4
and Union Bank (6.8%). Bank of the Sierra, including SCVB branches, ranks fifth on the 2014 market share list with
5.8% of total deposits. In Tulare County, however, where the Bank was originally formed, we rank first for deposit
market share with 18.2% of total deposits and have the largest number of branch locations (12, including our online
branch). The larger banks noted above have, among other advantages, the ability to finance wide-ranging advertising
campaigns and to allocate their resources to regions of highest yield and demand. They can also offer certain
services that we do not provide directly but may offer indirectly through correspondent institutions, and by virtue of
their greater capitalization those banks have legal lending limits that are substantially higher than ours. For loan
customers whose needs exceed our legal lending limits, we typically arrange for the sale, or participation, of some of
the balances to financial institutions that are not within our geographic footprint.
In addition to other banks, our competitors include savings institutions, credit unions, and numerous non-banking
institutions such as finance companies, leasing companies, insurance companies, brokerage firms, asset management
groups, mortgage banking firms and internet-based companies. Technological innovations have lowered traditional
barriers of entry and enabled many of these companies to offer services that previously were considered traditional
banking products, and we have witnessed increased competition from companies that circumvent the banking system
by facilitating payments via the internet, wireless devices, prepaid cards, and other means.
Strong competition for deposits and loans among financial institutions and non-banks alike affects interest rates and
other terms on which financial products are offered to customers. Mergers between financial institutions have
created additional pressures within the industry to remain competitive by streamlining operations, reducing expenses,
and increasing revenues. Competition is also impacted by federal and state interstate banking laws which permit
banking organizations to expand into other states. The relatively large California market has been particularly attrac-
tive to out-of-state institutions. Competitive conditions were further intensified in the year 2000 by the enactment of
the Financial Modernization Act, which made it possible for full affiliations to occur between banks and securities
firms, insurance companies, and other financial companies.
For years we have countered rising competition by offering a broad array of products with flexibility in structure and
terms that cannot always be matched by our competitors. We also offer our customers community-oriented, persona-
lized service, and rely on local promotional activity and personal contact by our employees. As noted above, layered
onto our traditional personal-contact banking philosophy are technology-driven initiatives that improve customer
access and convenience.
Employees
As of December 31, 2014 the Company had 349 full-time and 88 part-time employees. On a full-time equivalent
basis staffing stood at 420 at December 31, 2014, up from 389 at December 31, 2013 due primarily to the acquisition
of Santa Clara Valley Bank.
Regulation and Supervision
Banks and bank holding companies are heavily regulated by federal and state laws and regulations. Most banking
regulations are intended primarily for the protection of depositors and the deposit insurance fund and not for the ben-
efit of shareholders. The following is a summary of certain statutes, regulations and regulatory guidance affecting
the Company and the Bank. This summary is not intended to be a complete explanation of such statutes, regulations
and guidance, all of which are subject to change in the future, nor does it fully address their effects and potential
effects on the Company and the Bank.
Regulation of the Company Generally
The Company is a legal entity separate and distinct from the Bank and its other subsidiaries. As a bank holding
company, the Company is regulated under the Bank Holding Company Act of 1956 (the “BHC Act”), and is subject
to supervision, regulation and inspection by the Federal Reserve Board. The Company is also under the jurisdiction
of the SEC and is subject to the disclosure and regulatory requirements of the Securities Act of 1933 and the
Securities Exchange Act of 1934, each administered by the SEC. The Company’s common stock is listed on the
NASDAQ Global Select market (“NASDAQ”) under the trading symbol “BSRR” and the Company is, therefore,
subject to the rules of NASDAQ for listed companies.
