SOURCE: Timberland Bancorp, Inc.

Timberland Bancorp, Inc.

November 10, 2011 16:30 ET

Timberland Bancorp Earns $1.09 Million in Fiscal 2011

HOQUIAM, WA--(Marketwire - Nov 10, 2011) - Timberland Bancorp, Inc. (NASDAQ: TSBK) ("Timberland" or "the Company") today reported earnings of $1.09 million for fiscal 2011 compared to a net loss of $(2.29 million) reported one year ago. Net income available to common shareholders for fiscal 2011, after the preferred stock dividends and the preferred stock discount accretion, was $32,000, or $0.00 per diluted common share, compared to a net loss of $(3.33 million), or $(0.50) per common share for fiscal 2010.

The Company reported a net loss of $(73,000) for its fiscal fourth quarter ended September 30, 2011. The quarter's net loss to common shareholders, after adjusting for the preferred stock dividend and the preferred stock discount accretion, was $(339,000), or $(0.05) per common share, compared to net losses of $(1.55 million), or $(0.23) per common share for the quarter ended June 30, 2011 and $(403,000), or $(0.06) per common share for the quarter ended September 30, 2010.

"We believe the fiscal 2011 profit, while modest, marks a turning point for Timberland and reflects improving conditions in our markets," said Michael R. Sand, President and Chief Executive Officer. "With asset quality improving, net charge-offs declining, very strong capital and a stable net interest margin, we are well positioned to capitalize on the emerging recovery. In addition to attracting deposits from our area residents, who are increasingly choosing to bank with local institutions, we are actively lending in all of our markets, with the strongest demand emerging along the I-5 corridor."

"Historically low interest rates have increased the demand for home mortgages and business loans," Sand continued. "Housing prices, low mortgage rates and improving household incomes have all worked to make housing more affordable for consumers. The housing affordability index in the region is at historically high levels." Doug Pederson in October's Puget Sound Economic Forecaster Housing Report stated, "You have to go back to the second quarter of 1973, the tail end of the Boeing Bust, to find homes even marginally more affordable than they are today."

Fiscal 2011 Highlights (at or for the period ended September 30, 2011, compared to September 30, 2010, or June 30, 2011):

  • Net income of $1.09 million for fiscal 2011 compared to a net loss of $(2.29 million) for fiscal 2010;
  • Capital levels remain very strong: Total Risk Based Capital of 16.46%; Tier 1 Leverage Capital Ratio of 11.09%; Tangible Capital to Tangible Assets Ratio of 10.95%, all solidly above well capitalized levels;
  • Asset quality continues to improve with the ratio of non-performing assets to total assets decreasing to 4.81% at September 30, 2011, from 5.53% at both June 30, 2011 and September 30, 2010;
  • The provision for loan losses decreased to $1.76 million in the fourth quarter of fiscal 2011, from $3.40 million in the preceding quarter, and $2.01 million in the fiscal fourth quarter one year ago;
  • Net interest margin remained strong at 3.78% for fiscal 2011 and 3.75% for the fourth quarter of fiscal 2011;
  • Net loans increased 1.3% from the prior quarter, reflecting growing demand from both business and retail customers;
  • Non-interest income for fiscal 2011 increased 52% from fiscal 2010;
  • Net charge-offs for fiscal 2011 decreased 55% from fiscal 2010;
  • Core deposits, excluding time certificates, account for 61% of total deposits, up from 58% a year ago. There continues to be no brokered CDs in the deposit mix;
  • Book value per common share was $9.97 and tangible book value per common share was $9.11 at year end.

Capital Ratios and Asset Quality

Timberland Bancorp remains very well capitalized with a total risk-based capital ratio of 16.46%, a Tier 1 leverage capital ratio of 11.09% and a tangible capital to tangible assets ratio of 10.95% at September 30, 2011.

