Breaking Down Sierra Bancorp (BSRR) Financial Health: Key Insights for Investors

You're looking at Sierra Bancorp (BSRR) and wondering if the market's reaction to their latest numbers is an overcorrection or a sign of deeper trouble, and honestly, it's a little of both. The headline from their Q3 2025 earnings was a miss, with diluted earnings per share (EPS) of $0.72 falling short of the Street's $0.78 to $0.79 expectations, leading to a reported consolidated net income of $9.7 million for the quarter. But you need to look past that single figure, because the underlying business is showing some defintely resilient fundamentals. For instance, the bank's revenue net of interest expense actually beat forecasts, coming in at $40.03 million, and their balance sheet grew, with gross loans increasing by $57.2 million, or 9% annualized, to a total of $2.5 billion. Plus, asset quality is solid; the total nonperforming loans to total gross loans ratio improved to 0.56%, which is a key sign of management's discipline in a high-rate environment. The stock has dropped roughly 6% year-to-date, so the question isn't about the past quarter's headline, but whether the tangible book value per share of $24.66 justifies the current price, and what the loan portfolio composition tells us about near-term risk.

Revenue Analysis

You need to know where the money is actually coming from at Sierra Bancorp (BSRR) to assess the quality of their earnings. The direct takeaway is that their revenue engine is overwhelmingly driven by traditional lending-Net Interest Income (NII)-but they are seeing a healthy, stabilizing contribution from non-interest sources, which helps mitigate interest rate risk.

For the full 2025 fiscal year, analysts project Sierra Bancorp's total revenue to hit approximately $156.95 million, representing a year-over-year revenue growth rate of about +3.09%. This is a moderate, realistic growth pace, showing a shift from the higher volatility of recent years. Honestly, in the current banking environment, steady growth is defintely a win.

Primary Revenue Sources: The NII Engine

As a bank holding company for Bank of the Sierra, the primary revenue source is, predictably, Net Interest Income (NII). This is the difference between the interest they earn on assets (like loans and investments) and the interest they pay on liabilities (like deposits). For the third quarter of 2025 (Q3 2025), NII was the dominant segment.

Here's the quick math on the Q3 2025 revenue breakdown:

• Net Interest Income (NII): $31.97 million
• Total Non-Interest Income: $8.06 million

This means NII contributed roughly 79.86% of the total revenue of $40.03 million for the quarter, with non-interest income making up the remaining 20.14%. The loans driving this NII include agricultural, commercial, consumer, real estate, construction, and mortgage products across California.

Segment Contribution and Growth Trends

While NII is the core, the non-interest income segment is a crucial diversification tool. This segment includes service charges on deposit accounts, ATM/debit card fees, and other fee-based services. The company has worked to improve this area, and it shows.

The company reported a total revenue of $40.03 million for Q3 2025, which was a 3.8% increase year-over-year. More importantly, the Net Interest Income grew by $1.3 million, or 4%, compared to the prior linked quarter (Q2 2025). This improvement was driven by a higher loan yield, which hit 5.36% in Q3 2025, and a maintained low cost of funds at 1.45%. That's a strong sign of effective interest rate management.

The table below shows the key revenue components for the third quarter of 2025:

Significant Changes and Actionable Insights

The most significant change is the steady improvement in the core net interest margin (NIM), which reached 3.8% in Q3 2025, up from 3.7% estimated by analysts. This reflects the management's ability to price loans effectively while controlling deposit costs, even in a challenging rate environment. You should note that Total Non-Interest Income also saw a 12% rise in Q2 2025 compared to the same period in 2024, indicating a successful push for fee-based revenue. This diversification is what you want to see for long-term stability.

For a deeper dive into the institutional money moving in and out of the stock, check out Exploring Sierra Bancorp (BSRR) Investor Profile: Who's Buying and Why?

Your next concrete step is to track the Q4 2025 results, specifically looking for continued NIM expansion and a non-interest income contribution above 20% to confirm this trend. Finance: Model Q4 2025 NII based on a 5.4% loan yield target by month-end.

Profitability Metrics

When you look at Sierra Bancorp (BSRR), the core profitability story for 2025 is one of strong operational efficiency and robust core lending income, even as the bottom line faces pressure from credit provisioning. You need to look past the headline net income dip to see the underlying strength.

