| Contact: | Michael R. Sand, President & CEO Dean J. Brydon, CFO (360) 533-4747 |
| | www.timberlandbank.com |
Timberland Bancorp EPS Increases 50% to $0.36 for First Fiscal Quarter of 2016
Increases Quarterly Dividend by 14%
HOQUIAM, WA – January 25, 2016 - Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”) today reported net income of $2.53 million, or $0.36 per diluted common share, for its first fiscal quarter ended December 31, 2015. This compares to net income of $1.73 million, or $0.24 per diluted common share, for the quarter ended December 31, 2014.
Net income for the preceding quarter, ended September 30, 2015, was $2.96 million, or $0.42 per diluted common share. Net income for the September quarter was increased by a $1.53 million negative loan loss provision (approximately $1.00 million after income taxes, or approximately $0.14 per diluted common share) that resulted from a significant improvement in asset quality and recoveries during that quarter.
Timberland’s Board of Directors also announced a 14% increase in the quarterly cash dividend to common shareholders to $0.08 per common share, payable on February 26, 2016 to shareholders of record on February 12, 2016.
“We continued our strong performance in the first quarter of fiscal 2016,” said Michael R. Sand, President and CEO. “Solid loan and deposit growth contributed to higher revenues, an increased net interest margin and growing profitability. Our balance sheet is positioned to benefit from rising interest rates which we believe is appropriate given the Federal Reserve’s decision last month to begin raising rates. The timing of further rate increases is widely discussed but remains uncertain. What is certain, however, are the final maturities of three Federal Home Loan Bank advances, scheduled to occur in December of 2016 and August and September of 2017. The average rate of these advances is 4.10% and represented 49% of our funding costs in the quarter just ended. When they mature, the elimination, or significant reduction, of this interest expense will have a positive impact on our already strong net interest margin.”
First Fiscal Quarter 2016 Highlights (at or for the period ended December 31, 2015, compared to December 31, 2014, or September 30, 2015):
Earnings per diluted common share increased 50% to $0.36 from $0.24 for the comparable quarter one year ago;
Return on average equity was 11.26% for the current quarter;
Return on average assets was 1.22% for the current quarter;
Operating revenue increased 16% to $10.23 million from $8.78 million for the comparable quarter one year ago;
Net interest margin increased to 4.00% for the current quarter, which included the collection of $475,000 of non-accrual interest contributing approximately 25 basis points to the net interest margin;
Non-performing assets decreased 32% year-over-year and decreased 9% from the prior quarter;
Total delinquent and non-accrual loans decreased 57% year-over-year and decreased 24% from the prior quarter;
Total deposits increased 13% year-over-year and increased 3% from the prior quarter;
Net loans receivable increased 9% year-over-year and increased 3% from the prior quarter; and\
Book and tangible book values per common share increased to $13.02 and $12.21, respectively, at December 31, 2015.
Timberland Fiscal Q1 2016 Earnings
January 25, 2016
Page 2
Operating Results
Operating revenue (net interest income before recapture of loan losses, plus non-interest income excluding gains or losses on the sale of investment securities and other than temporary impairment [“OTTI”] charges on investment securities) increased 5% to $10.23 million for the current quarter from $9.70 million for the preceding quarter and increased 16% from $8.78 million for the first fiscal quarter one year ago.
Net interest income increased 10% to $7.71 million for the first quarter of fiscal 2016, from $7.03 million for the preceding quarter and increased 15% from $6.70 million for the first fiscal quarter one year ago. Net interest income improved in the current quarter primarily due to the increased level of average loans and average interest-earning assets and the collection of $475,000 of non-accrual interest. The net interest margin for the current quarter improved to 4.00% from 3.76% for the preceding quarter and from 3.88% for the comparable quarter one year ago. The $475,000 in non-accrual interest collected was related to the payoff of three non-accrual loans. The net interest margin for the comparable quarter one year ago was increased by approximately seven basis points due to the collection of $125,000 in non-accrual interest during that quarter.
