Sierra Bancorp (BSRR) Q4 2004 earnings summary

Executive summary

• 2004 net income reached $13.3 million, up 29% YoY; basic EPS was $1.41 vs. $1.12 in 2003, setting a record.

• Total assets grew 24% to $997 million; growth reflected a securities leverage strategy and strong organic loan growth.

• Net interest income rose 22% to $43.7 million, while the efficiency ratio improved to 54.6% from 59.7%.

Financial highlights

• Interest income was $52.2 million vs. $42.6 million; net income was $13.346 million vs. $10.364 million in 2003.

• Income before taxes increased to $20.5 million from $14.7 million; income tax expense rose to $7.2 million from $4.4 million.

• Total deposits grew 9% to $743 million; gross loans and leases rose $86 million to $696 million.

• Adjusted for the $400,000 REIT-related tax payment, the 2004 effective tax rate would have been 33.0%, versus 35.0% reported.

Outlook and guidance

• Management expected 2005 loans and leases to average around 71% of assets; the ratio depends on relative growth in investments and non-earning assets.

• Net interest margin was expected to remain broadly stable under likely rate scenarios; net interest income was expected to grow if loans expanded as planned and funding came from reasonably priced deposits.

• Reedley and Bakersfield branches were expected to open in Q3 and Q4 2005, respectively.

• Future cash dividends were expected at 30%–35% of prior-year net earnings, subject to earnings, growth needs, and regulatory limits.