Sierra Bancorp (BSRR) 8-K Sierra Bancorp Announces Record Quarterly and Year to Date Earnings

Exhibit 99.1

FOR IMMEDIATE RELEASE

Date:	July 19, 2021
Contact:	Kevin McPhaill, President/CEO
Phone:	(559) 782-4900 or (888) 454-BANK
Website Address:	www.sierrabancorp.com

SIERRA BANCORP ANNOUNCES RECORD QUARTERLY AND YEAR TO DATE EARNINGS

● Record net income of $11.7 million and $22.8 million for the three and six months ended 6/30/2021, respectively, compared to $8.3 million and $16.1 million for the three and six months ended 6/30/2020.

● Return on average assets improved to 1.42% for the second quarter of 2021, as compared to 1.19% for the same quarter in 2020, and 1.40% for the prior linked quarter.

● Return on average equity increased to 13.29% for the second quarter of 2021, as compared to 10.30% for the same quarter of 2020 and 12.94% for the prior linked quarter.

● Core non-maturity deposits increased by $52.5 million, or 2.2%, during the second quarter of 2021 and have increased by $283.4 million, or 13.4%, during the first six months of 2021

Porterville, CA – July 19, 2021 – Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the three-and six-month periods ended June 30, 2021. Sierra Bancorp reported consolidated net income of $11.7 million, or $0.76 per diluted share, for the second quarter of 2021, compared to $8.3 million, or $0.54 per diluted share, in the second quarter of 2020.

For the first six months of 2021, the Company recognized net income of $22.8 million as compared to $16.1 million for the same period in 2020. The Company's financial performance metrics for the first half of 2021 include an annualized return on average equity of 13.11%, a return on average assets of 1.41%, and diluted earnings per share of $1.48.

“We are pleased to report another quarter of record earnings!”, stated Kevin McPhaill, President and CEO. “Our strong results in the second quarter of 2021 are thanks to the continued hard work and persistence of our banking team. While we anticipate headwinds during the second half of this year due to historically low interest rates and competitive pressures, our core earnings engine remains strong, and our team is committed to meeting these challenges. We will continue to look for additional opportunities and we are excited about the future of Bank of the Sierra!,” McPhaill concluded.

Financial Highlights

Quarterly Changes (comparisons to the second quarter of 2020)

● The change in quarterly net income was primarily due to a $2.1 million negative provision for loan and lease losses. This significant decrease is attributable to the impact of continued improvements in the overall economy, lower historical loss rates, net recoveries during the past two quarters, and a $272.7 million decrease in average balances of net loans and leases.

● Net interest income increased $3.0 million, or 13%, due primarily to increases in average loan balances and a lower cost of funds.

Year to-Date Changes (comparisons to the first six-months of 2020)

● Net income increased by $6.7 million due mostly to a $1.9 million negative provision for loan and lease losses, attributed to the same reasons as noted above in the quarterly comparison.

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● Net interest income increased by $7.8 million, or 16%, as declines in loan yields were offset by higher balances and lower interest expense.

● The above year-to-date increases were partially offset by an increase in noninterest expense of $4.7 million, or 13%, due mostly to a $2.1 million increase in salaries and benefits, $1.4 million in professional services, and $0.8 million in data processing expense.

Balance Sheet Changes (comparisons to December 31, 2020)

● Total assets increased to $3.3 billion, representing an increase of $51.3 million, or 2%, during the first half of the year.

● Cash and due from banks increased 424% to $373.9 million during the first six months of the year due mostly to higher deposit balances coupled with lower loan balances.

● Gross loans declined $318.3 million due predominantly to a $157.3 million decline in mortgage warehouse line utilization, a $100 million decline in real estate loans mostly due to lower commercial real estate balances, and a $58.4 million decrease in commercial and industrial loans, which was mostly PPP loan forgiveness.

● Deposits totaled $2.8 billion at June 30, 2021, representing a year-to-date increase of $151.3 million, or 6%. The growth in deposits came primarily from core transaction and savings accounts, while higher-cost time deposits decreased.

Other financial highlights are reflected in the following table.