Non-interest income increased 19% to $2.52 million for the quarter ended December 31, 2015, from $2.12 million for the comparable quarter one year ago and decreased 5% from $2.66 million in the preceding quarter. The decrease in non-interest income compared to the preceding quarter was primarily due to a $118,000 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.
Total operating (non-interest) expenses decreased 3% to $6.48 million for the first fiscal quarter from $6.69 million for the preceding quarter and increased 3% from $6.27 million for the like quarter one year ago. The decreased expenses for the current quarter compared to the preceding quarter were primarily due to decreases in the following expense line items: professional fees, loan administration and foreclosure, OREO and other repossessed assets, premises and equipment, advertising and FDIC insurance. The decreases in professional fees and loan administration and foreclosure expenses were primarily due to the recovery of $80,000 in legal and foreclosure related expenses on three non-accrual loans that paid off during the quarter. These decreases were partially offset by an increase in salaries and employee benefit expense, which was primarily the result of annual salary adjustments and the hiring of addition lenders.
The provision for income taxes decreased $343,000 to $1.22 million for the quarter ended December 31, 2015, from $1.56 million for the preceding quarter. The tax provision was higher for the prior quarter primarily due to higher income related to the recognition of a negative loan loss provision of $1.53 million during that quarter. The effective tax rate was 32.6% for the current quarter compared to 34.6% for the quarter ended September 30, 2015.
Balance Sheet Management
Total assets increased $21.6 million, or 3%, to $837.4 million at December 31, 2015, from $815.8 million at September 30, 2015. The increase was primarily due to an $18.5 million increase in net loans receivable, a $2.3 million increase in CDs held for investment and a $1.3 million increase in cash and cash equivalents. The increase in total assets was funded primarily by an $18.9 million increase in total deposits.
Liquidity as measured by cash and cash equivalents, CDs held for investment and available for sale investments securities was 19.5% of total liabilities at December 31, 2015, compared to 19.6% at September 30, 2015, and 16.5% one year ago.
Net loans receivable increased $18.5 million, or 3%, to $625.8 million at December 31, 2015, from $607.3 million at September 30, 2015. The increase was primarily due to a $7.1 million increase in commercial business loans, a $5.9 million increase in construction and land development loans, a $4.3 million increase in commercial real estate loans, a $1.6 million increase in consumer loans and a $5.9 million decrease in the undisbursed portion of construction loans in process. These increases to net loans receivable were partially offset by a $4.3 million decrease in multi-family loans, a $1.2 million decrease in one- to-four family loans, and an $882,000 decrease in land loans.
Timberland Fiscal Q1 2016 Earnings
January 25, 2016
Page 3
LOAN PORTFOLIO
| ($ in thousands) | | December 31, 2015 | | | September 30, 2015 | | | December 31, 2014 | |
| | | Amount | | | Percent | | | Amount | | | Percent | | | Amount | | | Percent | |
| | | | | | | | | | | | | | | | | | | |
| Mortgage loans: | | | | | | | | | | | | | | | | | | |
| One- to four-family | | $ | 118,507 | | | | 17 | % | | $ | 119,715 | | | | 18 | % | | $ | 103,021 | | | | 17 | % |
