Press Release

Timberland Bank Reports Growing Profitability for 2017’s Third Fiscal Quarter:

Company Release - 7/25/2017 7:50 PM ET
  • Earnings Per Share Increased 61% to $0.58;
  • Prepays Legacy High Cost Federal Home Loan Bank Borrowings;
  • Announces $0.11 Regular Dividend and $0.08 Special Dividend

HOQUIAM, Wash., July 25, 2017 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) (“Timberland” or “the Company”) today reported net income of $4.28 million, or $0.58 per diluted common share, for its third fiscal quarter ended June 30, 2017.  This compares to net income of $2.55 million, or $0.36 per diluted common share, for the quarter ended June 30, 2016, and net income of $3.13 million, or $0.42 per diluted common share, for the preceding quarter ended March 31, 2017.  

For the first nine months of fiscal 2017, Timberland earned $10.55 million, or $1.44 per diluted common share, a 42% increase in net income and a 37% increase in earnings per diluted common share (“EPS”) from the $7.46 million, or $1.05 per diluted common share, reported for the first nine months of fiscal 2016.

Timberland’s Board of Directors also declared a quarterly dividend of $0.11 per common share, payable on August 25, 2017 to shareholders of record on August 11, 2017.  The Company’s Board of Directors also declared a special one-time dividend of $0.08 per share payable on August 25, 2017 to shareholders of record on August 11, 2017.

”This quarter we once again received the financial benefit of growing revenues more than expenses,” stated Michael R. Sand, President and CEO.  “We also recouped interest that had previously been classified as non-accrual and booked a recovery on a previously charged off loan that was fully paid during the quarter.  Income recognized from these two sources was partially offset by prepayment penalties incurred for the early termination of two legacy Federal Home Loan Bank (“FHLB”) borrowings.  The net result of these three items was a $953,000 increase in net income which positively affected the current quarter’s EPS by approximately $0.13.  Even without the benefit of these extraordinary items the quarter’s income and EPS significantly exceeded the results posted in the prior fiscal year’s comparable quarter.  Prepaying the FHLB borrowings eliminated monthly interest expense by, on average, $100,000 per month which will benefit our fiscal fourth and subsequent quarters.”     

Third Fiscal Quarter 2017 Earnings and Balance Sheet Highlights (at or for the period ended June 30, 2017, compared to March 31, 2017, or June 30, 2016):

   Earnings Highlights:

  • EPS increased 61% to $0.58 from $0.36 for the comparable quarter one year ago;
  • Net income increased 68% to $4.28 million from $2.55 million for the comparable quarter one year ago;
  • Return on average equity and return on average assets for the current quarter were 16.14% and 1.86%, respectively;
  • Operating revenue increased 20% from the comparable quarter one year ago;
  • Non-interest income increased 15% from the comparable quarter one year ago;
  • Efficiency ratio improved to 55.94% for the current quarter from 63.37% for the comparable quarter one year ago;
  • Net interest margin increased to 4.29% for the current quarter (approximately 22 basis points was due to the collection of non-accrual interest, which was partially offset by prepayment penalties paid for the early termination of two FHLB borrowings); and
  • Recorded a loan loss recapture of $1.00 million as a direct result of recording net recoveries of $1.02 million during the current quarter.

   Balance Sheet Highlights:

  • Increased net loans receivable 6% year-over-year and 2% from the prior quarter;
  • Increased total deposits 14% year-over-year and 1% from the prior quarter;
  • Prepaid $30.0 million of legacy FHLB borrowings during the current quarter;
  • Decreased troubled debt restructured loans 56% year-over-year and 47% from the prior quarter; and
  • Increased book and tangible book (non-GAAP) values per common share to $14.77 and $14.00, respectively, at June 30, 2017.

Operating Results

Operating revenue (net interest income before the recapture of loan losses, plus non-interest income excluding other than temporary impairment (“OTTI”) charges on investment securities) increased 20% to $12.40 million for the current quarter from $10.37 million for the comparable quarter one year ago and increased 10% from $11.30 million for the preceding quarter. Operating revenue increased 14% to $35.24 million for the first nine months of fiscal 2017 from $30.81 million for the comparable period one year ago.