FINANCIAL HIGHLIGHTS
(Dollars in Thousands, Except Per Share Data, Unaudited)
		As of or for the						As of or for the
		three months ended						six months ended
		6/30/2021		3/31/2021		6/30/2020		6/30/2021		6/30/2020
Net income	$	11,708	$	11,078	$	8,303	$	22,786	$	16,110
Diluted earnings per share	$	0.76	$	0.72	$	0.54	$	1.48	$	1.05
Return on average assets		1.42%		1.40%		1.19%		1.41%		1.21%
Return on average equity		13.29%		12.94%		10.30%		13.11%		10.14%
Net interest margin (tax-equivalent)		3.60%		3.93%		3.81%		3.76%		3.97%
Yield on average loans and leases		4.57%		4.53%		4.56%		4.55%		4.86%
Cost of average total deposits		0.09%		0.09%		0.15%		0.09%		0.24%
Efficiency ratio (tax-equivalent)¹		58.79%		56.43%		57.78%		57.57%		58.33%
Total assets	$	3,272,048	$	3,326,037	$	3,110,044	$	3,272,048	$	3,110,044
Loans & leases net of deferred fees	$	2,140,961	$	2,284,751	$	2,209,480	$	2,140,961	$	2,209,480
Noninterest demand deposits	$	1,073,833	$	1,020,350	$	949,662	$	1,073,833	$	949,662
Total deposits	$	2,775,914	$	2,853,892	$	2,506,754	$	2,775,914	$	2,506,754
Noninterest-bearing deposits over total deposits		38.7%		35.8%		37.9%		38.7%		37.9%
Shareholders equity / total assets		10.9%		10.5%		10.5%		10.9%		10.5%
Tangible common equity ratio		10.1%		9.6%		9.6%		10.1%		9.6%
Book value per share	$	23.21	$	22.58	$	21.55	$	23.21	$	21.55
Tangible book value per share	$	21.19	$	20.54	$	19.43	$	21.19	$	19.43

⁽¹⁾ Noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income was $27.2 million, for the second quarter of 2021, a $3.0 million increase, or 13% over the second quarter of 2020, and increased $7.8 million, or 16% to $55.7 million for the first six months of 2021 relative to the same period in 2020.

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For the second quarter of 2021, growth in average interest-earning assets totaled $491.8 million, or 19%, as compared to the second quarter of 2020. The yield on these balances was 29 basis points lower for the same period due mostly to a shift in the mix of earning assets to lower yielding assets and a decline in investment yields. This decrease in yield was partially offset by an 11 basis point drop in the cost of our interest-bearing liabilities for the same period.

Net interest income for the comparative year-to-date periods increased due to a $565.0 million, or 23% growth in average interest-earning assets. The yield on these average balances was 37 basis points lower for the same period, but was partially offset by a 25 basis point drop in interest paid on liabilities. The net impact of this lower rate was a 21 basis point decrease in our net interest margin for the six-months ending June 30, 2021 as compared to the same period in 2020.

Loan income during the second quarter 2021 included $1.0 million related to fee income, net of origination costs, recognized on Small Business Administration Paycheck Protection Program (“SBA PPP”) loans. Similarly, SBA PPP loan fees, net of origination costs of $2.4 million were recognized for the six months ended June 30, 2021. At June 30, 2021, approximately $2.4 million of unearned fees, net of origination costs related to SBA PPP loans remains on the balance sheet.

Interest expense was $0.9 million for the second quarter of 2021, a decline of $0.3 million, or 27%, relative to the second quarter of 2020. For the first six months of 2021, compared to the first six months of 2020, interest expense declined $1.7 million, or 49%, to $1.8 million. The significant decline in interest expense is attributable to a favorable shift in deposit mix as higher cost time deposits declined by $62.7 million or 14% in the second quarter of 2021 as compared to the second quarter of 2020, and fell by $132.1 million or 26% compared to the fourth quarter of 2020, while lower or no cost transaction and savings accounts increased $323.3 million or 17% for the second quarter of 2021 compared to the same period in 2020 and increased by $280.6 million or 14% over the fourth quarter of 2020.

Our net interest margin was primarily impacted by the additional liquidity from significant deposit growth in 2021 coupled with lower loan balances. This additional liquidity was mostly deployed in overnight funding at an average rate of 11 basis points for the second quarter and six-months ending June 30, 2021. Discount accretion on loans from whole-bank acquisitions enhanced our net interest margin by two basis points in the second quarter of 2021 compared to one basis point in the second quarter of 2020, and by two basis points for the first half of 2021 and for the same period in 2020. On June 30, 2021, the remaining balance of loan discount available to be accreted was $2.8 million. In addition, investment yields have continued to decline given the overall rate environment in 2021. The overall impact of a lower net interest margin was more than offset by higher earning assets in 2021 as compared to 2020.

Provision for Loan and Lease Losses

The Company recorded a net benefit related to loan and lease loss provision of $2.1 million in the second quarter of 2021 relative to a loan and lease loss provision expense of $2.2 million in the second quarter of 2020, and a year-to-date net benefit for loan and lease loss provision of $1.9 million in 2021 as compared to $4.0 million loan and lease loss provision expense for the same period in 2020. The Company's $4.3 million, or 195%, favorable decline in provision for loan and lease losses in the second quarter of 2021 as compared to the second quarter of 2020, and the $5.9 million favorable decrease, or 146% in the first six months of 2021 compared to the same period in 2020 is due mostly to lower historical loan loss rates, lower average balances on loans, net recoveries of previously charged-off loan balances, and changes to qualitative factors. Management adjusted its qualitative risk factors under our current incurred loss model for improved economic conditions, improvements in the severity and volume of past due loans, enhancements in the quality of the Company’s loan review system, and a reduction in the level of concentrations of credit in non-owner occupied real estate loans.

