:

● Investment securities :

Fair values are determined by obtaining quoted prices on nationally recognized securities exchanges or by matrix pricing, which is a mathematical technique used widely in the industry to value debt securities by relying on their relationship to other benchmark quoted securities.

For securities where quoted prices or market prices of similar securities are not available, fair values are estimated using broker expertise and other market indicators (Level 3).

For securities where quoted prices or market prices of similar securities are not available, fair values are estimated using broker expertise and other

market indicators (Level 3).

For bonds that are hand priced, actual recent trades for the exact bond are used in determining the price, adjusted for changes in market conditions since the time of the observable trade.

3 unchanged sentences

(dollars in thousands, unaudited)

Fair Value Measurements at March 31, 2026, using

Fair Value Measurements at June 30, 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 March 31, 2026, and December 31, 2025 (dollars in thousands):

March 31, 2026

The following tables present quantitative information about recurring Level 3 fair value measurements at June 30, 2026, and December 31, 2025 (dollars in thousands):

June 30, 2026

Corporate Bonds

7 unchanged sentences

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 three months ended March 31, 2026 and 2025:

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 six months ended June 30, 2026 and 2025:

Fair Value Measurements - Level 3 Recurring

5 unchanged sentences

Transfers into Level 3

Balance of recurring Level 3 assets at March 31,

Balance of recurring Level 3 assets at June 30,

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 March 31, 2026, and December 31, 2025, 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 June 30, 2026, and December 31, 2025, the Company used the following methods and significant assumptions:

● Individually evaluated collateral dependent loans :

22 unchanged sentences

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.

There was one other commercial collateral dependent loan for which a specific reserve had been established with a fair value of zero as of June 30, 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)

March 31, 2026

June 30, 2026

Allowance for Credit Losses

31 unchanged sentences

Total held-to-maturity securities

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.

An unrealized loss of $ 23.2 million and $ 24.2 million on securities transferred from the available-for-sale to held-to-maturity categorization, remains as of June 30, 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 no later than 90 days past due.

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 is included in other assets on the Company’s consolidated balance sheet and as of June 30, 2026, measured at $ 4.5 million and $ 2.3 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-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.

During the six-month periods ending June 30, 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 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.

As of June 30, 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

March 31, 2026

June 30, 2026

December 31, 2025

State and political subdivisions

(1) Prerefunded and escrowed to maturity bonds with an amortized cost of $ 2.3 million are excluded.

For available-for-sale debt securities in an unrealized loss position for which Management has an intent to sell the security or considers it more likely-than-not that the security in question will be sold prior to a recovery of its amortized cost basis, the security will be written down to fair value through a direct charge to income.

6 unchanged sentences

(dollars in thousands, unaudited)

March 31, 2026

June 30, 2026

Less than twelve months

21 unchanged sentences

(dollars in thousands, unaudited)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

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 March 31, 2026, and December 31, 2025 (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 June 30, 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.

March 31, 2026

June 30, 2026

Available-for-Sale

26 unchanged sentences

The Company currently has investments in eight different LIHTC fund limited partnerships made in 2014, 2015, two in 2022, one in 2023, and three in 2024, all of which were California-focused funds that help the Company meet its obligations under the Community Reinvestment Act.

The Company utilized the cost method of accounting for LIHTC fund investments, which were initially recorded on the consolidated balance sheet as an asset representing the total cash expected to be invested over the life of the partnership.

The Company utilized the cost method of accounting for LIHTC fund investments, which were initially recorded on the consolidated balance sheet as an asset representing the total cash

expected to be invested over the life of the partnership.

Any commitments or contingent commitments for future investment are reflected as a liability.

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 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.

As of June 30, 2026, the Company’s total LIHTC investment book balance was $ 21.2 million, which is included in “Other Assets” on the consolidated balance sheet.

This investment is offset by $ 5.1 million in remaining commitments for additional capital contributions, which is included in “Other Liabilities” on the consolidated balance sheet.

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.

There were approximately $ 1.5 million in tax credits derived from the Company’s LIHTC investments that were recognized during the six months ended June 30, 2026, and “below the line” amortization expense of $ 1.4 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.