For the third quarter of 2025 (Q3 2025), Sierra Bancorp reported total revenue of $40.03 million, composed of $31.97 million in Net Interest Income (NII) and $8.06 million in Non-Interest Income. This revenue base supported a consolidated net income of $9.7 million for the quarter, which translates to a precise Net Profit Margin of about 24.23%.

Here's the quick math on the key margins for Q3 2025, keeping in mind that for a bank, the Net Interest Margin (NIM) is the closest equivalent to a gross margin, reflecting the core business of lending versus funding costs.

• Net Interest Margin (NIM): 3.78% (Q3 2025). This is an improvement from the prior quarter's 3.68%, showing they are defintely managing their loan yields and cost of funds well.
• Operating Profit Margin: Approximately 40.97%. This is calculated using the Pre-Tax Pre-Provision for Credit Losses Income (PTPPCI) of $16.4 million against the total revenue of $40.03 million. This PTPPCI figure actually increased by 4% in Q3 2025, a clear sign of stronger underlying operational performance.
• Net Profit Margin: 24.23% (Q3 2025). This compares favorably to the US Banks industry average of around 28% for a similar period, though some analysis suggests Sierra Bancorp's margin has been as high as 28% recently, reinforcing a strong value narrative.

Trends and Operational Efficiency

The trend analysis reveals a mixed but generally prudent picture. While consolidated net income for the first nine months of 2025 was $29.4 million, this was a slight decrease of 3% compared to the same period in 2024. This dip is mainly due to a higher provision for credit losses, which increased by $4.6 million year-over-year, reflecting a cautious credit stance as the loan portfolio grows.

The real highlight is operational efficiency. The Efficiency Ratio-which measures non-interest expense as a percentage of revenue, so lower is better-improved to 58.0% in Q3 2025, down from 59.4% in the prior quarter. This is a solid metric for a regional bank and shows management is controlling costs effectively, even as they grow the balance sheet with gross loans increasing to $2.5 billion.

For a deeper look at the balance sheet and valuation, check out our full analysis at Breaking Down Sierra Bancorp (BSRR) Financial Health: Key Insights for Investors. You should also note that the bank's price-to-earnings ratio of 9.1x is well below the US Banks industry average of 11.2x, suggesting a compelling value proposition.

Debt vs. Equity Structure

You're looking at Sierra Bancorp (BSRR)'s balance sheet to understand how they fund their growth, and the numbers from the third quarter of 2025 tell a clear story: they are using a more aggressive mix of debt and equity than the typical financial firm, but their core regulatory capital remains rock solid.

As of September 30, 2025, Sierra Bancorp (BSRR)'s total debt stood at approximately $369.3 million, balanced against total common equity of $360.1 million. This results in a Debt-to-Common Equity ratio (D/E) of about 102.6%. Honestly, that's a figure you need to pause on. Here's the quick math: for every dollar of shareholder equity, the company is utilizing about $1.03 in debt to finance its assets.

• Total Debt (Q3 2025): $369.3 million.
• Total Common Equity (Q3 2025): $360.1 million.
• Debt-to-Common Equity Ratio: 102.6%.

To be fair, a 102.6% D/E ratio is higher than the broader Financials sector average of 68.9%, suggesting a higher reliance on borrowed capital. But for a bank, the capital adequacy ratios are often more telling than the simple D/E ratio. Sierra Bancorp (BSRR) maintains a strong capital buffer, with its subsidiary bank reporting a Regulatory Leverage Ratio of 11.73% as of Q3 2025. This is well above the 10.11% weighted average Tier 1 Leverage Ratio seen across US regional banks in mid-2025, showing a healthy cushion against unexpected losses.

The company's recent financing activity shows a smart, proactive management of its funding costs. In the third quarter of 2025 alone, Sierra Bancorp (BSRR) reduced higher-cost brokered deposits by a significant $55 million, shifting away from expensive short-term funding. Plus, they are actively returning capital to shareholders through stock repurchases, buying back 190,342 shares in Q3 2025. This dual action-cutting expensive debt and boosting shareholder equity per share-is a defintely positive signal for long-term value creation.