Net interest income for the current quarter increased 21% to $9.25 million from $7.62 million for the comparable quarter one year ago and increased 9% from $8.45 million for the preceding quarter.  The increased net interest income for the current quarter compared to the preceding quarter was primarily due to an increase in the amount of non-accrual interest collected, which was partially offset by FHLB borrowing prepayment penalties for the early termination of Timberland’s remaining FHLB borrowings.  For the first nine months of fiscal 2017, net interest income increased 13% to $26.01 million from $23.00 million for the first nine months of fiscal 2016.

The net interest margin for the current quarter increased to 4.29% from 3.88% for the preceding quarter and 3.83% for the comparable quarter one year ago.  The net interest margin for the current quarter was increased by approximately 22 basis points due to the net effect of collecting $748,000 of non-accrual interest and paying $282,000 in FHLB borrowing prepayment penalties.  The net interest margin for the preceding quarter was increased by approximately nine basis points due to the collection of $204,000 of non-accrual interest.  The net interest margin for the comparable quarter one year ago was increased by approximately two basis points due to the collection of $34,000 of non-accrual interest.  Timberland’s net interest margin for the first nine months of fiscal 2017 was 4.03% compared to 3.91% for the first nine months of fiscal 2016.

Non-interest income for the current quarter increased 15% to $3.16 million from $2.75 million for the comparable quarter one year ago and increased 11% from $2.85 million for the preceding quarter.  The increase in non-interest income for the current quarter compared to the preceding quarter was primarily due to a $155,000 increase in gain on sale of loans and smaller increases in several other categories.  The increase in gain on sale of loans was primarily due to an increase in the dollar volume of fixed-rate one- to four-family loans sold during the current quarter.  Fiscal year-to-date non-interest income increased 19% to $9.22 million from $7.78 million for the first nine months of fiscal 2016.

Total operating (non-interest) expenses for the current quarter increased 1% to $6.94 million from $6.86 million for the preceding quarter and increased 6% from $6.57 million for the comparable quarter one year ago.  The increased expenses for the current quarter compared to the preceding quarter were primarily due to a $61,000 increase in deposit operations expenses and smaller increases in several other categories.  The efficiency ratio for the current quarter improved to 55.94% from 63.37% for the comparable quarter one year ago and 60.67% for the preceding quarter.  Fiscal year-to-date operating expenses increased 5% to $20.61 million from $19.68 million for the first nine months of fiscal 2016.  The efficiency ratio for the first nine months of fiscal 2017 improved to 58.48% from 63.93% for the first nine months of fiscal 2016.

The provision for income taxes for the current quarter increased to $2.19 million from $1.57 million for the preceding quarter.  The effective tax rate was 33.8% for the current quarter compared to 33.4% for the quarter ended March 31, 2017.

Balance Sheet Management

Total assets decreased 2% to $931.01 million at June 30, 2017 from $946.68 million at March 31, 2017.  The decrease was primarily due to using liquid assets to prepay $30.00 million of high cost FHLB borrowings during the quarter.

Liquidity, as measured by cash and cash equivalents, CDs held for investment and available for sale investments securities, was 21.6% of total liabilities at June 30, 2017, compared to 24.0% at March 31, 2017, and 18.7% one year ago. 

Net loans receivable increased $11.08 million, or 2%, to $687.16 million at June 30, 2017, from $676.08 million at
March 31, 2017.  The increase was primarily due to a $10.27 million increase in custom and owner/builder one- to four-family construction loans, a $9.31 million increase in commercial construction loans, a $6.78 million increase in commercial mortgage loans, a $2.69 million increase in speculative one- to four-family construction loans, and smaller increases in several other categories.  These increases were partially offset by a $12.40 million increase in the amount of undisbursed construction loans in process, a $2.13 million decrease in multi-family mortgage loans, a $1.53 million decrease in land loans, and smaller decreases in several other categories. 

