- Reports Record Company Profitability for the First Half of Fiscal 2017
- Earnings per Share Increased 25% to $0.86 for the First Six Months of Fiscal 2017
HOQUIAM, Wash., April 25, 2017 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) (“Timberland” or “the Company”) today reported net income of $3.13 million, or $0.42 per diluted common share, for its second fiscal quarter ended March 31, 2017. This compares to net income of $2.38 million, or $0.34 per diluted common share, for the quarter ended March 31, 2016, and net income of $3.15 million, or $0.43 per diluted common share, for the preceding quarter ended December 31, 2016.
For the first six months of fiscal 2017, Timberland earned $6.28 million, or $0.86 per diluted common share, an increase in net income of 28% and an increase in earnings per diluted common share (“EPS”) of 25% from the $4.91 million, or $0.69 per diluted common share, reported for the first six months of fiscal 2016.
Timberland’s Board of Directors also declared a quarterly dividend of $0.11 per common share, payable on May 26, 2017 to shareholders of record on May 12, 2017.
“We continue to see solid growth opportunities in the Western Washington markets we serve,” stated Michael R. Sand, President and CEO. “Growth in assets to a Company record $947 million contributed to higher revenues and increased profitability for the first half of our current fiscal year. Revenue for this period increased 12% while expenses increased 4%, resulting in a 25% increase in our earnings per share compared to the first half of the prior fiscal year. We continue to see strong loan demand in our markets and remain pleased that core deposit growth has been sufficient to fund the Bank’s loan growth.”
Second Fiscal Quarter 2017 Earnings and Balance Sheet Highlights (at or for the period ended March 31, 2017, compared to December 31, 2016, or March 31, 2016):
Earnings Highlights:
- EPS increased 24% to $0.42 from $0.34 for the comparable quarter one year ago;
- Net income increased 31% to $3.13 million from $2.38 million for the comparable quarter one year ago;
- EPS for the first six months of fiscal 2017 increased 25% to $0.86 from $0.69 for the first six months of fiscal 2016;
- Return on average equity and return on average assets for the current quarter were 12.24% and 1.35%, respectively;
- Net interest margin remained strong at 3.88% for the current quarter;
- Operating revenue increased 11% from the comparable quarter one year ago; and
- Non-interest income increased 13% from the comparable quarter one year ago.
Balance Sheet Highlights:
- Total assets increased 11% year-over-year and 2% from the prior quarter;
- Net loans receivable increased 9% year-over-year and 1% from the prior quarter;
- Total deposits increased 14% year-over-year and 2% from the prior quarter;
- Other real estate owned (“OREO”) and other repossessed assets decreased 45% year-over-year and 8% from the prior quarter;
- Non-performing assets decreased 42% year-over-year and 12% from the prior quarter to 0.60% of total assets; and
- Book and tangible book values per common share were $14.27 and $13.50, respectively, at March 31, 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 11% to $11.30 million for the current quarter from $10.21 million for the comparable quarter one year ago and decreased 2% from $11.53 million for the preceding quarter. Operating revenue increased 12% to $22.83 million for the first six months of fiscal 2017 from $20.44 million for the comparable period one year ago.
Net interest income for the current quarter increased 10% to $8.45 million from $7.67 million for the comparable quarter one year ago and increased 2% from $8.31 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. For the first six months of fiscal 2017, net interest income increased 9% to $16.76 million from $15.38 million for the first six months of fiscal 2016.
The net interest margin for the current quarter was 3.88% compared to 3.91% for the preceding quarter and 3.92% for the comparable quarter one year ago. The net interest margin for the current 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 preceding quarter was increased by approximately one basis point due to the collection of $21,000 of non-accrual interest. The net interest margin for the comparable quarter one year ago was increased by approximately 12 basis points due to the collection of $189,000 in pre-payment penalties and the collection of $46,000 of non-accrual interest. Timberland’s net interest margin for the first six months of fiscal 2017 was 3.90% compared to 3.96% for the first six months of fiscal 2016.
Non-interest income increased 13% to $2.85 million from $2.51 million for the comparable quarter one year ago and decreased 11% from $3.22 million for the preceding quarter. The decrease in non-interest income for the current quarter compared to the preceding quarter was primarily due to a $283,000 decrease in gain on sale of loans and smaller decreases in several other categories. The decrease in gain on sale of loans was primarily due to a decrease 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 21% to $6.07 million from $5.03 million for the first six months of fiscal 2016.
