SOURCE: Timberland Bancorp, Inc.

Timberland Bancorp, Inc.

November 06, 2009 09:00 ET

Timberland Bancorp Announces Fiscal Fourth Quarter and Year End Results

HOQUIAM, WA--(Marketwire - November 6, 2009) - Timberland Bancorp, Inc. (NASDAQ: TSBK) ("Timberland" or "the Company") today reported fiscal fourth quarter net income of $47,000, or $0.01 per diluted common share. Income available to common shareholders after adjusting for the preferred stock dividend and the preferred stock discount accretion was a loss of $(209,000), or $(0.03) per diluted common share. This compares to net income of $1.35 million, or $0.21 per diluted common share, for the quarter ended September 30, 2008 and net income available to common shareholders of $769,000, or $0.12 per diluted common share, for the quarter ended June 30, 2009.

For fiscal 2009, the Company reported net income of $73,000. Income available to common shareholders after adjusting for the preferred stock dividend and the preferred stock discount accretion was a loss of $(699,000), or $(0.17) per diluted common share. This compares to net income of $4.01 million or $0.61 per diluted common share for fiscal 2008 when no preferred dividends were due.

The Board of Directors of Timberland also announced that a cash dividend of $0.03 per common share would be paid on November 29, 2009 to shareholders of record on November 16, 2009. This payment will be the 47th consecutive quarterly cash dividend that Timberland has paid on its common stock.

Fiscal Fourth Quarter 2009 Highlights:

--  Capital levels remain exceptionally strong: Total Risk Based Capital
    at 15.94%; Tier 1 Capital Ratio at 12.29%
--  Net interest margin increased to 3.93% from 3.86% for the immediately
    prior quarter
--  Deposits increased by 4% during the quarter; 83% of the increase was
    due to growth in N.O.W. checking account balances
--  Core deposits increased 6% year over year and currently account for
    84% of total deposits
--  Total assets increased by 4% during the quarter
--  Construction and land development loans decreased 25% year over year
--  Loan loss reserves strengthened to 2.52% of total loans
--  Core operating profits (pre-tax, pre-provision and pre-OTTI charges)
    increased to $3.6 million; an increase of 39% from the immediately prior
    quarter and 5% from the same quarter one year ago
    

"We continue to generate solid core revenues and core operating profits," stated Michael R. Sand, President and CEO. "Net interest income, net interest margin and core deposits increased moderately compared to the prior quarter. Deposit inflows added more than $18.2 million to our deposit base with increases in N.O.W. checking account balances representing 83% of the growth.

"We have diminishing exposure to construction related credits -- particularly those in the residential sector possessing a speculative component. While our total exposure to construction related credits decreased 25% from September 30, 2008 the decrease in residential speculative construction credits decreased by 45%," Sand stated. "We continue to work through the problem loans in our portfolio. During the quarter we sold nine OREO properties representing $2.1 million of the June 30, 2009 OREO balance. Our capital remains exceptionally strong with total risk based capital of 15.94%. We are well positioned to manage through the remainder of the economic downturn affecting the Northwest."

Capital Ratios and Asset Quality

Timberland Bancorp remains very well capitalized with a total risk-based capital ratio of 15.94% and a Tier 1 capital ratio of 12.29% at September 30, 2009. The tangible capital to tangible assets ratio was 11.73% on the same date.

The non-performing assets ("NPAs") to total assets ratio was 5.40% at September 30, 2009 compared to 4.88% at June 30, 2009. During the quarter ended September 30, 2009 net charge-offs were $1.47 million compared to $609,000 during the quarter ended June 30, 2009. Timberland recorded a $3.24 million provision to its allowance for loan losses during the current quarter. The allowance for loan losses totaled $14.2 million at September 30, 2009, or 2.52% of total loans compared to $12.4 million, or 2.23% of loans receivable at June 30, 2009 and $8.1 million, or 1.42% of loans receivable one year ago.