| Multi-family | | | 47,980 | | | | 7 | | | | 52,322 | | | | 8 | | | | 45,423 | | | | 7 | |
| Commercial | | | 295,595 | | | | 43 | | | | 291,216 | | | | 43 | | | | 295,113 | | | | 48 | |
| Construction and land | | | | | | | | | | | | | | | | | | | | | | | | |
| development | | | 116,843 | | | | 17 | | | | 110,920 | | | | 16 | | | | 69,235 | | | | 11 | |
| Land | | | 25,258 | | | | 4 | | | | 26,140 | | | | 4 | | | | 28,633 | | | | 5 | |
| Total mortgage loans | | | 604,183 | | | | 88 | | | | 600,313 | | | | 89 | | | | 541,425 | | | | 88 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Consumer loans: | | | | | | | | | | | | | | | | | | | | | | | | |
| Home equity and second | | | | | | | | | | | | | | | | | | | | | | | | |
| mortgage | | | 36,057 | | | | 5 | | | | 34,157 | | | | 5 | | | | 35,754 | | | | 6 | |
| Other | | | 4,387 | | | | 1 | | | | 4,669 | | | | 1 | | | | 4,453 | | | | 1 | |
| Total consumer loans | | | 40,444 | | | | 6 | | | | 38,826 | | | | 6 | | | | 40,207 | | | | 7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial business loans | | | 40,886 | | | | 6 | | | | 33,763 | | | | 5 | | | | 32,957 | | | | 5 | |
| Total loans | | | 685,513 | | | | 100 | % | | | 672,902 | | | | 100 | % | | | 614,589 | | | | 100 | % |
| Less: | | | | | | | | | | | | | | | | | | | | | | | | |
| Undisbursed portion of | | | | | | | | | | | | | | | | | | | | | | | | |
| construction loans in | | | | | | | | | | | | | | | | | | | | | | | | |
| process | | | (47,596 | ) | | | | | | | (53,457 | ) | | | | | | | (28,832 | ) | | | | |
| Deferred loan origination | | | | | | | | | | | | | | | | | | | | | | | | |
| fees | | | (2,183 | ) | | | | | | | (2,193 | ) | | | | | | | (1,840 | ) | | | | |
| Allowance for loan losses | | | (9,889 | ) | | | | | | | (9,924 | ) | | | | | | | (10,322 | ) | | | | |
| Total loans receivable, net | | $ | 625,845 | | | | | | | $ | 607,328 | | | | | | | $ | 573,595 | | | | | |
CONSTRUCTION AND LAND DEVELOPMENT LOAN COMPOSITION
| | | December 31, 2015 | | | September 30, 2015 | | | December 31, 2014 | |
| ($ in thousands) | | Amount | | | Percent of Loan Portfolio | | | Amount | | | Percent of Loan Portfolio | | | Amount | | | Percent of Loan Portfolio | |
| | | | | | | | | | | | | | | | | | | |
| Custom and owner / builder | | $ | 67,861 | | | | 10 | % | | $ | 62,954 | | | | 9 | % | | $ | 62,548 | | | | 10 | % |
| Speculative one- to four- | | | | | | | | | | | | | | | | | | | | | | | | |
| family | | | 6,199 | | | | 1 | | | | 6,668 | | | | 1 | | | | 2,287 | | | | -- | |
| Commercial real estate | | | 22,213 | | | | 3 | | | | 20,728 | | | | 3 | | | | 1,560 | | | | -- | |
| Multi-family (including | | | | | | | | | | | | | | | | | | | | | | | | |
| condominium) | | | 20,570 | | | | 3 | | | | 20,570 | | | | 3 | | | | 2,840 | | | | 1 | |
| Land development | | | -- | | | | -- | | | | -- | | | | -- | | | | -- | | | | -- | |
| Total construction loans | | $ | 116,843 | | | | 17 | % | | $ | 110,920 | | | | 16 | % | | $ | 69,235 | | | | 11 | % |
Timberland Fiscal Q1 2016 Earnings
January 25, 2016
Page 4
Timberland originated $53.8 million in loans during the quarter ended December 31, 2015, compared to $66.0 million for the preceding quarter and $50.1 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 December 31, 2015, fixed-rate one- to four-family mortgage loans totaling $12.6 million were sold compared to $16.5 million for the preceding quarter and $8.2 million for the comparable quarter one year ago.
Timberland’s investment securities decreased slightly during the quarter to $9.2 million at December 31, 2015, from $9.3 million at September 30, 2015, primarily due to scheduled amortization.
