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, 2005
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 þ NO ¨
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, 9,828,175 shares outstanding as of April 30, 2005
FORM 10-Q
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| Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations |
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| Overview of the Results of Operations and Financial Condition |
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| Item 3. Qualitative & Quantitative Disclosures about Market Risk |
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| Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds |
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| Item 4. - Submission of Matters to a Vote of Security Holders |
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2
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, unaudited)
| March 31, 2005 |
December 31, 2004 |
|||||||
| ASSETS | ||||||||
| Cash and due from banks |
$ | 35,022 | $ | 36,735 | ||||
| Federal Funds Sold |
19,400 | — | ||||||
| Total Cash & Cash Equivalents |
54,422 | 36,735 | ||||||
| Securities available for sale |
199,003 | 198,024 | ||||||
| Loans and leases: |
||||||||
| Gross loans and leases |
683,211 | 696,276 | ||||||
| Allowance for loan and lease losses |
(9,651 | ) | (8,842 | ) | ||||
| Deferred loan and lease fees, net |
(1,223 | ) | (1,277 | ) | ||||
| Net Loans and Leases |
672,337 | 686,157 | ||||||
| Other equity securities |
6,059 | 5,960 | ||||||
| Premises and equipment, net |
17,353 | 17,731 | ||||||
| Operating leases, net |
2,007 | 2,057 | ||||||
| Other real estate |
2,234 | 2,524 | ||||||
| Accrued interest receivable |
4,377 | 4,218 | ||||||
| Other assets |
44,899 | 44,077 | ||||||
| TOTAL ASSETS |
$ | 1,002,691 | $ | 997,483 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES |
||||||||
| Deposits: |
||||||||
| Demand |
$ | 241,603 | $ | 235,732 | ||||
| Interest bearing demand |
67,704 | 62,887 | ||||||
| Savings |
72,696 | 68,192 | ||||||
| MMDA’s |
115,578 | 137,545 | ||||||
| TDOA’s, IRA’s & KEOGH’S |
21,486 | 22,195 | ||||||
| Time deposits < $100,000 |
84,178 | 84,576 | ||||||
| Time deposits ³ $100,000 |
165,848 | 131,576 | ||||||
| Total Deposits |
769,093 | 742,703 | ||||||
| Federal funds purchased and repurchase agreements |
28,720 | 24,187 | ||||||
| Short Term Borrowings |
15,000 | 43,800 | ||||||
| Long Term Borrowings |
75,000 | 75,000 | ||||||
| Accrued interest payable |
1,995 | 1,053 | ||||||
| Other liabilities |
8,763 | 8,677 | ||||||
| Junior subordinated debentures |
30,928 | 30,928 | ||||||
| TOTAL LIABILITIES |
929,499 | 926,348 | ||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Common stock, no par value; 24,000,000 shares authorized; 9,775,923 and 9,649,258 shares issued and outstanding at March 31, 2005 and |
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| December 31, 2004, respectively |
10,310 | 8,829 | ||||||
| Retained earnings |
64,044 | 62,060 | ||||||
| Accumulated other comprehensive income |
(1,162 | ) | 246 | |||||
| TOTAL SHAREHOLDER’S EQUITY |
73,192 | 71,135 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 1,002,691 | $ | 997,483 | ||||
3
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
(dollars in thousands, except per share data, unaudited)
| For the Quarter Ended March 31, 2005 |
For the Quarter Ended March 31, 2004 | ||||||
| INTEREST INCOME: |
|||||||
| Federal funds sold and interest bearing deposits |
$ | 26 | $ | 8 | |||
| US Treasury securities |
4 | 4 | |||||
| US Gov’t agencies |
60 | 98 | |||||
| State and political subdivsions |
334 | 342 | |||||
| Mortgage-backed securities |
1,557 | 423 | |||||
| Restricted Stock |
— | 15 | |||||
| Loans and leases, including fee income |
12,678 | 11,062 | |||||
| Total interest income |
14,659 | 11,952 | |||||
| INTEREST EXPENSE: |
|||||||
| Interest on deposits |
1,677 | 1,348 | |||||
| Interest on borrowed funds |
1,154 | 261 | |||||