"Asset quality continues to improve on virtually every metric," said Sand. "As a result, we were able to reduce our provision for loan losses in both the fourth quarter and the fiscal year." Timberland provisioned $1.76 million to its loan loss allowance during the quarter ended September 30, 2011 compared to $3.40 million in the preceding quarter and $2.01 million in the comparable quarter one year ago. In fiscal 2011, the loan loss provision totaled $6.76 million, down 36% from $10.55 million in fiscal 2010. Net charge-offs for the fourth fiscal quarter, decreased to $1.60 million compared to $3.41 million for the preceding quarter and $1.64 million for the comparable quarter one year ago. Net charge-offs for fiscal 2011 decreased 55% to $6.08 million from $13.46 million for fiscal 2010.

Non-accrual loans totaled $21.6 million at September 30, 2011 and were comprised of 64 loans and 52 credit relationships. By category: 50% of non-accrual loans are secured by land and land development properties; 31% are secured by commercial properties; 12% are secured by residential properties; 4% are secured by residential construction projects; and 3% are secured by commercial real estate construction projects.

The loan loss allowance of $11.9 million represented 2.21% of loans receivable and loans held for sale at September 30, 2011. Total delinquent loans (past due 30 days or more) and non-accrual loans declined to $43.2 million at September 30, 2011 compared to $45.0 million at June 30, 2011. The non-performing assets ("NPAs") to total assets ratio improved to 4.81% at September 30, 2011 compared to 5.53% at both June 30, 2011 and September 30, 2010. Loans past due 90 days and still accruing, decreased to $305,000 at September 30, 2011 from $4.9 million at June 30, 2011.

Other real estate owned ("OREO") and other repossessed assets decreased to $10.8 million at September 30, 2011 from $11.0 million at June 30, 2011 and $11.5 million at September 30, 2010. At September 30, 2011 the OREO portfolio consisted of 46 individual properties and four other repossessed assets. The properties consisted of two condominium projects totaling $3.5 million, 28 land parcels totaling $3.3 million, 11 single family homes totaling $1.9 million, three commercial real estate properties totaling $1.2 million and two land development projects totaling $794,000. During the quarter ended September 30, 2011 seven OREO properties totaling $1.1 million were sold for a net gain of $38,000. In fiscal 2011, 37 properties totaling $5.17 million were sold for a net gain of $548,000.

Balance Sheet Management

Total assets increased to $738.2 million at September 30, 2011 from $735.0 million at June 30, 2011. The increase in total assets was primarily the result of a $6.7 million increase in net loans receivable and a $2.2 million increase in bank owned life insurance ("BOLI"). During the quarter ended September 30, 2011 Timberland purchased an additional $2.0 million of BOLI.

Liquidity as measured by cash and cash equivalents, CDs held for investment and available for sale investments was 21.1% of total liabilities at September 30, 2011 compared to 21.6% at June 30, 2011 and 21.4% one year ago. "We continue to stay on the short end of the yield curve to manage interest rate risk," said Dean Brydon, Chief Financial Officer.

Net loans receivable increased slightly more than 1% to $528.0 million at September 30, 2011 from $521.3 million at June 30, 2011. The increase was primarily due to a $16.2 million increase in commercial real estate loan balances and smaller increases in commercial business loan balances and one-to four-family loan balances. These increases were partially offset by decreases in construction and land development loan balances, land loan balances and consumer loan balances. Commercial real estate loan balances increased and construction loan balances decreased during the quarter primarily because three commercial construction projects totaling $13.2 million, completing their construction phase, converted to permanent financing.

Timberland continued reducing its exposure to construction and land development loans and land loans. Construction and land development loan balances decreased to $52.5 million at September 30, 2011, a 23% decrease from the preceding quarter and a 24% decrease year-over-year. The Bank's land loan portfolio decreased to $49.2 million at September 30, 2011, a 22% decrease year-over-year. The well diversified land portfolio consists of 389 loans on a variety of land types including individual building lots, acreage, raw land and commercially zoned properties. The average loan balance for the entire land portfolio was approximately $127,000 at September 30, 2011.