DEPOSIT BREAKDOWN ($ in thousands) | |
| | | December 31, 2015 | | | September 30, 2015 | | | December 31, 2014 | |
| | | Amount | | | Percent | | | Amount | | | Percent | | | Amount | | | Percent | |
| Non-interest bearing | | $ | 142,279 | | | | 20 | % | | $ | 141,388 | | | | 21 | % | | $ | 105,941 | | | | 17 | % |
| N.O.W. checking | | | 186,003 | | | | 27 | | | | 180,628 | | | | 27 | | | | 161,762 | | | | 26 | |
| Savings | | | 110,475 | | | | 16 | | | | 110,315 | | | | 16 | | | | 98,260 | | | | 16 | |
| Money market | | | 99,061 | | | | 14 | | | | 84,026 | | | | 12 | | | | 88,727 | | | | 14 | |
| Money market – brokered | | | 7,153 | | | | 1 | | | | 8,450 | | | | 1 | | | | 401 | | | | -- | |
| Certificates of deposit under $100 | | | 83,618 | | | | 12 | | | | 84,824 | | | | 12 | | | | 94,222 | | | | 15 | |
| Certificates of deposit $100 and over | | | 65,984 | | | �� | 9 | | | | 66,085 | | | | 10 | | | | 65,480 | | | | 11 | |
| Certificates of deposit – brokered | | | 3,197 | | | | 1 | | | | 3,196 | | | | 1 | | | | 3,193 | | | | 1 | |
| Total deposits | | $ | 697,770 | | | | 100 | % | | $ | 678,912 | | | | 100 | % | | $ | 617,986 | | | | 100 | % |
Total deposits increased $18.9 million, or 3%, to $697.8 million at December 31, 2015, from $678.9 million at September 30, 2015. The increase was primarily due to a $13.7 million increase in money market account balances, a $5.3 million increase in N.O.W. checking account balances and an $891,000 increase in non-interest bearing account balances. These increases were partially offset by a $1.3 million decrease in certificates of deposit account balances.
Shareholders’ Equity
Total shareholders’ equity increased $1.86 million to $91.05 million at December 31, 2015, from $89.19 million at September 30, 2015. The increase in shareholders’ equity was primarily due to net income of $2.52 million for the quarter, which was partially offset by dividend payments of $839,000 to shareholders. Book value per share increased to $13.02 and tangible book value per share increased to $12.21 at December 31, 2015.
Timberland did not repurchase any shares of its common stock during the quarter and had 287,893 shares remaining to be purchased on its existing stock repurchase plan at December 31, 2015.
Capital Ratios and Asset Quality
Timberland Bancorp remains well capitalized with a total risk-based capital ratio of 15.17%, a Tier 1 leverage capital ratio of 10.56% and a tangible capital to tangible assets ratio of 10.27% at December 31, 2015.
There was no provision for loan losses made for the quarter ended December 31, 2015, compared to a $1.53 million recapture of loan losses (which added approximately $0.14 to diluted earnings per share) for the quarter ended September 30, 2015. Net charge-offs for the current quarter were $35,000 compared to a net recovery of $982,000 for the quarter ended September 30, 2015 and net charge-offs of $105,000 for the quarter ended December 31, 2014. The non-performing assets to total assets ratio improved to 1.63% at December 31, 2015 from 1.84% three months earlier and 2.68% one year ago. The allowance for loan losses was 1.56% of loans receivable at December 31, 2015.
Timberland Fiscal Q1 2016 Earnings
January 25, 2016
Page 5
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased 24% to $5.5 million at December 31, 2015, from $7.2 million at September 30, 2015 and decreased 57% from $12.8 million one year ago. Non-accrual loans decreased 20% to $4.8 million at December 31, 2015, from $6.0 million at September 30, 2015 and decreased 55% from $10.8 million at December 31, 2014.