The balance is clear: Sierra Bancorp (BSRR) is comfortable with a higher leverage profile to drive asset growth, but they are simultaneously strengthening core capital and optimizing their funding mix. For a deeper dive into the full picture, check out the main post: Breaking Down Sierra Bancorp (BSRR) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need a clear picture of Sierra Bancorp (BSRR)'s ability to meet its near-term obligations, and the data from the first nine months of 2025 shows a strong, managed liquidity position, even if traditional metrics look odd for a bank. The key takeaway is that the company maintains substantial primary and secondary liquidity sources totaling $2.2 billion as of September 30, 2025, which is a far more useful metric than a simple ratio for a financial institution. This cushion is what matters in a tight credit environment.

Current and Quick Ratios (Liquidity Positions)

For a bank like Sierra Bancorp (BSRR), the textbook Current Ratio (Current Assets / Current Liabilities) and Quick Ratio are not defintely the best measure of health. You might see a trailing twelve-month Quick Ratio around 0.35, which would be a red flag for a manufacturer, but for a bank, most of the assets are long-term loans and most liabilities are customer deposits. The real liquidity strength lies in the bank's access to funding. Sierra Bancorp's overall primary and secondary liquidity sources, which include cash, unpledged securities, and borrowing capacity, stood at a robust $2.2 billion at the end of the third quarter of 2025. That's your true liquidity position.

Analysis of Working Capital Trends

The working capital-or more accurately, the management of its interest-earning assets and funding liabilities-shows a strategic, controlled trend. The bank is successfully growing its core business while actively managing its cost of funds. Here's the quick math on the balance sheet movements in Q3 2025:

• Gross loans increased by $57.2 million, reaching $2.5 billion.
• Customer deposits rose by $13.3 million, hitting $2.7 billion.
• Noninterest-bearing deposits, a low-cost funding source, were strong at $1.1 billion, representing 37% of total deposits at September 30, 2025.

The most telling move was the proactive reduction of $55 million in higher-cost brokered deposits during the third quarter, which signals a disciplined approach to funding and a focus on improving the net interest margin, which hit 3.78% in Q3 2025. That's smart balance sheet management.

Cash Flow Statements Overview

Looking at the cash flow trends for the nine months ended September 30, 2025, you see a company generating cash from its core operations and deploying it into growth and shareholder returns. Net income, the starting point for operating cash flow, was $29.4 million for the nine months.

• Operating Cash Flow: This is strong, driven by that $29.4 million in net income.
• Investing Cash Flow: This is a net cash outflow, which is expected and healthy for a growing bank. The $57.2 million increase in gross loans in Q3 alone demonstrates significant cash deployment into the core lending business.
• Financing Cash Flow: This is a mixed picture of inflows (new customer deposits) and outflows (debt and shareholder returns). The company used cash to repurchase 190,342 shares of common stock in Q3 at an average price of $30.55 per share, and it paid its regular quarterly dividend of $0.25 per share. The reduction in brokered deposits is also a financing cash outflow.

Potential Liquidity Concerns or Strengths

The primary strength is the robust liquidity buffer of $2.2 billion and the high percentage of noninterest-bearing deposits. Plus, the bank's capital ratios are solid, with the Consolidated Tangible Common Equity Ratio increasing to 9.03% at September 30, 2025. The only near-term risk to watch is the continued need for loan loss provisioning as the loan portfolio grows, but asset quality remains solid with the ratio of total nonperforming loans to total gross loans improving to 0.56%.

To dive deeper into the full financial picture, you should read the full analysis in Breaking Down Sierra Bancorp (BSRR) Financial Health: Key Insights for Investors.

Next Step: You should model the impact of a 50 basis point increase in the cost of funds on the Q4 net interest income by the end of the week.

Valuation Analysis

You're looking at Sierra Bancorp (BSRR) and trying to figure out if you're getting a deal or buying high. The direct takeaway is that, based on near-term metrics as of November 2025, Sierra Bancorp appears reasonably valued, leaning slightly toward undervalued compared to historical norms and peers, but you need to factor in the recent stock price volatility.