As of December 31, 2025, the Company’s total LIHTC investment book balance was $ 22.6 million, which includes $ 6.6 million in remaining commitments for additional capital contributions.

As of December 31, 2025, the Company’s total LIHTC investment book balance was $ 22.6 million, which included $ 6.6 million in remaining commitments for additional capital contributions.

There were $ 2.9 million in tax credits derived from LIHTC investments recognized during the year ended December 31, 2025;

10 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 $ 7.4 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.

Accrued interest receivable on loans of $ 7.1 million and $ 7.0 million at June 30, 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)

March 31, 2026

June 30, 2026

December 31, 2025

4 unchanged sentences

Other commercial

Mortgage warehouse lines

Mortgage warehouse facilities

Net deferred loan (fees)

3 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)

March 31, 2026

June 30, 2026

Nonaccrual Loans

5 unchanged sentences

Other commercial

Consumer loans

December 31, 2025

6 unchanged sentences

Other commercial

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:

The Company did not recognize any interest on nonaccrual loans during the three and six months ended June 30, 2026 and 2025, and would have recognized an additional $ 0.9 million and $ 0.9 million in interest income on nonaccrual loans during the first six months of 2026 and 2025, respectively, had those loans not been designated as nonaccrual.

During the three months ended June 30, 2026, and 2025, the Company reversed $ 0.2 million and $ 0.1 million, respectively, of accrued interest receivable associated with loans placed on nonaccrual status, which reduced interest income.

For the six months ended June 30, 2026, and 2025, these reversals totaled $ 0.2 million and $ 0.3 million, respectively.

The following table presents the amortized cost basis of collateral-dependent loans by class as of June 30, 2026, and December 31, 2025:

Collateral Dependent Loans

(dollars in thousands, unaudited)

March 31, 2026

June 30, 2026

December 31, 2025

7 unchanged sentences

(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.

During the first six 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 40.0 % at June 30, 2026.

There were no consumer mortgage

loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of June 30, 2026, and December 31, 2025.

Past Due Loans

(dollars in thousands, unaudited)

March 31, 2026

June 30, 2026

30-59 Days Past Due

8 unchanged sentences

Other commercial

Mortgage warehouse lines

Mortgage warehouse facilities

December 31, 2025

9 unchanged sentences

Other commercial

Mortgage warehouse lines

Mortgage warehouse facilities

Loan Modifications

7 unchanged sentences

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

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 following tables present the amortized cost basis of loans at June 30, 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):

Three months ended March 31, 2026

Three months ended June 30, 2026

Principal Forgiveness

4 unchanged sentences

Other commercial

Three months ended March 31, 2025

Three months ended June 30, 2025

Principal Forgiveness

4 unchanged sentences

Other commercial

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

Six months ended June 30, 2026

Principal Forgiveness

Payment Delay

Term Extension

Combination Term Extension Interest Rate Reduction

Total Class of Financing Receivable

Other commercial

Six months ended June 30, 2025

Principal Forgiveness

Payment Delay

Term Extension

Combination Term Extension Interest Rate Reduction

Total Class of Financing Receivable

Other commercial

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and six months ended June 30, 2026 and 2025 (dollars in thousands, unaudited):

Three months ended June 30, 2026

Principal Forgiveness

Weighted-Average Interest Rate Reduction

1 unchanged sentence

Other commercial

Three months ended March 31, 2025

Three months ended June 30, 2025

Principal Forgiveness

2 unchanged sentences

Other commercial

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.

Six months ended June 30, 2026

Principal Forgiveness

Weighted-Average Interest Rate Reduction

Weighted-Average Term Extension (years)

Other commercial

Six months ended June 30, 2025

Principal Forgiveness

Weighted-Average Interest Rate Reduction

Weighted-Average Term Extension (years)

Other commercial

There were no payment defaults on loans previously modified in the preceding 12 months for either of the periods ending June 30, 2026 and 2025.