LOAN PORTFOLIO
($ in thousands) Sept. 30, 2011 June 30, 2011 Sept 30, 2010
Amount Percent Amount Percent Amount Percent
Mortgage Loans:
One-to four-family $ 114,680 20 % $ 112,838 20 % $ 121,014 22 %
Multi-family 30,982 6 31,058 6 32,267 6
Commercial 246,037 44 229,800 41 208,002 37
Construction and land development 52,484 9 68,017 12 69,271 12
Land 49,236 9 50,238 9 62,999 11
Total mortgage loans 493,419 88 491,951 88 493,553 88
Consumer Loans:
Home equity and second mortgage 36,008 7 36,991 7 38,418 7
Other 8,240 1 8,226 1 9,086 2
Total consumer loans 44,248 8 45,217 8 47,504 9
Commercial business loans 22,510 4 20,621 4 17,979 3
Total loans 560,177 100 % 557,789 100 % 559,036 100 %
Less:
Undisbursed portion of construction loans in process (18,265 ) (22,713 ) (17,952 )
Deferred loan origination fees (1,942 ) (1,988 ) (2,229 )
Allowance for loan losses (11,946 ) (11,790 ) (11,264 )
Total loans receivable, net $ 528,024 $ 521,298 $ 527,591
CONSTRUCTION LOAN COMPOSITION
($ in thousands) Sept. 30, 2011 June 30, 2011 Sept. 30, 2010
Percent Percent Percent
of Loan of Loan of Loan
Amount Port-
folio
Amount Port-
folio
Amount Port-
folio
Custom and owner / builder $ 26,205 4 % $ 28,128 5 % $ 30,945 5 %
Speculative one- to four-family 1,919 1 3,028 1 4,777 1
Commercial real estate 12,863 2 26,081 4 23,528 4
Multi-family (including condominium) 9,322 1 8,254 1 3,587 1
Land development 2,175 1 2,526 1 6,434 1
Total construction loans $ 52,484 9 % $ 68,017 12 % $ 69,271 12 %

Timberland originated $37.1 million of loans during the quarter ended September 30, 2011 compared to $35.7 million for the preceding quarter and $49.3 million for the comparable quarter 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, 2011, $16.1 million of one-to-four family fixed-rate mortgage loans were sold compared to $8.2 million for the preceding quarter and $24.0 million for the quarter ended one year ago.

Timberland's mortgage-backed securities ("MBS") and other investments decreased by $1.1 million during the quarter to $10.9 million at September 30, 2011 from $12.0 million at June 30, 2011, primarily as a result of prepayments and scheduled amortization. During the quarter ended September 30, 2011, other-than-temporary-impairment ("OTTI") credit related write-downs and realized losses of $111,000 were recorded on the private label mortgage-backed securities that were acquired in the in-kind redemption from the AMF family of mutual funds in June 2008. At September 30, 2011 the Bank's remaining private label mortgage-backed securities portfolio had been reduced to $3.4 million from an original acquired balance of $15.3 million.

DEPOSIT BREAKDOWN
($ in thousands)
Sept. 30, 2011 June 30, 2011 Sept. 30, 2010
Amount Percent Amount Percent Amount Percent
Non-interest bearing $ 64,494 11 % $ 57,735 10 % $ 58,755 10 %
N.O.W. checking 155,299 26 158,725 27 153,304 26
Savings 83,636 14 77,391 13 67,448 12
Money market 61,028 10 56,151 9 55,723 10
Certificates of deposit under $100 141,899 24 146,037 25 150,633 26
Certificates of deposit $100 and over 86,322 15 93,459 16 93,006 16
Certificates of deposit - brokered -- -- -- -- -- --
Total deposits $ 592,678 100 % $ 589,498 100 % $ 578,869 100 %

Total deposits increased 1% to $592.7 million at September 30, 2011, from $589.5 million at June 30, 2011 primarily as a result of a $6.8 million increase in non-interest bearing account balances, a $6.2 million increase in savings account balances and a $4.9 million increase in money market account balances. These increases were partially offset by an $11.3 million decrease in CD account balances and a $3.4 million decrease in N.O.W. checking account balances.