Non-performing loans ("NPLs") increased to $29.3 million at September 30, 2009 from $25.1 million at June 30, 2009 and were comprised of 63 loans and 49 credit relationships. Included in the NPLs are:

--  8 - Land development loans totaling $8.80 million of which the largest
    has a balance of $2.24 million
--  17 - Land loans totaling $5.35 million of which the largest has a
    balance of $977,000
--  7 - Commercial real estate loans totaling $5.00 million of which the
    largest has a balance of $1.65 million
--  2 - Condominium construction loans totaling $4.37 million of which the
    largest has a balance of $3.74 million
--  8 - One-to-four family spec construction loans totaling $3.48 million
    of which the largest has a balance of $791,000
--  7 - One-to-four family home loans totaling $1.34 million of which the
    largest loan has a balance of $315,000
--  3 - One-to-four family owner / builder construction loans totaling
    $628,000 of which the largest has a balance of $270,000
--  6 - Second mortgage loans secured by liens on one-to-four family homes
    totaling $205,000 of which the largest loan has a balance of $56,000
--  2 - Commercial business loans totaling $65,000
--  3 - Consumer loans totaling $53,000
    

Net charge-offs totaled $1.47 million for the quarter ended September 30, 2009 and included the following:

--  $481,000 on two land development loans
--  $312,000 on five land loans
--  $295,000 on a condominium construction loan
--  $234,000 on two commercial real estate loans
--  $69,000 on two speculative construction loans
--  $62,000 on a home equity loan
--  $12,000 on three single family home loans
    

Other real estate owned ("OREO") totaled $8.19 million at September 30, 2009 compared to $7.70 million at June 30, 2009. The balance was comprised of 26 individual properties representing 14 relationships. During the quarter nine OREO properties were sold. These nine OREO properties represented $2.16 million of the OREO balance reported at June 30, 2009. Six additional OREO properties have earnest money agreements which, if closed, will result in a $1.4 million reduction in the OREO balance. The largest OREO property has a balance of $2.31 million and consists of a 78 lot plat located in Richland, Washington. The Richland/Kennewick/Pasco market is currently one of Washington State's better performing economic areas. Timberland continues to actively manage the disposition of OREO properties and has observed increased buyer interest in OREO properties.

Balance Sheet Management

Total assets increased by 4% during the quarter to $702.5 million at September 30, 2009 from $675.5 million at June 30, 2009. The $27.1 million increase in total assets was primarily a result of a $25.7 million increase in cash equivalents and a $1.4 million increase in net loans receivable. The Company continues to maintain a high level of liquidity, both on balance sheet and through off-balance sheet access to funds. Liquidity as measured by cash equivalents and available for sale investments securities to liabilities increased to 13.5% at September 30, 2009, from 9.9% one year ago.

Net loans receivable increased by $1.4 million during the quarter to $547.2 million at September 30, 2009. The increase was primarily due to a $9.3 million increase in commercial real estate loans, which was partially offset by a $2.3 million decrease in construction and land development loans. "We continue to improve the mix of loans in our portfolio," said Dean Brydon, Chief Financial Officer. "We have reduced our exposure to construction and land development loans by $47 million, year over year." During the current quarter the one-to-four family speculative construction portfolio decreased by 12% and the land development portfolio decreased by 7%. During the full fiscal year, the one-to-four family speculative construction portfolio decreased by 45% and the land development portfolio decreased by 32%. "Overall, we have reduced our total exposure to construction and land development loans by 25% from one year ago," Brydon added.


LOAN PORTFOLIO
($ in thousands)
                    Sept. 30, 2009     June 30, 2009      Sept. 30, 2008
                   Amount   Percent   Amount   Percent   Amount   Percent
                  -------- --------- -------- --------- -------- ---------
Mortgage Loans:
  One-to-four
   family         $110,556     19%   $110,338     19%   $112,299     18%
  Multi-family      25,638      4      25,702      4      25,927      4
  Commercial       188,205     32     178,941     30     146,223     24
  Construction
   and land
   development     139,728     23     142,006     24     186,344     31
  Land              65,642     11      65,736     11      60,701     10
                  -------- --------- -------- --------- -------- ---------
    Total mortgage
     loans         529,769     89     522,723     88     531,494     87

Consumer Loans:
  Home equity and
   second mortgage  41,746      7      41,950      7      48,690      8
  Other              9,827      2      10,107      2      10,635      2
                  -------- --------- -------- --------- -------- ---------
    Total consumer
     loans          51,573      9      52,057      9      59,325     10

Commercial
 business loans     13,775      2      15,199      3      21,018      3
                  -------- --------- -------- --------- -------- ---------
Total loans       $595,117    100%   $589,979    100%   $611,837    100%
Less:
  Undisbursed
   portion of
   construction
   loans in
   process         (31,298)           (29,447)           (43,353)
  Unearned income   (2,439)            (2,326)            (2,747)
  Allowance for
   loan losses     (14,172)           (12,440)            (8,050)
                  --------           --------           --------
Total loans
 receivable, net  $547,208           $545,766           $557,687
                  ========           ========           ========




