SIERRA BANCORP (BSRR)·Q4 2025 Earnings Summary

Sierra Bancorp Posts Record Quarterly Earnings as Margin Expansion Drives 34% EPS Surge

February 2, 2026 · by Fintool AI Agent

Sierra Bancorp (NASDAQ: BSRR) delivered its strongest quarter in company history, reporting record Q4 2025 earnings of $12.9 million, or $0.97 per diluted share—a 34% increase from $0.72 in Q4 2024 . The California-based regional bank's stock rose approximately 5% in after-hours trading following the announcement.

Did Sierra Bancorp Beat Earnings?

Yes—decisively. Sierra Bancorp posted a significant beat driven by margin expansion and credit quality improvements:

The outperformance was driven by three key factors: (1) a $3.3 million decrease in credit loss provisions following favorable resolution of individual reserves, (2) a 5.3% increase in net interest income, and (3) continued cost discipline .

What Drove the Record Quarter?

Net Interest Margin Expansion

The standout metric was Sierra Bancorp's net interest margin expansion to 3.79%, up 14 basis points from Q4 2024 . This improvement came despite Fed rate cuts, driven by:

• 26 basis point decline in funding costs: Cost of interest-bearing liabilities fell to 2.03% from 2.29%
• Customer deposit cost optimization: Cost of average total deposits dropped to 1.14% from 1.46%
• Strategic shift away from expensive time deposits: Customer time deposits decreased $71.4 million, or 13%

Credit Quality Improvement

The provision for credit losses flipped to a $0.8 million benefit in Q4 2025, compared to a $2.3 million expense in Q4 2024 . This reversal reflected:

• $1.5 million release of specific reserves on three separate loan relationships
• Resolution of a large agricultural loan workout that had driven elevated provisions earlier in 2025
• Nonperforming loans declined to 0.52% of gross loans from 0.84% a year ago

Expense Discipline

Management's focus on expense control delivered results:

• Overall noninterest expense remained essentially flat year-over-year despite inflation
• Reduced headcount by 20 full-time employees throughout 2025
• Closed a branch in Q4 2025

How Did the Stock React?

Sierra Bancorp shares closed at $35.41 on February 2 and jumped to $36.28 in after-hours trading—a gain of approximately 5% from the prior close of $34.55.

The stock has rallied 57% from its 52-week low of $22.42 and is now approaching its 52-week high of $36.79. Year-to-date, BSRR has significantly outperformed the regional bank sector.

What Changed From Last Quarter?

The Q4 2025 results marked a stark inflection from Q3 2025, when the company earned $0.72 per share:

The primary driver was the credit loss swing. Q3 2025 included a $3.5 million specific reserve establishment for an agricultural relationship, of which $2.3 million was charged off and $1.2 million released in Q4 .

Full Year 2025 Performance

For the full year 2025, Sierra Bancorp earned $42.3 million, or $3.11 per diluted share—a 10.3% increase from $2.82 in 2024 .

The EPS growth of 10.3% outpaced the 4% net income growth due to aggressive share repurchases—the company bought back 1,024,792 shares (7.2% of shares outstanding) throughout 2025 .

Capital Allocation Highlights

Share Repurchases

Sierra Bancorp continued its aggressive capital return strategy:

• Q4 2025: Repurchased 222,039 shares at an average price of $31.52
• Full Year 2025: Bought back 1,024,792 shares (7.2% of shares outstanding as of Dec 31, 2024)
• Total shares outstanding: Declined from 14.22 million to 13.27 million

Dividend Increase

The board approved a dividend increase to $0.26 per share (from $0.25) in January 2026—the company's 108th consecutive quarterly dividend .

Book Value Growth

Tangible book value per share increased 3.1% during Q4 to $25.42, up from $23.15 a year ago (+9.8% YoY) .

Balance Sheet Changes

Loan Growth

Total loans at amortized cost grew $215.4 million, or 9%, to $2.5 billion during 2025 . Growth was driven by:

• Mortgage warehouse lines: +$191.9 million (strategic enhancement to existing program)
• Commercial real estate: +$33.1 million
• Other commercial: +$14.2 million

Partially offset by decreases in residential real estate (-$23.0 million) and farmland loans (-$9.2 million) as the bank shifted away from agricultural lending .

Deposit Trends

Total deposits declined modestly by $15.2 million to $2.88 billion . The composition shifted favorably:

• Noninterest-bearing deposits: 34.6% of total deposits (stable)
• Customer time deposits: Down $71.4 million as the bank let expensive CDs roll off
• Brokered deposits: Up $45.1 million to fund mortgage warehouse growth

Liquidity Position

The bank maintains strong liquidity with $2.0 billion in primary and secondary sources , including:

• Unpledged investment securities: $551 million
• FHLB borrowing availability: $629 million
• Unsecured lines of credit: $251 million

What Did Management Say?

CEO Kevin McPhaill struck an optimistic tone:

"I am proud to announce the strongest quarterly earnings in our history! Thanks to the dedication of our banking teams and a laser focus on expense control, we are delivering impressive results, as demonstrated by a 10 percent earnings per share growth in 2025."

On the 2026 outlook, McPhaill noted three strategic priorities:

1. Deepen lending and deposit relationships with businesses and individuals in their communities
2. Enhance processes and technology
3. Maintain overall expenses

"I am even more optimistic about our opportunities for improvement not only in 2026, but well into the future!"

Asset Quality Update

Credit quality improved significantly:

The allowance ratio declined due to the mortgage warehouse loan growth (which carries a 0.13% reserve rate given minimal historical losses) and the charge-off of a $7.5 million agricultural loan relationship .

Remaining nonaccrual assets are concentrated in two agricultural relationships totaling $13.0 million and one OREO property of $1.6 million .

Forward Catalysts

Potential tailwinds:

• Continued net interest margin expansion if funding costs keep declining
• Additional expense leverage from 2025 headcount reductions and branch closure
• Strong capital position (CBLR of 11.94%) supports ongoing share repurchases
• Mortgage warehouse business growth provides fee income diversification

Key risks:

• Agricultural loan exposure in California's Central Valley
• Deposit competition in a potentially prolonged higher-rate environment
• Regional economic sensitivity to California conditions
• Concentration in commercial real estate (55% of loan portfolio)

About Sierra Bancorp

Sierra Bancorp is the holding company for Bank of the Sierra, one of the largest independent banks headquartered in California's South San Joaquin Valley. Now in its 49th year of operations, the bank operates 34 full-service branches across Tulare, Kern, Kings, Fresno, Ventura, San Luis Obispo, and Santa Barbara counties. In 2025, Bank of the Sierra received a 5-star rating from Bauer Financial .

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View full filing: Sierra Bancorp Q4 2025 8-K

Company page: Sierra Bancorp Research