Total shareholders' equity decreased $129,000 to $86.21 million at September 30, 2011, from $86.33 million at June 30, 2011. The decrease in equity was primarily a result of the accrual of preferred stock dividends and the net loss for the quarter. Timberland continues to remain very well capitalized with a total risk based capital ratio of 16.46% and a Tier 1 leverage capital of 11.09%. Book value per common share was $9.97 and tangible book value per common share was $9.11 at September 30, 2011.

Operating Results

Fiscal fourth quarter operating revenue (net interest income before provision for loan losses, plus non-interest income excluding OTTI charges and valuation allowances or recoveries on mortgage servicing rights ("MSRs")), increased to $8.61 million from $8.48 million for the preceding quarter and decreased from $8.80 million for the comparable quarter one year ago. Operating revenue increased in the current quarter compared to the preceding quarter primarily due to an increase in gains on sale of loans. For fiscal 2011, operating revenue decreased 1% to $34.16 million from $34.42 million for fiscal 2010 primarily due to a decrease in net interest income.

Net interest income decreased to $6.34 million for the quarter ended September 30, 2011, from $6.41 million in both the preceding quarter and the comparable quarter one year ago. The net interest margin for the current quarter of 3.75% was relatively unchanged from the 3.76% margin reported for the preceding quarter and the 3.77% margin reported for the comparable quarter one year ago. The net interest margin was reduced by approximately four basis points for the quarter ended September 30, 2011 by the reversal of interest income on loans placed on non-accrual status during the quarter. For fiscal 2011, net interest income decreased 1% to $25.43 million from $25.64 million for fiscal 2010. Timberland's net interest margin for the year ended September 30, 2011 was 3.78% compared to 3.87% for the year ended September 30, 2010.

Timberland provisioned $1.76 million to its loan loss allowance for the quarter ended September 30, 2011, compared to $3.40 million in the preceding quarter and $2.01 million in the comparable quarter one year prior. For fiscal 2011, the provision for loan losses decreased 36% to $6.76 million compared to $10.55 million for fiscal 2010. Net charge-offs for the quarter ended September 30, 2011 decreased to $1.60 million compared to $3.41 million for the quarter ended June 30, 2011 and $1.64 million for the quarter ended September 30, 2010. Net charge-offs decreased 55% to $6.08 million for fiscal 2011 from $13.46 million for fiscal 2010.

Non-interest income increased 6% to $1.86 million in the fourth quarter of fiscal 2011, from $1.76 million in the preceding quarter and 37% from $1.36 million for the comparable quarter one year ago. Non-interest income was reduced in the current quarter by a $298,000 non-cash valuation allowance on the Bank's mortgage servicing rights ("MSRs") asset and a $111,000 OTTI credit related write-down on private label mortgage-backed securities. The valuation allowance on the Bank's MSR asset was primarily a result of a decrease in mortgage interest rates at September 30, 2011 relative to June 30, 2011. The decrease in mortgage interest rates increased estimated mortgage prepayment speeds, shortened the estimated average life of loans comprising the MSR asset and reduced the fair value of the MSR asset. For fiscal 2011, non-interest income increased 52% to $8.68 million from $5.70 million for fiscal 2010, primarily due to a $1.75 million reduction in the OTTI charges recorded and a $1.30 million net MSR valuation adjustment.

Total operating (non-interest) expenses decreased 2% to $6.63 million for the fourth fiscal quarter from $6.78 million for the immediately prior quarter and increased 10% from $6.03 million for the comparable quarter one year ago. The decreased expenses for the current quarter compared to the preceding quarter were primarily the result of a decrease in OREO related expenses and foreclosure and loan administrative expenses, which were reflected in the other non-interest expense category.