CONSTRUCTION LOAN COMPOSITION
($ in thousands)
                    Sept. 30, 2009     June 30, 2009      Sept. 30, 2008
                            Percent            Percent            Percent
                            of Loan            of Loan            of Loan
                   Amount  Portfolio  Amount  Portfolio  Amount  Portfolio
                  -------- --------- -------- --------- -------- ---------
Custom and
 owner / builder  $ 35,414     6%    $ 34,373     6%    $ 47,168     8%
Speculative         16,959     3       19,332     3       30,895     5
Commercial
 real estate        49,397     8       42,056     7       39,620     6
Multi-family
 (including
 condominium)       18,800     3       25,631     4       40,509     7
Land development    19,158     3       20,614     4       28,152     5
                  --------           --------           --------
  Total
   construction
   loans          $139,728           $142,006           $186,344


Loan originations decreased during the current quarter as the demand to refinance one-to-four family mortgage loans declined. Loan originations totaled $49.5 million for the quarter ended September 30, 2009 compared to $94.8 million for the preceding quarter and $50.0 million for the quarter ended one year ago. 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. During the quarter ended September 30, 2009, fixed-rate one-to-four family mortgage loan sales totaled $21.7 million compared to $69.6 million for the preceding quarter and $9.4 million for the quarter ended one year ago.

Timberland's investment securities decreased by $2.2 million during the quarter to $21.9 million at June 30, 2009 from $24.1 million at June 30, 2009, primarily as a result of regular amortization and prepayments and an $857,000 credit related other-than-temporary-impairment ("OTTI") charge on private label mortgage-backed securities that were acquired in the in-kind redemption from the AMF family of mutual funds in June 2008.


DEPOSIT BREAKDOWN
($ in thousands)
                    Sept. 30, 2009     June 30, 2009      Sept. 30, 2008
                   Amount   Percent   Amount   Percent   Amount   Percent
                  -------- --------- -------- --------- -------- ---------
Non-interest
 bearing          $ 50,295     10%   $ 50,153     10%   $ 51,955     11%
N.O.W. checking    117,357     23     102,186     21      90,468     18
Savings             58,609     12      56,303     11      56,391     11
Money market        62,478     12      61,992     13      70,379     14
Certificates
 of deposit
 under $100        135,242     27     140,924     29     130,313     26
Certificates
 of deposit
 $100 and over      77,926     15      75,861     16      73,107     15
Certificates
 of deposit
 - brokered          3,754      1          --     --      25,959      5
                  -------- --------- -------- --------- -------- ---------
  Total
   deposits       $505,661    100%   $487,419    100%   $498,572    100%
                  ======== ========= ======== ========= ======== =========



Total deposits increased by 4% to $505.7 million at September 30, 2009, from $487.4 million at June 30, 2009 primarily as a result of a $15.2 million increase in N.O.W. checking account balances and a $2.3 million increase in savings account balances. Timberland had no true brokered funds in its deposit base at September 30, 2009. The $3.75 million noted as brokered deposits consisted of reciprocal deposits in the Certificate of Deposits Account Registry Service ("CDARS") program.

Total shareholders' equity decreased $685,000 to $88.1 million at September 30, 2009, from $88.8 million at June 30, 2009. The decrease was primarily due to the payment of $630,000 in dividends to common and preferred shareholders and a $171,000 increase in accumulated other comprehensive loss. These items were partially offset by net income of $47,000.

Operating Results

Fiscal fourth quarter operating revenue (net interest income before provision for loan losses, plus non-interest income excluding OTTI charges), increased by 2% to $9.0 million compared to $8.9 million in the like quarter a year ago. The increase was primarily a result of increased non-interest income, which was partially offset by a decrease in net interest income. The increased non-interest income was primarily due to a $174,000 increase in gains on sale of loans, a $169,000 valuation recovery on the Bank's mortgage servicing rights ("MSRs") and $139,000 in income recorded for property easements sold. In addition, the Bank recorded a $337,000 death claim benefit from its bank owned life insurance ("BOLI") policies.