The Company was subject to the adoption in the first quarter of 2020 of the Current Expected Credit Loss ("CECL") accounting method under Financial Accounting Standards Board (FASB) Accounting Standards Update 2016-03 and related amendments, Financial Instruments – Credit Losses (Topic 326). Prior to the close of the first quarter of 2020, the Company elected under Section 4014 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to defer the implementation of CECL until the earlier of when the national emergency related to the outbreak of COVID-19 ends

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or December 31, 2020. Later in 2020, the Consolidated Appropriations Act, 2021 extended the deferral of implementation of CECL to the earlier of the first day of the fiscal year, beginning after the national emergency terminates or January 1, 2022. The Company’s decision to defer the adoption of CECL was done primarily to provide additional time to assess better the impact of the COVID-19 pandemic on the expected lifetime credit losses. At the time the decision was made, there was a significant change in economic uncertainty on the local, regional, and national levels as a result of local and state stay-at-home orders, as well as relief measures provided at a national, state, and local level. Further, the Company has taken actions to serve our communities during the pandemic, including permitting short-term payment deferrals to current customers, as well as originating bridge loans and SBA PPP loans.

Noninterest Income

Total noninterest income decreased by $0.3 million, or 4%, for the quarter ended June 30, 2021 as compared to the same quarter in 2020 and increased $0.4 million, or 3% for the comparable year-to-date periods. The quarterly and year-to-date comparison includes a $0.7 million non-recurring gain resulting from the wrap-up of a low-income housing tax credit fund investment and a $0.4 million gain from the sale of debt securities which occurred in the second quarter of 2020. The year-to-date comparison also reflects a $0.7 million favorable swing in bank-owned life insurance (BOLI) income, resulting from fluctuations in income on BOLI associated with deferred compensation plans and a $0.4 million favorable increase in the valuation of equity securities.

Service charges on customer deposit account income increased by $0.1 million, or 4%, to $2.7 million in the second quarter of 2021 as compared to the second quarter of 2020. This service charge income was $0.3 million lower, or 5% in the first six months of 2021, as compared to the same period in 2020. These declines in the year-to-date comparison are primarily a result of a net decline in overdraft income partially offset by higher interchange income on debit cards.

Noninterest Expense

Total noninterest expense increased by $2.2 million, or 12%, in the second quarter of 2021 relative to the second quarter of 2020, and by $4.7 million, or 13%, in the first six months of 2021 as compared to the first six months of 2020.

Salaries and Benefits were $1.2 million, or 13%, higher in the second quarter of 2021 as compared to the second quarter of 2020 and $2.1 million, or 11% higher for the first six months of 2021 compared to the same period in 2020. The reason for this increase is primarily due to lower salary expense deferrals related to the decrease in loan originations for both the quarterly and year-to-date comparisons.

Occupancy expenses were $0.1 million higher for the second quarter of 2021 as compared to the same quarter in 2020 and $0.3 million higher for the first half of 2021 as compared to the first half of 2020. The primary reason for this increase was an acceleration of leasehold improvement amortization for two leased branch facilities that were closed during the second quarter. See the discussion of branch closures below.

Other noninterest expense increased $0.9 million, or 15% for the second quarter 2021 as compared to the second quarter in 2020, and increased $2.2 million, or 19% for the first half of 2021 as compared to the same period in 2020. The variance for second quarter of 2021 compared to the same period in 2020 was driven an increase of $0.5 million or 45% in data processing costs, due mostly to increases in core processor costs, price increases in loan processing software and additional software to compliment the Company’s digital strategy. We also experienced a $0.2 million increase in data communication costs, a $0.3 million increase in legal costs and a $0.3 million increase in other professional services costs. Other professional services variances include a $0.1 million increase in FDIC assessments, and a $0.1 million increase in deferred compensation expense for directors, which is linked to the changes in BOLI income. For the year-over-year comparison the categories of increase were the same as with the quarterly comparison, along with a $0.4 million increase in check-card processing costs.

The Company's provision for income taxes was 25.3% of pre-tax income in the second quarter of 2021 relative to 23.2% in the second quarter of 2020, and 25.4% of pre-tax income for the first half of 2021 relative to 23.6% for the same

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period in 2020. The increase in effective tax rate in the second quarter of 2021 is due to tax credits and tax-exempt income representing a smaller percentage of total taxable income.

As a result of the COVID-19 pandemic, several of our branch lobbies were fully or partially closed throughout the pandemic. All of these branch lobbies have reopened, except for five locations that the Company decided to permanently close in June 2021. This decision to close these branches was made as a result of a change in customer behaviors brought about by the COVID-19 pandemic along with an efficiency review. All of the five closed locations were located outside of the Bank’s primary market area. Customers affected by these branch closures were notified. Many of our customers have found an added convenience and ease of transacting business through online and mobile banking services which precipitated our decision to close locations where in-person transaction volumes no longer warranted a traditional brick-and-mortar branch. The acceleration of amortization of leasehold improvements for these locations increased depreciation expense by $0.4 million in the second quarter of 2021 and by $0.5 million year-to-date 2021. Most of the staff at these five locations were re-located to existing branches with position vacancies however, four individuals elected to leave the Company. It is projected that closing these five branch locations will result in annual noninterest expense savings of between $0.8 and $1.0 million.