Operating expenses increased 5% in fiscal 2011, to $25.96 million from $24.64 million for fiscal 2010, primarily as a result of increased salary and employee benefits expense, increased foreclosure and loan administration expenses, and increased OREO related expenses. These increases were partially offset by a reduction in FDIC insurance expense and directors and officers insurance expense.

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).

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 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 Federal Reserve 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, 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, which could adversely affect our liquidity and earnings; our compliance with regulatory enforcement actions, including regulatory memoranda of understandings ("MOUs") to which we are subject; 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; our ability to attract and retain deposits; further 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 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; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, the interpretation of regulatory capital or other rules and any changes in the rules applicable to institutions participating in the TARP Capital Purchase Program; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; 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 2012 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 OPERATIONS Three Months Ended
($ in thousands, except per share amounts) Sept. 30, June 30, Sept. 30,
(unaudited) 2011 2011 2010
Interest and dividend income
Loans receivable $ 8,010 $ 8,192 $ 8,683
MBS and other investments 127 141 215
Dividends from mutual funds 7 8 8
Interest bearing deposits in banks 87 90 90
Total interest and dividend income 8,231 8,431 8,996
Interest expense
Deposits 1,331 1,463 1,821
FHLB advances and other borrowings 562 556 768
Total interest expense 1,893 2,019 2,589
Net interest income 6,338 6,412 6,407
Provision for loan losses 1,758 3,400 2,005
Net interest income after provision for loan losses 4,580 3,012 4,402
Non-interest income
OTTI and realized losses on MBS and other investments, net (111 ) (165 ) (151 )
Service charges on deposits 1,032 993 1,022
Gain on sale of loans, net 336 247 560
Bank owned life insurance ("BOLI") net earnings 155 121 122
Servicing income on loans sold 22 7 48
Valuation allowance on mortgage servicing rights ("MSRs") (298 ) (137 ) (890 )
ATM transaction fees 526 515 432
Other 199 180 213
Total non-interest income, net 1,861 1,761 1,356
Non-interest expense
Salaries and employee benefits 3,186 3,150 3,047
Premises and equipment 707 667 648
Advertising 196 235 203
OREO and other repossessed assets expense, net 443 496 114
ATM expenses 219 203 208
FDIC insurance 242 248 336
Insurance 60 56 151
Postage and courier 140 139 139
Amortization of core deposit intangible ("CDI") 42 42 48
State and local taxes 147 155 173
Professional fees 186 190 102
Other 1,059 1,201 860
Total non-interest expense 6,627 6,782 6,029
Loss before income taxes (186 ) (2,009 ) (271 )
Benefit for income taxes (113 ) (729 ) (130 )
Net loss $ (73 ) $ (1,280 ) $ (141 )
Preferred stock dividends $ (208 ) $ (208 ) $ (208 )
Preferred stock discount accretion (58 ) (57 ) (54 )
Net loss to common shareholders $ (339 ) $ (1,545 ) $ (403 )
Net loss per common share:
Basic $ (0.05 ) $ (0.23 ) $ (0.06 )
Diluted $ (0.05 ) $ (0.23 ) $ (0.06 )
Weighted average common shares outstanding:
Basic 6,745,633 6,745,250 6,715,734
