SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
Commission file number: 000-33063
SIERRA BANCORP
(Exact name of Registrant as specified in its charter)
| California | 33-0937517 | |
| (State of Incorporation) | (IRS Employer Identification No) | |
| 86 North Main Street, Porterville, California | 93257 | |
| (Address of principal executive offices) | (Zip Code) | |
(559) 782-4900
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
YES þ NO ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
YES ¨ NO þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common stock, no par value, 9,410,268 shares outstanding as of April 30, 2004
Table of Contents
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| 3 | ||
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| 4 | ||
| 5 | ||
| 6 | ||
| Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations |
11 | |
| 11 | ||
| 11 | ||
| Overview of the Results of Operations and Financial Condition |
11 | |
| 13 | ||
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| Item 3. Qualitative & Quantitative Disclosures about Market Risk |
32 | |
| 32 | ||
| 33 | ||
| 33 | ||
| Item 2. - Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
33 | |
| 33 | ||
| Item 4. - Submission of Matters to a vote of Security Holders |
33 | |
| 33 | ||
| 34 | ||
| 36 | ||
2
PART I - FINANCIAL INFORMATION
SIERRA BANCORP
(dollars in thousands, unaudited)
| March 31, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Cash and due from banks |
$ | 41,363 | $ | 53,042 | ||||
| Federal Funds Sold |
20,000 | — | ||||||
| Total Cash & Cash Equivalents |
61,363 | 53,042 | ||||||
| Securities available for sale |
93,199 | 84,798 | ||||||
| Loans and leases: |
||||||||
| Gross loans and leases |
612,116 | 610,681 | ||||||
| Allowance for loan and lease losses |
(7,286 | ) | (6,701 | ) | ||||
| Deferred loan and lease fees, net |
(1,755 | ) | (1,716 | ) | ||||
| Net Loans and Leases |
603,075 | 602,264 | ||||||
| Other equity securities |
1,868 | 1,763 | ||||||
| Premises and equipment, net |
19,112 | 18,291 | ||||||
| Other real estate |
3,041 | 2,784 | ||||||
| Accrued interest receivable |
3,820 | 3,238 | ||||||
| Other assets |
37,727 | 35,494 | ||||||
| TOTAL ASSETS |
$ | 823,205 | $ | 801,674 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES |
||||||||
| Deposits: |
||||||||
| Demand |
$ | 197,895 | $ | 196,392 | ||||
| Interest bearing demand |
56,561 | 55,047 | ||||||
| Savings |
53,398 | 50,643 | ||||||
| MMDA’s |
129,213 | 130,803 | ||||||
| TDOA’s, IRA’s & KEOGH’S |
22,230 | 22,359 | ||||||
| Time deposits < $100,000 |
98,393 | 100,128 | ||||||
| Time deposits ³ $100,000 |
136,217 | 129,105 | ||||||
| Total Deposits |
693,907 | 684,477 | ||||||
| Federal funds purchased and repurchase agreements |
26,598 | 13,647 | ||||||
| Other borrowed funds |
11 | 19,615 | ||||||
| Accrued interest payable |
765 | 489 | ||||||
| Other liabilities |
7,988 | 8,006 | ||||||
| Junior subordinated debentures |
30,928 | 15,464 | ||||||
| TOTAL LIABILITIES |
760,197 | 741,698 | ||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Common stock, no par value; 24,000,000 shares authorized; 9,383,668 and 9,323,502 shares issued and outstanding in 2004 and 2003, respectively |
5,091 | 4,513 | ||||||
| Retained earnings |
56,429 | 54,124 | ||||||
| Accumulated other comprehensive income |
1,488 | 1,339 | ||||||
| TOTAL SHAREHOLDER’S EQUITY |
63,008 | 59,976 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 823,205 | $ | 801,674 | ||||
3
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
(dollars in thousands, except per share data, unaudited)
| For the Quarter Ended March 31, 2004 |
For the Quarter Ended March 31, 2003 |
||||||
| INTEREST INCOME: |
|||||||
| Federal funds sold and interest bearing deposits |
$ | 8 | $ | 25 | |||
| US Treasury securities |
4 | 2 | |||||
| US Gov’t agencies |
98 | 180 | |||||
| State and political subdivsions |
342 | 423 | |||||
| Mortgage-backed securities |
423 | 220 | |||||
| Corporate bonds |
— | 74 | |||||
| Equities |
15 | 57 | |||||
| Loans and leases, including fee income |
11,062 | 9,157 | |||||
