Sierra Bancorp (BSRR) Q4 2007 earnings summary

Executive summary

• FY08 net income was $13.4 million, down 36% YoY; diluted EPS was $1.37 vs. $2.09 in FY07. Q4 net loss was $1.9 million.

• Asset growth and deposit inflows were offset by a sharp increase in credit costs and nonperforming assets; 2009 priorities were credit management and core-deposit generation.

Financial highlights

• Net interest income was $56.6 million, up less than 1% YoY; noninterest income rose to $16.0 million from $14.6 million.

• Provision for loan and lease losses rose to $19.5 million from $3.3 million; operating expense was $35.9 million, down $122,000 YoY.

• Total assets increased 8% to $1.326 billion; deposits rose 25% to $1.061 billion, while gross loans and leases grew 2% to $946.6 million.

• Adjusted for nonrecurring items, FY08 included close to $900,000 of nonrecurring noninterest income and $337,000 of net nonrecurring operating expense.

Outlook and guidance

• FY09 focus was expected to remain on credit issues and core-deposit generation rather than asset growth; minimal loan-balance growth was anticipated amid weak demand and credit concerns.

• Management anticipated future dividends of 30%–35% of prior-year net earnings, subject to earnings, growth needs, and regulatory restrictions.

• FDIC insurance assessments were expected to rise; a special assessment of 10–20 bps of domestic deposits was announced for Q2 2009.