SIERRA BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

*** September 30, 2026***

(Unaudited)

Note 1 –*** The Business of Sierra Bancorp***

Sierra Bancorp (the “Company”) is a California corporation headquartered in Porterville, California, and is a registered bank holding company under federal banking laws. The Company was formed to serve as the holding company for Bank of the Sierra (the “Bank”) and has been the Company’s sole shareholder since* August**2001.* The Company exists primarily for the purpose of holding the stock of the Bank and of such other subsidiaries it* mayacquire or establish. As of September 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 arenot 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, and neighboring communities. The Bank was incorporated in* September 1977and opened for business in January1978* as aone-branch bank with $1.5 million in capital. The Company’s growth in the ensuing years has largely been organic in nature but includesfour whole-bank acquisitions: Sierra National Bank in2000, Santa Clara Valley Bank in2014, Coast National Bank in2016, and Ojai Community Bank in* October2017.* As of the filing date of this report, the Bank operates 34 full-service branches, maintaining ATMs at all butone branch location as well as atsix non-branch locations. The Bank focuses on lending to commercial and industrial, commercial real estate, and mortgage warehouse borrowers. The Company had total assets of $3.7 billion at* September 30, 2026*. The Company’s deposit accounts, which totaled $3.0 billion at* September 30, 2026*, are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to maximum insurable amounts.

Note 2 –*** Basis of Presentation***

The accompanying interim unaudited consolidated financial statements have been prepared in a condensed format as allowed under U.S. generally accepted accounting principles (“GAAP”). Therefore, these financial statements donot include all of the information and footnotes required for complete, audited financial statements as presented in the Company’s Annual Report on Form10-K. The information furnished in these interim statements reflects all adjustments that are, in the opinion of Management, necessary for a fair statement of the results for such periods. Such adjustments can generally be considered as normal and recurring unless otherwise disclosed in this Form10‑Q. In preparing the accompanying financial statements, Management has taken subsequent events into consideration, through* September 30, 2026*, and recognized them where appropriate. The results of operations in the interim statements arenot necessarily indicative of the results that* maybe expected for any other quarter, or for the full year. Certain amounts reported for2025* have been reclassified to be consistent with the reporting for2026,none of which impacted net income or shareholders’ equity. The interim financial information should be read in conjunction with the Company’s Annual Report on Form10‑K for the year ended* December 31, 2025*, as filed with the Securities and Exchange Commission (the “SEC”).

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Segment information

An operating segment is generally defined as a component of business for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker. 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 constitute 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 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. The chief operating decision maker uses consolidated expense information to manage the operations of the segment. The consolidated expense information is the same as is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets.

The chief operating decision maker uses consolidated net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the community banking segment or into other parts of the entity, such as for whole bank or branch acquisitions, or to pay dividends.

Net income is used to monitor budget versus actual results. The chief operating decision maker also uses net income in competitive analysis by benchmarking to the Company’s peer banking competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing Management’s compensation.

The Company doesnot 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 hadno impact on previously reported net income, total assets, total liabilities, or shareholders’ equity. The changes also hadno 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):

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Note 3 –*** Current Accounting Developments***

On* October 9, 2023,the FASB issued ASU2023*-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification of Initiative.” ASU2023-06 amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (the “Codification”). The ASU was issued in response to the SEC’s* August 2018final rule that updated and simplified disclosure requirements that the SEC believed were “redundant, duplicative, overlapping, outdated, or superseded.” The new guidance is intended to align U.S. GAAP requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. ASU2023*-06 applies to all reporting entities within the scope of the amended subtopics. 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 ASU2023-06 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 ASU2023-06 prospectively after the effective dates. The adoption of this standard isnot expected to have a significant effect on the Company’s financial statements.

