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SB

SIERRA BANCORP (BSRR)·Q1 2025 Earnings Summary

Executive Summary

  • EPS was $0.65, essentially in line with consensus $0.658; revenue missed consensus by ~$2.83M (-7.6%) as mortgage warehouse utilization fell late in the quarter, while NIM improved to 3.74% and the efficiency ratio to 60.62% . EPS estimate comparison from S&P Global: $0.658 vs actual $0.65*; revenue estimate $37.51M vs actual $34.68M*.
  • Balance sheet mix improved: reduced brokered deposits by $85.0M, increased core non-maturity deposits by $52.6M; noninterest-bearing deposits rose to 36.4% of total, uninsured deposits ~28% .
  • Capital deployment remained active: 476,770 shares repurchased at ~$29.71 and a $0.25 dividend declared; TBV/share rose 1% to $23.44 .
  • Asset quality strengthened sequentially (NPLs to 0.79% from 0.84%), with a post-quarter nonaccrual payoff of $6.5M reducing nonaccruals to $12.3M (positive near-term catalyst for credit narrative) .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded to 3.74% (from 3.65% in Q4 and 3.62% YoY) on lower liability costs and higher loan yields .
  • Efficiency ratio improved to 60.62% (vs 59.74% in Q4 and 65.97% YoY) with noninterest expense down $2.1M YoY; TBV/share increased to $23.44 (+1% QoQ) .
  • Deposit mix improved: brokered deposits -$85.0M; core non-maturity deposits +$52.6M; noninterest-bearing deposits rose to 36.4% of total, reducing funding costs .
  • Management tone: “our banking team has worked diligently to produce consistently solid results… Net interest margin and efficiency ratio also improved” — Kevin McPhaill, CEO .

What Went Wrong

  • Noninterest income declined $0.9M QoQ and $1.9M YoY, driven by unfavorable BOLI variance and lapping 2024 strategic transactions (bond sale and sale/leaseback) .
  • Provision for credit losses on loans was $1.961M (vs $2.335M in Q4 and $0.097M YoY), driven by increased specific reserves, notably a wine grape grower relationship .
  • Effective tax rate rose to 25.8% (vs 17.7% in Q4), reducing net income QoQ by $1.3M despite stable net interest income .

Financial Results

Income and EPS vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Net Interest Income ($USD Millions)$30.79 $30.35 $30.11
Noninterest Income ($USD Millions)$7.79 $7.51 $6.64
Net Income ($USD Millions)$10.60 $10.36 $9.10
Diluted EPS ($USD)$0.74 $0.72 $0.65
Return on Avg Assets (%)1.14% 1.13% 1.02%
Return on Avg Equity (%)11.95% 11.49% 10.44%

Margins and Efficiency

MetricQ3 2024Q4 2024Q1 2025
Net Interest Margin (tax-equivalent) (%)3.66% 3.65% 3.74%
Efficiency Ratio (tax-equivalent) (%)58.38% 59.74% 60.62%

Balance Sheet Mix and Liquidity

MetricQ3 2024Q4 2024Q1 2025
Total Deposits ($USD Billions)$2.962 $2.892 $2.850
Noninterest-Bearing Deposits (%)34.22% 34.83% 36.42%
Brokered Deposits ($USD Millions)$309.95 $274.95 $189.95
Primary & Secondary Liquidity ($USD Billions)$2.441 $2.327 $2.259

KPIs and Credit Quality

MetricQ3 2024Q4 2024Q1 2025
Uninsured Deposits (% of total)~28% ~28% ~28%
NPLs / Gross Loans (%)0.45% 0.84% 0.79%
ACL / Gross Loans (%)0.98% 1.07% 1.17%
TBV/Share ($)$22.93 $23.15 $23.44
Community Bank Leverage Ratio (%)11.70% 11.80% 12.11%
Weighted Avg Diluted Shares (000s)14,336 14,300 13,916

Q1 2025 Results vs S&P Global Consensus

MetricConsensusActualSurprise
Primary EPS$0.658*$0.65*-$0.008 (−1.2%)*
Revenue ($USD Millions)$37.51*$34.68*-$2.83 (−7.6%)*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal Financial GuidanceFY/Q2 2025Not provided Not provided Maintained
Dividend per ShareQ2 2025$0.24 (Q4 2024 declared) $0.25 (payable May 15, 2025) Raised
Share RepurchasesQ1 2025Ongoing authorization 476,770 shares at $29.71 Executed

Earnings Call Themes & Trends

Note: An earnings call transcript for Q1 2025 was not available in the document catalog; trends derived from company press releases for Q3 2024, Q4 2024, and Q1 2025 .

