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 SEPTEMBER 30, 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 x NO ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES ¨ NO x
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, 9,614,208 shares outstanding as of October 31, 2004
Table of Contents
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| 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 | |
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| 35 | ||
| Item 3. Qualitative & Quantitative Disclosures about Market Risk |
37 | |
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| 38 | ||
| 38 | ||
| Item 2. - Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
38 | |
| 38 | ||
| Item 4. - Submission of Matters to a Vote of Security Holders |
38 | |
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2
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, unaudited)
| September 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Cash and due from banks |
$ | 32,609 | $ | 53,042 | ||||
| Federal Funds Sold |
— | — | ||||||
| Total Cash & Cash Equivalents |
32,609 | 53,042 | ||||||
| Securities available for sale |
197,969 | 84,798 | ||||||
| Loans and leases: |
||||||||
| Gross loans and leases |
652,096 | 610,681 | ||||||
| Allowance for loan and lease losses |
(8,476 | ) | (6,701 | ) | ||||
| Deferred loan and lease fees, net |
(1,062 | ) | (1,716 | ) | ||||
| Net Loans and Leases |
642,558 | 602,264 | ||||||
| Other equity securities |
6,134 | 1,763 | ||||||
| Premises and equipment, net |
17,678 | 16,814 | ||||||
| Operating Leases |
1,755 | 1,477 | ||||||
| Other real estate |
2,039 | 2,784 | ||||||
| Accrued interest receivable |
4,151 | 3,238 | ||||||
| Other assets |
42,755 | 35,494 | ||||||
| TOTAL ASSETS |
$ | 947,648 | $ | 801,674 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES |
||||||||
| Deposits: |
||||||||
| Demand |
$ | 217,951 | $ | 196,392 | ||||
| Interest bearing demand |
58,240 | 55,047 | ||||||
| Savings |
66,308 | 50,643 | ||||||
| MMDA’s |
136,795 | 130,803 | ||||||
| TDOA’s, IRA’s & KEOGH’S |
22,565 | 22,359 | ||||||
| Time deposits < $100,000 |
88,838 | 100,128 | ||||||
| Time deposits > $100,000 |
128,658 | 129,105 | ||||||
| Total Deposits |
719,355 | 684,477 | ||||||
| Federal funds purchased and repurchase agreements |
28,339 | 13,647 | ||||||
| Short Term Borrowings |
15,003 | 19,615 | ||||||
| Long Term Borrowings |
75,000 | — | ||||||
| Accrued interest payable |
1,653 | 489 | ||||||
| Other liabilities |
8,235 | 8,006 | ||||||
| Junior subordinated debentures |
30,928 | 15,464 | ||||||
| TOTAL LIABILITIES |
878,513 | 741,698 | ||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Common stock, no par value; 24,000,000 shares authorized; 9,584,808 and 9,323,502 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively |
7,474 | 4,513 | ||||||
| Retained earnings |
60,912 | 54,124 | ||||||
| Accumulated other comprehensive income |
749 | 1,339 | ||||||
| TOTAL SHAREHOLDER’S EQUITY |
69,135 | 59,976 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 947,648 | $ | 801,674 | ||||
3
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
(dollars in thousands, except per share data, unaudited)
| For the Three-Month Period Ended September 30, |
For the Nine-Month Period Ended September 30, |
||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
||||||||||||
| INTEREST INCOME: |
|||||||||||||||
| Federal funds sold and interest bearing deposits |
$ | 24 | $ | 1 | $ | 47 | $ | 40 | |||||||
| US Treasury securities |
4 | 2 | 12 | 6 | |||||||||||
| US Gov’t agencies |
69 | 108 | 244 | 425 | |||||||||||
| State and political subdivsions |
317 | 375 | 988 | 1,201 | |||||||||||
| Mortgage-backed securities |
1,556 | 81 | 3,185 | 484 | |||||||||||
| Corporate bonds |
— | 30 | — | 153 | |||||||||||
| Equities |
55 | 42 | 95 | 120 | |||||||||||
| Loans and leases, including fee income |
11,451 | 10,276 | 33,274 | 28,948 | |||||||||||
| Total interest income |
13,476 | 10,915 | 37,845 | 31,377 | |||||||||||
| INTEREST EXPENSE: |
|||||||||||||||
| Interest on deposits |
1,342 | 1,366 | 3,992 | 4,544 | |||||||||||
| Interest on borrowed funds |
932 | 263 | 1,994 | 742 | |||||||||||
| Total interest expense |
2,274 | 1,629 | 5,986 | 5,286 | |||||||||||
| Net Interest Income |
11,202 | 9,286 | 31,859 | 26,091 | |||||||||||
| Provision for loan losses |
1,000 | 800 | 2,673 | 1,925 | |||||||||||
| Net Interest Income after Prov. for Loan Losses |
10,202 | 8,486 | 29,186 | 24,166 | |||||||||||
| OTHER OPERATING INCOME: |
|||||||||||||||
| Service charges on deposit accounts |
1,575 | 1,537 | 4,672 | 4,405 | |||||||||||
| Gains on sales of loans |
114 | 96 | 317 | 208 | |||||||||||
| Gain on sale of investment securities available-for-sale |
14 | 150 | 19 | 115 | |||||||||||
| Other |
1,029 | 935 | 3,052 | 2,707 | |||||||||||
| Total other operating income |
2,732 | 2,718 | 8,060 | 7,435 | |||||||||||
| OTHER OPERATING EXPENSES: |
|||||||||||||||
| Salaries and employee benefits |
2,990 | 3,407 | 10,038 | 10,254 | |||||||||||
| Occupancy expense |
1,608 | 1,375 | 4,498 | 3,796 | |||||||||||
| Other |
2,397 | 2,295 | 7,340 | 6,799 | |||||||||||
| Total other operating expenses |
6,995 | 7,077 | 21,876 | 20,849 | |||||||||||
| INCOME BEFORE PROV. FOR INCOME TAXES |
5,939 | 4,127 | 15,370 | 10,752 | |||||||||||
| Provision for income taxes |
1,996 | 1,086 | 5,355 | 2,774 | |||||||||||
| NET INCOME |
$ | 3,943 | $ | 3,041 | $ | 10,015 | $ | 7,978 | |||||||
| Other comprehensive loss, unrealized loss on securities available for sale, net of income taxes |
1,825 | (422 | ) | (590 | ) | (557 | ) | ||||||||
| COMPREHENSIVE INCOME PER SHARE DATA |
$ | 5,768 | $ | 2,619 | $ | 9,425 | $ | 7,421 | |||||||
| Book value |
$ | 7.21 | $ | 6.28 | $ | 7.21 | $ | 6.28 | |||||||
| Cash dividends |
$ | 0.09 | $ | 0.08 | $ | 0.27 | $ | 0.24 | |||||||
| Earnings per share basic |
$ | 0.41 | $ | 0.33 | $ | 1.06 | $ | 0.86 | |||||||
| Earnings per share diluted |
$ | 0.39 | $ | 0.30 | $ | 0.99 | $ | 0.80 | |||||||
| Average shares outstanding, basic |
9,532,498 | 9,302,657 | 9,433,255 | 9,278,885 | |||||||||||
| Average shares outstanding, diluted |
10,133,300 | 10,043,714 | 10,095,704 | 10,001,101 | |||||||||||
4
CONSOLIDATED STATEMENTS OF CASH FLOWS