In* November 2024,the FASB issued ASU2024*-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic220-40).” ASU2024-03 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. The objective of the disclosure requirements is to provide disaggregated information about a public business entity's expenses to help investors (a) better understand the entity's performance, (b) better assess the entity's prospects for future cash flows, and (c) compare an entity's performance over time and with that of other entities. The effective date of Update2024-03 was amended by ASU2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic220-40): Clarifying the Effective Date. Public business entities are required to adopt the guidance in annual reporting periods beginning after* December 15, 2026,and interim periods within annual reporting periods beginning after December 15, 2027.Early adoption of Update2024*-03 is permitted. ASU2024-03 isnot expected to have a significant impact on our financial statements.

In* November 2025,the FASB issued ASU2025*-08, “Financial Instruments-Credit Losses (Topic326): Purchased Loans.” ASU2025-08 expands the application of the gross-up approach currently used for purchased credit deteriorated (“PCD”) assets to certain acquired loans that meet the definition of purchased seasoned loans. Under the amended guidance, an allowance for credit losses is recognized at the acquisition date through a corresponding adjustment to the amortized cost basis of the acquired loan, rather than through provision expense recognized on the acquisition date. The amendments are intended to improve comparability in the accounting for acquired loans and better reflect the economics of loans acquired at fair value. The guidance is effective for fiscal years beginning after* December 15, 2026,including interim periods within those fiscal years, with early adoption permitted. The Company elected to early adopt ASU2025*-08 effective* July 1, 2026,on a prospective basis. The adoption of this standard didnot* have a material effect on the Company’s financial statements.

In* December 2025,the FASB issued ASU2025*-11, “Interim Reporting (Topic270)” related to interim disclosure requirements. The amendments in this update clarify current interim disclosure requirements and provide a comprehensive list of required interim disclosures. The update also incorporates a disclosure principle that requires entities to disclose material events that occur after the end of the last annual reporting period. This update is effective for interim periods within annual periods beginning after* December 15, 2027and early adoption is permitted. The Company is currently evaluating the guidance but doesnot* currently expect adoption to have a material impact on its consolidated financial statements.

Note 4 –*** Share Based Compensation***

On* March17,* 2023, the Company’s Board of Directors approved and adopted the2023 Equity Compensation Plan (the*“2023* Plan”), which became effective* May24,* 2023, the date approved by the Company’s shareholders. The2023 Plan replaced the Company’s2017 Stock Incentive Plan (the*“2017* Plan”). Options to purchase 107,200 shares granted under the2017 Plan and options to purchase 21,000 shares that were granted under the2007 Plan were still outstanding as of* September 30, 2026*, and remain unaffected by that plan’s expiration. The2023 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* maybe granted to officers and employees as well as non-employee directors, which maybe 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 the2023* Plan was initially 360,000 shares, and the number remaining available for grant as of* September 30, 2026*, was 229,488. Any unexercised, unvested, or undistributed portion of any expired, cancelled, terminated, or forfeited awards under the Company’s2017 Plan are added to the number of shares available to grant under the2023 Plan. There were 173,492 unvested Restricted Stock Awards issued under the2023 Equity Compensation Plan at* September 30, 2026*, and are included in shares outstanding. The potential dilutive impact of unexercised stock options and unvested restricted stock is discussed below in Note5, Earnings per Share.

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Pursuant to FASB’s standards on stock compensation, the value of each stock option and restricted stock award is reflected in the income statement as employee compensation or directors’ expense by amortizing its grant date fair value over the vesting period of the option or award. The Company utilized a Black-Scholes model to determine grant date fair values for options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Forfeitures are reflected in compensation costs as they occur for both types of awards. A pre-tax charge of $1.5 million was reflected in the Company’s income statement during thefirst nine months of2026 and $1.5 million during thefirst nine months of2025, as expense related to stock options and restricted stock awards.