Total operating (non-interest) expenses for the current quarter increased 1% to $6.86 million from $6.81 million for the preceding quarter and increased 3% from $6.63 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 $75,000 increase in salaries and employee benefits and smaller increases in several other categories. These increases were partially offset by a $95,000 decrease in loan administration and foreclosure expense and smaller decreases in several other categories. The increase in salaries and employee benefits expense was primarily due to a decrease in loan originations during the current quarter compared to the prior quarter and a corresponding reduction in the amount of loan origination fees collected. Under generally accepted accounting principles (“GAAP”), the portion of a loan origination fee that is attributable to the estimated employee costs to generate the loan is recorded as a reduction of salaries and employee benefits expense. The decrease in loan administration and foreclosure expense was primarily due to the recovery of $75,000 in legal and foreclosure related expenses on a troubled debt restructured loan (“TDR”) that paid off during the quarter. The efficiency ratio for the current quarter was 60.67% compared to 65.09% for the comparable quarter one year ago and 59.07% for the preceding quarter. Fiscal year-to-date operating expenses increased 4% to $13.67 million from $13.11 million for the first six months of fiscal 2016. The efficiency ratio for the first six months of fiscal 2017 improved to 59.86% from 64.21% for the first six months of fiscal 2016.
The provision for income taxes remained level at $1.57 million for the current quarter and the preceding quarter. The effective tax rate was 33.4% for the current quarter compared to 33.3% for the quarter ended December 31, 2016.
Balance Sheet Management
Total assets increased 2% to $946.68 million at March 31, 2017 from $923.75 million at December 31, 2016. The increase was primarily due to a $12.57 million increase in cash and cash equivalents and a $6.94 million increase in net loans receivable. These increases were primarily funded by an $18.88 million increase in deposits during the quarter.
Liquidity, as measured by cash and cash equivalents, CDs held for investment and available for sale investments securities, was 24.0% of total liabilities at March 31, 2017, compared to 23.1% at December 31, 2016, and 21.6% one year ago.
Net loans receivable increased $6.94 million, or 1%, to $676.08 million at March 31, 2017, from $669.14 million at December 31, 2016. The increase was primarily due to an $11.12 million increase in multi-family mortgage loans, a $3.51 million increase in land loans, a $3.40 million increase in one- to four-family mortgage loans, a $3.01 million increase in custom and owner/builder one- to four-family construction loans, a $2.14 million increase in commercial construction loans, and a $1.62 million increase in commercial real estate loans. These increases were partially offset by an $11.03 million decrease in multi-family construction loans, a $5.56 million increase in the amount of undisbursed construction loans in process and smaller decreases in several other categories. The increase in multi-family mortgage loans and the decrease in multi-family construction loans was primarily due to several multi-family construction projects being completed and converting to permanent financing.
| LOAN PORTFOLIO | ||||||||||||||||||||
| ($ in thousands) | March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||
| Mortgage loans: | ||||||||||||||||||||
| One- to four-family (a) | $ | 122,889 | 16 | % | $ | 119,485 | 16 | % | $ | 117,465 | 17 | % | ||||||||
| Multi-family | 63,181 | 8 | 52,062 | 7 | 42,666 | 6 | ||||||||||||||
| Commercial | 325,120 | 44 | 323,496 | 44 | 290,817 | 43 | ||||||||||||||
| Construction - custom and owner/builder | 99,304 | 13 | 96,292 | 13 | 69,817 | 10 | ||||||||||||||
| Construction - speculative one-to four-family | 5,311 | 1 | 6,133 | 1 | 6,384 | 1 | ||||||||||||||
| Construction - commercial | 10,762 | 2 | 8,627 | 1 | 22,487 | 3 | ||||||||||||||
| Construction - multi-family | 11,057 | 2 | 22,092 | 3 | 20,570 | 3 | ||||||||||||||
| Land | 25,866 | 3 | 22,359 | 3 | 24,322 | 4 | ||||||||||||||
| Total mortgage loans | 663,490 | 89 | 650,546 | 88 | 594,528 | 87 | ||||||||||||||
| Consumer loans: | ||||||||||||||||||||
| Home equity and second mortgage | 38,024 | 5 | 37,602 | 5 | 37,144 | 5 | ||||||||||||||
| Other | 3,527 | -- | 4,523 | 1 | 4,380 | 1 | ||||||||||||||
| Total consumer loans | 41,551 | 5 | 42,125 | 6 | 41,524 | 6 | ||||||||||||||
| Commercial business loans (b) | 42,603 | 6 | 42,657 | 6 | 43,355 | 7 | ||||||||||||||
| Total loans | 747,644 | 100 | % | 735,328 | 100 | % | 679,407 | 100 | % | |||||||||||
| Less: | ||||||||||||||||||||
| Undisbursed portion of construction loans in process | (59,724 | ) | (54,161 | ) | (44,465 | ) | ||||||||||||||
| Deferred loan origination fees | (2,251 | ) | (2,184 | ) | (2,048 | ) | ||||||||||||||
| Allowance for loan losses | (9,590 | ) | (9,843 | ) | (10,043 | ) | ||||||||||||||
| Total loans receivable, net | $ | 676,079 | $ | 669,140 | $ | 622,851 | ||||||||||||||
| __________________ | ||||||||||||||||||||
| a. Does not include one- to four-family loans held for sale totaling $5,542, $2,008 and $1,584 at March 31, 2017, December 31, 2016, and March 31, 2016, respectively. | ||||||||||||||||||||
| b. Does not include commercial business loans held for sale totaling $256 at March 31, 2017. | ||||||||||||||||||||
Timberland originated $79.50 million in loans during the quarter ended March 31, 2017, compared to $59.58 million for the comparable quarter one year ago and $90.15 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 second quarter of fiscal 2017, fixed-rate one- to four-family mortgage loans and SBA loans totaling $15.01 million were sold compared to $13.94 million for the comparable quarter one year ago and $24.20 million for the preceding quarter.
Timberland’s investment securities decreased $108,000, or 1%, during the quarter to $8.60 million at March 31, 2017, from $8.71 million at December 31, 2016, primarily due to scheduled amortization.
| DEPOSIT BREAKDOWN | ||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||
| March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||
| Non-interest bearing demand | $ | 186,239 | 23 | % | $ | 176,382 | 22 | % | $ | 148,980 | 21 | % | ||||||
| NOW checking | 214,488 | 27 | 207,415 | 26 | 188,108 | 27 | ||||||||||||
| Savings | 138,518 | 17 | 131,124 | 17 | 115,461 | 16 | ||||||||||||
| Money market | 118,791 | 15 | 122,026 | 15 | 100,903 | 14 | ||||||||||||
| Money market – brokered | 8,665 | 1 | 6,912 | 1 | 7,591 | 1 | ||||||||||||
| Certificates of deposit under $100 | 74,281 | 9 | 76,951 | 10 | 81,350 | 11 | ||||||||||||
| Certificates of deposit $100 and over | 64,658 | 8 | 65,956 | 9 | 66,448 | 9 | ||||||||||||
| Certificates of deposit – brokered | 3,212 | -- | 3,209 | -- | 3,197 | 1 | ||||||||||||
| Total deposits | $ | 808,852 | 100 | % | $ | 789,975 | 100 | % | $ | 712,038 | 100 | % | ||||||
Total deposits increased $18.88 million, or 2%, during the current quarter to $808.85 million at March 31, 2017, from $789.98 million at December 31, 2016. The current quarter’s increase was primarily due to a $9.86 million increase in non-interest bearing demand account balances, a $7.39 million increase in savings account balances and a $7.07 million increase in negotiable order of withdrawal (“NOW”) checking account balances. These increases were partially offset by a $3.97 million decrease in certificates of deposit account balances and a $1.48 million decrease in money market account balances.
Shareholders’ Equity
Total shareholders’ equity increased $5.20 million to $104.83 million at March 31, 2017, from $99.63 million at December 31, 2016. The increase in shareholders’ equity was primarily due to net income of $3.13 million for the quarter and $2.50 million in proceeds received from the exercise of a stock warrant. These increases to shareholders’ equity were partially offset by dividend payments of $808,000 to shareholders.
The stock warrant (which allowed the holder to purchase 370,899 shares of the Company’s common stock at an exercise price of $6.73 at any time through December 23, 2018) was granted in December 2008 to the U.S. Treasury Department (“Treasury”) as part of the Company’s participation in the Treasury’s Troubled Asset Relief Program (“TARP”). In June 2013, the Treasury sold the stock warrant to private investors. On January 31, 2017, the stock warrant was exercised and 370,899 shares of the Company’s common stock were issued in exchange for $2.50 million.
Timberland did not repurchase shares of its common stock during the quarter and, at March 31, 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 17.02% and a Tier 1 leverage capital ratio of 10.89%.
Timberland recorded a $250,000 loan loss reserve recapture (which added approximately $0.02 to diluted earnings per share) during the quarter ended March 31, 2017 as asset quality metrics continued to improve. The non-performing assets to total assets ratio improved to 0.60% at March 31, 2017 from 0.70% at December 31, 2016 and 1.16% one year ago.
