Timberland Bancorp, Inc. (NASDAQ:TSBK) (“Timberland” or “the
Company”) today reported net income of $3.61 million, or $0.48 per
diluted common share, for its first fiscal quarter ended December
31, 2017. This compares to net income of $3.15 million, or $0.43
per diluted common share, for the quarter ended December 31, 2016,
and net income of $3.62 million, or $0.48 per diluted common share
for the preceding quarter ended September 30, 2017.
Timberland’s Board of Directors also announced an 18% increase
in the quarterly cash dividend to shareholders to $0.13 per common
share, payable on February 28, 2018 to shareholders of record on
February 14, 2018.
“The recently enacted tax reform legislation will materially
reduce Timberland’s 2018 fiscal year income tax expense.
Fiscal year companies, such as Timberland, were able to use a
reduced tax rate for the recently completed December quarter,” said
Michael Sand, President and CEO. “For the December quarter, a
blended tax rate of 24.5% was applicable to the Company’s current
taxable income rather than the previously employed 35% rate.
This blended rate will also apply to the Company’s taxable income
for each of the next three quarters, after which the Company will
cease using the blended rate and revert to the newly legislated 21%
corporate tax rate. During the quarter, the Company incurred
a one-time tax expense of $548,000 to write down its net deferred
tax asset and that expense was fully offset by a $551,000 tax
benefit gained by using the blended rate. We have continued
to grow our franchise by increasing loans and deposits, expanding
net interest margin and maintaining solid asset quality,” stated
Sand. “Additionally, based on a number of factors including
the Company’s sustained strong financial performance, its Board of
Directors voted to increase the quarterly cash dividend by 18% to
$0.13 per share from the $0.11 per share dividend declared for each
of the previous four quarters.”
First Fiscal Quarter 2018 Earnings and Balance Sheet
Highlights (at or for the period ended December 31, 2017,
compared to December 31, 2016, or September 30, 2017):
Earnings Highlights:
- Net income increased 15% to $3.61 million from $3.15 million
for the comparable quarter one year ago;
- Earnings per diluted common share (“EPS”) increased 12% to
$0.48 from $0.43 for the comparable quarter one year ago;
- Return on average equity and return on average assets for the
current quarter remained strong at 12.90% and 1.50%,
respectively;
- Operating revenue increased 9% from the comparable quarter one
year ago and 3% from the preceding quarter; and
- Net interest margin improved to 4.19% from 3.91% for the
comparable quarter one year ago and from 4.18% for the preceding
quarter.
Balance Sheet Highlights:
- Increased total assets 8% year-over-year and 4% from the prior
quarter;
- Increased net loans receivable 5% year-over-year and 2% from
the prior quarter;
- Increased total deposits 11% year-over-year and 5% from the
prior quarter;
- Decreased non-performing assets 15% year-over-year and 4% from
the prior quarter; and
- Increased book and tangible book (non-GAAP) values per common
share to $15.49 and $14.72, respectively, at December 31,
2017.
Operating
Results
Operating revenue (net interest income before
provision for loan losses, plus non-interest income excluding gains
or losses on the sale of investment securities and recoveries or
other than temporary impairment (“OTTI”) charges on investment
securities) increased 9% for the current quarter to $12.55 million
from $11.53 million for the comparable quarter one year ago and
increased 3% from $12.24 million for the preceding
quarter.
Net interest income for the current quarter
increased 13% to $9.43 million from $8.31 million for the
comparable quarter one year ago and increased 3% from $9.13 million
for the preceding quarter. The increases were primarily due
to increases in average total interest-earning assets and increases
in the yield earned on average total interest-earning assets.
The net interest margin (“NIM”) for the current
quarter improved to 4.19% from 3.91% for the comparable quarter one
year ago and from 4.18% for the preceding quarter. The NIM
for the current quarter was increased by approximately two basis
points due to the collection of $45,000 of non-accrual
interest. The NIM for the comparable quarter one year ago was
increased by approximately one basis point due to the collection of
$21,000 of non-accrual interest and the NIM for the preceding
quarter was increased by less than one basis point due to the
collection of $8,000 of non-accrual interest.
Non-interest income decreased slightly to $3.14
million for the current quarter from $3.15 million for the
preceding quarter and decreased 2% from $3.22 million for the
comparable quarter one year ago. The decreased non-interest
income for the current quarter compared to the preceding quarter
was primarily due to a decrease in the ATM and debit card
interchange transaction fees, which was partially offset by an
increase in gain on sales of loans.
Total operating expenses for the current quarter
increased 4% to $7.18 million from $6.91 million for the preceding
quarter and increased 5% from $6.81 million for the comparable
quarter one year ago. The increased expenses for the current
quarter compared to the preceding quarter were primarily due to
increases in the salaries and employee benefits and OREO and other
repossessed assets categories. The increase in salaries and
employee benefits was primarily due to typical annual salary
adjustments and the hiring of additional lending personnel.