Restricted Stock Awards

The Company’s Restricted Stock Awards are awards of either time-vested or performance-based shares. The Restricted Stock Awards are non-transferable shares of common stock and are available to be granted to the Company’s employees and directors. The vesting period of Restricted Stock Awards is determined at the time the awards are issued, and different awards* mayhave different vesting terms or performance measures, provided, however, thatno* installment of any Restricted Stock Award shall become vested less thanone year from the grant date. Restricted Stock Awards are valued utilizing the fair value of the Company’s stock at the grant date. 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 thefirst nine months of2026. As of* September 30, 2026*, there was $2.8 million of unamortized compensation cost related to unvested Restricted Stock Awards granted under the2017 and2023 plans. That cost is expected to be amortized over a weighted average period of 2.2 years.

The Company’s restricted stock award activity for thenine months ended* September 30, 2026and2025*, is summarized below (unaudited):

Stock Option Grants

The Company has issued equity instruments in the form of Incentive Stock Options and Nonqualified Stock Options to certain officers and directors. No options have been granted since2020, but the Company could elect to issue under the2023 Plan. The exercise price of each stock option is determined at the time of the grant and* maybeno* less than100% of the fair market value of such stock at the time the option is granted.

The Company’s stock option activity during thenine months ended* September 30, 2026and2025*, are summarized below (dollars in thousands, except per share data, unaudited):

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Note 5 –*** Earnings per Share***

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. 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. Anti-dilution occurs when the unrecognized compensation cost per share of a restricted stock unit or the exercise price of a stock option exceeds the market price of the Company’s stock.

The Company’s earnings per share activity for thethree andnine months ended* September 30, 2026and2025*, is summarized below (dollars in thousands, except per share data, unaudited):

Note 6 –*** Comprehensive Income***

As presented in the Consolidated Statements of Comprehensive Income (Loss), 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 Note9 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 (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.

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Note 7 –*** Commitments and Contingent Liabilities***

The Company is a party to financial instruments with off‑balance‑sheet risk in the normal course of business. Those financial instruments currently consist of unused commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of risk in excess of the amount recognized in the consolidated balance sheet. The Company’s exposure to credit loss in the event of nonperformance by counterparties for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and issuing letters of credit as it does for originating loans included on the consolidated balance sheet. The following financial instruments represent off‑balance‑sheet credit risk (dollars in thousands):

Commitments to extend credit consist primarily of the unused or unfunded portions of the following: mortgage warehouse facilities; home equity lines of credit; commercial real estate construction loans, where disbursements are made over the course of construction; commercial revolving lines of credit; unsecured personal lines of credit; and formalized (disclosed) deposit account overdraft lines. Commitments generally have fixed expiration dates or other termination clauses and* mayrequire payment of a fee. Since many commitments are expected to expire without being drawn upon, the unused portions of committed amounts donot* necessarily represent future cash requirements. Standby letters of credit are issued by the Company to guarantee the performance of a customer to athird 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 facilities which are in the form of repo lines and are unconditionally cancelable. Unused commitments on mortgage warehouse facilities were $488.2 million at* September 30, 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 portion of the unfunded commitment that isnot unconditionally cancelable. 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* September 30, 2026*, the Company was also utilizing a letter of credit in the amount of $125.0 million issued by the Federal Home Loan Bank (“FHLB”) on the Company’s behalf as security for certain deposits. 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 doesnot believe there are such matters that will have a material effect on the consolidated financial statements.

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

FASB’s standards on financial instruments, and on fair value measurements and disclosures, require public business entities to disclose in their financial statement footnotes the estimated fair values of financial instruments. In addition to disclosure requirements, FASB’s standard on investments requires that debt securities classified as available-for-sale and equity securities with readily determinable fair values be measured and reported at fair value in the statement of financial position. Certain collateral-dependent, individually-evaluated loans are also reported at fair value, as explained in greater detail below, and foreclosed assets are carried at the lower of cost or fair value. FASB’s standard on financial instruments permits companies to report certain other financial assets and liabilities at fair value, but the Company hasnot elected the fair value option for any of those financial instruments.

