Financial Analysis

14. COMMITMENTS AND CONTINGENCIES Letter of Credit The Company holds two letters of credit with the Federal Home Loan Bank of San Francisco totaling $127.9 million. A $125.0 million letter of credit is pledged to secure public deposits at December 31, 2025 and a $2.9 million standby letter of credit was obtained on behalf of one of our customers to guarantee financial performance. Should the standby letter of credit be drawn upon, the customer would reimburse the Company from an existing line of credit. Financial Instruments with Off-Balance-Sheet Risk The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business. These financial instruments consist of commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheet. The Companys exposure to credit loss in the event of nonperformance by the other party for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and letters of credit as it does for loans included on the balance sheet. The following financial instruments represent off-balance-sheet credit risk (dollars in thousands): December 31, 2025 2024 Fixed-rate commitments to extend credit $ 75,928 $ 80,127 Variable-rate commitments to extend credit $ 471, …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

17. BENEFIT PLANS Salary Continuation Agreements, Directors Retirement and Officer Supplemental Life Insurance Plans The Company entered into salary continuation agreements with certain senior officers in 2002 and 2007 and also established retirement plans for certain qualifying members of the Board of Directors at the same time. The plans provide for annual benefits for up to fifteen years after retirement or death. The benefit obligation under these plans is recognized on the consolidated balance sheet in other liabilities and totaled $3.9 million and $4.1 million for the years ended December 31, 2025 and 2024, and was fully accrued for both years. There was a $0.2 million expense accrual recognized under these arrangements for the year ended December 31, 2025, and no expense accrual recorded in 2024. The expense recognized under these arrangements totaled $0.3 million for the year ended December 31, 2023. Salary continuation benefits paid to former directors or executives of the Company, or their beneficiaries totaled $0.4 million, $0.5 million, and $0.5 million for the years ended December 31, 2025, 2024, and 2023. Certain officers of the Company have supplemental life insurance policies with death benefits available to the officers beneficiaries with an accumulated post-retirement benefit liability of $0.8 million and $0.9 million for the years ended December 31, 2025 and 2024, respectively. In connection with these plans and other employee benefit plans of the Company, …

CompensationAndEmployeeBenefitPlansTextBlock · excerpt; the full note is in the filing

10. OTHER BORROWING ARRANGEMENTS At year end, short-term borrowings consisted of the following (dollars in thousands): 2025 Average balance outstanding Amount Average interest rate during the year Maximum month-end balance during the year Weighted average interest rate at year-end As of December 31: Repurchase agreements $ 123,425 $ 130,853 0.21% $ 136,954 0.21% Short term borrowings 58,809 222,700 4.25% 317,500 4.25% Total $ 182,234 $ 353,553 $ 454,454 2024 Average balance outstanding Amount Average interest rate during the year Maximum month-end balance during the year Weighted average interest rate at year-end As of December 31: Repurchase agreements $ 123,878 $ 108,860 0.17% $ 148,003 0.12% Short term borrowings 16,375 5.72% 76,400 Total $ 140,253 $ 108,860 $ 224,403 At year end, long-term advances from FHLB consisted of the following (dollars in thousands): 2025 2024 Amount Fixed rate Weighted average interest rate Amount Fixed rate Weighted average interest rate As of December 31: Federal Home Loan Bank advances, maturing 2026 $ 25,000 3.96% 3.96% $ 25,000 3.96% 3.96% Federal Home Loan Bank advances, maturing 2028 15,000 3.78% 3.78% 15,000 3.78% 3.78% Federal Home Loan Bank advances, maturing 2026 20,000 4.04% 4.04% 20,000 4.04% 4.04% Federal Home Loan Bank advances, maturing 2028 20,000 3.81% 3.81% 20,000 3.81% 3.81% Total $ 80,000 $ 80,000 There were short-term borrowings of $222.7 million at December 31, 2025. Included in short term borrowings at December 31, 2025, w …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

21. FAIR VALUE Fair value is defined by U.S. GAAP as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. U.S. GAAP also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a companys own assumptions about the factors that market participants would use in pricing an asset or liability. The Company used the following methods and significant assumptions to estimate fair values for each category of financial asset noted below: Securities : The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges, live trading desk pricing from brokerages, o …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

