SIERRA BANCORP
For the period ended Sep 30, 2025. Filed Oct 31, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Oct 31, 2025
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Allowance for Credit Losses on Loans
ALLOWANCE FOR CREDIT LOSSES* – LOANS*
The allowance for credit losses on loans, a contra-asset, is established through periodic provisions for credit losses on loans. It is maintained at a level that is considered adequate to measure expected losses on individually identified loans, as well as expected losses inherent in the remaining loan portfolio. Specifically identifiable and quantifiable losses are immediately charged off against the allowance; recoveries are generally recorded only when sufficient cash payments are received subsequent to the charge-off.
The Company's allowance for credit losses on loans and leases was $25.2 million at September 30, 2025, as compared to $24.8 million at December 31, 2024. The increase resulted from a $3.5 million increase in specific individual reserves on impaired loans on a single agricultural production loan in the third quarter of 2025, offset by a $5.3 million partial charge-off on the same loan in the second quarter of 2025, which had a $3.0 million specific individual reserve at December 31, 2024. Such agricultural production loan was in the wine grape industry and had a remaining book balance of $3.5 million at September 30, 2025, with a full individual reserve of $3.5 million offsetting the remaining balance. In addition to this loan, the Bank had $19.2 million in outstanding agricultural production loans in the winery and grape industry at September 30, 2025, of which $1.7 million were grapes. None of the remaining $19.2 million in wine and grape production loans were classified as special mention or substandard.
The allowance as a percentage of gross loans was 1.01% and 1.07%, at September 30, 2025 and December 31, 2024, respectively. Management's detailed analysis indicates that the Company's allowance for credit losses on loans should be sufficient to cover credit losses for the life of the loans outstanding as of September 30, 2025, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the credit loss allowance for loans. The total allowance for credit losses on loans of $25.2 million at September 30, 2025, included $0.5 million of allowance related to $452.7 million of mortgage warehouse lines. A separate allowance of $0.8 million for potential credit losses inherent in unused commitments is included in other liabilities at September 30, 2025, an increase of $0.1 million, from December 31, 2024.
Allowance for Credit Losses on Loans
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| · · For the three months ended · · For the threemonths ended · · For the ninemonths ended · · For the ninemonths ended · · For the year ended | |||||||||||||||
| · September 30, · September 30, · September 30, · September 30, · December 31, | |||||||||||||||
| Balances: · · 2025 · · 2024 · · 2025 · · 2024 · · 2024 | |||||||||||||||
| Average gross loans outstanding during period (1) | | $2,437,218 | | $2,271,692 | | $2,389,164 | | $2,195,352 | | $2,225,402 | |||||
| Gross Loans outstanding at end of period | | $2,491,779 | | $2,320,629 | | $2,491,779 | | $2,320,629 | | $2,331,341 | |||||
| | | | | | | | | | | | | | | | |
| Allowance for credit losses on loans: | | | | | | | | | | | | | | | |
| Balance at beginning of period | | $21,680 | | $21,640 | | $24,830 | | $23,500 | | $23,500 | |||||
| Provision charged to expense | | | 3,709 | | | 1,240 | | | 6,880 | | | 2,258 | | | 4,593 |
| Charge-offs | | | | | | | | | | | | | | | |
| Real estate | | | | | | | | | | | | | | | |
| Commercial real estate | | | 18 | | | (30) | | | 1,165 | | | 2,438 | | | 2,438 |
| Farmland | | | — | | | — | | | — | | | 410 | | | 410 |
| Total real estate | | | 18 | | | (30) | | | 1,165 | | | 2,848 | | | 2,848 |
| Other commercial | | | 31 | | | 39 | | | 5,506 | | | 365 | | | 529 |
| Consumer loans | | | 231 | | | 388 | | | 727 | | | 1,126 | | | 1,484 |
| Total | | $280 | | $397 | | $7,398 | | $4,339 | | $4,861 | |||||
| Recoveries | | | | | | | | | | | | | | | |
| Real estate | | | | | | | | | | | | | | | |
| Residential real estate | | $— | | $— | | $— | | $60 | | $60 | |||||
| Commercial real estate | | | — | | | — | | | — | | | — | | | — |
| Farmland | | | — | | | — | | | 410 | | | — | | | — |
| Total real estate | | | — | | | — | | | 410 | | | 60 | | | 60 |
| Other commercial | | | 11 | | | 16 | | | 34 | | | 559 | | | 655 |
| Consumer loans | | | 60 | | | 211 | | | 424 | | | 672 | | | 883 |
| Total | | $71 | | $227 | | $868 | | $1,291 | | $1,598 | |||||
| Net loan charge-offs | | $209 | | $170 | | $6,530 | | $3,048 | | $3,263 | |||||
| Balance at end of period | | $25,180 | | $22,710 | | $25,180 | | $22,710 | | $24,830 | |||||
| | | | | | | | | | | | | | | | |
| RATIOS | | | | | | | | | | | | | | | |
| Net charge-offs to average loans (annualized) | | | 0.03% | | | 0.03% | | | 0.37% | | | 0.18% | | | 0.59% |
| Allowance for credit losses on loans to gross loans at end of period | | | 1.01% | | | 0.98% | | | 1.01% | | | 0.98% | | | 1.07% |
| Net loan charge-offs to allowance for credit losses on loans at end of period | | | 0.83% | | | 0.75% | | | 25.93% | | | 13.42% | | | 13.14% |
| Net loan charge-offs to provision for credit losses on loans | | | 5.63% | | | 13.71% | | | 94.91% | | | 134.99% | | | 71.04% |
| (1) | Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs. |
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