LOAN PORTFOLIO

($ in thousands) June 30, 2017 March 31, 2017 June 30, 2016
  Amount  Percent  Amount  Percent  Amount  Percent 
                
Mortgage loans:             
  One- to four-family (a) $  121,705  16%   $  122,889  16% $ 117,055  17%
  Multi-family    61,051    8      63,181    8      51,672    7 
  Commercial    331,901    43     325,120    44     294,887    42 
  Construction - custom and            
owner/builder    109,578    14     99,304    13      88,593    12 
  Construction - speculative
  one-to four-family
    8,002    1     5,311    1     8,261    1 
  Construction - commercial    20,067    3     10,762    2     21,427    3 
  Construction - multi-family    11,057    1     11,057    2     18,090    3 
  Land    24,333    3     25,866    3     24,076    3 
Total mortgage loans    687,694    89     663,490    89     624,061    88 
             
Consumer loans:            
  Home equity and second            
mortgage    36,320    5     38,024    5     38,482    5 
  Other    3,789    --     3,527    --     4,490    1 
Total consumer loans    40,109    5     41,551    5     42,972    6 
             
Commercial business loans (b)       43,407    6     42,603    6     43,571    6 
Total loans    771,210  100%    747,644  100%    710,604  100%
Less:            
Undisbursed portion of            
construction loans in            
process  (72,133)    (59,724)    (51,163)  
Deferred loan origination            
fees  (2,309)    (2,251)    (2,233)  
Allowance for loan losses  (9,610)    (9,590)    (9,842)  
Total loans receivable, net $  687,158    $  676,079    $647,366   
 
                      
                      
(a)  Does not include one- to four-family loans held for sale totaling $3,523, $5,542 and $4,885 at June 30, 2017,
March 31, 2017, and June 30, 2016, respectively.
(b)  Does not include commercial business loans held for sale totaling $256 at March 31, 2017.
 

Timberland originated $92.93 million in loans during the quarter ended June 30, 2017, compared to $88.81 million for the comparable quarter one year ago and $79.50 million for the preceding quarter.  Timberland continues to sell fixed rate one- to four-family mortgage loans into the secondary market for asset-liability management purposes and to generate non-interest income.  Timberland also (on a much smaller volume) sells the guaranteed portion of U.S. Small Business Administration (“SBA”) loans.  During the third quarter of fiscal 2017, fixed-rate one- to four-family mortgage loans and SBA loans totaling $19.34 million were sold compared to $14.19 million for the comparable quarter one year ago and $13.00 million for the preceding quarter.                                             

Timberland’s investment securities increased $2.91 million, or 34%, to $11.50 million at June 30, 2017, from $8.60 million at March 31, 2017, primarily due to the purchase of $3.00 million in investment securities.


DEPOSIT BREAKDOWN
($ in thousands)
   June 30, 2017 March 31, 2017 June 30, 2016
   Amount  Percent  Amount  Percent  Amount  Percent 
Non-interest bearing demand  $197,527 24% $186,239 23% $149,575 21%
NOW checking   216,719 26     214,488 27     189,475 26 
Savings   136,750 17   138,518 17   119,576 17 
Money market   119,025 15   118,791 15   100,914 14 
Money market – brokered   8,506 1   8,665 1   7,032 1 
Certificates of deposit under $250   121,505 15   123,670 15   129,194 18 
Certificates of deposit $250 and over   15,590 2   15,269 2   16,443 2 
Certificates of deposit – brokered   3,196 --   3,212 --   3,172 1 
Total deposits  $818,818 100% $808,852 100% $715,381 100%
 

Total deposits increased $9.97 million, or 1%, during the current quarter to $818.82 million at June 30, 2017, from $808.85 million at March 31, 2017.  The current quarter’s increase was primarily due to an $11.29 million increase in non-interest bearing demand account balances and a $2.23 million increase in negotiable order of withdrawal (“NOW”) checking account balances.  These increases were partially offset by a $1.86 million decrease in certificates of deposit account balances and a $1.77 million decrease in savings account balances. 