Diluted 6,745,633 6,745,250 6,715,734
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS Year Ended
($ in thousands, except per share) Sept. 30, Sept. 30,
(unaudited) 2011 2010
Interest and dividend income
Loans receivable $ 32,976 $ 35,344
MBS and other investments 612 910
Dividends from mutual funds 31 35
Interest bearing deposits in banks 347 307
Total interest and dividend income 33,966 36,596
Interest expense
Deposits 6,136 7,807
FHLB advances and other borrowings 2,397 3,154
Total interest expense 8,533 10,961
Net interest income 25,433 25,635
Provision for loan losses 6,758 10,550
Net interest income after provision for loan losses 18,675 15,085
Non-interest income
OTTI and realized losses on MBS and other investments, net (449 ) (2,196 )
Gain on sale of MBS and other investments 79 --
Service charges on deposits 3,907 4,240
Gain on sale of loans, net 1,548 1,547
BOLI net earnings 516 491
Servicing income on loans sold 9 135
Valuation recovery (allowance) on MSRs 405 (890 )
ATM transaction fees 1,911 1,619
Other 755 750
Total non-interest income, net 8,681 5,696
Non-interest expense
Salaries and employee benefits 12,578 12,066
Premises and equipment 2,743 2,768
Advertising 800 829
OREO and other repossessed assets expense, net 1,374 882
ATM expenses 802 698
FDIC insurance 1,161 1,659
Insurance 359 435
Postage and courier 540 539
Amortization of CDI 167 191
State and local taxes 622 626
Professional fees 753 664
Other 4,064 3,284
Total non-interest expense 25,963 24,641
Income (loss) before income taxes 1,393 (3,860 )
Provision (benefit) for income taxes 304 (1,569 )
Net income (loss) $ 1,089 $ (2,291 )
Preferred stock dividends $ (832 ) $ (832 )
Preferred stock discount accretion (225 ) (210 )
Net income (loss) to common shareholders $ 32 $ (3,333 )
Net income (loss) per common share:
Basic $ 0.00 $ (0.50 )
Diluted $ 0.00 $ (0.50 )
Weighted average common shares outstanding:
Basic 6,745,347 6,713,766
Diluted 6,745,524 6,713,766
TIMBERLAND BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts) (unaudited) Sept. 30, June 30, Sept. 30,
2011 2011 2010
Assets
Cash and due from financial institutions $ 11,455 $ 10,997 $ 9,466
Interest-bearing deposits in other banks 100,610 103,306 102,320
Total cash and cash equivalents 112,065 114,303 111,786
Certificate of deposits ("CDs") held for investment, at cost 18,659 18,087 18,047
Mortgage-backed securities and other investments:
Held to maturity, at amortized cost 4,145 4,283 5,066
Available for sale, at fair value 6,717 7,679 11,119
FHLB stock 5,705 5,705 5,705
Loans receivable 535,926 532,322 535,885
Loans held for sale 4,044 766 2,970
Less: Allowance for loan losses (11,946 ) (11,790 ) (11,264 )
Net loans receivable 528,024 521,298 527,591
Premises and equipment, net 17,389 16,981 17,383
OREO and other repossessed assets, net 10,811 10,996 11,519
BOLI 15,917 13,762 13,400
Accrued interest receivable 2,411 2,527 2,630
Goodwill 5,650 5,650 5,650
Core deposit intangible 397 439 564
Mortgage servicing rights, net 2,108 2,463 1,929
Prepaid FDIC insurance assessment 2,103 2,335 3,268
Other assets 6,123 8,510 7,030
Total assets $ 738,224 $ 735,018 $ 742,687
Liabilities and shareholders' equity
Deposits: Non-interest-bearing demand $ 64,494 $ 57,735 $ 58,755
Deposits: Interest-bearing 528,184 531,763 520,114
Total deposits 592,678 589,498 578,869
FHLB advances 55,000 55,000 75,000
Repurchase agreements 729 598 622
Other liabilities and accrued expenses 3,612 3,588 2,788
Total liabilities 652,019 648,684 657,279