Fair value measurement and disclosure standards also establish a framework for measuring fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Further, the standards establish a fair value hierarchy that encourages an entity to maximize the use of observable inputs and limit the use of unobservable inputs when measuring fair values. The standards describethree levels of inputs that* may*be used to measure fair values:

Fair value estimates are made at a specific point in time based on relevant market data and information about the financial instruments. Fair value disclosures for deposits include demand deposits, which are, by definition, equal to the amount payable on demand at the reporting date. Fair value calculations for loans reflect exit pricing and incorporate Management’s assumptions with regard to the impact of prepayments on future cash flows and credit quality adjustments based on risk characteristics of various financial instruments, among other things. Since the estimates are subjective and involve uncertainties and matters of significant judgment they cannot be determined with precision, and changes in assumptions could significantly alter the fair values presented.

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Fair Value of Financial Instruments

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

Fair Value Measurements–** Recurring**

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The following tables present quantitative information about recurring Level3 fair value measurements at* September 30, 2026*, and* December 31, 2025* (dollars in thousands):

The significant unobservable inputs utilized in the fair value measurement of the Company’s corporate bonds included risk profile and market conditions, and arenot quantifiable inputs. Differing unobservable input assumptions, such as 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 (Level3) for thenine months ended* September 30, 2026and2025*:

Corporate bonds with a fair value of $54.5 million as of* December 31, 2024*, were transferred from Level3 to Level2 in thethird quarter of2025 because observable market data became available for the securities.

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

Fair Value Measurements–** Nonrecurring**

The table above includes collateral dependent loan balances for which a specific reserve has been established. There wereno collateral dependent loans for which a specific reserve had been established as of* September 30, 2026*. Information on the Company’s total collateral dependent loan balances and specific loss reserves associated with those balances is included in Note10 below.

The unobservable inputs are based on Management’s best estimates of appropriate discounts in arriving at fair market value. Adjusting any of those inputs could result in a significantly lower or higher fair value measurement.

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Note 9 –*** Investments***

Investment Securities

Pursuant to FASB’s guidance on accounting for debt securities, available-for-sale securities are carried on the Company’s financial statements at their estimated fair market values, with monthly tax-effected “mark-to-market” adjustments reflected in accumulated other comprehensive income (loss) in shareholders’ equity. Held-to-maturity securities are carried on the Company’s financial statements at their amortized cost, net of the allowance for credit losses. Amortized cost is adjusted to the fair value of the security upon transfer to held-to-maturity.

Amortized Cost and Estimated Fair Value

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An unrealized loss of $21.9 million and $24.2 million on securities transferred from the available-for-sale to held-to-maturity categorization, remains as of* September 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 didnot estimate reserves on accrued interest receivable balances, as any past due interest income is reversedno later than90 days past due. Accrued interest receivable is included in other assets on the Company’s consolidated balance sheet and as of* September 30, 2026*, measured at $4.3 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 thenine-month periods ending* September 30, 2026and2025*,no interest receivable on available-for-sale or held-to-maturity securities was reversed against interest income and the Company didnot 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, 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. government on the agency and mortgage-backed securities there isno expectation of future losses andno allowance for credit losses has been established for these securities.

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The following table summarizes the amortized cost of held-to-maturity municipal bonds aggregated by nationally recognized statistical rating organizations (“NRSRO”) credit rating:

Held-To-Maturity by Credit Rating

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. For the remainder of available-for-sale debt securities in an unrealized loss position, which donot meet the previously outlined criteria, Management evaluates whether the decline in fair value is due to credit deterioration or other factors. In performing this evaluation, Management considers the extent to which fair value has fallen below amortized cost, changes in ratings by rating agencies, and other information indicating a deterioration in repayment capacity of either the underlying issuer or the borrowers providing repayment capacity in a securitization. If Management’s evaluation indicates that a credit loss exists, then a present value of the expected cash flows is calculated and compared to the amortized cost basis of the security in question. To the degree that the amortized cost basis exceeds the present value, an ACL is established, with the caveat that the maximum amount of the reserve on any individual security is the difference between the fair value and amortized cost balance of the security in question. Any unrealized loss that hasnot been recorded through an ACL is recognized in other comprehensive income (loss).