FHLB Borrowings

On April 26, 2017, FHLB borrowings totaling $30.00 million were prepaid.  Prepayment penalties of $282,000 were incurred for the early termination of these high-cost borrowings (weighted average rate of 3.98%).

Shareholders’ Equity

Total shareholders’ equity increased $3.79 million to $108.62 million at June 30, 2017, from $104.83 million at March 31, 2017.  The increase in shareholders’ equity was primarily due to net income of $4.28 million for the quarter, which was partially offset by dividend payments of $809,000 to shareholders.  Timberland did not repurchase shares of its common stock during the quarter and, at June 30, 2017, had 221,893 shares authorized to be purchased in accordance with the terms of its existing stock repurchase plan.

Capital Ratios and Asset Quality

Timberland remains well capitalized with a total risk-based capital ratio of 17.30% and a Tier 1 leverage capital ratio of 11.42% at June 30, 2017.

Timberland recorded a $1.00 million loan loss reserve recapture (which added approximately $0.09 to diluted earnings per share) during the quarter ended June 30, 2017 due to the Bank’s recovery on a previously charged-off commercial mortgage loan.  Timberland had a net recovery of $1.02 million for the current quarter compared to net charge-offs of $3,000 for the preceding quarter and net charge-offs of $201,000 for the comparable quarter one year ago.  The allowance for loan losses was 1.38% of loans receivable at June 30, 2017 compared to 1.40% at March 31, 2017.

Total delinquent loans (past due 30 days or more) and non-accrual loans decreased 39% to $2.44 million at June 30, 2017, from $4.01 million one year ago, and decreased 8% from $2.66 million at March 31, 2017.  Non-accrual loans decreased 30% to $2.06 million at June 30, 2017, from $2.96 million one year ago, and increased 9% from $1.89 million at March 31, 2017.


NON-ACCRUAL LOANS    June 30, 2017 March 31, 2017 June 30, 2016
($ in thousands)    Amount Quantity   Amount Quantity   Amount Quantity
                
Mortgage loans:               
One- to four-family    $  896 7 $  820 6 $  1,236 9
Commercial    403 1 313 1 808 2
Land    496 2 296 2 444 3
Total mortgage loans    1,795 10 1,429 9 2,488 14
                
Consumer loans:               
Home equity and second               
mortgage    260 3 383 5 436 7
Other    -- -- 28 1 31 1
Total consumer loans    260 3 411 6 467 8
                
Commercial business loans    -- -- 54 2 -- --
Total loans    $  2,055 13 $  1,894 17 $   2,955 22
 

OREO and other repossessed assets decreased 28% to $3.42 million at June 30, 2017, from $4.76 million at June 30, 2016, and increased 14% from $3.01 million at March 31, 2017.  At June 30, 2017, the OREO and other repossessed asset portfolio consisted of 17 individual real estate properties.  During the quarter ended June 30, 2017, one OREO property was sold for a net gain of $42,000.


OREO and OTHER REPOSSESSED ASSETS       June 30, 2017 March 31, 2017 June 30, 2016
($ in thousands) Amount Quantity Amount Quantity Amount Quantity
             
One- to four-family $   927 3 $   411 2 $   1,382 7
Commercial  587 2  637 3    648 3
Land  1,903 12  1,957 12    2,665 16
Mobile home  -- --  -- --    67 1
Total $  3,417 17 $   3,005 17 $     4,762 27
 

The non-performing assets to total assets ratio was 0.65% at June 30, 2017, compared to 0.60% at March 30, 2017 and 1.01% one year ago.

Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures.  Timberland believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.

Financial measures that exclude intangible assets are non-GAAP measures.  To provide investors with a broader understanding of capital adequacy, Timberland provides non-GAAP financial measures for tangible common equity, along with the GAAP measure.  Tangible common equity is calculated as shareholders’ equity less goodwill.  In addition, tangible assets equal total assets less goodwill.