Timberland had net charge-offs of $3,000 for the current quarter compared to a net recovery of $17,000 for the preceding quarter and a net recovery of $154,000 for the comparable quarter one year ago. The allowance for loan losses was 1.40% of loans receivable at March 31, 2017.
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased 34% to $2.66 million at March 31, 2017, from $4.06 million at December 31, 2016, and decreased 27% from $3.67 million one year ago. Non-accrual loans decreased 20% to $1.89 million at March 31, 2017, from $2.36 million at December 31, 2016, and decreased 44% from $3.39 million one year ago.
| NON-ACCRUAL LOANS | March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||
| ($ in thousands) | Amount | Quantity | Amount | Quantity | Amount | Quantity | ||||||||
| Mortgage loans: | ||||||||||||||
| One- to four-family | $ | 820 | 6 | $ | 846 | 7 | $ | 1,365 | 11 | |||||
| Commercial | 314 | 1 | -- | -- | 1,129 | 3 | ||||||||
| Construction | -- | -- | 367 | 1 | -- | -- | ||||||||
| Land | 296 | 2 | 735 | 5 | 451 | 3 | ||||||||
| Total mortgage loans | 1,430 | 9 | 1,948 | 13 | 2,945 | 17 | ||||||||
| Consumer loans: | ||||||||||||||
| Home equity and second mortgage | 383 | 5 | 387 | 5 | 413 | 7 | ||||||||
| Other | 27 | 1 | 29 | 1 | 33 | 1 | ||||||||
| Total consumer loans | 410 | 6 | 416 | 6 | 446 | 8 | ||||||||
| Commercial business loans | 54 | 2 | -- | -- | -- | -- | ||||||||
| Total loans | $ | 1,894 | 17 | $ | 2,364 | 19 | $ | 3,391 | 25 | |||||
OREO and other repossessed assets decreased 45% to $3.01 million at March 31, 2017, from $5.46 million at March 31, 2016, and decreased 8% from $3.25 million at December 31, 2016. At March 31, 2017, the OREO and other repossessed asset portfolio consisted of 17 individual real estate properties. During the quarter ended March 31, 2017, four OREO properties and one other repossessed asset totaling $381,000 were sold for a net gain of $49,000.
| OREO and OTHER REPOSSESSED ASSETS | March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||
| ($ in thousands) | Amount | Quantity | Amount | Quantity | Amount | Quantity | ||||||||
| One- to four-family | $ | 411 | 2 | $ | 456 | 3 | $ | 1,645 | 7 | |||||
| Commercial | 637 | 3 | 636 | 3 | 446 | 2 | ||||||||
| Land | 1,957 | 12 | 2,095 | 13 | 3,300 | 18 | ||||||||
| Mobile home | -- | -- | 67 | 1 | 67 | 1 | ||||||||
| Total | $ | 3,005 | 17 | $ | 3,254 | 20 | $ | 5,458 | 28 | |||||
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 are 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) | March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
| Shareholders’ equity | $ | 104,829 | $ | 99,634 | $ | 92,262 | ||||||
| Less goodwill | (5,650 | ) | (5,650 | ) | (5,650 | ) | ||||||
| Tangible common equity | $ | 99,179 | $ | 93,984 | $ | 86,612 | ||||||
| Total assets | $ | 946,682 | $ | 923,751 | $ | 851,962 | ||||||
| Less goodwill | (5,650 | ) | (5,650 | ) | (5,650 | ) | ||||||
| Tangible assets | $ | 941,032 | $ | 918,101 | $ | 846,312 | ||||||
Subsequent Event
In April 2017, the Company received a payoff on a $2.24 million TDR. As part of the TDR repayment, the Company also recovered, to the allowance for loan losses, $1.06 million in previously charged off amounts and $718,000 in non-accrual interest. This subsequent event had no financial impact on the quarter ended March 31, 2017.
