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1
PART I
ITEM 1. BUSINESS
General
The Company
Sierra Bancorp (the “Company”) is a California corporation headquartered in Porterville, California, and is a registered
bank holding company under federal banking laws. The Company was formed to serve as the holding company for
Bank of the Sierra (the “Bank”), and has been the Bank’s sole shareholder since August 2001. The Company exists
primarily for the purpose of holding the stock of the Bank and of such other subsidiaries it may acquire or establish.
At the present time, the Company’s only other direct subsidiaries are Sierra Statutory Trust II and Sierra Capital Trust
III, which were formed in March 2004 and June 2006, respectively, solely to facilitate the issuance of capital trust pass-
through securities (“TRUPS”). Pursuant to the Financial Accounting Standards Board’s guidance on the consolidation
of variable interest entities, these trusts are not reflected on a consolidated basis in the financial statements of the
Company. References herein to the “Company” include Sierra Bancorp and its consolidated subsidiary, the Bank,
unless the context indicates otherwise. At December 31, 2015, the Company had consolidated assets of $1.797 billion,
gross loans of $1.133 billion, deposits of $1.465 billion and shareholders’ equity of $190 million. The Company’s
liabilities include $31 million in debt obligations due to Sierra Statutory Trust II and Sierra Capital Trust III, related to
TRUPS issued by those entities.
The Bank
The Bank is a California state-chartered bank headquartered in Porterville, California. We offer a full range of retail
and commercial banking services primarily in Tulare, Kern, Fresno, and Kings Counties in Central California, and in
select markets in Southern California including Ventura County and the Santa Clarita Valley. Bank of the Sierra was
incorporated in September 1977, and opened for business in January 1978 as a one-branch bank with $1.5 million in
capital and eleven employees. Our growth in the ensuing years has primarily been organic, but includes two
acquisitions: Sierra National Bank in the year 2000, and Santa Clara Valley Bank (“SCVB”) in 2014. We are the
largest bank headquartered in the South San Joaquin Valley, and plan to expand even further in 2016 with the acquisi-
tion of Coast Bancorp, the holding company for Coast National Bank, and the purchase of certain deposits and loans
from Citizens Business Bank (see the following section, Recent Developments, for more details on these acquisitions).
Our chief products and services are related to the business of lending money and accepting deposits. The Bank’s
lending activities include real estate, commercial (including small business), mortgage warehousing, agricultural, and
consumer loans. The bulk of our real estate loans are secured by commercial, professional office, and agricultural
properties which are predominantly owner occupied, and we also offer a complete line of construction loans for resi-
dential and commercial development, permanent mortgage loans, land acquisition and development loans, and multi-
family credit facilities. Secondary market services for residential mortgage loans are provided through the Bank’s
affiliations with Freddie Mac, Fannie Mae and certain non-governmental institutions. As of December 31, 2015, the
percentage of our total loan and lease portfolio for each of the principal types of credit we extend was as follows: (i)
loans secured by real estate (68.7%); (ii) agricultural production loans (4.1%); (iii) commercial and industrial loans and
leases (including SBA loans and direct finance leases) (10.0%); (iv) mortgage warehouse loans (15.9%); and (v) con-
sumer loans (1.3%). Interest, fees, and other income on real-estate secured loans, which is by far the largest segment
of our portfolio, totaled $38.2 million, or 49% of net interest plus other income in 2015, and $33.5 million, or 49% of
net interest plus other income in 2014.
In addition to loans, we offer a wide range of deposit products for individuals and businesses including checking
accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts.
The Bank’s deposit accounts are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to maximum
insurable amounts. We attract deposits throughout our market area with direct-mail campaigns, a customer-oriented
product mix, competitive pricing, convenient locations, drive-through banking, and a multitude of alternative delivery
channels, and we strive to retain our deposit customers by providing a consistently high level of service. At December
31, 2015 we had 101,200 deposit accounts totaling $1.465 billion, compared to 99,200 deposit accounts totaling $1.367
billion at December 31, 2014.