Balance Sheet Summary

Balance sheet changes during the first half of 2021 include an increase in total assets of $51.3 million, or 2%, primarily a result of a $302.5 million increase in cash and due from banks, and an increase of $63.5 million or 12% in investment securities, net of a $317.7 million decrease in net loan balances.

The decrease in gross loan balances as compared to December 31, 2020 was primarily a result of a $157.3 million decline in mortgage warehouse line utilization. In addition, there was a net decrease of $100.0 million in real estate secured loans, primarily from construction and other commercial real estate loans as the Company strategically lowered its regulatory commercial real estate concentration ratio from 378% at December 31, 2020 to 335% at June 30, 2021. Further, SBA PPP loan forgiveness resulted in a $49.0 million decline in loan balances. The loan pipeline at June 30, 2021 continues to improve as compared to the past two quarters.

Unused commitments, excluding mortgage warehouse and consumer overdraft lines, were $224.8 million at June 30, 2021, compared to $260.0 million at December 31, 2020. Total line utilization, excluding mortgage warehouse and consumer overdraft lines, was 56% at June 30, 2021 and 57% at December 31, 2020. Mortgage warehouse utilization declined significantly to 43% at June 30, 2021, as compared to 71% at December 31, 2020.

The Company participated in the SBA PPP as authorized by the CARES Act. We began accepting and funding loans under this program in April 2020. There were 943 loans for $68.0 million outstanding at June 30, 2021, compared to 1,274 loans for $117.2 million at December 31, 2020. During the second quarter of 2021, the Bank originated, and the SBA approved, funding for $16.1 million in SBA PPP loans while the SBA forgave $45.5 million of SBAPPP loans.

Deposit balances reflect growth of $151.3 million, or 6%, during the first six months of 2021. Core non-maturity deposits increased by $283.4 million, or 13%, while customer time deposits decreased by $117.1 million, or 28%. Wholesale brokered deposits decreased by $15.0 million to $85.0 million. Overall noninterest-bearing deposits as a percent of total deposits at June 30, 2021, increased to 38.7%, as compared to 36.0% at December 31, 2020. Other interest-bearing liabilities of $70.5 million on June 30, 2021 consists exclusively of customer repurchase agreements. Other interest-bearing liabilities at December 31, 2020 of $182.0 million consisted of $100.0 million of fed funds purchased, $39.1 million of customer repurchase agreements, $37.9 million of FHLB overnight borrowings and $5.0 million of FHLB short term borrowings

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The Company continues to have substantial liquidity. At June 30, 2021, and December 31, 2020, the Company had the following sources of primary and secondary liquidity (Dollars in Thousands):

Primary and secondary liquidity sources		June 30, 2021		December 31, 2020
Cash and cash equivalents	$	373,902	$	71,417
Unpledged investment securities		482,039		311,983
Excess pledged securities		44,262		52,892
FHLB borrowing availability		662,641		535,404
Unsecured lines of credit		305,000		230,000
Funds available through fed discount window		62,897		58,127
Totals	$	1,930,741	$	1,259,823

Total capital of $357.7 million at June 30, 2021 reflects an increase of $13.8 million, or 4%, relative to year-end 2020. The increase in equity during the first half of 2021 was due to the addition of $22.8 million in net income, offset by a $3.0 million unfavorable swing in accumulated other comprehensive income/loss, and net of $6.5 million in dividends paid. The remaining difference is related to stock options exercised during the quarter. The Company executed no share repurchases during the first half of 2021.

Asset Quality

Total nonperforming assets, comprised of nonaccrual loans and foreclosed assets, decreased by $0.5 million to $8.1 million for the first half of 2021. The Company's ratio of nonperforming loans to gross loans increased to 0.34% at June 30, 2021 from 0.31% at December 31, 2020; this was due to a decrease in the gross loan and lease portfolio, since nonperforming loans decreased $0.3 million during the same period. All of the Company's impaired assets are periodically reviewed and are either well-reserved based on current loss expectations or are carried at the fair value of the underlying collateral, net of expected disposition costs.

The Company's allowance for loan and lease losses was $16.4 million at June 30, 2021, as compared to a balance of $17.7 million at December 31, 2020 and $13.6 million at June 30, 2020. The allowance was 0.77% of total loans at June 30, 2021, and 0.72% at December 31, 2020 and 0.61% at June 30, 2020.

The $1.3 million decrease in the allowance for loan and lease losses during the first half of the year resulted from the $1.9 million benefit associated with loan and lease loss provision combined with net loan recoveries of previously charged off loan balances for $0.5 million. For further information regarding the Company's decision to defer the implementation of CECL under Section 4014 of the CARES Act, as well as further detail on the decrease in loan and lease loss provision during the second quarter and first half of 2021, please see the discussion above under Provision for Loan and Lease Losses.