| NON-ACCRUAL LOANS | | December 31, 2015 | | | September 30, 2015 | | | December 31, 2014 | |
| ($ in thousands) | | Amount | | | Quantity | | | Amount | | | Quantity | | | Amount | | | Quantity | |
| | | | | | | | | | | | | | | | | | | |
| Mortgage loans: | | | | | | | | | | | | | | | | | | |
| One- to four-family | | $ | 2,694 | | | | 17 | | | $ | 2,368 | | | | 16 | | | $ | 4,296 | | | | 20 | |
| Multi-family | | | -- | | | | -- | | | | 760 | | | | 1 | | | | -- | | | | -- | |
| Commercial | | | 1,184 | | | | 3 | | | | 1,016 | | | | 2 | | | | 1,439 | | | | 1 | |
| Construction | | | -- | | | | -- | | | | -- | | | | -- | | | | 156 | | | | 1 | |
| Land | | | 546 | | | | 4 | | | | 1,558 | | | | 5 | | | | 4,357 | | | | 6 | |
| Total mortgage loans | | | 4,424 | | | | 24 | | | | 5,702 | | | | 24 | | | | 10,248 | | | | 28 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Consumer loans: | | | | | | | | | | | | | | | | | | | | | | | | |
| Home equity and second | | | | | | | | | | | | | | | | | | | | | | | | |
| mortgage | | | 300 | | | | 4 | | | | 303 | | | | 4 | | | | 564 | | | | 8 | |
| Other | | | 34 | | | | 1 | | | | 35 | | | | 1 | | | | -- | | | | -- | |
| Total consumer loans | | | 334 | | | | 5 | | | | 338 | | | | 5 | | | | 564 | | | | 8 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial business loans | | | 73 | | | | 1 | | | | -- | | | | -- | | | | -- | | | | -- | |
| Total loans | | $ | 4,831 | | | | 30 | | | $ | 6,040 | | | | 29 | | | $ | 10,812 | | | | 36 | |
Other real estate owned (“OREO”) and other repossessed assets decreased 7% to $7.7 million at December 31, 2015, from $8.2 million at December 31, 2014 and decreased 2% from $7.9 million at September 30, 2015. At December 31, 2015, the OREO and other repossessed asset portfolio consisted of 31 individual real estate properties and one mobile home. During the quarter ended December 31, 2015, three OREO properties totaling $170,000 were sold for a net loss of $3,000.
| OREO and OTHER REPOSSESSED ASSETS | | December 31, 2015 | | | September 30, 2015 | | | December 31, 2014 | |
| ($ in thousands) | | Amount | | | Quantity | | | Amount | | | Quantity | | | Amount | | | Quantity | |
| | | | | | | | | | | | | | | | | | | |
| One- to four-family | | $ | 2,763 | | | | 10 | | | $ | 2,868 | | | | 11 | | | $ | 1,976 | | | | 9 | |
| Multi-family | | | -- | | | | -- | | | | -- | | | | -- | | | | 142 | | | | 1 | |
| Commercial | | | 1,449 | | | | 3 | | | | 1,568 | | | | 3 | | | | 2,190 | | | | 4 | |
| Land | | | 3,388 | | | | 18 | | | | 3,351 | | | | 20 | | | | 3,912 | | | | 23 | |
| Mobile home | | | 67 | | | | 1 | | | | 67 | | | | 1 | | | | -- | | | | -- | |
| Total | | $ | 7,667 | | | | 32 | | | $ | 7,854 | | | | 35 | | | $ | 8,220 | | | | 37 | |
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,
Timberland Fiscal Q1 2016 Earnings
January 25, 2016
Page 6
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 2016 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 Fiscal Q1 2016 Earnings
January 25, 2016
Page 7
TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME | | Three Months Ended | |
| ($ in thousands, except per share amounts) | | Dec. 31, | | | Sept. 30, | | | Dec. 31, | |
| (unaudited) | | 2015 | | | 2015 | | | 2014 | |
| Interest and dividend income | | | | | | | | | |
| Loans receivable | | $ | 8,429 | | | $ | 7,780 | | | $ | 7,509 | |