7. GOODWILL AND INTANGIBLE ASSETS Goodwill The balance of goodwill at the years beginning and ended December 31, 2025, 2024, and 2023 was $27.4 million. There was no acquired goodwill or impairment for the years ended December 31, 2025, 2024, and 2023. The Company performed a quantitative impairment assessment as of October 1, 2025, using a market approach. Based on the results of the Companys goodwill impairment assessment, the Company determined that the fair value of its reporting unit, which was at the consolidated level, exceeded the carrying value. Therefore, goodwill was not impaired as of December 31, 2025, and there was no impairment charges related to the Companys goodwill recorded during the year ended December 31, 2025. Acquired Intangible Assets Acquired intangible assets were as follows at year-end (dollars in thousands): Years Ended December 31, 2025 2024 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Core deposit intangibles $ 5,181 $ 5,129 $ 5,181 $ 4,563 Aggregate amortization expense was $0.6 million, $0.8 million, and $0.9 million for 2025, 2024, and 2023. Estimated amortization expense for each of the next five years and thereafter (dollars in thousands): 2026 $ 52 2027 2028 2029 2030 Thereafter Total $ 52 …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

13. INCOME TAXES The provision for income taxes follows (dollars in thousands): Year Ended December 31, 2025 2024 2023 Current expense: Federal $ 8,971 $ 5,702 $ 8,470 State 5,150 3,578 5,493 Total current tax expense 14,121 9,280 13,963 Deferred expense: Federal (169) 2,711 (1,531) State 64 1,317 (812) Total deferred tax (benefit) expense (105) 4,028 (2,343) Total income tax expense $ 14,016 $ 13,308 $ 11,620 The components of the net deferred tax asset, included in other assets, are as follows (dollars in thousands): December 31, 2025 2024 Deferred tax assets: Allowance for credit losses on loans $ 6,350 $ 7,341 Deferred compensation 5,282 4,903 Accrued reserves 765 1,006 Non-accrual loans 257 256 Lease liability 6,820 7,003 Loan fair value adjustment 71 128 Intangibles 163 48 Net operating losses 1,051 1,115 State income tax deduction 1,046 760 Other 811 764 Unrealized losses on debt securities 9,727 13,119 Total deferred tax assets 32,343 36,443 Deferred tax liabilities: Deferred loan origination costs (1,165) (1,268) Right-of-use asset (7,849) (8,204) TruPS accretion (629) (682) FMV equity securities (528) (528) Prepaids (783) (771) Other (924) (1,123) Premises and equipment (1,081) (1,196) Total deferred tax liabilities (12,959) (13,772) Net deferred tax assets $ 19,384 $ 22,671 The Company believes that the deferred tax assets will be fully realized, therefore no valuation allowance has been recorded. The Company adopted ASU 2023-09 Income Taxes (Topic 740): Improvemen …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

6. OPERATING LEASES The Company leases space under non-cancelable operating leases for 30 branch locations, three off-site ATM locations, one administrative building, and two loan production offices. Many of our leases include both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs). Payments for taxes and insurance as well as non-lease components are not included in the accounting of the lease component but are separately accounted for in occupancy expense. The Company recognized lease expense of $4.6 million for the year ended December 31, 2025, $4.5 million for the year ended December 31, 2024, and $2.3 million for the year ended December 31, 2023. Most leases include one or more renewal options available to exercise. The exercise of lease renewal options is typically at the Companys sole discretion; therefore, the majority of renewals to extend the lease terms are not included in our right-of-use assets and lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal period in our lease term. As most of our leases do not provide an implicit rate, we used our incremental borrowing rate in determining the present value of the lease payments. There were no leveraged leases or lease transactions with related parties during the years ending December 31, 2025 and 2024. …

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11. LONG-TERM DEBT At year-end, long-term debt was as follows (dollars in thousands): 2025 2024 Principal Unamortized Debt Issuance Costs Principal Unamortized Debt Issuance Costs Fixed - floating rate subordinated debentures, due 2031 (1) $ 50,000 $ 517 $ 50,000 $ 607 $ 50,000 $ 517 $ 50,000 $ 607 (1) 3.25% fixed rate for five years then floating rate at 253.5 bps over 3-month term SOFR starting September 30, 2026. …

LongTermDebtTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Pronouncements In March 2023, the FASB issued ASU No. 2023-02, InvestmentsEquity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023-02 is intended to improve the accounting and disclosures for investments in tax credit structures. ASU 2023-02 allows entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. Previously, this method was only available for qualifying tax equity investments in low-income housing tax credit structures. ASU 2023-02 was adopted by the Company on January 1, 2024, and its adoption did not have a significant effect on the Companys financial statements. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 expands segment disclosure requirements for public entities to require disclosure of significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segments profit or loss and assets that are currently required annually. ASU 2023-07 was adopted by the Company in 2024, and its adoption did not have a significant impact on our financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to I …