Management's detailed analysis indicates that the Company's allowance for loan and lease losses should be sufficient to cover credit losses inherent in loan and lease balances outstanding as of June 30, 2021, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the loan and lease loss allowance.

The Company provided loan modification deferrals to customers under Section 4013 of the CARES Act, which are not treated as troubled debt restructured loans. As of June 30, 2021, we had three remaining loans for two customer relationships totaling $10.4 million. All of these loans are fully secured by real estate collateral. We expect all customers to show an ability and willingness to pay full principal and interest payments upon maturity of their deferment periods.

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About Sierra Bancorp

Sierra Bancorp is the holding company for Bank of the Sierra (www.bankofthesierra.com), which is in its 44^th year of operations and is the largest independent bank headquartered in the South San Joaquin Valley. Bank of the Sierra is a community-centric regional bank, which offers a broad range of retail and commercial banking services through full-service branches located within the counties of Tulare, Kern, Kings, Fresno, Ventura, San Luis Obispo and Santa Barbara. The Bank also maintains an online branch and provides specialized lending services through an agricultural credit center, an SBA center and a dedicated loan production office in Roseville, California. In 2021, Bank of the Sierra was recognized as one of the strongest and top-performing community banks in the country, with a 5-star rating from Bauer Financial.

Forward-Looking Statements

The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future de­velopments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties including but not limited to the health of the national and local economies, the Company's ability to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully de­ploy new technology, the success of acquisitions and branch expansion, changes in interest rates, loan portfolio performance, and other factors detailed in the Company's SEC filings, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Form 10-K and Form 10-Q.

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STATEMENT OF CONDITION
(Dollars in Thousands, Unaudited)
ASSETS		6/30/2021		3/31/2021		12/31/2020		9/30/2020		6/30/2020
Cash and due from banks	$	373,902	$	346,211	$	71,417	$	88,933	$	156,611
Investment securities		607,474		552,931		543,974		577,278		599,333
Real estate loans
1-4 family residential construction		37,165		36,818		48,565		75,532		89,225
Other construction/land		27,682		50,433		71,980		83,797		90,545
1-4 family - closed-end		106,599		126,949		139,836		162,022		178,071
Equity lines		33,334		36,276		38,075		38,620		44,318
Multi-family residential		58,230		58,324		61,865		61,740		55,921
Commercial real estate - owner occupied		359,021		359,777		343,199		328,832		313,863
Commercial real estate - non-owner occupied		1,048,153		1,071,532		1,062,498		945,374		691,292
Farmland		125,783		126,157		129,905		127,964		134,454
Total real estate loans		1,795,967		1,866,266		1,895,923		1,823,881		1,597,689
Agricultural production loans		42,952		45,476		44,872		45,782		48,516
Commercial and industrial		150,632		183,762		209,048		217,224		221,502
Mortgage warehouse lines		150,351		187,940		307,679		287,516		338,124
Consumer loans		4,894		5,024		5,589		5,897		6,266
Gross loans and leases		2,144,796		2,288,468		2,463,111		2,380,300		2,212,097
Deferred loan and lease fees		(3,835)		(3,717)		(3,147)		(3,078)		(2,617)
Allowance for loan and lease losses		(16,421)		(18,319)		(17,738)		(15,586)		(13,560)
Net loans and leases		2,124,540		2,266,432		2,442,226		2,361,636		2,195,920
Bank premises and equipment		25,949		26,795		27,505		27,216		27,779
Other assets		140,183		133,668		135,620		144,555		130,401
Total assets	$	3,272,048	$	3,326,037	$	3,220,742	$	3,199,618	$	3,110,044
LIABILITIES AND CAPITAL
Noninterest demand deposits	$	1,073,833	$	1,020,350	$	943,664	$	975,750	$	949,662
Interest-bearing transaction accounts		752,137		770,271		668,346		656,922		641,815
Savings deposits		435,076		415,230		368,420		361,857		346,262
Money market deposits		133,977		136,653		131,232		126,918		125,420
Customer time deposits		295,891		411,388		412,944		420,266		433,595
Wholesale brokered deposits		85,000		100,000		100,000		50,000		10,000
Total deposits		2,775,914		2,853,892		2,624,606		2,591,713		2,506,754
Junior subordinated debentures		35,213		35,169		35,124		35,079		35,035
Other interest-bearing liabilities		70,535		56,527		182,038		194,657		204,449
Total deposits and interest-bearing liabilities		2,881,662		2,945,588		2,841,768		2,821,449		2,746,238
Other liabilities		32,657		32,468		35,078		41,922		36,373
Total capital		357,729		347,981		343,896		336,247		327,433
Total liabilities and capital	$	3,272,048	$	3,326,037	$	3,220,742	$	3,199,618	$	3,110,044

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GOODWILL AND INTANGIBLE ASSETS
(Dollars in Thousands, Unaudited)
		6/30/2021		3/31/2021		12/31/2020		9/30/2020		6/30/2020
Goodwill	$	27,357	$	27,357	$	27,357	$	27,357	$	27,357
Core deposit intangible		3,780		4,038		4,307		4,575		4,844
Total intangible assets	$	31,137	$	31,395	$	31,664	$	31,932	$	32,201
CREDIT QUALITY
(Dollars in Thousands, Unaudited)
		6/30/2021		3/31/2021		12/31/2020		9/30/2020		6/30/2020
Non-accruing loans	$	7,276	$	8,599	$	7,598	$	7,186	$	5,808
Foreclosed assets		774		945		971		2,970		2,893
Total nonperforming assets	$	8,050	$	9,544	$	8,569	$	10,156	$	8,701
Performing TDR's (not included in NPA's)	$	10,774	$	10,596	$	11,382	$	7,708	$	9,192
Net (recoveries) / charge offs	$	(533)	$	(331)	$	735	$	687	$	363
Past due & still accruing (30-89)	$	3,197	$	2,991	$	1,656	$	7,201	$	2,333
Loans deferred under CARES Act	$	10,411	$	22,437	$	29,500	$	405,858	$	386,243
Non-performing loans to gross loans		0.34%		0.38%		0.31%		0.30%		0.26%
NPA's to loans plus foreclosed assets		0.38%		0.42%		0.35%		0.43%		0.39%
Allowance for loan and lease losses to loans		0.77%		0.80%		0.72%		0.65%		0.61%
SELECT PERIOD-END STATISTICS
(Unaudited)
		6/30/2021		3/31/2021		12/31/2020		9/30/2020		6/30/2020
Shareholders equity / total assets		10.9%		10.5%		10.7%		10.5%		10.5%
Gross loans / deposits		77.3%		80.2%		93.8%		91.8%		88.2%
Non-interest bearing deposits / total deposits		38.7%		35.8%		36.0%		37.6%		37.9%

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July 19, 2021

Page 10

CONSOLIDATED INCOME STATEMENT
(Dollars in Thousands, Unaudited)		For the three months ended:						For the six months ended:
		6/30/2021		3/31/2021		6/30/2020		6/30/2021		6/30/2020
Interest income	$	28,092	$	29,458	$	25,385	$	57,550	$	51,437
Interest expense		903		903		1,243		1,806		3,508
Net interest income		27,189		28,555		24,142		55,744		47,929
(Benefit) / provision for loan and lease losses		(2,100)		250		2,200		(1,850)		4,000
Net interest income after provision		29,289		28,305		21,942		57,594		43,929
Service charges		2,725		2,767		2,618		5,491		5,802
BOLI income		814		583		649		1,397		687
Other noninterest income		3,073		3,480		3,243		6,554		6,128
Total noninterest income		6,612		6,830		6,900		13,442		13,007
Salaries and benefits		10,425		11,151		9,266		21,576		19,438
Occupancy expense		2,626		2,486		2,504		5,112		4,832
Other noninterest expenses		7,184		6,634		6,263		13,818		11,581
Total noninterest expense		20,235		20,271		18,033		40,506		35,851
Income before taxes		15,666		14,864		10,809		30,530		21,085
Provision for income taxes		3,958		3,786		2,506		7,744		4,975
Net income	$	11,708	$	11,078	$	8,303	$	22,786	$	16,110
TAX DATA
Tax-exempt muni income	$	1,517	$	1,449	$	1,440	$	2,967	$	2,778
Interest income - fully tax equivalent	$	28,495	$	29,843	$	25,768	$	58,339	$	52,175

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July 19, 2021

Page 11

PER SHARE DATA
(Unaudited)		For the three months ended:						For the six months ended:
		6/30/2021		3/31/2021		6/30/2020		6/30/2021		6/30/2020
Basic earnings per share	$	0.77	$	0.73	$	0.55	$	1.49	$	1.06
Diluted earnings per share	$	0.76	$	0.72	$	0.54	$	1.48	$	1.05
Common dividends	$	0.21	$	0.21	$	0.20	$	0.42	$	0.40
Weighted average shares outstanding		15,243,698		15,223,010		15,191,823		15,242,451		15,226,748
Weighted average diluted shares		15,375,825		15,337,710		15,237,655		15,365,966		15,288,009
Book value per basic share (EOP)	$	23.21	$	22.58	$	21.55	$	23.21	$	21.55
Tangible book value per share (EOP)	$	21.19	$	20.54	$	19.43	$	21.19	$	19.43
Common shares outstanding (EOP)		15,410,763		15,410,763		15,192,838		15,410,763		15,192,838
KEY FINANCIAL RATIOS
(Unaudited)		For the three months ended:						For the six months ended:
		6/30/2021		3/31/2021		6/30/2020		6/30/2021		6/30/2020
Return on average equity		13.29%		12.94%		10.30%		13.11%		10.14%
Return on average assets		1.42%		1.40%		1.19%		1.41%		1.21%
Net interest margin (tax-equivalent)		3.60%		3.93%		3.81%		3.76%		3.97%
Efficiency ratio (tax-equivalent)¹		58.79%		56.43%		57.78%		57.57%		58.33%
Net (recoveries) charge offs to avg loans (not annualized)		(0.01)%		(0.01)%		0.00%		(0.02)%		0.02%

⁽¹⁾ Noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities

Sierra Bancorp Financial Results

July 19, 2021

Page 12

NONINTEREST INCOME/EXPENSE
(Dollars in Thousands, Unaudited)
		For the three months ended:						For the six months ended:
Noninterest income:		6/30/2021		3/31/2021		6/30/2020		6/30/2021	6/30/2020
Service charges on deposit accounts	$	2,725	$	2,767	$	2,618	$	5,491	$	5,802
Other service charges and fees		3,050		2,560		2,503		5,611		4,907
Net gains on sale of securities available-for-sale		—		—		390		—		390
Bank-owned life insurance		814		583		649		1,397		687
Other		23		920		740		943		1,221
Total noninterest income	$	6,612	$	6,830	$	6,900	$	13,442	$	13,007
As a % of average interest earning assets (1)		0.86%		0.93%		1.07%		0.89%		1.06%
Noninterest expense:
Salaries and employee benefits	$	10,425	$	11,151	$	9,266	$	21,576	$	19,438
Occupancy costs
Furniture & equipment		453		452		619		905		1,084
Premises		2,173		2,034		1,885		4,207		3,748
Advertising and marketing costs		292		321		425		612		1,026
Data processing costs		1,513		1,426		1,045		2,939		2,187
Deposit services costs		2,282		2,068		2,229		4,350		4,025
Loan services costs
Loan processing		65		169		191		234		362
Foreclosed assets		(10)		107		62		98		68
Other operating costs
Telephone & data communications		668		380		467		1,048		835
Postage & mail		109		84		106		193		174
Other		337		462		365		799		751
Professional services costs
Legal & accounting		682		442		357		1,125		685
Other professional service		1,004		897		701		1,899		947
Stationery & supply costs		73		78		131		151		246
Sundry & tellers		169		200		184		370		275
Total noninterest expense	$	20,235	$	20,271	$	18,033	$	40,506	$	35,851
As a % of average interest earning assets (1)		2.64%		2.75%		2.80%		2.68%		2.94%
Efficiency ratio (2)(3)		58.79%		56.43%		57.78%		57.58%		58.33%

(1) Annualized

(2) Tax equivalent

(3) Noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and bank owned life insurance income.

Sierra Bancorp Financial Results

July 19, 2021

Page 13

AVERAGE BALANCES AND RATES
(Dollars in Thousands, Unaudited)
	For the quarter ended			For the quarter ended			For the quarter ended
	June 30, 2021			March 31, 2021			June 30, 2020
	Average Balance (1)	Income/ Expense	Yield/ Rate (2)	Average Balance (1)	Income/ Expense	Yield/ Rate (2)	Average Balance (1)	Income/ Expense	Yield/ Rate (2)
Assets
Investments:
Interest-earning due from banks	$ 308,453	$ 85	0.11%	$ 76,504	$ 19	0.10%	$ 53,209	$ 12	0.09%
Taxable	340,690	1,573	1.85%	317,254	1,578	2.02%	403,517	2,250	2.24%
Non-taxable	243,461	1,517	3.16%	226,838	1,449	3.28%	216,746	1,440	3.38%
Total investments	892,604	3,175	1.61%	620,596	3,046	2.24%	673,472	3,702	2.44%
Loans and leases: (3)
Real estate	1,825,600	21,015	4.62%	1,879,359	21,391	4.62%	1,477,380	18,355	5.00%
Agricultural production	43,959	408	3.72%	46,153	419	3.68%	47,806	452	3.80%
Commercial	166,554	2,124	5.12%	191,656	2,451	5.19%	170,876	1,080	2.54%
Consumer	4,978	193	15.55%	5,422	196	14.66%	6,667	225	13.57%
Mortgage warehouse lines	142,348	1,151	3.24%	242,865	1,928	3.22%	206,669	1,532	2.98%
Other	1,460	26	7.14%	1,588	27	6.90%	2,811	39	5.58%
Total loans and leases	2,184,899	24,917	4.57%	2,367,043	26,412	4.53%	1,912,209	21,683	4.56%
Total interest earning assets (4)	3,077,503	$ 28,092	3.71%	2,987,639	$ 29,458	4.05%	2,585,681	$ 25,385	4.01%
Other earning assets	15,438			13,275			13,190
Non-earning assets	209,218			201,114			207,623
Total assets	$ 3,302,159			$ 3,202,028			$ 2,806,494
Liabilities and shareholders' equity
Interest bearing deposits:
Demand deposits	$ 161,871	$ 91	0.23%	$ 130,763	$ 73	0.23%	$ 134,159	$ 71	0.21%
NOW	601,339	116	0.08%	569,171	101	0.07%	481,679	83	0.07%
Savings accounts	424,512	59	0.06%	391,091	53	0.05%	327,833	46	0.06%
Money market	139,336	30	0.09%	136,422	30	0.09%	125,594	31	0.10%
Time deposits	337,270	262	0.30%	412,416	289	0.29%	442,762	625	0.57%
Wholesale brokered deposits	92,418	61	0.26%	100,000	62	0.25%	19,890	37	0.75%
Total interest bearing deposits	1,756,746	619	0.14%	1,739,863	608	0.14%	1,531,917	893	0.23%
Borrowed funds:
Junior subordinated debentures	35,185	245	2.79%	35,141	247	2.85%	35,009	311	3.57%
Other interest-bearing liabilities	61,186	39	0.26%	63,449	48	0.31%	45,936	39	0.34%
Total borrowed funds	96,371	284	1.18%	98,590	295	1.21%	80,945	350	1.74%
Total interest bearing liabilities	1,853,117	903	0.20%	1,838,453	$ 903	0.20%	1,612,862	1,243	0.31%
Demand deposits - noninterest bearing	1,052,494			977,137			830,333
Other liabilities	43,095			39,199			39,155
Shareholders' equity	353,453			347,239			324,144
Total liabilities and shareholders' equity	$ 3,302,159			$ 3,202,028			$ 2,806,494
Interest income/interest earning assets			3.71%			4.05%			4.01%
Interest expense/interest earning assets			0.11%			0.12%			0.20%
Net interest income and margin (5)		$ 27,189	3.60%		$ 28,555	3.93%		$ 24,142	3.81%