As a seasoned financial analyst, I look at the core valuation ratios-Price-to-Earnings (P/E) and Price-to-Book (P/B)-to cut through the noise. For the 2025 fiscal year, Sierra Bancorp's trailing P/E ratio is 10.20, and the forward P/E is even lower at approximately 9.77. This is a strong signal. For a regional bank, a P/E in the low double digits or high single digits suggests the market isn't pricing in aggressive growth, which often means you are buying earnings cheaply. The Price-to-Book (P/B) ratio, which is crucial for banks since it compares the stock price to the company's net asset value, sits at 1.09. This is just slightly above book value, which is defintely not a sign of overvaluation.

Here's the quick math on the valuation metrics:

• Trailing P/E Ratio: 10.20
• Forward P/E Ratio (FY2025): ~9.77
• Price-to-Book (P/B) Ratio: 1.09
• Enterprise Value-to-EBITDA (EV/EBITDA): Not applicable (N/A) for a bank, as earnings before interest, taxes, depreciation, and amortization (EBITDA) is not a primary valuation driver for financial institutions.

The stock has had a bumpy ride over the last 12 months, which is why the current valuation looks attractive. The stock price has decreased by 7.65% over the past year, trading in a 52-week range between a low of $22.42 and a high of $33.50. The latest closing price is around $29.38 as of mid-November 2025. This drop, while concerning on a chart, is what gives you the low P/E multiple. What this estimate hides is the market's reaction to interest rate uncertainty, which hits all regional banks, but the core business remains solid.

For income investors, the dividend profile is a key part of the value proposition. Sierra Bancorp offers an annual dividend of $1.00 per share for 2025, resulting in a dividend yield of approximately 3.40%. The payout ratio-the percentage of earnings paid out as dividends-is a healthy 35.00%. That low payout ratio means the dividend is well-covered by earnings and leaves plenty of capital for growth or to cushion against economic shocks.

Wall Street analysts generally see an upside here. The consensus rating from a group of analysts is a 'Moderate Buy,' with an average 12-month price target set at $34.50. This target suggests a potential upside of over 17% from the current stock price. This aligns with the cheap P/E and P/B ratios; the market has yet to fully price in the bank's earnings power. To be fair, some analysts rate it a 'Hold,' so it's not a unanimous call, but the overall sentiment is positive. You can dive deeper into the operational risks and opportunities in Breaking Down Sierra Bancorp (BSRR) Financial Health: Key Insights for Investors.

Next step: Use the average analyst target of $34.50 to set your own target price, and then establish a clear entry point below $29.00 to maximize your margin of safety.

Risk Factors

You need to know the real threats to Sierra Bancorp (BSRR)'s bottom line, not just the good news from their loan growth. The core risks-credit quality, interest rate sensitivity, and regulatory concentration-are all visible in the 2025 fiscal year data, and they require your attention.

The biggest near-term financial risk is the cost of credit. While the company is growing loans, they're also setting aside much more cash for potential losses. That's a direct hit to earnings.

Operational and Credit Quality Risks

The operational risk is less about day-to-day process and more about specific credit exposure, which is an immediate concern. The provision for credit losses on loans for the first nine months of 2025 jumped to $6.9 million, a significant increase from $2.3 million in the same period in 2024.

Here's the quick math: that's a $4.6 million year-over-year increase in the provision for credit losses. What this estimate hides is the concentration risk within that number. The increase was largely driven by a single, specific issue: a $3.5 million individual reserve added in the third quarter of 2025, mostly tied to one agricultural production loan. That's a sharp reminder that a regional bank's performance can be defintely impacted by a few large, localized credit events.

• Credit Provision Spike: Year-to-date 2025 provision for credit losses is $6.9 million.
• Single-Loan Exposure: $3.5 million reserve added for one agricultural loan in Q3 2025.
• Asset Quality Improvement: Total nonperforming loans to total gross loans ratio actually improved to 0.56% at September 30, 2025, down from 0.62% in the prior quarter.

Financial and Market Condition Risks

The financial results for Q3 2025 show that Sierra Bancorp is navigating a difficult interest rate environment and persisting inflation concerns, as noted by management. The company reported Q3 2025 diluted earnings per share (EPS) of $0.72, missing the analyst consensus of about $0.78 to $0.80. Net income for the quarter was $9.7 million, a 9% decrease compared to the previous quarter.