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20. RELATED PARTY TRANSACTIONS During the normal course of business, the Bank may enter into loans with related parties, including executive officers and directors. These loans are made with substantially the same terms, including rates and collateral, as loans to unrelated parties. The following is a summary of the aggregate activity involving related party borrowers (dollars in thousands): Year Ended December 31, 2025 2024 2023 Balance, beginning of year $ 26 $ 82 $ 139 Disbursements 5 Amounts repaid (21) (64) (57) Effect of changes in composition of related parties (5) 3 Balance, end of year $ $ 26 $ 82 Undisbursed commitments to related parties $ $ 3 $ 6 Deposits from related parties held by the Bank at December 31, 2025 and 2024, amounted to $4.0 million and $6.1 million, respectively. …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

24. REVENUE FROM CONTRACTS WITH CUSTOMERS All of the Companys revenue from contracts with customers in the scope of ASC 606 is recognized within Noninterest Income. The following table presents the Companys sources of Noninterest Income for the twelve months ended December 31, 2025 and 2024. Items outside the scope of ASC 606 are noted as such (dollars in thousands). Year Ended December 31, 2025 2024 2023 Noninterest income Service charges on deposits Returned item and overdraft fees $ 5,232 $ 5,513 $ 5,261 Other service charges on deposits 10,189 10,526 9,790 Debit card interchange income 8,067 8,134 8,052 Dividends on equity investments (1) 1,335 1,337 1,076 Unrealized losses recognized on equity investments (1) (311) (291) Net gains (losses) on sale of securities (1) 120 (2,681) 396 Other (1) 5,646 9,003 6,116 Total noninterest income $ 30,589 $ 31,521 $ 30,400 (1) Not within the scope of ASC 606. Revenue streams are not related to contracts with customers and are accounted for on an accrual basis under other provisions of GAAP. …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

"2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation and Basis of Presentation The consolidated financial statements include the accounts of the Company and the accounts of its wholly owned subsidiary, Bank of the Sierra. All significant intercompany balances and transactions have been eliminated. Certain reclassifications have been made to prior years balances to conform to classifications used in 2025. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (U.S. GAAP) and prevailing practices within the banking industry. In accordance with U.S. GAAP, the Companys investments in Sierra Statutory Trust II, Sierra Capital Trust III and Coast Bancorp Statutory Trust II are not consolidated and are accounted for under the equity method and included in other assets on the consolidated balance sheet. The subordinated debentures issued and guaranteed by the Company and held by the trusts are reflected on the Companys consolidated balance sheet. The Bank has subsidiary interests in variable interest entities (VIE) for which the Bank does not have a controlling financial interest and is not the primary beneficiary. These subsidiary interests are not included in the Companys consolidated financial statements. For additional information on the Banks interest in VIEs, see Note 23. Subsequent Events The Company has evaluated subsequent events for recognition and disclosure through February 27, 2025, …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

