SIERRA BANCORP
For the period ended Sep 30, 2026. Filed Oct 30, 2026.
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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, 2026 · Filed Oct 30, 2026
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Noninterest Income and Noninterest Expense
Noninterest Income/Expense
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| Noninterest income: | 2026 | 2025 | 2026 | 2025 |
| Service charges and fees on deposit accounts | | | | |
| Interchange income on debit cards | $2,034 | $2,027 | $6,052 | $6,036 |
| Business analysis fees | 1,254 | 1,220 | 3,458 | 3,377 |
| Overdraft fee income | 1,344 | 1,357 | 3,980 | 3,857 |
| Other service charges and fees | 1,480 | 1,461 | 4,283 | 4,231 |
| Net gain on sale of securities available-for-sale | — | — | — | 124 |
| Gain (loss) on sale of fixed assets | — | — | 360 | (22) |
| Increase in cash surrender value of life insurance | 421 | 410 | 1,256 | 991 |
| Earnings on separate account life insurance | 112 | 608 | 1,118 | 1,078 |
| Other | 1,071 | 975 | 3,749 | 3,580 |
| Total noninterest income | $7,716 | $8,058 | $24,256 | $23,252 |
| As a % of average interest-earning assets (1) | 0.92% | 0.94% | 0.97% | 0.92% |
| | | | | |
| Noninterest expense: | | | | |
| Salaries and employee benefits | | | | |
| Salary and incentives | $10,203 | $10,863 | $31,014 | $32,014 |
| Employee benefits | 1,921 | 1,865 | 6,218 | 6,118 |
| Deferred compensation | 37 | 99 | 176 | 243 |
| Occupancy costs | 3,162 | 3,234 | 9,451 | 9,354 |
| Advertising and marketing costs | 317 | 403 | 988 | 1,156 |
| Data processing costs | 1,493 | 1,518 | 4,734 | 4,582 |
| Deposit services costs | 1,865 | 2,134 | 5,796 | 6,243 |
| Loan services costs | | | | |
| Loan processing | 107 | 173 | 337 | 425 |
| Foreclosed assets | 1 | 1 | 18 | 3 |
| Other operating costs | 929 | 901 | 2,480 | 2,905 |
| Professional services costs | | | | |
| Legal and accounting services | 738 | 641 | 1,866 | 1,712 |
| Director's costs | 342 | 332 | 1,035 | 951 |
| Deferred directors' fees cost | 154 | 438 | 621 | 942 |
| Other professional services | 721 | 763 | 2,115 | 2,180 |
| Stationery and supply costs | 77 | 102 | 274 | 335 |
| Debit card and fraud loss | 247 | 168 | 527 | 656 |
| Total noninterest expense | $22,314 | $23,635 | $67,650 | $69,819 |
| As a % of average interest-earning assets (1) | 2.66% | 2.76% | 2.72% | 2.77% |
| (1) | Annualized |
Noninterest Income:
Total noninterest income decreased $0.3 million, or 4%, to $7.7 million in the third quarter 2026 from $8.1 million in the third quarter of 2025. The decrease was primarily attributable to a $0.5 million decline in earnings on separate-account life insurance, partially offset by increases in service charges and fees on deposit accounts and the above-mentioned special FHLB dividend.
For the first nine months of 2026, noninterest income increased $1.0 million, or 4%, to $24.3 million compared to $23.3 million for the same period in 2025. The increase was primarily driven by a $0.4 million gain on the sale of fixed assets, a $0.3 million increase in cash surrender value income from life insurance, a $0.3 million increase in service charges and fees on deposit accounts, and a $0.2 million increase in other income. These favorable variances were partially offset by the absence of securities gains recognized during the first nine months of 2025.
The Company’s nonqualified deferred compensation plan for officers and directors allows participants to defer a portion of their earnings and select from various hypothetical investment alternatives to determine their individual returns. The Company economically offsets this liability with separate-account life insurance policies that are invested in similar underlying fund types within the life insurance policy. Because the deferred compensation liability and the separate-account life insurance asset are not contractually linked, differences in balances, fund performance, and insurance costs can result in temporary timing mismatches between changes in separate-account life insurance income and the related deferred compensation expense.
Earnings on separate account life insurance were $0.1 million for the third quarter of 2026, compared to $0.6 million in the third quarter of 2025. For the first nine months of both 2026 and 2025, earnings on separate account life insurance totaled $1.1 million. These changes reflect market-driven fluctuations in the value of the underlying investment alternatives and do not represent changes in the operating performance or credit quality of the Company.
The majority of the related deferred compensation expense or benefit is reported within professional services expense under deferred directors' fees, as it primarily relates to directors' deferred compensation elections. Deferred directors' fee expense was $0.2 million during the third quarter of 2026, compared to $0.4 million in the third quarter of 2025. For the first nine months of 2026, deferred directors' fee expense totaled $0.6 million, compared to $0.9 million for the first nine months of 2025.
Noninterest Expense:
Total noninterest expense decreased $1.2 million, or 5%, to $22.3 million during the third quarter of 2026 from $23.5 million in the linked quarter. The decrease was primarily attributable to a $0.9 million decline in deferred directors' fee expense, a $0.4 million reduction in salaries and employee benefits expense, and lower data processing and deposit service costs. These favorable variances were partially offset by higher legal and accounting expenses and higher debit card and fraud losses.
Compared to the third quarter of 2025, total noninterest expense decreased $1.3 million, or 6%, from $23.6 million. Salaries and employee benefits expense declined $0.7 million, primarily due to lower full-time equivalent staffing levels, and deposit service costs decreased $0.3 million. These favorable variances were partially offset by increases in legal and accounting expenses and director-related costs.
For the first nine months of 2026, noninterest expense decreased $2.2 million, or 3%, to $67.7 million from $69.8 million for the same period in 2025. Salaries and employee benefits expense decreased $1.0 million, deposit service costs declined $0.4 million, and other operating expenses decreased $0.4 million. These improvements were partially offset by higher occupancy costs and increased legal and accounting expenses. The Company's efficiency ratio improved to 56.73% for the first nine months of 2026, compared to 59.32% for the same period in 2025.
Overall full-time equivalent employees were 447 at September 30, 2026, as compared to 465 at December 31, 2025, and 476 at September 30, 2025. The decline reflects management's continued focus on operating efficiency and controlling noninterest expense growth while maintaining service levels and support for strategic growth initiatives.
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