The increase in OREO and other repossessed assets expense was
primarily due to market value write-downs on two real estate
properties and one personal property during the quarter. The
efficiency ratio for the current quarter was 57.08% compared to
56.31% for the preceding quarter and 59.07% for the comparable
quarter one year ago.
The provision for income taxes for the current quarter increased
to $1.78 million from $1.75 million for the preceding quarter, and
was impacted by the Tax Cuts and Jobs Act Legislation which was
signed into law on December 22, 2017. As a result of the new
legislation (which decreases the federal corporate income tax rate
to 21.0% from 35.0%), Timberland recorded a one-time income tax
expense of $548,000 in conjunction with writing down its net
deferred tax asset (“DTA”). Since Timberland is a
September 30th fiscal year-end corporation, it will use a blended
tax rate of 24.5% for the fiscal year ending September 30, 2018 and
then use a 21.0% rate thereafter. The impact of using the
24.5% blended tax rate for the current quarter versus a 35.0% tax
rate reduced the provision for income tax expense by approximately
$551,000 and offset the one-time $548,000 DTA write-down.
Balance Sheet
Management
Total assets increased $41.87 million, or 4%, during the first
fiscal quarter to $993.90 million at December 31, 2017 from $952.02
million at September 30, 2017. The increase was primarily due
to a $28.51 million increase in cash and cash equivalents and CDs
held for investment and a $14.90 million increase in net loans
receivable which were funded by increased deposits.
Liquidity, as measured by the sum of cash and cash equivalents,
CDs held for investment and available for sale investment
securities, was 25.1% of total liabilities at December 31, 2017,
compared to 22.9% at September 30, 2017, and 23.1% one year
ago.
Net loans receivable increased $14.90 million, or 2%, to $705.27
million at December 31, 2017, from $690.36 million at September 30,
2017. The increase was primarily due to a $5.72 million
increase in custom and owner/builder one- to four-family
construction loans, a $4.16 million increase in commercial real
estate loans, a $3.27 million increase in multi-family construction
loans, a $2.96 million decrease in the amount of undisbursed
construction loans in process, a $2.76 million increase in
multi-family mortgage loans, a $2.37 million increase in commercial
construction loans and smaller increases in several other
categories. These increases were partially offset by a $2.79
million decrease in land loans, a $2.67 million decrease in
speculative one- to four-family construction loans, a $1.17 million
decrease in one- to four-family mortgage loans and smaller
decreases in several other categories.
|
LOAN PORTFOLIO |
($ in thousands) |
December 31, 2017 |
|
September 30, 2017 |
|
December 31, 2016 |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
One- to
four-family (a) |
$ |
116,976 |
|
|
15 |
% |
|
$ |
118,147 |
|
|
15 |
% |
|
$ |
119,485 |
|
|
16 |
% |
Multi-family |
|
61,366 |
|
|
8 |
|
|
|
58,607 |
|
|
7 |
|
|
|
52,062 |
|
|
7 |
|
Commercial |
|
333,085 |
|
|
42 |
|
|
|
328,927 |
|
|
42 |
|
|
|
323,496 |
|
|
44 |
|
Construction -
custom and |
|
|
|
|
|
|
|
|
|
|
|
owner/builder |
|
123,365 |
|
|
15 |
|
|
|
117,641 |
|
|
|
15 |
|
|
|
96,292 |
|
|
13 |
|
Construction -
speculative one- to
four-family |
|
7,253 |
|
|
1 |
|
|
|
9,918 |
|
|
1 |
|
|
|
6,133 |
|
|
1 |
|
Construction -
commercial |
|
22,000 |
|
|
3 |
|
|
|
19,630 |
|
|
3 |
|
|
|
8,627 |
|
|
1 |
|
Construction -
multi-family |
|
24,601 |
|
|
3 |
|
|
|
21,327 |
|
|
3 |
|
|
|
22,092 |
|
|
3 |
|
Land |
|
21,122 |
|
|
2 |
|
|
|
23,910 |
|
|
3 |
|
|
|
22,359 |
|
|
3 |
|
Total
mortgage loans |
|
709,768 |
|
|
89 |
|
|
|
698,107 |
|
|
89 |
|
|
|
650,546 |
|
|
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans: |