(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

(2) Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate.

(3) Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $1.0 million and $(0.2) million for the quarters ended June 30, 2021 and 2020, respectively, and $1.4 million for the quarter ended March 31, 2021.

(4) Non-accrual loans have been included in total loans for purposes of computing total earning assets.

(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.

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July 19, 2021

Page 14

AVERAGE BALANCES AND RATES
(Dollars in Thousands, Unaudited)
	For the six months ended						For the six months ended
	June 30, 2021						June 30, 2020
	Average Balance (1)		Income/ Expense		Yield/ Rate (2)	Average Balance (1)		Income/ Expense		Yield/ Rate (2)
Assets
Investments:
Interest-earning due from banks	$	193,120	$	104	0.11%	$	45,166	$	153	0.68%
Taxable		329,029		3,150	1.93%		406,054		4,710	2.33%
Non-taxable		235,204		2,967	3.22%		206,218		2,778	3.42%
Total investments		757,353		6,221	1.87%		657,438		7,641	2.56%
Loans and leases:(3)
Real estate		1,852,330		42,407	4.62%		1,436,145		37,079	5.19%
Agricultural		45,050		827	3.70%		48,169		1,035	4.32%
Commercial		179,036		4,575	5.15%		139,287		2,176	3.14%
Consumer		5,199		389	15.09%		7,124		593	16.74%
Mortgage warehouse lines		192,329		3,078	3.23%		175,645		2,797	3.20%
Other		1,523		53	7.02%		4,027		116	5.79%
Total loans and leases		2,275,467		51,329	4.55%		1,810,397		43,796	4.86%
Total interest earning assets (4)		3,032,820		57,550	3.88%		2,467,835		51,437	4.25%
Other earning assets		14,363					13,015
Non-earning assets		205,187					202,265
Total assets	$	3,252,370				$	2,683,115
Liabilities and shareholders' equity
Interest bearing deposits:
Demand deposits	$	146,403	$	164	0.23%	$	111,445	$	134	0.24%
NOW		585,344		217	0.07%		469,133		205	0.09%
Savings accounts		407,894		112	0.06%		312,777		119	0.08%
Money market		137,887		60	0.09%		121,421		74	0.12%
Time deposites		374,636		551	0.30%		451,656		1,991	0.89%
Brokered deposits		96,188		123	0.26%		30,357		204	1.35%
Total interest bearing deposits		1,748,352		1,227	0.14%		1,496,789		2,727	0.37%
Borrowed funds:
Junior subordinated debentures		35,164		493	2.83%		34,986		706	4.06%
Other interest-bearing liabilities		62,312		86	0.28%		39,684		75	0.38%
Total borrowed funds		97,476		579	1.20%		74,670		781	2.10%
Total interest bearing liabilities		1,845,828		1,806	0.20%		1,571,459		3,508	0.45%
Demand deposits - noninterest bearing		1,015,023					754,463
Other liabilities		41,156					37,687
Shareholders' equity		350,363					319,506
Total liabilities and shareholders' equity	$	3,252,370				$	2,683,115
Interest income/interest earning assets					3.88%					4.25%
Interest expense/interest earning assets					0.12%					0.28%
Net interest income and margin(5)			$	55,744	3.76%			$	47,929	3.97%

(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

(2) Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate.

(3) Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $2,402 thousand and $(377) thousand for the six months ended June 30, 2021 and 2020, respectively.

(4) Non-accrual loans have been included in total loans for purposes of computing total earning assets.

(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.

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