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) | March 31, | Dec 31, | March 31, | |||||||||
| (unaudited) | 2017 | 2016 | 2016 | |||||||||
| Interest and dividend income | ||||||||||||
| Loans receivable | $ | 8,840 | $ | 8,788 | $ | 8,306 | ||||||
| Investment securities | 68 | 70 | 74 | |||||||||
| Dividends from mutual funds and FHLB stock | 12 | 24 | 39 | |||||||||
| Interest bearing deposits in banks | 379 | 281 | 231 | |||||||||
| Total interest and dividend income | 9,299 | 9,163 | 8,650 | |||||||||
| Interest expense | ||||||||||||
| Deposits | 545 | 543 | 507 | |||||||||
| FHLB borrowings | 302 | 307 | 472 | |||||||||
| Total interest expense | 847 | 850 | 979 | |||||||||
| Net interest income | 8,452 | 8,313 | 7,671 | |||||||||
| Recapture of loan losses | (250 | ) | -- | -- | ||||||||
| Net interest income after recapture of loan losses | 8,702 | 8,313 | 7,671 | |||||||||
| Non-interest income | ||||||||||||
| OTTI on investment securities, net | -- | -- | (23 | ) | ||||||||
| Service charges on deposits | 1,090 | 1,105 | 937 | |||||||||
| ATM and debit card interchange transaction fees | 793 | 800 | 710 | |||||||||
| Gain on sale of loans, net | 406 | 689 | 393 | |||||||||
| Bank owned life insurance (“BOLI”) net earnings | 136 | 137 | 137 | |||||||||
| Servicing income on loans sold | 99 | 97 | 55 | |||||||||
| Other | 327 | 388 | 304 | |||||||||
| Total non-interest income, net | 2,851 | 3,216 | 2,513 | |||||||||
| Non-interest expense | ||||||||||||
| Salaries and employee benefits | 3,755 | 3,680 | 3,466 | |||||||||
| Premises and equipment | 776 | 755 | 771 | |||||||||
| Advertising | 167 | 162 | 193 | |||||||||
| OREO and other repossessed assets, net | (12 | ) | 30 | 195 | ||||||||
| ATM and debit card processing | 350 | 311 | 331 | |||||||||
| Postage and courier | 120 | 95 | 110 | |||||||||
| State and local taxes | 152 | 155 | 138 | |||||||||
| Professional fees | 199 | 201 | 117 | |||||||||
| FDIC insurance | 107 | 113 | 127 | |||||||||
| Other insurance | 33 | 33 | 33 | |||||||||
| Loan administration and foreclosure | (1 | ) | 94 | 95 | ||||||||
| Data processing and telecommunications | 464 | 450 | 474 | |||||||||
| Deposit operations | 240 | 309 | 234 | |||||||||
| Other | 507 | 422 | 345 | |||||||||
| Total non-interest expense | 6,857 | 6,810 | 6,629 | |||||||||
| Three Months Ended | ||||||||||||
| March 31, | Dec. 31, | March 31, | ||||||||||
| 2017 | 2016 | 2016 | ||||||||||
| Income before income taxes | $ | 4,696 | $ | 4,719 | $ | 3,555 | ||||||
| Provision for income taxes | 1,568 | 1,572 | 1,175 | |||||||||
| Net income | $ | 3,128 | $ | 3,147 | $ | 2,380 | ||||||
| Net income per common share: | ||||||||||||
| Basic | $ | 0.44 | $ | 0.46 | $ | 0.35 | ||||||
| Diluted | 0.42 | 0.43 | 0.34 | |||||||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 7,135,083 | 6,862,749 | 6,846,527 | |||||||||
| Diluted | 7,379,353 | 7,235,515 | 7,080,005 | |||||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME | Six Months Ended | |||||||||
| ($ in thousands, except per share amounts) | March 31, | March 31, | ||||||||
| (unaudited) | 2017 | 2016 | ||||||||
| Interest and dividend income | ||||||||||
| Loans receivable | $ | 17,628 | $ | 16,735 | ||||||
| Investment securities | 138 | 143 | ||||||||
| Dividends from mutual funds and FHLB stock | 37 | 61 | ||||||||
| Interest bearing deposits in banks | 660 | 402 | ||||||||
| Total interest and dividend income | 18,463 | 17,341 | ||||||||
| Interest expense | ||||||||||
| Deposits | 1,088 | 1,012 | ||||||||
| FHLB borrowings | 610 | 948 | ||||||||
| Total interest expense | 1,698 | 1,960 | ||||||||
| Net interest income | 16,765 | 15,381 | ||||||||
| Recapture of loan losses | (250 | ) | -- | |||||||
| Net interest income after recapture of loan losses | 17,015 | 15,381 | ||||||||