|
|
|
|
|
|
|
|
|
|
|
Home equity and
second |
|
|
|
|
|
|
|
|
|
|
|
mortgage |
|
38,975 |
|
|
5 |
|
|
|
38,420 |
|
|
5 |
|
|
|
37,602 |
|
|
5 |
|
Other |
|
4,050 |
|
|
-- |
|
|
|
3,823 |
|
|
-- |
|
|
|
4,523 |
|
|
1 |
|
Total
consumer loans |
|
43,025 |
|
|
5 |
|
|
|
42,243 |
|
|
5 |
|
|
|
42,125 |
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business
loans (b) |
|
43,993 |
|
|
6 |
|
|
|
44,444 |
|
|
6 |
|
|
|
42,657 |
|
|
6 |
|
Total loans |
|
796,786 |
|
|
100 |
% |
|
|
784,794 |
|
|
100 |
% |
|
|
735,328 |
|
|
100 |
% |
Less: |
|
|
|
|
|
|
|
|
|
|
|
Undisbursed portion of |
|
|
|
|
|
|
|
|
|
|
|
construction loans in |
|
|
|
|
|
|
|
|
|
|
|
process |
|
(79,449 |
) |
|
|
|
|
(82,411 |
) |
|
|
|
|
(54,161 |
) |
|
|
Deferred
loan origination |
|
|
|
|
|
|
|
|
|
|
|
fees |
|
(2,504 |
) |
|
|
|
|
(2,466 |
) |
|
|
|
|
(2,184 |
) |
|
|
Allowance
for loan losses |
|
(9,565 |
) |
|
|
|
|
(9,553 |
) |
|
|
|
|
(9,843 |
) |
|
|
Total
loans receivable, net |
$ |
705,268 |
|
|
|
|
$ |
690,364 |
|
|
|
|
$ |
669,140 |
|
|
|
|
_______________________
(a) Does not include one- to four-family loans held for sale
totaling $3,236, $3,515 and $2,008 at December 31, 2017, September
30, 2017, and December 31, 2016, respectively. (b) Does not
include commercial business loans held for sale totaling $171 and
$84 at December 31, 2017 and September 30, 2017, respectively.
Timberland originated $82.51 million in loans during the quarter
ended December 31, 2017, compared to $90.15 million for the
comparable quarter one year ago and $85.10 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)
periodically sells the guaranteed portion of U.S. Small Business
Administration (“SBA”) loans. During the first quarter of
fiscal 2018, fixed-rate one- to four-family mortgage loans and SBA
loans totaling $15.91 million were sold compared to $24.20 million
for the comparable quarter one year ago and $15.88 million for the
preceding
quarter.
Timberland’s investment securities and other investments decreased
$82,000, or 1%, to $11.30 million at December 31, 2017, from $11.38
million at September 30, 2017, primarily due to scheduled
amortization.
|
DEPOSIT BREAKDOWN ($ in
thousands) |
|
|
December 31, 2017 |
|
September 30, 2017 |
|
December 31, 2016 |
|
|
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Non-interest-bearing
demand |
|
$ |
210,108 |
|
24 |
% |
|
$ |
205,952 |
|
25 |
% |
|
$ |
176,382 |
|
22 |
% |
|
NOW checking |
|
|
218,422 |
|
25 |
|
|
|
220,315 |
|
26 |
|
|
|
207,415 |
|
26 |
|
|
Savings |
|
|
142,660 |
|
16 |
|
|
|
140,987 |
|
17 |
|
|
|
131,124 |
|
17 |
|
|
Money market |
|
|
156,665 |
|
18 |
|
|
|
122,877 |
|
15 |
|
|
|
122,026 |
|
15 |
|
|
Money market –
brokered |
|
|
10,796 |
|
1 |
|
|
|
8,125 |
|
1 |
|
|
|
6,912 |
|
1 |
|
|
Certificates of deposit
under $250 |
|
|
118,017 |
|
14 |
|
|
|
120,844 |
|
14 |
|
|
|
127,035 |
|
17 |
|
|
Certificates of deposit
$250 and over |
|
|
16,208 |
|
2 |
|
|
|
15,601 |
|
2 |
|
|
|
15,872 |
|
2 |
|
|
Certificates of deposit
– brokered |
|
|
3,198 |
|
-- |
|
|
|
3,197 |
|
-- |
|
|
|
3,209 |
|
-- |
|
|
Total
deposits |
|
$ |
876,074 |
|
100 |
% |
|
$ |
837,898 |
|
100 |
% |
|
$ |
789,975 |
|
100 |
% |
|
|
Total deposits increased $38.18 million, or 5%, during the
current quarter to $876.07 million at December 31, 2017, from
$837.90 million at September 30, 2017. This increase was
primarily due to a $36.46 million increase in money market account
balances, a $4.16 million increase in non-interest-bearing demand
account balances and a $1.67 million increase savings account
balances. These increases were partially offset by a $2.22
million decrease in certificates of deposit account balances and a
$1.89 million decrease in NOW checking account balances. The
increase in money market account balances was primarily due to a
commercial customer making a large deposit ($28.7 million).