| Total interest expense |
2,831 | 1,609 | |||||
| Net Interest Income |
11,828 | 10,343 | |||||
| Provision for loan losses |
1,000 | 900 | |||||
| Net Interest Income after Provision for Loan Losses |
10,828 | 9,443 | |||||
| OTHER OPERATING INCOME: |
|||||||
| Service charges on deposit accounts |
1,302 | 1,523 | |||||
| Gains on sales of loans |
527 | 117 | |||||
| (Loss) gain on investment securities |
(330 | ) | 5 | ||||
| Other |
1,160 | 964 | |||||
| Total other operating income |
2,659 | 2,609 | |||||
| OTHER OPERATING EXPENSES: |
|||||||
| Salaries and employee benefits |
4,066 | 3,708 | |||||
| Occupancy expense |
1,497 | 1,364 | |||||
| Other |
3,173 | 2,463 | |||||
| Total other operating expenses |
8,736 | 7,535 | |||||
| INCOME BEFORE PROVISION FOR INCOME TAXES |
4,751 | 4,517 | |||||
| Provision for income taxes |
1,490 | 1,371 | |||||
| NET INCOME |
$ | 3,261 | $ | 3,146 | |||
| Other comprehensive (loss) income, unrealized (loss) gain on securities available for sale, net of income taxes |
(1,408 | ) | 149 | ||||
| COMPREHENSIVE INCOME |
$ | 1,853 | $ | 3,295 | |||
| PER SHARE DATA |
|||||||
| Book value |
$ | 7.49 | $ | 6.71 | |||
| Cash dividends |
$ | 0.11 | $ | 0.09 | |||
| Earnings per share basic |
$ | 0.34 | $ | 0.34 | |||
| Earnings per share diluted |
$ | 0.31 | $ | 0.31 | |||
| Average shares outstanding, basic |
9,723,454 | 9,353,761 | |||||
| Average shares outstanding, diluted |
10,386,027 | 10,081,680 | |||||
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands, unaudited)
| Three Months Ended March 31, |
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| 2005 |
2004 |
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| Cash Flows from Operating Activities |
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| Net income |
$ | 3,261 | $ | 3,146 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Loss (Gain) on investments |
330 | (5 | ) | |||||
| Gain on sales of loans |
(527 | ) | (117 | ) | ||||
| Gain on sale of other real estate |
(39 | ) | — | |||||
| Writedown to OREO |
260 | — | ||||||
| Provision for loan losses |
810 | 900 | ||||||
| Depreciation and amortization |
791 | 697 | ||||||
| Net amortization on securities premiums and discounts |
358 | 365 | ||||||
| (Increase) Decrease in unearned net loan fees |
(54 | ) | 39 | |||||
| Increase in cash surrender value of life insurance policies |
(157 | ) | (145 | ) | ||||
| Proceeds from sales of loans held for sale |
32,648 | 6,339 | ||||||
| Originations of loans held for sale |
(31,802 | ) | (6,361 | ) | ||||
| Decrease (Increase) in interest receivable and other assets |
62 | (3,177 | ) | |||||
| Increase in other liabilities |
1,028 | 258 | ||||||
| Net cash provided by operating activities |
6,969 | 1,939 | ||||||
| Cash Flows from Investing Activities |
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| Maturities of securities available for sale |
1,785 | 3,503 | ||||||
| Proceeds from sales/calls of securities available for sale |
— | 4,550 | ||||||
| Purchases of securities available for sale |
(14,729 | ) | (20,116 | ) | ||||
| Principal paydowns on securities available for sale |
9,215 | 3,779 | ||||||
| Decrease (Increase) in loans receivable, net |
12,745 | (1,322 | ) | |||||
| Purchases of premises and equipment |
(363 | ) | (1,478 | ) | ||||
| Proceeds from sales of other real estate |
69 | — | ||||||
| Other |
— | (378 | ) | |||||
| Net cash provided by (used in) investing activities |
8,722 | (11,462 | ) | |||||
| Cash Flows from Financing Activities |
||||||||
| Increase in deposits |
26,390 | 9,430 | ||||||
| Decrease in borrowed funds |
(28,800 | ) | (19,604 | ) | ||||
| Increase in repurchase agreements |
4,533 | 12,951 | ||||||
| Proceeds from issuance of subordinated debentures |
— | 15,464 | ||||||
| Cash dividends paid |
(1,070 | ) | (840 | ) | ||||
| Stock repurchased |
(214 | ) | — | |||||
| Stock options exercised |
1,157 | 443 | ||||||
| Net cash provided by financing activities |
1,996 | 17,844 | ||||||