The following table provides a reconciliation of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP), and ending total assets (GAAP) to ending tangible assets (non-GAAP).


($ in thousands)  June 30, 2017 March 31, 2017 June 30, 2016
            
Shareholders’ equity  $  108,616  $  104,829  $  94,452 
Less goodwill   (5,650)  (5,650)  (5,650)
Tangible common equity  $  102,966  $  99,179  $  88,802 
                                                                      
Total assets  $  931,009  $  946,682  $  858,139 
Less goodwill   (5,650)  (5,650)  (5,650)
Tangible assets  $  925,359  $  941,032  $  852,489 
 

About Timberland Bancorp, Inc.
Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank (“Bank”).  The Bank opened for business in 1915 and serves consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties, Washington with a full range of lending and deposit services through its 22 branches (including its main office in Hoquiam).  Timberland ranked 8th in the recent release of the S&P Global Market Intelligence ranking of the top performing 50 largest public thrifts as of December 31, 2016.  The ranking was based on six metrics which included: return on average assets, return on average common tangible equity, efficiency ratio, median three-year growth rate in tangible common equity per share, non-performing loans to total loans and net charge-offs to average loans.  

Disclaimer

Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact and often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.”  Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future performance.  These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results anticipated, including, but not limited to: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets and may lead to increased losses and non-performing assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our loan loss reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; secondary market conditions for loans and our ability to sell loans in the secondary market; results of examinations of us by the Board of Governors of the Federal Reserve System and our bank subsidiary by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action or require us to increase our allowance for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits or impose additional requirements or restrictions, which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules including as a result of Basel III; the impact of the Dodd Frank Wall Street Reform and Consumer Protection Act and the implementation of related rules and regulations; our ability to attract and retain deposits;  increases in premiums for deposit insurance; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risk associated with the loans on our consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; computer systems on which we depend could fail or experience a security breach; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; our ability to manage loan delinquency rates;  increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common and stock; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of war or any terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations; pricing, products and services; and other risks detailed in our reports filed with the Securities and Exchange Commission.

Any of the forward-looking statements that we make in this press release and in the other public statements we make are based upon management’s beliefs and assumptions at the time they are made.  We undertake no obligation to publicly update or revise any forward-looking statements included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise.  We caution readers not to place undue reliance on any forward-looking statements.  We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.  These risks could cause our actual results for fiscal 2017 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us, and could negatively affect the Company’s operations and stock price performance.

TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
($ in thousands, except per share amounts)June 30, March 31, June 30,
(unaudited) 2017   2017    2016 
Interest and dividend income        
Loans receivable$9,652  $      8,840   $      8,257 
Investment securities 69   68    70 
Dividends from mutual funds and FHLB stock 23   12    22 
Interest bearing deposits in banks 421   379    247 
  Total interest and dividend income 10,165   9,299    8,596 
         
Interest expense     
Deposits 549   545    508 
FHLB borrowings 369   302    472 
  Total interest expense 918   847    980 
  Net interest income 9,247   8,452    7,616 
      
Recapture of loan losses (1,000)  (250)   -- 
  Net interest income after recapture of loan losses 10,247   8,702    7,616 
         
Non-interest income     
Service charges on deposits 1,153   1,090    989 
ATM and debit card interchange transaction fees 855   793    778 
Gain on sale of loans, net 561   406    443 
Bank owned life insurance (“BOLI”) net earnings 133   136    137 
Servicing income on loans sold 106   99    60 
OTTI on investment securities, net   --     --    (4)
Other 348   327    346 
  Total non-interest income, net 3,156   2,851    2,749 
         