| Non-interest income | ||||||||||
| OTTI on investment securities, net | -- | (23 | ) | |||||||
| Service charges on deposits | 2,195 | 1,909 | ||||||||
| ATM and debit card interchange transaction fees | 1,593 | 1,409 | ||||||||
| Gain on sale of loans, net | 1,095 | 787 | ||||||||
| BOLI net earnings | 274 | 273 | ||||||||
| Servicing income on loans sold | 196 | 120 | ||||||||
| Other | 715 | 556 | ||||||||
| Total non-interest income, net | 6,068 | 5,031 | ||||||||
| Non-interest expense | ||||||||||
| Salaries and employee benefits | 7,435 | 6,936 | ||||||||
| Premises and equipment | 1,531 | 1,531 | ||||||||
| Advertising | 329 | 398 | ||||||||
| OREO and other repossessed assets, net | 18 | 438 | ||||||||
| ATM and debit card processing | 662 | 653 | ||||||||
| Postage and courier | 214 | 211 | ||||||||
| State and local taxes | 308 | 270 | ||||||||
| Professional fees | 399 | 247 | ||||||||
| FDIC insurance | 221 | 234 | ||||||||
| Other insurance | 66 | 65 | ||||||||
| Loan administration and foreclosure | 93 | 124 | ||||||||
| Data processing and telecommunications | 914 | 924 | ||||||||
| Deposit operations | 549 | 406 | ||||||||
| Other | 929 | 670 | ||||||||
| Total non-interest expense | 13,668 | 13,107 | ||||||||
| Six Months Ended | ||||||||||
| March 31, | March 31, | |||||||||
| 2017 | 2016 | |||||||||
| Income before income taxes | $ | 9,415 | $ | 7,305 | ||||||
| Provision for income taxes | 3,140 | 2,397 | ||||||||
| Net income | $ | 6,275 | $ | 4,908 | ||||||
| Net income per common share: | ||||||||||
| Basic | $ | 0.90 | $ | 0.72 | ||||||
| Diluted | 0.86 | 0.69 | ||||||||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 6,997,420 | 6,858,190 | ||||||||
| Diluted | 7,306,644 | 7,081,945 | ||||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS | |||||||||||||
| ($ in thousands, except per share amounts) (unaudited) | March 31, | Dec. 31, | March 31, | ||||||||||
| 2017 | 2016 | 2016 | |||||||||||
| Assets | |||||||||||||
| Cash and due from financial institutions | $ | 17,060 | $ | 16,598 | $ | 17,121 | |||||||
| Interest-bearing deposits in banks | 130,980 | 118,872 | 92,908 | ||||||||||
| Total cash and cash equivalents | 148,040 | 135,470 | 110,029 | ||||||||||
| Certificates of deposit (“CDs”) held for investment, at cost | 52,934 | 53,432 | 52,524 | ||||||||||
| Investment securities: | |||||||||||||
| Held to maturity, at amortized cost | 7,326 | 7,418 | 7,743 | ||||||||||
| Available for sale, at fair value | 1,272 | 1,288 | 1,365 | ||||||||||
| FHLB stock | 2,307 | 2,204 | 2,804 | ||||||||||
| Loans held for sale | 5,798 | 2,008 | 1,584 | ||||||||||
| Loans receivable | 685,669 | 678,983 | 632,894 | ||||||||||
| Less: Allowance for loan losses | (9,590 | ) | (9,843 | ) | (10,043 | ) | |||||||
| Net loans receivable | 676,079 | 669,140 | 622,851 | ||||||||||
| Premises and equipment, net | 18,013 | 17,816 | 16,355 | ||||||||||
| OREO and other repossessed assets, net | 3,005 | 3,254 | 5,458 | ||||||||||
| BOLI | 18,994 | 18,858 | 18,443 | ||||||||||
| Accrued interest receivable | 2,443 | 2,443 | 2,232 | ||||||||||
| Goodwill | 5,650 | 5,650 | 5,650 | ||||||||||
| Mortgage servicing rights, net | 1,710 | 1,706 | 1,488 | ||||||||||
| Other assets | 3,111 | 3,064 | 3,436 | ||||||||||
| Total assets | $ | 946,682 | $ | 923,751 | $ | 851,962 | |||||||
| Liabilities and shareholders’ equity | |||||||||||||
| Deposits: Non-interest-bearing demand | $ | 186,239 | $ | 176,382 | $ | 148,980 | |||||||
| Deposits: Interest-bearing | 622,613 | 613,593 | 563,058 | ||||||||||
| Total deposits | 808,852 | 789,975 | 712,038 | ||||||||||
| FHLB borrowings | 30,000 | 30,000 | 45,000 | ||||||||||
| Other liabilities and accrued expenses | 3,001 | 4,142 | 2,662 | ||||||||||
| Total liabilities | 841,853 | 824,117 | 759,700 | ||||||||||