For fiscal 2009, operating revenues (excluding OTTI charges and loss on redemption of mutual funds) increased by 6% to $35.9 million from $33.9 million in fiscal 2008. The increase was primarily a result of increased non-interest income, which was partially offset by a decrease in net interest income. The increased non-interest income was primarily due to a $1.8 million increase in gain on sale of loans, an $819,000 increase in fee income on deposit accounts and $139,000 in income for property easements sold. In addition BOLI income was increased due to a $337,000 death claim benefit and a $134,000 gain from moving a number of the Bank's BOLI insurance policies to a new insurance carrier.

Net interest income before the provision for loan losses decreased by 9% to $6.2 million for the quarter ended September 30, 2009, from $6.8 million for the like quarter one year ago with interest and dividend income decreasing by 11% and interest expense decreasing by 16%. The decrease in net interest income was primarily due to an increase in loans placed on non-accrual status and margin compression due to the lower interest rate environment. In spite of the challenging interest rate environment, Timberland's net interest margin remained strong at 3.93% for the current quarter; an increase of 7 basis points from 3.86% for the quarter ended June 30, 2009 and a decrease of 43 basis points from 4.36% for the quarter a year ago. The reversal of interest income on loans placed on non-accrual status during the quarter ended September 30, 2009 reduced the net interest margin by approximately 16 basis points.

For fiscal 2009, net interest income before the provision for loan losses decreased by 6% to $25.3 million from $26.9 million in the like period a year ago. Net interest margin for the year was 4.01%, down 40 basis points from one year ago.

In the fourth fiscal quarter Timberland recorded a $3.2 million provision to its allowance for loan losses, compared to $1.0 million in the preceding quarter and $1.5 million in the like quarter in the prior fiscal year. For fiscal 2009, the provision for loan losses totaled $10.7 million, compared to $3.9 million for fiscal 2008. Net charge-offs for the quarter ended September 30, 2009 totaled $1.47 million compared to $609,000 for the quarter ended June 30, 2009 and $526,000 for the quarter ended September 30, 2008. For fiscal 2009, net charge-offs were $4.4 million compared to $647,000 for fiscal 2008.

Timberland's total operating (non-interest) expenses decreased slightly to $5.39 million for the fourth fiscal quarter from $5.40 million from the like quarter one year ago and decreased by 15% from $6.37 million for the immediately prior quarter. Contributing to the decreased quarterly expense was a capital gain on the sale of bank owned property, which reduced premises and equipment expense by $235,000. The Bank sold a portion of its Edgewood branch office property in lieu of an eminent domain action to facilitate a road widening project in Edgewood, Washington.

For fiscal 2009, total operating expenses increased by 12% to $22.7 million from $20.4 million for fiscal 2008. The increased expenses during the current year were primarily due to increased FDIC insurance expenses (including an FDIC special assessment of $300,000), increased OREO related expenses, increased premises and equipment expenses, increased salaries and employee benefits, and increased loan monitoring and collection related expenses.

In the fourth fiscal quarter Timberland's federal income tax benefit was increased by approximately $180,000 due to adjustments made to the Company's deferred tax asset valuation allowance for a previously non-deductible capital loss carry forward related to the 2008 mutual fund redemption.

About Timberland Bancorp, Inc.

Timberland Bancorp operates 22 branches in the state of Washington in Hoquiam, Aberdeen, Ocean Shores, Montesano, Elma, Olympia, Lacey, Tumwater, Yelm, Puyallup, Edgewood, Tacoma, Spanaway (Bethel Station), Gig Harbor, Poulsbo, Silverdale, Auburn, Chehalis, Winlock, and Toledo. Timberland Bank received a rating of three and a half stars from Bauer Financial, a widely recognized independent bank rating agency.



TIMBERLAND BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
($ in thousands, except per share amounts)
(unaudited)
                                                 Three Months Ended
                                         ---------------------------------
                                         Sept. 30,    June 30,   Sept. 30,
                                           2009        2009        2008
                                         ---------   ---------   ---------
Interest and dividend income
Loans receivable                         $   9,020   $   9,240   $   9,977
Investments and mortgage-backed
 securities                                    297         322         439
Dividends from mutual funds
 and FHLB stock                                  9           9          33
Federal funds sold                               1           8         104
Interest bearing deposits in banks              37          32          14
                                         ---------   ---------   ---------
   Total interest and dividend income        9,364       9,611      10,567

Interest expense
Deposits                                     2,150       2,440       2,609
FHLB advances                                  990         979       1,121
Other borrowings                                --          --           2
                                         ---------   ---------   ---------
   Total interest expense                    3,140       3,419       3,732
                                         ---------   ---------   ---------
   Net interest income                       6,224       6,192       6,835