Non-interest expense     
Salaries and employee benefits 3,741   3,755    3,397 
Premises and equipment 767   776    774 
Advertising 170   167    192 
OREO and other repossessed assets, net 4   (12)   123 
ATM and debit card processing 375   350    337 
Postage and courier 109   120    98 
State and local taxes 176   152    141 
Professional fees 230   199    202 
FDIC insurance 99   107    100 
Loan administration and foreclosure 20   (1)   92 
Data processing and telecommunications 480   464    470 
Deposit operations 301   240    232 
Other 466   540    410 
  Total non-interest expense 6,938   6,857    6,568 
      
Income before income taxes 6,465   4,696    3,797 
Provision for income taxes 2,188   1,568    1,250 
  Net income$  4,277  $  3,128   $  2,547 
         
Net income per common share:     
Basic$0.59  $0.44   $0.37 
Diluted 0.58   0.42    0.36 
      
Weighted average common shares outstanding:     
Basic 7,269,564   7,135,083    6,822,608 
Diluted 7,432,171   7,379,353    7,111,199 
 
 
 
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
 Nine Months Ended 
($ in thousands, except per share amounts) June 30,    June 30, 
(unaudited)  2017    2016
Interest and dividend income        
Loans receivable 27,280    $24,992 
Investment securities 207        213 
Dividends from mutual funds and FHLB stock 60        83 
Interest bearing deposits in banks 1,081        649 
  Total interest and dividend income 28,628        25,937 
     
Interest expense    
Deposits 1,637        1,520 
FHLB borrowings 979        1,420 
  Total interest expense  2,616        2,940 
  Net interest income 26,012        22,997 
Recapture of loan losses (1,250)        -- 
  Net interest income after recapture of loan losses 27,262        22,997 
     
Non-interest income    
Service charges on deposits 3,348        2,898 
ATM and debit card interchange transaction fees 2,448        2,187 
Gain on sale of loans, net 1,656        1,230 
BOLI net earnings 407        410 
Servicing income on loans sold 302        180 
OTTI on investment securities, net --        (28)
Other 1,063        903 
  Total non-interest income, net 9,224        7,780 
             
Non-interest expense            
Salaries and employee benefits 11,176        10,333 
Premises and equipment 2,298        2,305 
Advertising 499        590 
OREO and other repossessed assets, net 22        561 
ATM and debit card processing 1,036        990 
Postage and courier 324        309 
State and local taxes 484        410 
Professional fees 629        449 
FDIC insurance 319        334 
Loan administration and foreclosure 113        216 
Data processing and telecommunications 1,394        1,394 
Deposit operations 850        638 
Other 1,462        1,146 
  Total non-interest expense 20,606        19,675 
     
Income before income taxes 15,880    $   11,102 
Provision for income taxes 5,328        3,647 
  Net income 10,552    $   7,455 
             
Net income per common share:            
  Basic 1.49    $   1.09 
  Diluted 1.44        1.05 
     
Weighted average common shares outstanding:     
  Basic     7,088,134        6,846,373 
  Diluted 7,348,486        7,091,661 

 

TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
 
($ in thousands, except per share amounts) (unaudited) June 30, March 31, June 30,
  2017 2017 2016
Assets      
Cash and due from financial institutions $17,476  $17,060  $16,394 
Interest-bearing deposits in banks  114,964   130,980   72,779 
Total cash and cash equivalents  132,440   148,040   89,173 
       
Certificates of deposit (“CDs”) held for investment, at cost  41,187   52,934   52,435 
Investment securities:      
Held to maturity, at amortized cost  7,244   7,326   7,618 
Available for sale, at fair value  4,260   1,272   1,363 
FHLB stock  1,107   2,307   2,804 
Loans held for sale  3,523   5,798   4,885 
       
Loans receivable  696,768   685,669   657,208 
Less: Allowance for loan losses  (9,610)  (9,590)  (9,842)
Net loans receivable  687,158   676,079   647,366 
       
Premises and equipment, net  18,465   18,013   16,224 
OREO and other repossessed assets, net  3,417   3,005   4,762 
BOLI  19,127   18,994   18,580 
Accrued interest receivable  2,437   2,443   2,270 
Goodwill  5,650   5,650   5,650 
Mortgage servicing rights, net  1,781   1,710   1,516 
Other assets  3,213   3,111   3,493 
Total assets $931,009  $946,682  $858,139 
       