The following table summarizes available-for-sale debt securities in an unrealized loss position for which an ACL hasnot been recorded:

Investment Portfolio - Unrealized Losses

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Investment Portfolio - Realized Gains/(Losses)

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at* September 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.

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Variable Interest Entities

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. 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.

The Company currently has investments innine different LIHTC fund limited partnerships made in2014, 2015, two in2022, one in2023, three in2024, andone in2026, 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. 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* September 30, 2026*, the Company’s total LIHTC investment book balance was $25.4 million, which is included in “Other Assets” on the consolidated balance sheet. This investment is partially offset by $8.1 million in remaining commitments for additional capital contributions, which is included in “Other Liabilities” on the consolidated balance sheet. There were approximately $2.3 million in tax credits derived from the Company’s LIHTC investments that were recognized during thenine months ended* September 30, 2026*, and “below the line” amortization expense of $2.2 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 isnot impaired.

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*; “below the line” amortization expense of $3.0 million associated with those investments was netted against pre-tax noninterest income for the same time period.

During thethird quarter of2026, the Company made an investment in a renewable energy tax equity project designed to generate federal income tax credits and other tax benefits over the expected life of the project. The investment is included in other assets within the Consolidated Balance Sheets.

The Company accounts for the investment using the proportional amortization method and amortizes the carrying amount of the investment in proportion to the income tax credits and other income tax benefits received. The amortization of the investment and the related tax benefits are recognized as a component of income tax expense.

For thenine months ended* September 30, 2026,*the Company recognized approximately $4.9 million of income tax credits and $0.8 million in other tax benefits associated with the investment and recorded approximately $5.1 million of investment amortization, resulting in a net income tax benefit of approximately $0.6 million.

The Company’s investments in qualified affordable housing projects, small business investment companies, and renewable energy tax equity investments meet the definition of a variable interest entity, as the entities are structured such that the limited partner investors lack substantive voting rights. Pursuant to the FASB standard on the consolidation of variable interest entities, these investments arenot reflected on a consolidated basis in the Company’s financial statements.

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Note 10 –*** Loans and Allowance for Credit Losses***

The ACL on the loan portfolio is a valuation allowance deducted from the recorded balance in loans. Under CECL, the ACL represents principal which isnot expected to be collected over the contractual life of the loans, adjusted for expected prepayments. The ACL is increased by a provision for credit losses charged to expense and by principal recovered on charged-off balances. It is reduced by principal charge-offs. The amount of the allowance is based on Management’s evaluation of the collectability of the loan portfolio, using information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Adjustments are also made for changes in risk profile, credit concentrations, historical trends, and other economic conditions.

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, didnot 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 $7.6 million and $7.0 million at* September 30, 2026*, and* December 31, 2025*, respectively, is included in other assets on the Company’s consolidated balance sheet.

During thethird quarter of2026, the Company purchased approximately $41.2 million of loans. Substantially all of the acquired loans met the definition of purchased seasoned loans under ASU2025-08 and were accounted for using the gross-up approach, resulting in the recognition of an allowance for credit losses of $0.4 million upon acquisition. A small number of acquired loans with an aggregate balance of approximately $8.7 million didnot qualify as purchased seasoned loans because they had been originated within90 days of the acquisition date. These loans were accounted for under the Company's existing loan accounting policies applicable to purchased non-seasoned loans. Upon adoption of ASU2025-08, the Company elected to estimate expected credit losses on purchased seasoned loans using the expected loss reserve methodology. The Company also elected to estimate expected credit losses based on the unpaid principal balance of the purchased seasoned loans rather than the amortized cost basis.