Note 7 Commitments and Contingent Liabilities The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business. Those financial instruments currently consist of unused commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of risk in excess of the amount recognized in the consolidated balance sheet. The Companys exposure to credit loss in the event of nonperformance by counterparties for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and issuing letters of credit as it does for originating loans included on the consolidated balance sheet. The following financial instruments represent off-balance-sheet credit risk (dollars in thousands): June 30, 2026 December 31, 2025 Commitments or facilities to extend credit $ 611,254 $ 547,424 Standby letters of credit $ 5,750 $ 5,708 Commitments to extend credit consist primarily of the unused or unfunded portions of the following: mortgage warehouse facilities; home equity lines of credit; commercial real estate construction loans, where disbursements are made over the course of construction; commercial revolving lines of credit; unsecured personal lines of credit; and formalized (disclosed) deposit account overdraft lines. Commitments generally have fixed expiration dates or other termination clauses and may require p …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Note 12 Borrowings and Other Arrangements Repurchase Agreements Repurchase agreements represent sweep accounts, where commercial deposit balances above a specified threshold are transferred at the close of each business day into separate non-deposit accounts. Customers use balances of the non-deposit accounts to purchase government bonds from the Company daily, subject to an agreement from the Company to repurchase such securities the next business day. Repurchase agreements totaled $122.4 million at June 30, 2026, relative to a balance of $130.9 million at December 31, 2025. Long-Term Debt The Company has long-term debt in the form of fixed to floating rate subordinated debentures with a fixed rate of 3.25% until September 30, 2026, then floating rate at 253.5 basis points over 3-month term Secured Overnight Financing Rate (SOFR) until maturity on October 1, 2031. The balance of the Companys long-term debt, net of unamortized issuance costs, was $49.5 million at June 30, 2026, and $49.5 million at December 31, 2025. Subordinated Debentures Sierra Statutory Trust II (Trust II), Sierra Capital Trust III (Trust III), and Coast Bancorp Statutory Trust II (Trust IV), (collectively, the Trusts) exist solely for the purpose of issuing trust preferred securities fully and are unconditionally guaranteed by the Company. For financial reporting purposes, the Trusts are not consolidated, and the Floating Rate Junior Subordinated Deferrable Interest Debentures (the Subordinated Debenture …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Note 4 Share Based Compensation On March 17, 2023, the Companys Board of Directors approved and adopted the 2023 Equity Compensation Plan (the 2023 Plan), which became effective May 24, 2023, the date approved by the Companys shareholders. The 2023 Plan replaced the Companys 2017 Stock Incentive Plan (the 2017 Plan). Options to purchase 108,200 shares granted under the 2017 Plan and options to purchase 23,000 shares that were granted under the 2007 Plan were still outstanding as of June 30, 2026, and remain unaffected by that plans expiration. The 2023 Plan provides for the issuance of various types of equity awards, including options, stock appreciation rights, restricted stock awards, restricted share units, performance share awards, dividend equivalents, or any combination thereof. Such awards may be granted to officers and employees as well as non-employee directors, which may be granted on such terms and conditions as are established by the Board of Directors or the Compensation Committee in its discretion. The total number of shares of the Companys authorized but unissued stock reserved for issuance pursuant to awards under the 2023 Plan was initially 360,000 shares, and the number remaining available for grant as of June 30, 2026, was 229,488. Any unexercised, unvested, or undistributed portion of any expired, cancelled, terminated, or forfeited awards under the Companys 2017 Plan are added to the number of shares available to grant under the 2023 Plan. There were 173, …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Note 8 Fair Value Disclosures and Reporting and Fair Value Measurements FASBs standards on financial instruments, and on fair value measurements and disclosures, require public business entities to disclose in their financial statement footnotes the estimated fair values of financial instruments. In addition to disclosure requirements, FASBs standard on investments requires that debt securities classified as available-for-sale and equity securities with readily determinable fair values be measured and reported at fair value in the statement of financial position. Certain collateral-dependent, individually-evaluated loans are also reported at fair value, as explained in greater detail below, and foreclosed assets are carried at the lower of cost or fair value. FASBs standard on financial instruments permits companies to report certain other financial assets and liabilities at fair value, but the Company has not elected the fair value option for any of those financial instruments. Fair value measurement and disclosure standards also establish a framework for measuring fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Further, the standards establish a fair value hierarchy that encourages an entity to maximize the use of observable inputs a …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Note 11 Goodwill The balance of goodwill at the six months beginning and ended June 30, 2026 and 2025 was $27.4 million. There was no acquired goodwill for the six months ended June 30, 2026 and 2025. The Company performs its goodwill impairment tests annually, or more often if events or circumstances indicate the carrying value may not be recoverable. The annual assessment date was changed to October 1 in 2023 to allow more time for evaluation of impairment. The Company performed its annual quantitative goodwill impairment assessment effective as of October 1, 2025, using a market approach. Based on the results of the Companys goodwill impairment assessment, the Company determined that the fair value of its reporting unit, which was at the consolidated level, exceeded the carrying value. Management continues to evaluate whether or not a triggering event occurs, or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount before the next annual test in 2026 and has concluded no such events have occurred. Therefore, goodwill was not impaired as of June 30, 2026, and there were no impairment charges related to the Companys goodwill recorded during the six months ended June 30, 2026 and 2025. …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Note 13 Revenue Recognition The Company utilizes the guidance found in ASU 2014-09, Revenue from Contracts with Customers (ASC 606), when accounting for certain noninterest income. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Sufficient information should be provided to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Companys revenue streams that are within the scope of and accounted for under Topic 606 include service charges on deposit accounts, debit card interchange fees, and fees levied for other services the Company provides its customers. The guidance does not apply to revenue associated with financial instruments such as loans and investments, and other noninterest income such as loan servicing fees and earnings on bank-owned life insurance, which are accounted for on an accrual basis under other provisions of GAAP. All of the Companys revenue from contracts within the scope of ASC 606 is recognized as noninterest income. Due to the short-term nature of the Companys contracts with customers, an insignificant amount of receivables related to such revenue was recorded at the three and six months ended June 30, 2026 and 2025. The fol …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing