Investors are becoming impatient with SierraWest Bancorp in Truckee, Calif., and have initiated talks with management about sale of the $846.6 million-asset company.

Boutique fund managers are disappointed at SierraWest's earnings growth, return on equity, and ability to control overhead expenses.

Some frustrated investors, who recently have held discussions with management and speak highly of SierraWest's geographic franchise, said the talks are amicable. But that could change if SierraWest does not show signs of improvement-or take steps to sell-by yearend.

"For every step forward, they seem to take two steps back," said David H. Winton, an anaylst at Keefe, Bruyette & Woods Inc. in New York, who recently reduced his rating of the stock to "attractive" from "buy." He added, "Investors want something to happen."

Although it is unclear to what degree these fund managers can put pressure on management, there is even early talk of launching a proxy fight.

"I'm sure some folks would like to see us sell, but there are others who would like us to hang on," said William T. Fike, president and chief executive officer. Mr. Fike, who owns 2.5% of SierraWest stock, added that management continually reviews its short- and long-term strategies.

Market sources speculated that SierraWest could fetch from $45 to $48 a share. Potential buyers include Zions Bancorp. and First Security Corp., two Salt Lake City banking companies that have been active in California.

Shares of SierraWest closed at $33.375, up 25 cents, in heavy trading Friday and were trading at $32.75 at midafternoon Monday.

SierraWest reported a second-quarter loss of $72,000, or 2 cents a share, compared with earnings of $2.6 million, or 52 cents a share, a year earlier. It reported a return on equity of 12.9%, compared with 18.9% for the comparable period in 1997.

Company officials attributed the earnings plunge to $3.5 million of merger expenses related to the acquisition of California Community Bankshares in Vacaville.

Analysts said the poor second-quarter showing also reflected loan prepayments, as the bank's customers opted for lower rates offered by Bank of America and Wells Fargo & Co.

Based near Lake Tahoe, SierraWest has 20 branches stretching along Northern California's Interstate 80 corridor, into Reno, and is among the nation's top 25 Small Business Administration lenders.

The bank is coming off a tough 1997 restructuring. Management eliminated 40 jobs and consolidated some back-office operations. The measures saved $1.5 million, or 45 cents a share, and improved the company's efficiency ratio of 70% to 57% last year. But this ratio rose to 68.3% again in the second quarter.

"The extraordinary expenses have become the ordinary," said small-fund manager David Harvey of Everest Partners LP in Gardnerville, Nev., who owns a 1.5% stake. "Their time has run out."

Jeff Miller, managing partner of the Acadia Fund, a Villanova, Pa., hedge fund that owns 4% of SierraWest stock, said management has built a great franchise. But he said selling the company "makes more sense now than it did six months ago."

Still, some analysts say, SierraWest's long-term prospects are good.

Bear, Stearns & Co.'s Kirsten B. Gard said she remains hopeful, despite shaving 35 cents off her fiscal year 1998 earnings estimate in June to $1.85 per share.

In a First Call report, Ms. Gard wrote: "The first six months of 1998 have produced disappointing results ... but we believe they will improve after the acquisition is fully absorbed and cost savings are realized in the third quarter."

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