| Shareholders’ equity | |||||||||||||
| Common stock, $.01 par value; 50,000,000 shares authorized; | |||||||||||||
| 7,345,477 shares issued and outstanding – March 31, 2017 | |||||||||||||
| 6,956,568 shares issued and outstanding – December 31, 2016 | |||||||||||||
| 6,933,068 shares issued and outstanding – March 31, 2016 | 12,986 | 10,188 | 9,698 | ||||||||||
| Unearned shares issued to Employee Stock Ownership Plan (“ESOP”) | (529 | ) | (595 | ) | (793 | ) | |||||||
| Retained earnings | 92,550 | 90,230 | 83,643 | ||||||||||
| Accumulated other comprehensive loss | (178 | ) | (189 | ) | (286 | ) | |||||||
| Total shareholders’ equity | 104,829 | 99,634 | 92,262 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 946,682 | $ | 923,751 | $ | 851,962 | |||||||
| KEY FINANCIAL RATIOS AND DATA | Three Months Ended | ||||||||||||
| ($ in thousands, except per share amounts) (unaudited) | March 31, | Dec. 31, | March 31, | ||||||||||
| 2017 | 2016 | 2016 | |||||||||||
| PERFORMANCE RATIOS: | |||||||||||||
| Return on average assets (a) | 1.35 | % | 1.39 | % | 1.13 | % | |||||||
| Return on average equity (a) | 12.24 | % | 12.87 | % | 10.42 | % | |||||||
| Net interest margin (a) | 3.88 | % | 3.91 | % | 3.92 | % | |||||||
| Efficiency ratio | 60.67 | % | 59.07 | % | 65.09 | % | |||||||
| Six Months Ended | |||||||||||||
| March 31, | March 31, | ||||||||||||
| 2017 | 2016 | ||||||||||||
| PERFORMANCE RATIOS: | |||||||||||||
| Return on average assets | 1.37 | % | 1.18 | % | |||||||||
| Return on average equity | 12.55 | % | 10.84 | % | |||||||||
| Net interest margin | 3.90 | % | 3.96 | % | |||||||||
| Efficiency ratio | 59.86 | % | 64.21 | % | |||||||||
| March 31, | Dec. 31, | March 31, | |||||||||||
| 2017 | 2016 | 2016 | |||||||||||
| ASSET QUALITY RATIOS AND DATA: | |||||||||||||
| Non-accrual loans | $ | 1,894 | $ | 2,364 | $ | 3,391 | |||||||
| Loans past due 90 days and still accruing | 135 | 135 | 135 | ||||||||||
| Non-performing investment securities | 638 | 681 | 868 | ||||||||||
| OREO and other repossessed assets | 3,005 | 3,254 | 5,458 | ||||||||||
| Total non-performing assets (b) | $ | 5,672 | $ | 6,434 | $ | 9,852 | |||||||
| Non-performing assets to total assets (b) | 0.60 | % | 0.70 | % | 1.16 | % | |||||||
| Net charge-offs (recoveries) during quarter | $ | 3 | $ | (17 | ) | $ | (154 | ) | |||||
| Allowance for loan losses to non-accrual loans | 506 | % | 416 | % | 296 | % | |||||||
| Allowance for loan losses to loans receivable (c) | 1.40 | % | 1.45 | % | 1.59 | % | |||||||
| Troubled debt restructured loans on accrual status (d) | $ | 6,428 | $ | 7,579 | $ | 7,923 | |||||||
| CAPITAL RATIOS: | |||||||||||||
| Tier 1 leverage capital | 10.89 | % | 10.60 | % | 10.56 | % | |||||||
| Tier 1 risk-based capital | 15.77 | % | 15.13 | % | 14.21 | % | |||||||
| Common equity Tier 1 risk-based capital | 15.77 | % | 15.13 | % | 14.21 | % | |||||||
| Total risk-based capital | 17.02 | % | 16.39 | % | 15.46 | % | |||||||
| Tangible common equity to tangible assets (non-GAAP) | 10.54 | % | 10.24 | % | 10.23 | % | |||||||
| BOOK VALUES: | |||||||||||||
| Book value per common share | $ | 14.27 | $ | 14.32 | $ | 13.31 | |||||||
| Tangible book value per common share (e) | 13.50 | 13.51 | 12.49 | ||||||||||
| __________________________________________________ | |||||||||||||
| (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 $404, $404 and $531 reported as non-accrual loans at March 31, 2017, December 31, 2016 and March 31, 2016, respectively. | |||||||||||||
| (e) Tangible common equity divided by common shares outstanding (non-GAAP). | |||||||||||||
| AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY | ||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||
| Assets | ||||||||||||||||||||