Liabilities and shareholders’ equity      
Deposits: Non-interest-bearing demand $197,527  $186,239  $149,575 
Deposits: Interest-bearing  621,291   622,613   565,806 
Total deposits  818,818   808,852   715,381 
       
FHLB borrowings  --   30,000   45,000 
Other liabilities and accrued expenses  3,575   3,001   3,306 
Total liabilities  822,393   841,853   763,687 
       
Shareholders’ equity      
Common stock, $.01 par value; 50,000,000 shares authorized;
   7,354,577 shares issued and outstanding – June 30, 2017
   7,345,477 shares issued and outstanding – March 31, 2017
   6,939,068 shares issued and outstanding – June 30, 2016
  13,223   

12,986
   
9,818
 
Unearned shares issued to Employee Stock Ownership Plan (“ESOP”)  (463)  (529)  (728)
Retained earnings  96,018   92,550   85,635 
Accumulated other comprehensive loss  (162)  (178)  (273)
Total shareholders’ equity  108,616   104,829   94,452 
Total liabilities and shareholders’ equity $931,009  $946,682  $858,139 


KEY FINANCIAL RATIOS AND DATA      Three Months Ended
($ in thousands, except per share amounts) (unaudited)        June 30, March 31, June 30,
    2017   2017   2016 
PERFORMANCE RATIOS:       
Return on average assets (a)   1.86%   1.35%   1.20% 
Return on average equity (a)   16.14%   12.24%   10.96% 
Net interest margin (a)   4.29%   3.88%   3.83% 
Efficiency ratio   55.94%   60.67%   63.37% 
        
   Nine Months Ended
                         June 30,   June 30,
      2017     2016 
PERFORMANCE RATIOS:       
Return on average assets (a)
     1.53%     1.18% 
Return on average equity (a)      13.80%     10.88% 
Net interest margin (a)      4.03%     3.91% 
Efficiency ratio     58.48%     63.93% 
        
   June 30, March 31, June 30,
    2017   2017   2016 
ASSET QUALITY RATIOS AND DATA:       
Non-accrual loans  $2,055  $1,894  $2,955 
Loans past due 90 days and still accruing   --   135   135 
Non-performing investment securities   590   638   789 
OREO and other repossessed assets   3,417   3,005   4,762 
Total non-performing assets (b)  $6,062  $5,672  $8,641 
        
        
Non-performing assets to total assets (b)   0.65%   0.60%   1.01% 
Net charge-offs (recoveries) during quarter  $(1,020)  $  3  $  201 
Allowance for loan losses to non-accrual loans   468%   506%   333% 
Allowance for loan losses to loans receivable (c)   1.38%   1.40%   1.50% 
Troubled debt restructured loans on accrual status (d)  $3,360  $6,429  $7,677 
        
        
CAPITAL RATIOS:       
Tier 1 leverage capital   11.42%   10.89%   10.68% 
Tier 1 risk-based capital   16.05%   15.77%   14.20% 
Common equity Tier 1 risk-based capital   16.05%   15.77%   14.20% 
Total risk-based capital   17.30%   17.02%   15.45% 
Tangible common equity to tangible assets (non-GAAP)   11.13%   10.54%   10.42% 
        
        
BOOK VALUES:       
Book value per common share  $  14.77   $  14.27   $13.61 
Tangible book value per common share (e)   14.00   13.50   12.80 
        
        
(a)  Annualized               
(b)  Non-performing assets include non-accrual loans, loans past due 90 days and still accruing, non-performing
investment securities and OREO and other repossessed assets. Troubled debt restructured loans on accrual
status are not included. 
(c)  Does not include loans held for sale and is before the allowance for loan losses.
(d)  Does not include troubled debt restructured loans totaling $252, $404 and $530 reported as non-accrual
loans at June 30, 2017, March 31, 2017 and June 30, 2016, respectively. 
(e)  Tangible common equity divided by common shares outstanding (non-GAAP).    


AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($ in thousands)
(unaudited)
 For the Three Months Ended
 June 30, 2017 March 31, 2017 June 30, 2016
 Amount Rate Amount Rate Amount Rate
            
Assets           
Loans and loans held for sale$693,931  5.56% $688,506  5.14% $647,781  5.10%
Investment securities and FHLB stock 12,482  2.98   10,866  2.94   11,860  3.10 
Interest bearing deposits and CD’s 156,507  1.08   171,203  0.90   136,724  0.73 
Total interest-bearing assets 862,920  4.71   870,575  4.27   796,365  4.32 
Other assets 57,841     59,561     55,926   
Total assets 920,761     930,136     852,291   
            
Liabilities and Shareholders’ Equity           
NOW checking accounts$207,060  0.22% $208,736  0.22% $187,836  0.24%
Money market accounts 125,787  0.35   127,935  0.34   105,884  0.32 
Savings accounts 137,108  0.06   134,073  0.06   116,818  0.05 
Certificates of deposit accounts 141,254  0.87   144,021  0.86   149,713  0.79 
Total interest-bearing deposits 611,209  0.36   614,765  0.35   560,251  0.36 
FHLB borrowings 8,571  17.57   30,000  4.08   45,000  4.22 
Total interest-bearing liabilities 619,780  0.59   644,765  0.52   605,251  0.65 
            
Non-interest bearing demand deposits 190,631     178,977     150,331   
Other liabilities 4,379     4,208     3,750   
Shareholders’ equity 105,971     102,186     92,959   
Total liabilities and shareholders’ equity 920,761     930,136     852,291   
            
Interest rate spread  4.12%   3.75%   3.67%
Net interest margin (1)  4.29%   3.88%   3.83%
Average interest-bearing assets to           
average interest bearing liabilities 139.23%    135.02%    131.58%  
 
                 
(1) Net interest margin = annualized net interest income /
  average interest-bearing assets
                


AVERAGE BALANCES, YIELDS, AND RATES –YEAR-TO-DATE
($ in thousands)
(unaudited)
 
   For the Nine Months Ended
   June 30, 2017   June 30, 2016
   Amount Rate     Amount Rate
                         
Assets            
Loans and loans held for sale  $688,936  5.29%    $634,981  5.25%
Investment securities and FHLB stock   11,447  3.11      11,887  3.31 
Interest bearing deposits and CD’s   160,458  0.90      136,681  0.63 
Total interest-bearing assets   860,841  4.43      783,549  4.41 
Other assets   58,324        57,079   
Total assets   919,165        840,628   
             
Liabilities and Shareholders’ Equity            
NOW checking accounts  $206,037  0.22%    $183,938  0.25%
Money market accounts   124,650  0.34      105,307  0.31 
Savings accounts   132,922  0.06      113,069  0.05 
Certificates of deposit accounts   144,249  0.85      151,813  0.78 
Total interest-bearing deposits   607,858  0.36      554,127  0.37 
FHLB borrowings   22,857  5.73      45,000  4.22 
Total interest-bearing liabilities   630,715  0.55      599,127  0.65 
             
Non-interest bearing demand deposits   182,117        146,466   
Other liabilities   4,368        3,661   
Shareholders’ equity   101,965        91,374   
Total liabilities and shareholders’ equity   919,165        840,628   
             
Interest rate spread    3.88%      3.76%
Net interest margin (1)    4.03%      3.91%
Average interest-bearing assets to            
average interest bearing liabilities   136.49%       130.78%  
 
                  
(1) Net interest margin = annualized net interest income /
     average interest-bearing assets 
                 

 

Contact:  
Michael R. Sand,
President & CEO
Dean J. Brydon, CFO
(360) 533-4747
www.timberlandbank.com

Primary Logo

Source: Timberland Bancorp, Inc
Copyright 2018, © S&P Global Market Intelligence  Terms of Use