| Investment securities | | | 69 | | | | 70 | | | | 65 | |
Dividends from mutual funds and Federal Home Loan Bank (“FHLB”) stock | | | 22 | | | | 10 | | | | 7 | |
| Interest bearing deposits in banks | | | 171 | | | | 148 | | | | 105 | |
| Total interest and dividend income | | | 8,691 | | | | 8,008 | | | | 7,686 | |
| | | | | | | | | | | | | |
| Interest expense | | | | | | | | | | | | |
| Deposits | | | 504 | | | | 508 | | | | 509 | |
FHLB advances | | | 477 | | | | 475 | | | | 474 | |
| Total interest expense | | | 981 | | | | 983 | | | | 983 | |
| Net interest income | | | 7,710 | | | | 7,025 | | | | 6,703 | |
| | | | | | | | | | | | | |
| Recapture of loan losses | | | -- | | | | (1,525 | ) | | | -- | |
| Net interest income after recapture of loan losses | | | 7,710 | | | | 8,550 | | | | 6,703 | |
| | | | | | | | | | | | | |
| Non-interest income | | | | | | | | | | | | |
| OTTI on investment securities, net | | | -- | | | | (8 | ) | | | -- | |
| Gain on sale of investment securities, net | | | -- | | | | -- | | | | 45 | |
| Service charges on deposits | | | 972 | | | | 980 | | | | 885 | |
| Gain on sale of loans, net | | | 394 | | | | 512 | | | | 236 | |
| Bank owned life insurance (“BOLI”) net earnings | | | 135 | | | | 137 | | | | 136 | |
| ATM and debit card interchange transaction fees | | | 700 | | | | 699 | | | | 630 | |
| Other | | | 317 | | | | 342 | | | | 191 | |
| Total non-interest income, net | | | 2,518 | | | | 2,662 | | | | 2,123 | |
| | | | | | | | | | | | | |
| Non-interest expense | | | | | | | | | | | | |
| Salaries and employee benefits | | | 3,471 | | | | 3,324 | | | | 3,396 | |
| Premises and equipment | | | 760 | | | | 817 | | | | 725 | |
| Advertising | | | 205 | | | | 249 | | | | 188 | |
| OREO and other repossessed assets, net | | | 244 | | | | 301 | | | | 76 | |
| ATM and debit card processing | | | 322 | | | | 292 | | | | 338 | |
| Postage and courier | | | 100 | | | | 107 | | | | 104 | |
| State and local taxes | | | 132 | | | | 135 | | | | 118 | |
| Professional fees | | | 130 | | | | 223 | | | | 176 | |
| FDIC insurance | | | 107 | | | | 144 | | | | 160 | |
| Other insurance | | | 32 | | | | 33 | | | | 37 | |
| Loan administration and foreclosure | | | 29 | | | | 62 | | | | 43 | |
| Data processing and telecommunications | | | 450 | | | | 468 | | | | 379 | |
| Deposit operations | | | 172 | | | | 197 | | | | 175 | |
| Other | | | 325 | | | | 341 | | | | 359 | |
| Total non-interest expense | | | 6,479 | | | | 6,693 | | | | 6,274 | |
| | | | | | | | | | | | | |
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| (Statement continued on following page) | |
Timberland Fiscal Q1 2016 Earnings
January 25, 2016
Page 8
| | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | Dec. 31, | | | Sept. 30, | | | Dec. 31, | |
| | | | 2015 | | | | 2015 | | | | 2014 | |
| Income before income taxes | | $ | 3,749 | | | $ | 4,519 | | | $ | 2,552 | |
| Provision for income taxes | | | 1,221 | | | | 1,564 | | | | 825 | |
| Net income | | $ | 2,528 | | | $ | 2,955 | | | $ | 1,727 | |
| | | | | | | | | | | | | |
| Net income per common share: | | | | | | | | | | | | |
Basic | | $ | 0.37 | | | $ | 0.43 | | | $ | 0.25 | |
Diluted | | | 0.36 | | | | 0.42 | | | | 0.24 | |
| | | | | | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | | | | | |
Basic | | | 6,869,726 | | | | 6,896,941 | | | | 6,891,952 | |