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Net Interest Margin and EfficiencyNIM ~3.66%; efficiency 58–60% with operational initiatives NIM 3.74%; efficiency 60.62% Improving
Deposit Mix and Brokered DepositsBrokered deposits increased in 2024 to fund warehouse lines; NIB ~34% Brokered deposits cut by $85M; NIB at 36.4% Improving funding mix
Mortgage Warehouse UtilizationIncreased to 54.6% (Q3); 51% (Q4) with more customers Fell to 41% on seasonality and late-quarter paydowns Lower utilization near-term
Asset QualityNPLs 0.45% (Q3) → 0.84% (Q4) NPLs 0.79%; post-Q1 payoff reduces nonaccruals further Stabilizing/improving
Tax Rate~26–27% (Q3) → 17.7% (Q4) 25.8% (timing on LIHTC amortization) Normalizing higher
Technology/OperationsNew loan origination/management software; card network shift to VISA Lower debit card processing costs; continued efficiency gains Beneficial tailwinds

Management Commentary

  • “These efforts resulted in growth of both commercial and real estate loans, as well as increases in each category of customer transaction deposits in the first quarter of 2025. Net interest margin and efficiency ratio also improved.” — Kevin McPhaill, CEO .
  • Balance sheet priorities: reduce higher-cost funding, emphasize core deposits, maintain strong liquidity ($2.26B in primary and secondary sources) .
  • Credit outlook: allowance for credit losses at 1.17% of loans, driven by specific reserves; subsequent payoff of a $6.5M nonaccrual CRE loan improves nonaccrual balances post-quarter .

Q&A Highlights

No Q1 2025 earnings call transcript was available in the catalog; therefore, Q&A highlights and any call-based guidance clarifications are not accessible for this period [Functions search returned none].

Estimates Context

  • EPS printed at $0.65 vs consensus $0.658 (−$0.008); small miss with drivers including higher effective tax rate despite improved NIM *.
  • Revenue printed at $34.68M vs consensus $37.51M (−$2.83M, −7.6%); miss reflects lower mortgage warehouse utilization and softer service charges seasonality *.
  • With deposit cost reductions and lower borrowed funds costs, estimate revisions may tilt modestly lower on revenue/fee lines while EPS sensitivity hinges on credit costs and tax rate normalization *.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Funding mix improved materially (brokered deposits −$85M; NIB deposits 36.4%), supporting continued NIM expansion should rate and mix tailwinds persist .
  • Operational efficiency remains a lever (60.62% efficiency ratio) with tangible benefits from card network conversion and cost discipline .
  • Credit costs elevated vs prior year but stabilizing QoQ; post-quarter $6.5M nonaccrual payoff is a positive data point for asset quality trajectory .
  • Mortgage warehouse visibility: utilization fell to 41% due to seasonality and late-quarter paydowns; management notes an increasing customer pipeline (watch utilization recovery into Q2/Q3) .
  • Capital return continues: repurchases (476,770 shares) and $0.25 dividend; TBV/share up to $23.44; leverage ratio 12.11% provides flexibility .
  • Near-term trading: narrative likely driven by NIM trajectory and asset quality updates; absence of call transcript reduces color, but post-quarter credit payoff and deposit mix improvement are supportive .
  • Medium-term thesis: balance sheet optimization, core deposit growth, and selective loan growth (CRE/commercial) underpin ROA/ROE durability; monitor BOLI/deferred comp volatility impacting noninterest lines and effective tax rate .