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. The final table in this section separates a roll forward of the ACL at the portfolio segment level. Unless specifically noted otherwise, the disclosures in this footnote are prepared on an amortized cost basis.

The Company places a loan on nonaccrual status when Management has determined full repayment of principal and collection of contractually agreed upon interest is unlikely, or the loan in question has become delinquent more than90 days. The Company* maydetermine it is appropriate to continue to accrue interest on certain loans more than90* 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. 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. Once a loan is on nonaccrual status, subsequent payments received from the customer are applied to principal, andno further interest income is recognized until the principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required. Loans are generallynot restored to accrual status until the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest isno longer in doubt.

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The Company did recognized approximately $1.1 million in interest income on nonaccrual loans during thethree andnine months ended* September 30, 2026* andnone during thethree andnine months ended* September 30, 2025* and would have recognized an additional $0.1 million and $0.9 million in interest income on nonaccrual loans during thefirst nine months of2026 and2025, respectively, had those loansnot been designated as nonaccrual. During thethree months ended* September 30, 2026*, the Company reversed $0.2 million of accrued interest receivable associated with loans placed on nonaccrual status, which reduced interest income, and an inconsequential amount during thethree months ended* September 30, 2025*. For thenine months ended* September 30, 2026* and2025, these reversals totaled $0.4 million and $0.3 million, respectively.

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

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During thefirst nine months of2026, the amortized cost basis of collateral-dependent loans decreased by $4.3 million, primarily due to the successful resolution of an agricultural production loan that resulted in the recovery of substantially all principal, accrued interest, and fees previously deemed uncollectible. The weighted average loan-to-value ratio of collateral-dependent loans was 62.9% at* September 30, 2026*. There wereno consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of* September 30, 2026*, and* December 31, 2025*.

Loan Modifications

Occasionally, the Company modifies loans to borrowers experiencing financial difficulty by providing principal forgiveness, rate reduction, payment deferral, or term extension. When principal forgiveness is provided, the amount of forgiveness is charged off against the allowance for credit losses.

In certain cases, the Company provides multiple types of concessions on a single loan. Typically,one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness,* maybe granted. For the loans included in the “combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period. The combination is at leasttwo* of the following: principal forgiveness, rate reduction, payment deferral, and/or term extension.

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The following tables present the amortized cost basis of loans at* September 30, 2026and2025*, 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):

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The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for thethree andnine months ended* September 30, 2026and2025* (dollars in thousands, unaudited):

There wereno payment defaults on loans previously modified in the preceding12 months for either of the periods ending* September 30, 2026and2025*. For the purpose of this disclosure, the Company defines a payment default as90 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 both* September 30, 2026*, and* September 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. Loans classified as “loss” are immediately charged off. The Company uses the following definitions of risk classifications:

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Loan Credit Quality by Vintage

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Loan Credit Quality by Vintage

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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 electednot to transition these loans into the PCD designation. As of* September 30, 2026*, the Company hadno 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. Recently a full review with modifications in thethird quarter of2024, a partial review with minimal modifications in thethird quarter of2025, and a comprehensive review during thethird quarter of2026 were completed. The Company continues to utilize the multi-factor regression framework adopted during the2024 update and continues to utilize California-based peer banks with assets between $1.5 billion and $10 billion in estimating expected credit losses. The2026 comprehensice review included an evaluation of alternative peer group selections, loss drivers, prepayment assumptions, funding assumptions, and qualitative factor methodologies. Based on that review, Management elected to retain the California peer group and multi-factor regression framework, while updating model assumptions and incorporating additional historical data where appropriate. The Company’s ACL is calculated quarterly, with any difference in the calculated ACL and the recorded ACL adjusted through an entry to the provision (benefit) for credit losses. For purposes of estimating the Company’s ACL, Management generally evaluates collectively evaluated loans by call code in order to group loans with similar risk characteristics together; 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.

