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SIERRA BANCORP (BSRR)·Q2 2025 Earnings Summary

Executive Summary

  • EPS of $0.78 beat Wall Street consensus $0.738 by ~6% on stronger noninterest income and lower credit provisioning; revenue of $38.01M slightly missed consensus $38.52M as net interest margin compressed sequentially from Q1 * [functions.GetEstimates]*.
  • Linked quarter earnings rose 17% driven by +$0.5M net interest income, -$0.9M provision for credit losses, and +$1.9M noninterest income; efficiency ratio improved to 59.43% .
  • Loans grew $127.9M in Q2 (+22% annualized), with mortgage warehouse utilization up $118.7M; non-brokered deposits rose $24.6M and noninterest-bearing deposits reached 35.8% of total .
  • Credit costs were elevated on a previously reserved agricultural production loan, producing $6.58M quarterly net charge-offs and reducing ACL coverage to 0.89% of loans; NPL ratio improved to 0.62% as balances declined .
  • Capital and liquidity remain solid: TBV/share $23.98, community bank leverage ratio 11.75%, $2.31B available liquidity; dividend of $0.25 declared and 135,641 shares repurchased in Q2 .

What Went Well and What Went Wrong

What Went Well

  • Strong organic and warehouse-driven loan growth: +$127.9M in Q2; mortgage warehouse utilization +$118.7M, with broader loan production momentum (+$114.5M YTD new credit extended) .
  • Deposit mix improvement: noninterest-bearing deposits increased to $1.066B (35.8% of total), supporting lower funding costs; core non-maturity deposits +$86.8M YTD .
  • Management execution and tone: “strong loan and deposit growth” with community-centric focus and disciplined operations (“we will remain diligent, committed, and conscientious”) .

What Went Wrong

  • Sequential NIM compression: 3.68% vs 3.74% in Q1, as asset yields fell and liability costs rose modestly; CLO resets after late-2024 prime rate decline pressured investment yields .
  • Elevated credit costs: $6.58M quarterly net charge-offs and higher loan loss provision linked to a specifically reserved agricultural production loan; ACL ratio fell to 0.89% .
  • Noninterest expense increased 6% linked quarter (Q2 vs Q1), partly from deferred compensation and higher salary/benefit costs; deferred comp volatility tied to BOLI offset in noninterest income .

Financial Results

MetricQ2 2024 (oldest)Q1 2025Q2 2025 (newest)
Revenue ($USD Millions)$36.90*$34.68*$38.01*
Revenue Consensus Mean ($USD Millions)$37.18*$37.51*$38.52*
Diluted EPS ($)$0.71 $0.65 $0.78
EPS Consensus Mean ($)$0.604*$0.658*$0.738*
Net Interest Income ($USD Millions)$30.17 $30.11 $30.65
Total Noninterest Income ($USD Millions)$7.63 $6.64 $8.55
Net Interest Margin (%)3.69% 3.74% 3.68%
Efficiency Ratio (%)59.15% 60.62% 59.43%
Return on Avg Assets (%)1.14% 1.02% 1.16%
Return on Avg Equity (%)11.95% 10.44% 12.08%

Values with asterisks retrieved from S&P Global.

Balance Sheet and Credit KPIsQ2 2024 (oldest)Q1 2025Q2 2025 (newest)
Total Assets ($USD Billions)$3.681 $3.606 $3.770
Loans, net ($USD Billions)$2.235 $2.307 $2.435
Total Deposits ($USD Billions)$2.942 $2.850 $2.974
Noninterest-bearing Deposits ($USD Billions)$0.987 $1.038 $1.066
NIB Deposits / Total Deposits (%)33.5% 36.4% 35.8%
Mortgage Warehouse Lines ($USD Millions, EOP)$274.1 $283.2 $401.9
Uninsured Deposits (% of total)~28% (YE 2024) ~28% (Q1) ~26% (Q2)
ACL / Loans (%)0.97% 1.17% 0.89%
NPLs / Gross Loans (%)0.29% 0.79% 0.62%
Quarterly Net Charge-offs ($USD Millions)$2.421 $(0.259) $6.580
Tangible Book Value per Share ($)$22.24 $23.44 $23.98

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per ShareQ2 2025 payout$0.25 (Q1 declared) $0.25 (paid Aug 14, 2025) Maintained
Capital Return (Buybacks)Q2 2025N/A135,641 shares repurchased in Q2 Informational
Liquidity CapacityQ2 2025$2.33B (YE 2024) $2.31B (Q2) Maintained
Formal Revenue/Margin GuidanceFY/QuarterNot providedNot providedN/A

No formal quantitative revenue/earnings/margin guidance was issued in the Q2 materials; management reiterated balance sheet growth and liquidity/capital discipline .