The majority of this deposit is scheduled to be withdrawn during
January, 2018.
Shareholders’
Equity
Total shareholders’ equity increased $3.11 million to $114.11
million at December 31, 2017, from $111.00 million at September 30,
2017. The increase in shareholders’ equity was primarily due
to net income of $3.61 million for the quarter, which was partially
offset by dividend payments of $810,000 to shareholders.
Capital Ratios and Asset
Quality
Timberland remains well capitalized with a total
risk-based capital ratio of 17.74% and a Tier 1 leverage capital
ratio of 11.45% at December 31, 2017.
No provision for loan losses was made for the
quarters ended December 31, 2017, September 30, 2017 and December
31, 2016. Timberland had a net recovery of $12,000 for the
current quarter compared to net charge-offs of $57,000 for the
preceding quarter and a net recovery of $17,000 for the comparable
quarter one year ago. The allowance for loan losses was 1.34%
of loans receivable at December 31, 2017, compared to 1.36% at
September 30, 2017 and 1.45% at December 31, 2016.
Total delinquent loans (past due 30 days or more)
and non-accrual loans decreased 23% to $3.12 million at December
31, 2017, from $4.06 million one year ago, and increased 29% from
$2.41 million at September 30, 2017. Non-accrual loans
decreased 11% to $2.11 million at December 31, 2017 from $2.36
million one year ago, and increased 11% from $1.91 million at
September 30, 2017.
|
NON-ACCRUAL
LOANS |
December 31, 2017 |
|
September 30, 2017 |
|
December 31, 2016 |
|
($ in thousands) |
Amount |
|
Quantity |
|
Amount |
|
Quantity |
|
|
Amount |
|
Quantity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
|
One- to
four-family |
$ |
947 |
|
8 |
|
$ |
874 |
|
7 |
|
|
$ |
846 |
|
7 |
Commercial |
|
402 |
|
3 |
|
|
213 |
|
2 |
|
|
|
-- |
|
-- |
Construction |
|
-- |
|
-- |
|
|
-- |
|
-- |
|
|
|
367 |
|
1 |
Land |
|
395 |
|
4 |
|
|
566 |
|
4 |
|
|
|
735 |
|
5 |
Total
mortgage loans |
|
1,744 |
|
15 |
|
|
1,653 |
|
13 |
|
|
|
1,948 |
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans: |
|
|
|
|
|
|
|
|
|
|
|
|
Home equity and
second |
|
|
|
|
|
|
|
|
|
|
|
|
mortgage |
|
188 |
|
4 |
|
|
258 |
|
3 |
|
|
|
387 |
|
5 |
Other |
|
-- |
|
-- |
|
|
-- |
|
-- |
|
|
|
29 |
|
1 |
Total
consumer loans |
|
188 |
|
4 |
|
|
258 |
|
3 |
|
|
|
416 |
|
6 |
Commercial
business |
|
181 |
|
2 |
|
|
-- |
|
-- |
|
|
|
-- |
|
-- |
Total loans |
$ |
2,113 |
|
21 |
|
$ |
1,911 |
|
16 |
|
|
$ |
2,364 |
|
19 |
|
OREO and other repossessed assets decreased 13% to
$2.89 million at December 31, 2017, from $3.30 million at September
30, 2017, and decreased 11% from $3.25 million at December 31,
2016. At December 31, 2017, the OREO and other repossessed
asset portfolio consisted of 14 individual real estate properties
and one recreational vehicle. During the quarter ended
December 31, 2017, two OREO properties were sold for a net gain of
$12,000.
|
OREO and OTHER
REPOSSESSED ASSETS |
December 31, 2017 |
|
September 30, 2017 |
|
December 31, 2016 |
($ in thousands) |
Amount |
|
Quantity |
|
Amount |
|
Quantity |
|
Amount |
|
Quantity |
|
|
|
|
|
|
|
|
|
|
|
|
One- to
four-family |
$ |
516 |
|
1 |
|
$ |
875 |
|
2 |
|
$ |
456 |
|
3 |
Commercial |
|
332 |
|
1 |
|
|
533 |
|
2 |
|
|
636 |
|
3 |
Land |
|
2,026 |
|
12 |
|
|
1,865 |
|
11 |
|
|
2,095 |
|
13 |
Consumer |
|
13 |
|
1 |
|
|
28 |
|
1 |
|
|
67 |
|
1 |
Total |
$ |
2,887 |
|
15 |
|
$ |
3,301 |
|
16 |
|
$ |
3,254 |
|
20 |
|
The non-performing assets to total assets ratio
improved to 0.55% at December 31, 2017, from 0.60% at September 30,
2017 and 0.70% one year ago.