The DCF quantitative reserve methodology incorporates the consideration of probability of default (“PD”) and loss given default (“LGD”) estimates to estimate periodic losses. The PD estimates are derived through the application of reasonable and supportable economic forecasts to call code specific regression models, derived from the consideration of historical bank-specific and peer loss-rate data. The loss-rate data has been regressed against benchmark economic indicators, for which reasonable and supportable forecasts exist, in the development of the call-code specific regression models. Regression models are updated periodically, in order to pull in more recent loss-rate data. Reasonable and supportable forecasts of the selected economic metric are then input into the regression model to calculate an expected default rate. The expected default rates are then applied to expected monthly loan balances estimated through the consideration of contractual repayment terms and expected prepayments. The Company utilizes afour-quarter forecast period, after which the expected default rates revert to the historical average for each call code, over afour-quarter reversion period, on a straight-line basis. The prepayment assumptions applied to expected cash flow over the contractual life of the loans are estimated based on historical, bank-specific experience, peer data, and the consideration of current and expected conditions and circumstances including the level of interest rates. Management* mayupdate prepayment assumptions when changing conditions impact Management’s estimate or additional historical data indicates a reevaluation is warranted. LGD utilized in the DCF is derived from the application of the Frye-Jacobs theory, which relates LGD to PD based on historical peer data, as calculated by athird*-party. Economic forecasts are considered over afour-quarter forecast period, with reversion to mean occurring on a straight-line basis overfour quarters. The call code multiple factor regression models utilized as of* September 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* September 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.

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The quantitative reserves for Farmland, Agricultural Production, and Consumer loans are calculated using a Remaining Life methodology where the Company’s average historical loss-rates are applied to expected loan balances over an estimated remaining life of loans in calculation of the quantitative portion of collectively evaluated loans in these classes. The estimated remaining life is calculated using historical peer data. During the2026 refresh, Management evaluated alternative methodologies for the Farmland and Agricultural Production portfolios, including a DCF approach utilizing broader peer data. Management concluded that continuing to utilize the remaining life methodology and the Bank's own historical loss experience provided a more representative estimate of expected credit losses given the characteristics of these portfolios and the Company's recent loss history. Reasonable and supportable forecasts of the National Unemployment Rate, GDP, and HPI are incorporated through qualitative factor adjustments for these portfolio segments.

As part of the2026 review, Management also examined prepayment assumptions, funding assumptions, and qualitative factor methodologies. Updated assumptions were incorporated where appropriate; however, the overall CECL framework, forecast horizon, reversion methodology, segmentation approach, and primary economic drivers remained substantially unchanged from the methodologies adopted in prior periods.

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* mayvary 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.

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The qualitative portion of the Company’s reserves on collectively evaluated loans are calculated using a combination of numeric frameworks and Management judgment to determine risk categorizations in each of the Q-factors presented above. The amount of qualitative reserves is also contingent upon the historical peer, life-of-loan equivalent, loss-rate ranges, and the relative weighting of Q-factors according to Management’s judgment.

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:

Loans secured by Residential Real Estate have a different profile from those secured by Commercial Real Estate, as borrowers for the former are typically consumers, whereas Commercial Real Estate borrowers are often businesses. Loan performance during the COVID-19 pandemic clearly illustrated how thesetwo categories of real estate loans were subject to different risks, exacerbated by the widespread work-from-home model adopted by many companies during and since the pandemic. Farmland and Agricultural Production loans are included in a single segment as these loans are often made to the same types of borrowers, facing the same risks relating to commodity prices, water supply and drought conditions, in addition to other environmental concerns. 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 balances warrant presentation as an individual portfolio segment given the specific nature of these constantly revolving lines to mortgage originators and a very limited loss history, even after consideration of peer data. Finally, Consumer loans are split out due to the small balances and homogeneous terms that characterize these loans.

