Sierra Bancorp (BSRR) Q4 2002 earnings summary

Executive summary

• FY02 net income reached a record $8.8m, up 28.5% YoY; earnings rose in 18 of the prior 19 years.

• ROA was 1.32% and ROE 17.59%, up from 1.15% and 15.94% in FY01.

• Year-end assets were $701m, loans $511.6m, deposits $605.7m and shareholders’ equity $53.3m.

Financial highlights

• Net income was $8.8m versus $6.9m in FY01; net income per share was $0.96 versus $0.75.

• Net interest income benefited from $62m growth in average earning assets and a 40 bps improvement in net interest margin.

• Non-interest expenses increased 3.7% YoY; total non-interest income declined due to non-recurring gains in FY01.

• Provision for loan losses rose $2.1m YoY, reflecting portfolio growth, higher charge-offs and non-accrual balances, and agricultural-sector weakness.

• Pretax income increased $1.4m, while income tax provision fell $542,000, mainly from a tax benefit related to the REIT.

Outlook and guidance

• Annual savings from the September 2002 in-house item-processing conversion were expected to be substantial beginning in 2003.

• The North Fresno branch was expected to open in Q2 2003; construction had begun, and a Clovis location was nearing announcement.

• Growth plans focused on new branches in existing markets and entry into new markets within the Bakersfield-to-Fresno footprint.

• Longer-term funding plans called for replacing brokered deposits with branch-generated deposits.