Provision for loan losses                    3,243       1,000       1,500
                                         ---------   ---------   ---------
   Net interest income after
    provision for loan losses                2,981       5,192       5,335

Non-interest income
Total OTTI on securities                    (1,869)       (881)         --
Less: portion recorded as other
 comprehensive loss                          1,012         756          --
                                         ---------   ---------   ---------
Net OTTI loss recognized                      (857)       (125)         --

Service charges on deposits                  1,088       1,066       1,201
Gain on sale of loans, net                     357       1,170         183
Bank owned life insurance ("BOLI")
 net earnings                                  464         123         126
Servicing income on loans sold                  27          20          23
Valuation recovery (allowance)
 on MSRs                                       169        (169)         --
ATM transaction fees                           342         326         321
Other                                          345         263         165
                                         ---------   ---------   ---------
   Total non-interest income                 1,935       2,674       2,019

Non-interest expense
Salaries and employee benefits               2,983       2,919       2,852
Premises and equipment                         496         719         674
Advertising                                    224         252         218
OREO and other repossessed
 items expense                                  91         391          (4)
ATM expenses                                   164         162         150
FDIC insurance expense                         192         400          79
Postage and courier                            101         203         138
Amortization of core deposit
 intangible                                     54          54          62
State and local taxes                          154         152         175
Professional fees                              198         199         211
Other                                          731         922         842
                                         ---------   ---------   ---------
   Total non-interest expense                5,388       6,373       5,397

Income (loss) before federal
 and state income taxes                       (472)      1,493       1,957
Provision (benefit) for federal
 and state income taxes                       (519)        435         607
                                         ---------   ---------   ---------
   Net income                            $      47   $   1,058   $   1,350
                                         =========   =========   =========

Preferred stock dividends                $     206   $     210   $      --
Preferred stock discount accretion              50          79          --
                                         ---------   ---------   ---------
Net income (loss) avail. to common
 shareholders                            $    (209)  $     769   $   1,350
                                         =========   =========   =========

Earnings (loss) per common share:
   Basic                                 $   (0.03)  $    0.12   $    0.21
   Diluted                               $   (0.03)  $    0.12   $    0.21
Weighted average common shares
 outstanding:
   Basic                                 6,655,479   6,645,229   6,475,385
   Diluted                               6,655,479   6,645,229   6,570,492





TIMBERLAND BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
($ in thousands, except per share)
(unaudited)
                                                Twelve Months Ended
                                         ---------------------------------
                                         Sept. 30,               Sept. 30,
                                           2009                    2008
                                         ---------               ---------
Interest and dividend income
Loans receivable                         $  37,249               $  40,924
Investments and mortgage-backed
 securities                                  1,379                   1,064
Dividends from mutual funds
 and FHLB stock                                 38                   1,123
Federal funds sold                              36                     191
Interest bearing deposits in banks              99                      36
                                         ---------               ---------
   Total interest and dividend income       38,801                  43,338

Interest expense
Deposits                                     9,472                  11,763
FHLB advances                                4,031                   4,628
Other borrowings                                 1                      22
                                         ---------               ---------
   Total interest expense                   13,504                  16,413
                                         ---------               ---------
   Net interest income                      25,297                  26,925

Provision for loan losses                   10,734                   3,900
                                         ---------               ---------
   Net interest income after provision
    for loan losses                         14,563                  23,025

Non-interest income
Total OTTI on securities                    (4,600)                     --
Less: portion recorded as other
 comprehensive loss                          1,455                      --
                                         ---------               ---------
Net OTTI loss recognized                    (3,145)                     --

Service charges on deposits                  4,312                   3,493
Gain on sale of loans, net                   2,828                   1,011
Loss on redemption of mutual funds              --                  (2,822)
BOLI net earnings                              965                     486
Servicing income on loans sold                 103                      90
ATM transaction fees                         1,261                   1,251
Other                                        1,102                     669
                                         ---------               ---------
   Total non-interest income                 7,426                   4,178

Non-interest expense
Salaries and employee benefits              11,801                  11,569
Premises and equipment                       2,574                   2,307
Advertising                                    895                     897
OREO and other repossessed
 items expense                                 643                      (3)
ATM expenses                                   613                     576
FDIC insurance expense                         778                     130
Postage and courier                            549                     514
Amortization of core deposit
 intangible                                    217                     249
State and local taxes                          604                     622
Professional fees                              745                     678
Other                                        3,320                   2,835
                                         ---------               ---------
   Total non-interest expense               22,739                  20,374