Non-GAAP Financial MeasuresIn addition to
results presented in accordance with generally accepted accounting
principles (“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) |
|
December 31, 2017 |
|
September 30, 2017 |
|
December 31, 2016 |
|
|
|
|
|
|
|
Shareholders’
equity |
|
$ |
114,112 |
|
|
$ |
111,000 |
|
|
$ |
99,634 |
|
Less goodwill |
|
|
(5,650 |
) |
|
|
(5,650 |
) |
|
|
(5,650 |
) |
Tangible common
equity |
|
$ |
108,462 |
|
|
$ |
105,350 |
|
|
$ |
93,984 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
993,895 |
|
|
$ |
952,024 |
|
|
$ |
923,751 |
|
Less goodwill |
|
|
(5,650 |
) |
|
|
(5,650 |
) |
|
|
(5,650 |
) |
Tangible assets |
|
$ |
988,245 |
|
|
$ |
946,374 |
|
|
$ |
918,101 |
|
|
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).
DisclaimerCertain 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 2018 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
SUBSIDIARYCONSOLIDATED STATEMENTS OF
INCOME |
|
Three Months Ended |
($ in
thousands, except per share amounts) |
|
Dec. 31, |
|
Sept. 30, |
|
Dec. 31, |
(unaudited) |
|
|
2017 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Interest and
dividend income |
|
|
|
|
|
|
|
Loans receivable and
loans held for sale |
|
$ |
9,328 |
|
|
$ |
9,104 |
|
|
$ |
8,788 |
|
|
Investment
securities |
|
|
58 |
|
|
|
73 |
|
|
|
70 |
|
|
Dividends from mutual
funds, FHLB stock and other investments |
|
|
26 |
|
|
|
28 |
|
|
|
24 |
|
|
Interest bearing
deposits in banks and CDs |
|
|
623 |
|
|
|
505 |
|
|
|
281 |
|
|
Total
interest and dividend income |
|
|
10,035 |
|
|
|
9,710 |
|
|
|
9,163 |
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
|
|
|
|
|
Deposits |
|
|
601 |
|
|
|
581 |
|
|
|
543 |
|
|
FHLB borrowings |
|
|
-- |
|
|
|
-- |
|
|
|
307 |
|
|
Total
interest expense |
|
|
601 |
|
|
|
581 |
|
|
|
850 |
|
|
Net
interest income |
|
|
9,434 |
|
|
|
9,129 |
|
|
|
8,313 |
|
|
|
|
|
|
|
|
|
|
Provision for
loan losses |
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
Net
interest income after provision for loan losses |
|
|
9,434 |
|
|
|
9,129 |
|
|
|
8,313 |
|
|
|
|
|
|
|
|
|
|
Non-interest
income |
|
|
|
|
|
|
|
Service charges on
deposits |
|
|
1,179 |
|
|
|
1,170 |
|
|
|
1,105 |
|
|
ATM and debit card
interchange transaction fees |
|
|
845 |
|
|
|
895 |
|
|
|
800 |
|
|
Gain on sales of loans,
net |
|
|
521 |
|
|
|
502 |
|
|
|
689 |
|
|
Bank owned life
insurance (“BOLI”) net earnings |
|
|
136 |
|
|
|
139 |
|
|
|
137 |
|
|
Servicing income on
loans sold |
|
|
116 |
|
|
|
114 |
|
|
|
97 |
|
|
Recoveries (OTTI) on
investment securities, net |
|
|
22 |
|
|
|
33 |
|
|
|
-- |
|
|
Other, net |
|
|
318 |
|
|
|
292 |
|
|
|
388 |
|
|
Total
non-interest income, net |
|
|
3,137 |
|
|
|
3,145 |
|
|
|
3,216 |
|
|
|
|
|
|
|
|
|
|
Non-interest
expense |
|
|
|
|
|
|
|
Salaries and employee
benefits |
|
|
3,950 |
|
|
|
3,732 |
|
|
|
3,680 |
|
|
Premises and
equipment |
|
|
768 |
|
|
|
789 |
|
|
|
755 |
|
|
Advertising |
|
|
209 |
|
|
|
199 |
|
|
|
162 |
|
|
OREO and other
repossessed assets, net |
|
|
113 |
|
|
|
-- |
|
|
|
30 |
|
|
ATM and debit card
processing |
|
|
331 |
|
|
|
369 |
|
|
|
311 |
|
|
Postage and
courier |
|
|
105 |
|
|
|
111 |
|
|
|
95 |
|
|
State and local
taxes |
|
|
161 |
|
|
|
125 |
|
|
|
155 |
|
|
Professional fees |
|
|
218 |
|
|
|
258 |
|
|
|
201 |
|
|
FDIC insurance |
|
|
65 |
