Basswood Capital Management Reduces Its Holding In Sierra Bancorp (BSRR)

Sierra Bancorp released its earnings data on July 20 and the stock price slumped despite the seemingly strong financial figures. The bank posted net income of $4.56 million for the second quarter of the current year, which marked an increase of 8% year-over-year. Moreover, Sierra Bancorp delivered diluted earnings per share of $0.33, compared to the $0.30 figure reported in the same quarter a year ago. It is also worth noting that the diluted earnings per share figure beat the analysts’ estimates of $0.31, so the slump in the company’s share price seems quite bizarre. But as the Efficient-market hypothesis suggests, the market as a whole is always right. It might be the case that the market expected even stronger financial results on behalf of Sierra Bancorp, given that other banks in the industry had delivered very strong second quarter results. Even more to that, let’s not forget to mention that the company did not meet the analysts’ estimates on revenue. Sierra Bancorp posted revenue of $19.70 million for the quarter, compared to the consensus estimate of $19.75 million. However, Kevin McPhaill, the President and CEO of Sierra Bancorp, appeared to be very positive and optimistic about the company’s financial performance. He mentioned that the bank experienced exceptional growth in both loans and core deposits as a result of its focused business development efforts.

Earlier this year, Sierra Bancorp announced the approval of an additional share repurchase program amounting to 500,000 shares, which represent roughly 4% of the company’s total outstanding shares. Sierra Bancorp had previously repurchased 700,000 shares during the period of March 2014 through March 2015. Therefore, the additional repurchases may enhance the earnings per share the company will be posting in the upcoming quarters. Sierra Bancorp claimed that its improved financial performance over the last months and quarters allowed the company to pursue this activity. So it should not be a surprise if the bank delivers earnings per share figures that beat the EPS figures previously reported. Within our database, Joshua Nash’s Ulysses Management is among the largest shareholders in Sierra Bancorp (NASDAQ:BSRR),  holding 126,646 shares as of March 31.

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