Diluted | | | 7,083,864 | | | | 7,069,880 | | | | 7,063,540 | |
Timberland Fiscal Q1 2016 Earnings
January 25, 2016
Page 9
TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS | |
| ($ in thousands, except per share amounts) (unaudited) | | Dec. 31, | | Sept. 30, | | Dec. 31, |
| | | 2015 | | 2015 | | 2014 |
| Assets | | | | | | |
| Cash and due from financial institutions | | $ 12,481 | | $ 14,014 | | $ 12,583 |
| Interest-bearing deposits in banks | | 81,119 | | 78,275 | | 57,772 |
| | Total cash and cash equivalents | | 93,600 | | 92,289 | | 70,355 |
| | | | | | | | |
| Certificates of deposit (“CDs”) held for investment, at cost | | 50,865 | | 48,611 | | 37,997 |
| Investment securities: | | | | | | |
| | Held to maturity, at amortized cost | | 7,824 | | 7,913 | | 5,201 |
| | Available for sale, at fair value | | 1,362 | | 1,392 | | 1,494 |
| FHLB stock | | 2,699 | | 2,699 | | 5,191 |
| | | | | | | | |
| Loans receivable | | 634,430 | | 614,201 | | 582,722 |
| Loans held for sale | | 1,304 | | 3,051 | | 1,195 |
| Less: Allowance for loan losses | | (9,889) | | (9,924) | | (10,322) |
| | Net loans receivable | | 625,845 | | 607,328 | | 573,595 |
| | | | | | | | |
| Premises and equipment, net | | 16,589 | | 16,854 | | 17,574 |
| OREO and other repossessed assets, net | | 7,667 | | 7,854 | | 8,220 |
| BOLI | | 18,306 | | 18,170 | | 17,769 |
| Accrued interest receivable | | 2,234 | | 2,170 | | 1,967 |
| Goodwill | | 5,650 | | 5,650 | | 5,650 |
| Mortgage servicing rights, net | | 1,475 | | 1,478 | | 1,549 |
| Other assets | | 3,263 | | 3,407 | | 3,355 |
| | Total assets | | $837,379 | | $815,815 | | $749,917 |
| | | | | | | | |
| Liabilities and shareholders’ equity | | | | | | |
| Deposits: Non-interest-bearing demand | | $ 142,279 | | $ 141,388 | | $ 105,941 |
| Deposits: Interest-bearing | | 555,491 | | 537,524 | | 512,045 |
| | Total deposits | | 697,770 | | 678,912 | | 617,986 |
| | | | | | | | |
| FHLB advances | | 45,000 | | 45,000 | | 45,000 |
| Other liabilities and accrued expenses | | 3,558 | | 2,716 | | 2,664 |
| | Total liabilities | | 746,328 | | 726,628 | | 665,650 |
| | | | | | | |
| Shareholders’ equity | | | | | | |
Common stock, $.01 par value; 50,000,000 shares authorized; 7,052,336 shares issued and outstanding – December 31, 2014 6,988,848 shares issued and outstanding – September 30, 2015 6,994,148 shares issued and outstanding – December 31, 2015 | | 10,402 | | 10,293 | | 10,846 |
| Unearned shares issued to Employee Stock Ownership Plan (“ESOP”) | | (859) | | (926) | | (1,124) |
| Retained earnings | | 81,823 | | 80,133 | | 74,909 |
| Accumulated other comprehensive loss | | (315) | | (313) | | (364) |
| | Total shareholders’ equity | | 91,051 | | 89,187 | | 84,267 |
| | Total liabilities and shareholders’ equity | | $837,379 | | $815,815 | | $749,917 |
Timberland Fiscal Q1 2016 Earnings
January 25, 2016
Page 10
| KEY FINANCIAL RATIOS AND DATA | Three Months Ended |
| ($ in thousands, except per share amounts) (unaudited) | | Dec. 31, | | Sept. 30, | | Dec. 31, |
| | | 2015 | | 2015 | | 2014 |
| | | | | | | |
| PERFORMANCE RATIOS: | | | | | | |
| Return on average assets (a) | | 1.22% | | 1.47% | | 0.92% |
| Return on average equity (a) | | 11.26% | | 13.47% | | 8.29% |
| Net interest margin (a) | | 4.00% | | 3.76% | | 3.88% |
| Efficiency ratio | | 63.35% | | 69.09% | | 71.09% |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | Dec. 31, | | Sept. 30, | | Dec. 31, |