|
|
|
42 |
|
|
|
113 |
|
|
Loan administration and
foreclosure |
|
|
79 |
|
|
|
93 |
|
|
|
94 |
|
|
Data processing and
telecommunications |
|
|
467 |
|
|
|
476 |
|
|
|
450 |
|
|
Deposit operations |
|
|
278 |
|
|
|
225 |
|
|
|
309 |
|
|
Other, net |
|
|
432 |
|
|
|
492 |
|
|
|
455 |
|
|
Total
non-interest expense, net |
|
|
7,176 |
|
|
|
6,911 |
|
|
|
6,810 |
|
|
|
|
|
|
|
|
|
|
Income before
income taxes |
|
|
5,395 |
|
|
|
5,363 |
|
|
|
4,719 |
|
|
Provision for
income taxes |
|
|
1,781 |
|
|
|
1,748 |
|
|
|
1,572 |
|
|
Net
income |
|
$ |
3,614 |
|
|
$ |
3,615 |
|
|
$ |
3,147 |
|
|
|
|
|
|
|
|
|
|
Net income per
common share: |
|
|
|
|
|
|
|
Basic |
|
$ |
0.49 |
|
|
$ |
0.50 |
|
|
$ |
0.46 |
|
|
Diluted |
|
|
0.48 |
|
|
|
0.48 |
|
|
|
0.43 |
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
7,312,531 |
|
|
|
7,280,773 |
|
|
|
6,862,749 |
|
|
Diluted |
|
|
7,508,169 |
|
|
|
7,473,724 |
|
|
|
7,235,515 |
|
|
|
|
|
TIMBERLAND BANCORP INC. AND
SUBSIDIARYCONSOLIDATED BALANCE
SHEETS |
|
($ in
thousands, except per share amounts) (unaudited) |
|
Dec. 31, |
|
Sept. 30, |
|
Dec. 31, |
|
|
|
2017 |
|
|
|
2017 |
|
|
|
2016 |
|
Assets |
|
|
|
|
|
|
Cash and
due from financial institutions |
|
$ |
16,952 |
|
|
$ |
17,447 |
|
|
$ |
16,598 |
|
Interest-bearing deposits in banks |
|
|
149,255 |
|
|
|
130,741 |
|
|
|
118,872 |
|
|
Total cash and cash
equivalents |
|
|
166,207 |
|
|
|
148,188 |
|
|
|
135,470 |
|
|
|
|
|
|
|
|
|
Certificates of deposit (“CDs”) held for investment, at cost |
|
|
53,528 |
|
|
|
43,034 |
|
|
|
53,432 |
|
|
|
|
|
|
|
|
Investment
securities: |
|
|
|
|
|
|
|
Held to maturity, at
amortized cost |
|
|
7,077 |
|
|
|
7,139 |
|
|
|
7,418 |
|
|
Available for sale, at
fair value |
|
|
1,221 |
|
|
|
1,241 |
|
|
|
1,288 |
|
FHLB
stock |
|
|
1,107 |
|
|
|
1,107 |
|
|
|
2,204 |
|
Other
investments, at cost |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
-- |
|
Loans held
for sale |
|
|
3,407 |
|
|
|
3,599 |
|
|
|
2,008 |
|
|
|
|
|
|
|
|
Loans
receivable |
|
|
714,833 |
|
|
|
699,917 |
|
|
|
678,983 |
|
Less:
Allowance for loan losses |
|
|
(9,565 |
) |
|
|
(9,553 |
) |
|
|
(9,843 |
) |
|
Net loans
receivable |
|
|
705,268 |
|
|
|
690,364 |
|
|
|
669,140 |
|
|
|
|
|
|
|
|
|
Premises
and equipment, net |
|
|
18,307 |
|
|
|
18,418 |
|
|
|
17,816 |
|
OREO and
other repossessed assets, net |
|
|
2,887 |
|
|
|
3,301 |
|
|
|
3,254 |
|
BOLI |
|
|
19,402 |
|
|
|
19,266 |
|
|
|
18,858 |
|
Accrued
interest receivable |
|
|
2,743 |
|
|
|
2,520 |
|
|
|
2,443 |
|
Goodwill |
|
|
5,650 |
|
|
|
5,650 |
|
|
|
5,650 |
|
Mortgage
servicing rights, net |
|
|
1,871 |
|
|
|
1,825 |
|
|
|
1,706 |
|
Other
assets |
|
|
2,220 |
|
|
|
3,372 |
|
|
|
3,064 |
|
|
Total
assets |
|
$ |
993,895 |
|
|
$ |
952,024 |
|
|
$ |
923,751 |
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
Deposits:
Non-interest-bearing demand |
|
$ |
210,108 |
|
|
$ |
205,952 |
|
|
$ |
176,382 |
|
Deposits:
Interest-bearing |
|
|
665,966 |
|
|
|
631,946 |
|
|
|
613,593 |
|
|
Total deposits |
|
|
876,074 |
|
|
|
837,898 |
|
|
|
789,975 |
|
|
|
|
|
|
|
|
|
FHLB
borrowings |
|
|
-- |
|
|
|
-- |
|
|
|
30,000 |
|
Other
liabilities and accrued expenses |
|
|
3,709 |
|
|
|
3,126 |
|
|
|
4,142 |
|
|
Total
liabilities |
|
|
879,783 |
|
|
|
841,024 |
|
|
|
824,117 |
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
