Bull of the Day: Sierra Bancorp (BSRR) - Bull of the Day - Sierra (NASDAQ:BSRR)

This California-based bank reported strong results with solid growth in loans and improvement in credit quality. Rising earnings estimates sent the stock back to Zacks Rank # 1 (Strong Buy).

About the Company

Sierra Bancorp BSRR is the parent of Bank of the Sierra, which it acquired in August 2001. Bank of the Sierra offers a full range of retail and commercial banking services, primarily in the central and southern sections of the San Joaquin Valley, California.

Excellent Results and Improving Fundamentals

Sierra Bancorp reported its Q2 2014 results on July 21.Net income for the quarter was $4.2 million, up 12% from the same quarter of 2013, thanks mainly to higher net interest income, lower loan loss provision and investment gains.

The bank's ROA was 1.16%, up from 1.09% in Q2 2013. ROE also increased to 9.13% in the quarter from 8.62% in the same period last year. . Earnings for the quarter increased to $0.30 per share, significantly ahead of the Zacks Consensus Estimate of $0.23 per share and also up from $0.27 per share a year ago.

Total non-performing assets declined by 36.5% to $33.7 million, or 3.27% of gross loans, from $53.1 million, or 5.22% of gross loans, at June 30, 2013. Both loans and deposits saw nice growth during the quarter.

Strong Capital Position, Returning Cash to Shareholders

The bank has a very strong capital position with total risk-based capital ratio at 20.1%, tier 1 risk-based capital ratio at 18.9%, and tier 1 leverage ratio at 13.9% at June 30, 2014.

On July 18, the bank announced a quarterly cash dividend of $0.09 per share, an increase of 13% over the dividend paid the previous quarter and the third dividend increase within the past 12 months. The company has paid regular cash dividends to shareholders every year since 1987.

Positive Earnings Estimates Revisions

As a result of improving outlook for the company, analysts have been revising their estimates for current and the next fiscal year. Zacks consensus estimates for FY 2013 and 2014 now stand at $1.11 and $1.20 per share, up from $0.96 and $1.01 per share, 60 days ago. The company has beaten the Zacks Consensus Estimates in each of the last four quarter with an average positive surprise of 25.4%.

The following chart shows the positive earnings momentum for the stock:

The Bottom Line

With strong loan growth, improvement in loan quality and strong capital levels, this bank looks poised to outperform in the coming months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.

Click to get this free report

SIERRA BANCORP BSRR: Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Market News and Data brought to you by Benzinga APIs