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

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 had $ 0.1 million in additional funds committed on loans which have been modified to borrowers experiencing financial difficulty as of both June 30, 2026, and June 30, 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)

March 31, 2026

June 30, 2026

Term Loans Amortized Cost Basis by Origination Year

15 unchanged sentences

Current period gross charge-offs (1)

Mortgage warehouse lines

Mortgage warehouse facilities

Current period gross charge-offs

22 unchanged sentences

Current period gross charge-offs (1)

Mortgage warehouse lines

Mortgage warehouse facilities

Current period gross charge-offs

5 unchanged sentences

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.

As of June 30, 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.

18 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 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).

The call code multiple factor regression models utilized as of June 30, 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 June 30, 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.

28 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 balances 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 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:

As of June 30, 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.

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2026 and 2025:

Allowance for Credit Losses

4 unchanged sentences

Commercial & Industrial

Mortgage Warehouse Lines

Mortgage Warehouse Facilities

Allowance for credit losses:

Balance December 31, 2025

Balance March 31, 2026

(Benefit) provision for credit losses

Balance June 30, 2026

Residential Real Estate

Commercial Real Estate

Farmland & Agricultural Production

Commercial & Industrial

Mortgage Warehouse Facilities

Allowance for credit losses:

Balance March 31, 2025

(Benefit) provision for credit losses

Balance June 30, 2025

Residential Real Estate

2 unchanged sentences

Commercial & Industrial

Mortgage Warehouse Lines

Mortgage Warehouse Facilities

Allowance for credit losses:

1 unchanged sentence

(Benefit) provision for credit losses

Balance March 31, 2025

Balance June 30, 2026

Residential Real Estate

Commercial Real Estate

Farmland & Agricultural Production

Commercial & Industrial

Mortgage Warehouse Facilities

Allowance for credit losses:

Balance, December 31, 2024

(Benefit) provision for credit losses

Balance June 30, 2025

Note 11 – Goodwill

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 balance of goodwill at the six months beginning and ended June 30, 2026 and 2025 was $ 27.4 million.

There was no acquired goodwill for the six months ended June 30, 2026 and 2025.

The Company performs its 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.

2 unchanged sentences

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 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.

Therefore, goodwill was not impaired as of June 30, 2026, and there were no impairment charges related to the Company’s goodwill recorded during the six months ended June 30, 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 $ 127.8 million at March 31, 2026, relative to a balance of $ 130.9 million at December 31, 2025.

Repurchase agreements totaled $ 122.4 million at June 30, 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 March 31, 2026, and $ 49.5 million at December 31, 2025.

The balance of the Company’s long-term debt, net of unamortized issuance costs, was $ 49.5 million at June 30, 2026, and $ 49.5 million at December 31, 2025.

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 are unconditionally guaranteed by the Company.

2 unchanged sentences

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

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

At June 30, 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 June 30, 2026, and December 31, 2025:

June 30, 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 $ 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 Funds Purchased – The Company had unsecured lines of credit with its correspondent banks which, in the aggregate, amounted to $ 366.8 million at June 30, 2026, and $ 250.8 million at December 31, 2025, at fixed interest rates which vary with market conditions.

There was $ 120.0 million in outstanding overnight balances under these lines of credit at June 30, 2026, and $ 210.0 million at December 31, 2025.

Secured FHLB Borrowings – At June 30, 2026, and December 31, 2025, the Company had secured available lines of credit with the FHLB totaling $ 611.6 million and $ 629.5 million, respectively, based on eligible collateral of certain loans and investment securities.

There were no borrowings outstanding against these lines at June 30, 2026 and $ 12.7 million outstanding at December 31, 2025.

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 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.

At June 30, 2026, and December 31, 2025, the Company had borrowing capacity under this line totaling $ 243.8 million and $ 254.9 million, respectively.

The Company had outstanding borrowings of zero and $ 210.0 million on this line of credit as of June 30, 2026, and December 31, 2025.

Note 13 – Revenue Recognition

3 unchanged sentences

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 March 31, 2026 and 2025.

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 the three and six months ended June 30, 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 March 31,

Three months ended June 30,

Six months ended June 30,

Noninterest income

4 unchanged sentences

Dividends on equity investments (1)

Unrealized losses recognized on equity investments (1)

Unrealized gain recognized on equity investments (1)

Net gain on sale of securities (1)

6 unchanged sentences

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