Earnings Call Themes & Trends

Earnings call transcript for Q2 2025 was not available; themes below reflect management commentary in press releases and 8‑K exhibits.

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Deposit mix and cost of fundsShift toward brokered to fund warehouse; deposit costs down vs 2023 Reduced brokered by $85M; NIB rose to 36.4% NIB at 35.8%; cost of total deposits 1.30% Improving mix; benign funding costs
Mortgage warehouse growth181% YoY increase in outstandings; customer base +60% Seasonal decline late Q1; pipeline increasing Utilization +$118.7M; lines at $401.9M Re-accelerating
Net interest margin (NIM)3.65% in Q4; benefited from lower borrowings 3.74% in Q1; lower liability costs 3.68% in Q2; CLO resets pressured yields Slight sequential compression
Credit qualityNPLs up due to ag loan; ACL 1.07% ACL 1.17% with specific reserve NPLs down to 0.62%; net charge-offs $6.58M; ACL 0.89% Cleanup of reserved loan; lower ACL ratio
Noninterest income/expense volatilityPrior-year sale/leaseback and securities losses BOLI-linked swings; lower service charges seasonally BOLI/deferred comp offset; service charges improved Volatility persists but offsetting

Management Commentary

  • “The Bank’s second quarter results reflect our team’s efforts with strong loan and deposit growth. We are proud of our bankers, and we will remain diligent, committed, and conscientious as we work to make each of our communities stronger.” — Kevin McPhaill, President/CEO .
  • Emphasis on balance sheet strength: TBV/share up 2% QoQ to $23.98; community bank leverage ratio 11.75%; liquidity sources ~$2.31B .
  • Rate environment headwind: CLO resets following late‑2024 prime rate declines pressured investment yields; NIM impacted despite lower liability costs .

Q&A Highlights

  • Earnings call transcript for Q2 2025 was not available. No Q&A themes or clarifications could be sourced from transcripts; commentary is derived from press releases and 8‑K exhibits [functions.ListDocuments].

Estimates Context

  • EPS: Actual $0.78 vs consensus $0.738 — bold beat; five estimates. Revenue: Actual $38.01M vs consensus $38.52M — slight miss; four estimates [functions.GetEstimates]*.
  • Prior periods: Q1 2025 actual EPS $0.65 vs consensus $0.658; revenue $34.68M vs $37.51M consensus; Q2 2024 EPS $0.71 vs $0.604 consensus; revenue $36.90M vs $37.18M consensus [functions.GetEstimates]*.
  • Implication: EPS outperformance despite NIM compression suggests stronger fee/BOLI contributions and lower provisions; revenue softness vs consensus likely reflects asset yield headwinds from CLO resets .

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Sierra delivered an EPS beat and linked-quarter earnings acceleration despite modest NIM compression, driven by positive fee/BOLI variance and lower provisioning — supportive near-term sentiment. [functions.GetEstimates]*.
  • Mortgage warehouse is a key growth engine; utilization and commitments ramped, but introduces rate/volume cyclicality—monitor utilization and funding mix each quarter. .
  • Credit clean-up on a specifically reserved ag exposure drove high net charge-offs and lower ACL ratio; with NPLs down, watch ACL adequacy vs loan mix and warehouse growth. .
  • Deposit mix improved with higher NIB, supporting funding costs; uninsured deposits ~26% with IntraFi solutions available—liquidity and depositor confidence remain favorable. .
  • Capital return ongoing: $0.25 dividend and buybacks; TBV/share advancing—provides downside support to valuation. .
  • Near term: Stock could react to the EPS beat and loan growth; watch subsequent quarters for NIM trajectory (CLO resets) and expense volatility from BOLI/deferred comp. .
  • Medium term: Thesis hinges on sustained warehouse/customary loan growth with disciplined funding and credit costs; liquidity/capital levels provide flexibility for growth and shareholder returns. .