Jan. 27--Bank of the Sierra, through its holding company, reported a 4th-quarter loss Monday but remained profitable for 2008 as a whole.

The tough quarter underscores how the recession's impact has spread to regional banks -- which were spared much of the subprime fiasco -- as other real estate sectors soften.

The Porterville-based institution, which has a strong Kern County presence, lost $1.9 million, or 19 cents per basic share, on assets of $1.3 billion. The quarterly loss compares to earnings of $4.9 million a year earlier.

For the year, the bank's net income was $13.4 million, or $1.40 a share, a decline of 36 percent from earnings in 2007.

James C. Holly, chief executive, said in a statement he expects choppy waters in the short term, including an increase in nonperforming loans. He expects the banking outlook to improve by early 2010.

The bulk of troubled loans involve land acquisition and development projects. The bank also saw an increase in wobbly residential construction loans.

Holly said aggressive identification of soured assets, including write-downs and charge-offs as needed, will position the company well for the eventual economic recovery.

The bank announced a quarterly dividend last week of 10 cents a share payable on Feb. 19.

The holding company, Sierra Bancorp, trades on Nasdaq under the symbol BSRR. Shares closed down $1.05 Monday at $14.01.

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