Common stock, $.01 par value; 50,000,000 shares
authorized; 7,367,327 shares issued and outstanding –
December 31, 2017 7,361,077 shares issued and
outstanding – September 30, 2017 6,956,568 shares
issued and outstanding – December 31, 2016 |
|
|
13,540 |
|
|
|
13,286 |
|
|
|
10,188 |
|
Unearned
shares issued to Employee Stock Ownership Plan (“ESOP”) |
|
|
(331 |
) |
|
|
(397 |
) |
|
|
(595 |
) |
Retained
earnings |
|
|
101,039 |
|
|
|
98,235 |
|
|
|
90,230 |
|
Accumulated
other comprehensive loss |
|
|
(136 |
) |
|
|
(124 |
) |
|
|
(189 |
) |
|
Total shareholders’ equity |
|
|
114,112 |
|
|
|
111,000 |
|
|
|
99,634 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
993,895 |
|
|
$ |
952,024 |
|
|
$ |
923,751 |
|
|
|
KEY
FINANCIAL RATIOS AND DATA |
Three Months Ended |
($ in thousands, except
per share amounts) (unaudited) |
|
Dec. 31, |
|
Sept. 30, |
|
Dec. 31, |
|
|
|
2017 |
|
|
|
2017 |
|
|
|
2016 |
|
PERFORMANCE
RATIOS: |
|
|
|
|
|
|
Return on average
assets (a) |
|
|
1.50 |
% |
|
|
1.55 |
% |
|
|
1.39 |
% |
Return on average
equity (a) |
|
|
12.90 |
% |
|
|
13.23 |
% |
|
|
12.87 |
% |
Net interest margin
(a) |
|
|
4.19 |
% |
|
|
4.18 |
% |
|
|
3.91 |
% |
Efficiency ratio |
|
|
57.08 |
% |
|
|
56.31 |
% |
|
|
59.07 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. 31, |
|
Sept. 30, |
|
Dec. 31, |
|
|
|
2017 |
|
|
|
2017 |
|
|
|
2016 |
|
ASSET QUALITY RATIOS AND DATA: |
|
|
|
|
|
|
Non-accrual loans |
|
$ |
2,113 |
|
|
$ |
1,911 |
|
|
$ |
2,364 |
|
Loans past due 90 days
and still accruing |
|
|
-- |
|
|
|
-- |
|
|
|
135 |
|
Non-performing
investment securities |
|
|
500 |
|
|
|
533 |
|
|
|
681 |
|
OREO and other
repossessed assets |
|
|
2,887 |
|
|
|
3,301 |
|
|
|
3,254 |
|
Total non-performing
assets (b) |
|
$ |
5,500 |
|
|
$ |
5,745 |
|
|
$ |
6,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing assets
to total assets (b) |
|
|
0.55 |
% |
|
|
0.60 |
% |
|
|
0.70 |
% |
Net charge-offs
(recoveries) during quarter |
|
$ |
(12 |
) |
|
$ |
57 |
|
|
$ |
(17 |
) |
Allowance for loan
losses to non-accrual loans |
|
|
453 |
% |
|
|
500 |
% |
|
|
416 |
% |
Allowance for loan
losses to loans receivable (c) |
|
|
1.34 |
% |
|
|
1.36 |
% |
|
|
1.45 |
% |
Troubled debt
restructured loans on accrual status (d) |
|
$ |
3,282 |
|
|
$ |
3,342 |
|
|
$ |
7,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL RATIOS: |
|
|
|
|
|
|
Tier 1 leverage
capital |
|
|
11.45 |
% |
|
|
11.52 |
% |
|
|
10.60 |
% |
Tier 1 risk-based
capital |
|
|
16.49 |
% |
|
|
16.31 |
% |
|
|
15.13 |
% |
Common equity Tier 1
risk-based capital |
|
|
16.49 |
% |
|
|
16.31 |
% |
|
|
15.13 |
% |
Total
risk-based capital |
|
|
17.74 |
% |
|
|
17.56 |
% |
|
|
16.39 |
% |
Tangible common equity
to tangible assets (non-GAAP) |
|
|
10.98 |
% |
|
|
11.13 |
% |
|
|
10.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOOK VALUES: |
|
|
|
|
|
|
Book value per common
share |
|
$ |
15.49 |
|
|
$ |
15.08 |
|
|
$ |
14.32 |
|
Tangible book value per
common share (e) |
|
|
14.72 |
|
|
|
14.31 |
|
|
|
13.51 |
|
|
|
|
|
|
|
|
_______________________________________________(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 $199, $253 and $404
reported as non-accrual loans at December 31, 2017, September 30,
2017 and December 31, 2016, respectively. (e) Tangible common
equity divided by common shares outstanding (non-GAAP).