Management individually evaluates loans that donot share risk characteristics with other loans when estimating reserves. As of* September 30, 2026and2025*, the only loans Management considered to have different risk characteristics from other loans sharing the same call report code were loans designated as nonaccrual.

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The following tables present the activity in the allowance for credit losses by portfolio segment for thethree andnine months ended* September 30, 2026and2025*:

Allowance for Credit Losses

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Note 11 –*** Goodwill***

The balance of goodwill at thenine months beginning and ended* September 30, 2026and2025*, was $27.4 million. There wasno acquired goodwill for thenine months ended* September 30, 2026and2025*.

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

The Company performed its annual quantitative goodwill impairment assessment subsequent to the* September 30, 2026,period end, effective as of October 1, 2026,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 ornot* a triggering event occurs, or circumstances change that would more likely thannot reduce the fair value of the Company below its carrying amount before the next annual test in2027 and has concludedno such events have occurred. Therefore, goodwill wasnot impaired as of* September 30, 2026*, and there wereno impairment charges related to the Company’s goodwill recorded during thenine months ended* September 30, 2026and2025*.

Note 12 –*** Borrowings and Other Arrangements***

Repurchase Agreements–** Repurchase agreements represent “sweep accounts,” where commercial deposit balances above a specified threshold are transferred at the close of each business day into separate non-deposit accounts. 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 $113.1 million at September 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 over3*-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 $49.6 million at September 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. For financial reporting purposes, the Trusts arenot 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 Topic810. Trust preferred securities are variable rate instruments which were benchmarked against the London Interbank Offered Rate (LIBOR) plus a spread until LIBOR was phased out on* June 30, 2023.These instruments are benchmarked against the SOFR, effective June 30, 2023.At September 30, 2026*, and* December 31, 2025*, the Company’s trust-preferred securities totaled $36.2 million and $36.0 million, respectively.

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The following table summarizes the Company’s other borrowings as of* September 30, 2026*, and* December 31, 2025*:

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 unsecured lines of credit with its correspondent banks which, in the aggregate, amounted to $511.8 million at* September 30, 2026*, and $250.8 million at* December 31, 2025*, at fixed interest rates which vary with market conditions. There wereno outstanding overnight balances under these lines of credit at* September 30, 2026*, and $210.0 million at* December 31, 2025*.

Secured FHLB Borrowings– At* September 30, 2026*, and* December 31, 2025*, the Company had secured available lines of credit with the FHLB totaling $604.3 million and $629.5 million, respectively, based on eligible collateral of certain loans and investment securities. There wereno borrowings outstanding against these lines at* September 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* September 30, 2026*, and* December 31, 2025*, the Company had borrowing capacity under this line totaling $212.9 million and $254.9 million, respectively. The Company had outstanding borrowings of $17.0 million andzero on this line of credit as of* September 30, 2026*, and* December 31, 2025*, respectively.

Note 13 –*** Revenue Recognition***

The Company utilizes the guidance found in ASU2014‑09, Revenue from Contracts with Customers (ASC606), when accounting for certain noninterest income. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Sufficient information should be provided to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company’s revenue streams that are within the scope of and accounted for under Topic606 include service charges on deposit accounts, debit card interchange fees, and fees levied for other services the Company provides its customers. The guidance doesnot 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.

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All of the Company’s revenue from contracts within the scope of ASC606 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 thethree andnine months ended* September 30, 2026and2025*. The following table presents the Company’s sources of noninterest income. Items outside the scope of ASC606 are noted as such (dollars in thousands, unaudited).

With regard to noninterest income associated with customer contracts, the Company has determined that transaction prices are fixed, and performance obligations are satisfied as services are rendered, thus there is little orno judgment involved in the timing of revenue recognition under contracts that are within the scope of ASC606.

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PART I - FINANCIAL INFORMATION