| Loans and loans held for sale | $ | 688,506 | 5.14 | % | $ | 684,911 | 5.13 | % | $ | 631,708 | 5.26 | % | ||||||||
| Investment securities and FHLB Stock | 10,866 | 2.94 | 10,989 | 3.42 | 11,844 | 3.82 | ||||||||||||||
| Interest bearing deposits and CD’s | 171,203 | 0.90 | 153,831 | 0.72 | 139,732 | 0.66 | ||||||||||||||
| Total interest-bearing assets | 870,575 | 4.27 | 849,731 | 4.31 | 783,284 | 4.42 | ||||||||||||||
| Other assets | 59,561 | 57,105 | 57,072 | |||||||||||||||||
| Total assets | 930,136 | 906,836 | 840,356 | |||||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||
| NOW checking accounts | $ | 208,736 | 0.22 | % | $ | 202,385 | 0.23 | % | $ | 184,414 | 0.24 | % | ||||||||
| Money market accounts | 127,935 | 0.34 | 120,311 | 0.32 | 105,670 | 0.30 | ||||||||||||||
| Savings accounts | 134,073 | 0.06 | 127,656 | 0.06 | 112,064 | 0.05 | ||||||||||||||
| Certificate of deposit accounts | 144,021 | 0.86 | 147,433 | 0.83 | 151,837 | 0.80 | ||||||||||||||
| Total interest-bearing deposits | 614,765 | 0.35 | 597,785 | 0.36 | 553,985 | 0.37 | ||||||||||||||
| FHLB borrowings | 30,000 | 4.08 | 30,000 | 4.07 | 45,000 | 4.22 | ||||||||||||||
| Total interest-bearing liabilities | 644,765 | 0.52 | 627,785 | 0.54 | 598,985 | 0.66 | ||||||||||||||
| Non-interest bearing demand deposits | 178,977 | 176,768 | 146,581 | |||||||||||||||||
| Other liabilities | 4,208 | 4,495 | 3,455 | |||||||||||||||||
| Shareholders’ equity | 102,186 | 97,788 | 91,335 | |||||||||||||||||
| Total liabilities and shareholders’ equity | 930,136 | 906,836 | 840,356 | |||||||||||||||||
| Interest rate spread | 3.75 | % | 3.77 | % | 3.76 | % | ||||||||||||||
| Net interest margin (1) | 3.88 | % | 3.91 | % | 3.92 | % | ||||||||||||||
| Average interest-bearing assets to average interest bearing liabilities | 135.02 | % | 135.35 | % | 130.77 | % | ||||||||||||||
| _____________________________________ | ||||||||||||||||||||
| (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 Six Months Ended | ||||||||||||||
| March 31, 2017 | March 31, 2016 | |||||||||||||
| Amount | Rate | Amount | Rate | |||||||||||
| Assets | ||||||||||||||
| Loans and loans held for sale | $ | 686,689 | 5.13 | % | $ | 628,616 | 5.32 | % | ||||||
| Investment securities and FHLB Stock | 10,929 | 3.18 | 11,900 | 3.43 | ||||||||||
| Interest bearing deposits and CD’s | 162,433 | 0.81 | 136,666 | 0.59 | ||||||||||
| Total interest-bearing assets | 860,051 | 4.29 | 777,182 | 4.46 | ||||||||||
| Other assets | 58,317 | 57,645 | ||||||||||||
| Total assets | 918,368 | 834,827 | ||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||
| NOW checking accounts | $ | 205,526 | 0.23 | % | $ | 181,999 | 0.25 | % | ||||||
| Money market accounts | 124,081 | 0.33 | 105,020 | 0.30 | ||||||||||
| Savings accounts | 130,829 | 0.06 | 111,205 | 0.05 | ||||||||||
| Certificate of deposit accounts | 145,746 | 0.84 | 152,858 | 0.78 | ||||||||||
| Total interest-bearing deposits | 606,182 | 0.36 | 551,082 | 0.37 | ||||||||||
| FHLB borrowings | 30,000 | 4.08 | 45,000 | 4.21 | ||||||||||
| Total interest-bearing liabilities | 636,182 | 0.54 | 596,082 | 0.66 | ||||||||||
| Non-interest bearing demand deposits | 177,860 | 144,544 | ||||||||||||
| Other liabilities | 4,363 | 3,616 | ||||||||||||
| Shareholders’ equity | 99,963 | 90,585 | ||||||||||||
| Total liabilities and shareholders’ equity | 918,368 | 834,827 | ||||||||||||
| Interest rate spread | 3.76 | % | 3.80 | % | ||||||||||
| Net interest margin (1) | 3.90 | % | 3.96 | % | ||||||||||
| Average interest-bearing assets to average interest bearing liabilities | 135.19 | % | 130.38 | % | ||||||||||
| _____________________________________ | ||||||||||||||
| (1) Net interest margin = annualized net interest income / average interest-bearing assets | ||||||||||||||