| Total interest income |
11,952 | 10,138 | |||||
| INTEREST EXPENSE: |
|||||||
| Interest on deposits |
1,348 | 1,695 | |||||
| Interest on borrowed funds |
261 | 239 | |||||
| Total interest expense |
1,609 | 1,934 | |||||
| Net Interest Income |
10,343 | 8,204 | |||||
| Provision for loan losses |
900 | 400 | |||||
| Net Interest Income after Provision for Loan Losses |
9,443 | 7,804 | |||||
| OTHER OPERATING INCOME: |
|||||||
| Service charges on deposit accounts |
1,452 | 1,341 | |||||
| Gains on sales of loans |
117 | 61 | |||||
| Gain on sale of investment securities available-for-sale |
5 | (37 | ) | ||||
| Other |
1,035 | 838 | |||||
| Total other operating income |
2,609 | 2,203 | |||||
| OTHER OPERATING EXPENSES: |
|||||||
| Salaries and employee benefits |
3,708 | 3,561 | |||||
| Occupancy expense |
1,396 | 1,182 | |||||
| Other |
2,431 | 2,037 | |||||
| Total other operating expenses |
7,535 | 6,780 | |||||
| INCOME BEFORE PROVISION FOR INCOME TAXES |
4,517 | 3,227 | |||||
| Provision for income taxes |
1,371 | 756 | |||||
| NET INCOME |
$ | 3,146 | $ | 2,471 | |||
| Other comprehensive income (loss), unrealized gain (loss) on securities available for sale, net of income taxes |
149 | (74 | ) | ||||
| COMPREHENSIVE INCOME |
$ | 3,295 | $ | 2,397 | |||
| PER SHARE DATA |
|||||||
| Book value |
$ | 6.71 | $ | 5.93 | |||
| Cash dividends |
$ | 0.09 | $ | 0.08 | |||
| Earnings per share basic |
$ | 0.34 | $ | 0.27 | |||
| Earnings per share diluted |
$ | 0.31 | $ | 0.25 | |||
| Average shares outstanding, basic |
9,353,761 | 9,253,137 | |||||
| Average shares outstanding, diluted |
10,081,680 | 9,866,569 | |||||
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands, unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash Flows from Operating Activities |
||||||||
| Net income |
$ | 3,146 | $ | 2,471 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| (Gain) Loss on sale of securities |
(5 | ) | 37 | |||||
| Gain on sales of loans |
(117 | ) | (68 | ) | ||||
| Loss on sale of other real estate |
— | 70 | ||||||
| Provision for loan losses |
900 | 400 | ||||||
| Depreciation and amortization |
697 | 532 | ||||||
| Net amortization (accretion) on securities premiums and discounts |
365 | (151 | ) | |||||
| Increase in unearned net loan fees |
39 | 167 | ||||||
| Increase (Decrease) in cash surrender value of life insurance policies |
(145 | ) | (29 | ) | ||||
| Proceeds from sales of loans held for sale |
6,339 | 3,266 | ||||||
| Originations of loans held for sale |
(6,361 | ) | (2,791 | ) | ||||
| Increase in interest receivable and other assets |
(3,177 | ) | (1,113 | ) | ||||
| Increase (Decrease) in other liabilities |
258 | (1,430 | ) | |||||
| Net cash provided by (used in) operating activities |
1,939 | 1,361 | ||||||
| Cash Flows from Investing Activities |
||||||||
| Maturities of securities available for sale |
3,503 | 2,243 | ||||||
| Proceeds from sales/calls of securities available for sale |
4,550 | 2,599 | ||||||
| Purchases of securities available for sale |
(20,116 | ) | (10,394 | ) | ||||
| Principal paydowns on securities available for sale |
3,779 | 4,006 | ||||||
| (Increase) Decrease in loans receivable, net |
(1,322 | ) | 768 | |||||
| Purchases of premises and equipment |
(1,478 | ) | (215 | ) | ||||
| Proceeds from sales of other real estate |
— | 173 | ||||||
| Other |
(378 | ) | (197 | ) | ||||
| Net cash used in investing activities |
(11,462 | ) | (1,017 | ) | ||||
| Cash Flows from Financing Activities |
||||||||
| Increase (decrease) in deposits |
9,430 | (5,738 | ) | |||||
| Decrease in federal funds purchased |
— | (4,750 | ) | |||||
| Decrease in borrowed funds |
(19,604 | ) | (3 | ) | ||||
| Increase in repurchase agreements |
12,951 | 814 | ||||||
| Proceeds from issuance of subordinated debentures |
15,464 | — | ||||||
| Cash dividends paid |
(840 | ) | (740 | ) | ||||
| Stock repurchased |
— | (377 | ) | |||||
| Stock options exercised |
443 | 261 | ||||||
| Net cash provided by financing activities |
17,844 | (10,533 | ) | |||||
| (Decrease) in cash and due from banks |
8,321 | (10,189 | ||||||