Shareholders' equity
Preferred stock, $.01 par value; 1,000,000 shares authorized; 16,641 shares, Series A, issued and outstanding $1,000 per share liquidation value 15,989 15,932 15,764
Common stock, $.01 par value; 50,000,000 shares authorized; 7,045,036 shares issued and outstanding 10,457 10,464 10,377
Unearned shares- Employee Stock Ownership Plan (1,983 ) (2,049 ) (2,247 )
Retained earnings 62,270 62,608 62,238
Accumulated other comprehensive loss (528 ) (621 ) (724 )
Total shareholders' equity 86,205 86,334 85,408
Total liabilities and shareholders' equity $ 738,224 $ 735,018 $ 742,687
KEY FINANCIAL RATIOS AND DATA
($ in thousands, except per share amounts) (unaudited)
Three Months Ended
Sept. 30, June 30, Sept. 30,
2011 2011 2010
PERFORMANCE RATIOS:
Loss on average assets (a) (0.04 )% (0.69 )% (0.08 )%
Return (loss) on average equity (a) (0.34 )% (5.83 )% (0.66 )%
Net interest margin (a) 3.75 % 3.76 % 3.77 %
Efficiency ratio 80.83 % 82.98 % 77.66 %
Year Ended
Sept. 30, Sept. 30,
2011 2010
Return (loss) on average assets (a) 0.15 % (0.32 )%
Return (loss) on average equity (a) 1.26 % (2.65 )%
Net interest margin (a) 3.78 % 3.87 %
Efficiency ratio 76.11 % 78.65 %
Sept. 30, June 30, Sept. 30,
2011 2011 2010
ASSET QUALITY RATIOS:
Non-accrual loans $ 21,589 $ 21,545 $ 24,864
Past due 90 days and still accruing 305 4,893 1,325
Non-performing investment securities 2,796 3,184 3,390
OREO and other repossessed assets 10,811 10,996 11,519
Total non-performing assets (b) $ 35,501 $ 40,618 $ 41,098
Non-performing assets to total assets (b) 4.81 % 5.53 % 5.53 %
Net charge-offs during quarter $ 1,603 $ 3,408 $ 1,641
Allowance for loan losses to non-accrual loans 55 % 55 % 45 %
Allowance for loan losses to loans receivable, net (c) 2.21 % 2.21 % 2.09 %
Troubled debt restructured loans on accrual status (d) $ 18,166 $ 20,783 $ 8,995
CAPITAL RATIOS:
Tier 1 leverage capital 11.09 % 11.01 % 10.96 %
Tier 1 risk based capital 15.19 % 15.34 % 15.00 %
Total risk based capital 16.46 % 16.60 % 16.26 %
Tangible capital to tangible assets (e) 10.95 % 11.01 % 10.75 %
BOOK VALUES:
Book value per common share $ 9.97 $ 9.99 $ 9.89
Tangible book value per common share (e) $ 9.11 $ 9.13 $ 9.00
(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) Includes loans held for sale and is before the allowance for loan losses.
(d) Does not include troubled debt restructured loans totaling $7,376, $4,956 and $7,405 reported as non-accrual loans at September 30, 2011, June 30, 2011 and September 30, 2010, respectively.
(e) Calculation subtracts goodwill and core deposit intangible from the equity component and from assets.
AVERAGE BALANCE SHEETS: Three Months Ended
($ in thousands) (unaudited) Sept. 30, June 30, Sept. 30,
2011 2011 2010
Average total loans $ 537,612 $ 537,858 $ 544,561
Average total interest-bearing assets (a) 675,800 682,529 678,925
Average total assets 737,152 743,207 737,854
Average total interest-bearing deposits 526,659 535,873 518,683
Average FHLB advances and other borrowings 55,502 55,509 75,584
Average shareholders' equity 86,465 87,797 86,086
Year Ended
Sept. 30, Sept. 30,
2011 2010
Average total loans $ 537,739 $ 550,050
Average total interest-bearing assets (a) 673,536 661,697
Average total assets 733,328 718,179
Average total interest-bearing deposits 528,961 499,473
Average FHLB advances and other borrowings 55,511 78,402
Average shareholders' equity 86,631 86,570
(a) Includes loans and investment securities on non-accrual status

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