|
AVERAGE BALANCES, YIELDS, AND RATES -
QUARTERLY |
($ in
thousands) |
(unaudited) |
|
|
For the Three Months Ended |
|
December 31, 2017 |
|
September 30, 2017 |
|
December 31, 2016 |
|
Amount |
|
Rate |
|
Amount |
|
Rate |
|
Amount |
|
Rate |
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Loans receivable and
loans held for sale |
$ |
709,079 |
|
|
5.26 |
% |
|
$ |
702,171 |
|
|
5.19 |
% |
|
$ |
684,911 |
|
|
5.13 |
% |
Investment securities
and FHLB stock (1) |
|
12,451 |
|
|
2.70 |
|
|
|
12,522 |
|
|
3.23 |
|
|
|
10,989 |
|
|
3.42 |
|
Interest-bearing
deposits in banks and CD’s |
|
180,038 |
|
|
1.37 |
|
|
|
159,297 |
|
|
1.26 |
|
|
|
153,831 |
|
|
0.72 |
|
Total
interest-earning assets |
|
901,568 |
|
|
4.45 |
|
|
|
873,990 |
|
|
4.44 |
|
|
|
849,731 |
|
|
4.31 |
|
Other assets |
|
60,128 |
|
|
|
|
|
60,365 |
|
|
|
|
|
57,105 |
|
|
|
Total
assets |
$ |
961,696 |
|
|
|
|
$ |
934,355 |
|
|
|
|
$ |
906,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
NOW checking
accounts |
$ |
212,550 |
|
|
0.21 |
% |
|
$ |
211,046 |
|
|
0.21 |
% |
|
$ |
202,385 |
|
|
0.23 |
% |
Money market
accounts |
|
136,466 |
|
|
0.38 |
|
|
|
127,214 |
|
|
0.37 |
|
|
|
120,311 |
|
|
0.32 |
|
Savings accounts |
|
141,266 |
|
|
0.06 |
|
|
|
139,162 |
|
|
0.06 |
|
|
|
127,656 |
|
|
0.06 |
|
Certificates of deposit
accounts |
|
138,687 |
|
|
0.96 |
|
|
|
139,975 |
|
|
0.93 |
|
|
|
147,433 |
|
|
0.83 |
|
Total
interest-bearing deposits |
|
628,969 |
|
|
0.38 |
|
|
|
617,397 |
|
|
0.37 |
|
|
|
597,785 |
|
|
0.36 |
|
FHLB borrowings |
|
-- |
|
|
-- |
|
|
|
-- |
|
|
-- |
|
|
|
30,000 |
|
|
4.07 |
|
Total interest-bearing
liabilities |
|
628,969 |
|
|
0.38 |
|
|
|
617,397 |
|
|
0.37 |
|
|
|
627,785 |
|
|
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing
demand deposits |
|
216,907 |
|
|
|
|
|
202,948 |
|
|
|
|
|
176,768 |
|
|
|
Other liabilities |
|
3,732 |
|
|
|
|
|
4,693 |
|
|
|
|
|
4,495 |
|
|
|
Shareholders’
equity |
|
112,088 |
|
|
|
|
|
109,317 |
|
|
|
|
|
97,788 |
|
|
|
Total
liabilities and shareholders’ equity |
$ |
961,696 |
|
|
|
|
$ |
934,355 |
|
|
|
|
$ |
906,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
spread |
|
|
4.07 |
% |
|
|
|
4.07 |
% |
|
|
|
3.77 |
% |
Net interest
margin (2) |
|
|
4.19 |
% |
|
|
|
4.18 |
% |
|
|
|
3.91 |
% |
Average
interest-earning assets to |
|
|
|
|
|
|
|
|
|
|
|
average
interest-bearing liabilities |
|
143.34 |
% |
|
|
|
|
141.56 |
% |
|
|
|
|
135.35 |
% |
|
|
_____________________________________(1) Includes other
investments(2) Net interest margin = annualized net interest income
/ average interest-bearing assets
Contact: Michael R.
Sand,President & CEODean J. Brydon,
CFO(360)
533-4747www.timberlandbank.com
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