Still, the company is actively managing its funding costs. They proactively reduced higher-cost brokered deposits by $55 million in Q3 2025, which helped maintain a low cost of funds at 1.45% and improved the net interest margin (NIM) to 3.78%. That's a smart move to protect the NIM in an uncertain rate environment.

Regulatory and Strategic Risks

For a regional bank, regulatory oversight is a constant. Sierra Bancorp's Commercial Real Estate (CRE) Concentration Ratio was 242.7% at September 30, 2025. While this is a high concentration-meaning a large portion of their capital is tied up in CRE loans-the company has been actively working to reduce this exposure, and it is down from previous periods. This concentration requires careful monitoring, as a downturn in the regional CRE market could trigger heightened regulatory scrutiny or capital requirements.

The key mitigation strategy here is maintaining a strong capital base and liquidity. The subsidiary bank's Regulatory Leverage Ratio was 11.73% at September 30, 2025, with overall primary and secondary liquidity sources totaling $2.2 billion. Plus, the company continues its share repurchase program, buying back 190,342 shares in Q3 2025 at an average price of $30.55, which supports the tangible book value per share, which increased 3% to $24.66. That's a clear action to manage capital and signal confidence to the market.

To dig deeper into the company's full financial picture, including detailed valuation tools, you should check out the full post on Breaking Down Sierra Bancorp (BSRR) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear path forward for Sierra Bancorp (BSRR), and the data shows a picture of modest, calculated growth-a defensive stability that's a turnaround from its past. Analysts project a steady, albeit cautious, trajectory for the 2025 fiscal year, with annual revenue expected to rise by 3.4% and earnings by 3.6%. This isn't a high-flying tech stock, but a regional bank focused on operational prudence and capital strength in California's South-Central Valley.

Core Drivers: Loan and Margin Expansion

The primary engine for Sierra Bancorp's near-term growth is its ability to grow the loan book while improving its net interest margin (NIM). In the third quarter of 2025, the company saw gross loans increase by $57.2 million, an annualized growth rate of 9%, bringing the total to $2.5 billion. This loan growth, coupled with a disciplined approach to funding, pushed the NIM up to 3.78% in Q3 2025, an improvement from 3.68% in the prior quarter. Honestly, a 3.78% NIM in this rate environment shows strong interest rate management.

On the funding side, the bank is actively managing its cost of funds, proactively reducing higher-cost brokered deposits. This strategy helped customer deposits grow by $13.3 million, or 2% annualized, to $2.7 billion in Q3 2025, while maintaining a strong proportion of noninterest-bearing deposits at 37% of total deposits. Plus, the efficiency ratio-a key measure of operational cost-improved to 58.0% in Q3 2025, down from 59.4% in the previous quarter.

2025 Financial Estimates and Performance

To give you a concrete view of the near-term financial picture, here are the reported results for the third quarter and the analyst consensus estimates for the final quarter of 2025. This shows the base for their modest annual growth projections.

Strategic Levers and Competitive Edge

Sierra Bancorp's strategic initiatives are less about flashy product innovations and more about capital management and leveraging its deep community roots. The company continues to return value to shareholders through buybacks, having repurchased 802,753 shares in the first nine months of 2025, which helped lift the diluted earnings per share to $2.15 for the nine-month period. This stock repurchase program is a defintely a clear action to boost per-share metrics.

Their competitive advantage (moat) is built on a few core pillars:

• Strong Core Deposits: A high percentage of noninterest-bearing deposits provides a lower and more stable cost of funding.
• Asset Quality: The ratio of total nonperforming loans to total gross loans improved to 0.56% in Q3 2025, signaling strong underwriting discipline.
• Dividend Stability: The company declared its 107th consecutive quarterly dividend of $0.25 per share, appealing to yield-focused investors.

What this estimate hides is the regional bank exposure to California's economic shifts, but the focus on strong asset quality and capital ratios (Tangible Book Value per share increased to $24.66 in Q3 2025) provides a cushion. For a deeper dive into the bank's current financial health, you can review Breaking Down Sierra Bancorp (BSRR) Financial Health: Key Insights for Investors.

Action: Monitor the Q4 2025 earnings release for confirmation of the $0.81 EPS estimate, paying close attention to any changes in the loan-to-deposit ratio as a gauge of continued balance sheet growth.