Income (loss) before federal and
 state income taxes                           (750)                  6,829
Provision (benefit) for federal
 and state income taxes                       (823)                  2,824
                                         ---------               ---------
   Net income                            $      73               $   4,005
                                         =========               =========

Preferred stock dividends                $     643               $      --
Preferred stock discount accretion             129                      --
                                         ---------               ---------
Net income (loss) avail. to common
 shareholders                            $    (699)              $   4,005
Earnings (loss) per common share:
   Basic                                 $   (0.11)              $    0.62
   Diluted                               $   (0.11)              $    0.61
Weighted average common shares
 outstanding:
   Basic                                 6,621,399               6,475,385
   Diluted                               6,621,399               6,570,492





TIMBERLAND BANCORP, INC.
CONSOLIDATED BALANCE SHEET
($ in thousands, except per share amounts) (unaudited)

                                         Sept. 30,    June 30,   Sept. 30,
                                           2009        2009        2008
Assets                                   ---------   ---------   ---------
Cash equivalents:
   Cash and due from financial
    institutions                         $  10,205   $  12,118   $  14,013
   Interest-bearing deposits in
    other banks                             59,508      31,853       3,431
   Federal funds sold                           --          --      25,430
                                         ---------   ---------   ---------
                                            69,713      43,971      42,874

Investments and mortgage-backed
 securities:
   Held to maturity                          8,421      10,196      14,233
   Available for sale                       13,471      13,898      17,098
FHLB stock                                   5,705       5,705       5,705
                                         ---------   ---------   ---------
                                            27,597      29,799      37,036

Loans receivable                           560,750     555,961     563,964
Loans held for sale                            630       2,245       1,773
Less: Allowance for loan losses            (14,172)    (12,440)     (8,050)
                                         ---------   ---------   ---------
Net loans receivable                       547,208     545,766     557,687


Accrued interest receivable                  2,805       2,918       2,870
Premises and equipment                      18,046      18,174      16,884
OREO and other repossessed items             8,185       7,698         511
BOLI                                        12,918      13,403      12,902
Goodwill                                     5,650       5,650       5,650
Core deposit intangible                        755         809         972
Mortgage servicing rights                    2,618       2,366       1,306
Other assets                                 7,052       4,938       3,191
                                         ---------   ---------   ---------
Total Assets                             $ 702,547   $ 675,492   $ 681,883
                                         =========   =========   =========

Liabilities and Shareholders' Equity
Non-interest-bearing deposits            $  50,295   $  50,153   $  51,955
Interest-bearing deposits                  455,366     437,266     446,617
                                         ---------   ---------   ---------
   Total deposits                          505,661     487,419     498,572

FHLB advances                               95,000      95,000     104,628
Federal Reserve Bank advances               10,000          --          --
Other borrowings: repurchase
 agreements                                    777         666         758
Other liabilities and accrued
 expenses                                    3,039       3,652       3,084
                                         ---------   ---------   ---------
Total Liabilities                          614,477     586,737     607,042
                                         ---------   ---------   ---------

Shareholders' Equity
Preferred stock -- $.01 par value;
 1,000,000 shares authorized;               15,554      15,487          --
   Sept. 30, 2009 -- 16,641 shares
    issued and outstanding
   June 30, 2009 -- 16,641 shares
    issued and outstanding
Common stock -- $.01 par value;
 50,000,000 shares authorized;              10,315      10,328       8,672
   Sept. 30, 2009 -- 7,045,036
    shares issued and outstanding
   June 30, 2009 -- 7,045,036
    shares issued and outstanding
   Sept. 30, 2008 -- 6,967,579
    shares issued and outstanding
Unearned shares -- Employee Stock
 Ownership Plan                             (2,512)     (2,578)     (2,776)
Retained earnings                           66,168      66,802      69,406
Accumulated other comprehensive loss        (1,455)     (1,284)       (461)
                                         ---------   ---------   ---------
Total Shareholders' Equity                  88,070      88,755      74,841
                                         ---------   ---------   ---------
Total Liabilities and Shareholders'
 Equity                                  $ 702,547   $ 675,492   $ 681,883
                                         =========   =========   =========




KEY FINANCIAL RATIOS AND DATA
($ in thousands, except per share amounts) (unaudited)

                                                 Three Months Ended
                                         ---------------------------------
                                         Sept. 30,    June 30,   Sept. 30,
                                           2009        2009        2008
                                         ---------   ---------   ---------
PERFORMANCE RATIOS:
Return on average assets (a)                  0.03%       0.61%       0.80%
Return on average equity (a)                  0.21%       4.79%       7.22%
Net interest margin (a)                       3.93%       3.86%       4.36%
Efficiency ratio                             66.04%      71.88%      60.96%


                                                Twelve Months Ended
                                         ---------------------------------
                                         Sept. 30,               Sept. 30,
                                           2009                    2008
                                         ---------               ---------
Return on average assets (a)                  0.01%                   0.61%
Return on average equity (a)                  0.08%                   5.35%
Net interest margin (a)                       4.01%                   4.41%
Efficiency ratio                             69.49%                  65.50%


                                         Sept. 30,    June 30,   Sept. 30,
                                           2009        2009        2008
                                         ---------   ---------   ---------
ASSET QUALITY RATIOS:
Non-performing loans                     $  29,287   $  25,113   $  11,990
Non-performing investment securities           477         175          --
OREO and other repossessed assets            8,185       7,698         511
                                         ---------   ---------   ---------
Total non-performing assets              $  37,949   $  32,986   $  12,501

Non-performing assets to total
 assets (b)                                   5.40%       4.88%       1.83%
Allowance for loan losses to
 non-performing loans                           48%         50%         67%
Troubled debt restructured loans         $      --   $      --   $      --
Past due 90 days and still accruing      $     796   $     830   $      --

CAPITAL RATIOS:
Tier 1 leverage capital                      12.29%      12.30%      10.28%
Tier 1 risk based capital                    14.68%      14.94%      12.37%
Total risk based capital                     15.94%      16.20%      13.62%
Tangible capital to tangible
 assets (e)                                  11.73%      12.30%      10.10%

BOOK VALUES:
Book value per common share (c)          $   10.29   $   10.36   $   10.74
Book value per common share (d)          $   10.81   $   10.76   $   11.34
Tangible book value per common
share (c) (e)                            $    9.38   $    9.33   $    9.79
Tangible book value per common
share (d) (e)                            $    9.85   $    9.80   $   10.34


(a) Annualized
(b) Non-performing assets include non-accrual loans, non-accrual investment
    securities, and other real estate owned and other repossessed assets
(c) Calculation includes ESOP shares not committed to be released
(d) Calculation excludes ESOP shares not committed to be released
(e) Calculation subtracts goodwill and core deposit intangible from the
    equity component




AVERAGE BALANCE SHEET:
                                                 Three Months Ended
                                         ---------------------------------
                                         Sept. 30,    June 30,   Sept. 30,
                                           2009        2009        2008
                                         ---------   ---------   ---------
Average total loans                      $ 563,159   $ 562,105   $ 564,145
Average total interest-earning
 assets (a)                                633,803     641,468     626,574
Average total assets                       685,534     688,411     674,354
Average total interest-bearing deposits    444,241     450,974     438,496
Average FHLB advances and
 other borrowings                           95,668      95,612     106,074
Average shareholders' equity                89,164      88,433      74,803


                                                Twelve Months Ended
                                         ---------------------------------
                                         Sept. 30,               Sept. 30,
                                           2009                    2008
                                         ---------               ---------
Average total loans                      $ 564,741               $ 552,318
Average total interest-earning
 assets (a)                                631,254                 611,135
Average total assets                       679,005                 658,221
Average total interest-bearing deposits    440,143                 419,338
Average FHLB advances and other
 borrowings                                 97,393                 108,858
Average shareholders' equity                86,383                  74,875


(a) Includes loans on non-accrual status


Disclaimer

This report contains certain "forward-looking statements." The Company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protection of such safe harbor with forward-looking statements. These forward-looking statements may describe future plans or strategies and include the Company's expectations of future financial results. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated objectives. These risk factors include but are not limited to the effect of interest rate changes, competition in the financial services market for both deposits and loans as well as regional and general economic conditions. The words "believe," "expect," "anticipate," "estimate," "project," and similar expressions identify forward-looking statements. The Company's ability to predict results or the effect of future plans or strategies is inherently uncertain and undue reliance should not be placed on such statements.

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