| | | 2015 | | 2015 | | 2014 |
| ASSET QUALITY RATIOS AND DATA: | | | | | | |
| Non-accrual loans | | $4,831 | | $6,040 | | $10,812 |
| Loans past due 90 days and still accruing | | 285 | | 151 | | -- |
| Non-performing investment securities | | 891 | | 932 | | 1,057 |
| OREO and other repossessed assets | | 7,667 | | 7,854 | | 8,220 |
| Total non-performing assets (b) | | $13,674 | | $14,977 | | $20,089 |
| | | | | | | |
| | | | | | | |
| Non-performing assets to total assets (b) | | 1.63% | | 1.84% | | 2.68% |
| Net charge-offs (recoveries) during quarter | | $ 35 | | $ (982) | | $ 105 |
| Allowance for loan losses to non-accrual loans | | 205% | | 164% | | 95% |
| Allowance for loan losses to loans receivable (c) | | 1.56% | | 1.61% | | 1.77% |
| Troubled debt restructured loans on accrual status (d) | | $7,971 | | $12,484 | | $12,337 |
| | | | | | | |
| | | | | | | |
| CAPITAL RATIOS: | | | | | | |
| Tier 1 leverage capital | | 10.56% | | 10.64% | | 10.72% |
| Tier 1 risk-based capital | | 13.91% | | 13.91% | | 13.86% |
| Total risk-based capital | | 15.17% | | 15.16% | | 15.12% |
| Tangible capital to tangible assets (e) | | 10.27% | | 10.31% | | 10.56% |
| | | | | | | |
| | | | | | | |
| BOOK VALUES: | | | | | | |
| Book value per common share | | $ 13.02 | | $ 12.76 | | $ 11.95 |
| Tangible book value per common share (e) | | 12.21 | | 11.95 | | 11.15 |
| | | | | | | |
__________________________________________________
(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 $1,229, $1,233 and $2,034 reported as non-accrual loans at December 31, 2015, September 30, 2015 and December 31, 2014, respectively.
(e) Calculation subtracts goodwill and core deposit intangible from the equity component and from assets.
Timberland Fiscal Q1 2016 Earnings
January 25, 2016
Page 11
AVERAGE BALANCES, YIELDS AND RATES - QUARTERLY
($ in thousands)
(unaudited)
| | | For the three months ended | |
| | | December 31, 2015 | | | September 30, 2015 | | | December 31, 2014 | |
| | | Average Balance | | | Average Yield/Rate | | | Average Balance | | | Average Yield/Rate | | | Average Balance | | | Average Yield/Rate | |
| Assets | | | | | | | | | | | | | | | | | | |
| Loans | | $ | 625,558 | | | | 5.39 | % | | $ | 612,383 | | | | 5.08 | % | | $ | 581,820 | | | | 5.16 | % |
| Investment securities and FHLB stock | | | 11,955 | | | | 3.04 | % | | | 12,062 | | | | 2.63 | % | | | 13,266 | | | | 2.15 | % |
| Other interest-bearing assets | | | 133,643 | | | | 0.50 | % | | | 123,129 | | | | 0.48 | % | | | 96,326 | | | | 0.43 | % |
| Total interest-bearing assets | | | 771,156 | | | | 4.51 | % | | | 747,574 | | | | 4.28 | % | | | 691,412 | | | | 4.45 | % |
| Other assets | | | 58,204 | | | | | | | | 57,808 | | | | | | | | 59,922 | | | | | |
| Total assets | | $ | 829,360 | | | | | | | $ | 805,382 | | | | | | | $ | 751,334 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | |
| N.O.W. checking accounts | | $ | 179,611 | | | | 0.25 | % | | $ | 171,764 | | | | 0.27 | % | | $ | 159,498 | | | | 0.28 | % |
| Money market accounts | | | 104,377 | | | | 0.30 | % | | | 101,204 | | | | 0.31 | % | | | 90,263 | | | | 0.27 | % |
| Savings accounts | | | 110,356 | | | | 0.05 | % | | | 107,250 | | | | 0.05 | % | | | 96,653 | | | | 0.05 | % |
| Certificates of deposit accounts | | | 153,866 | | | | 0.76 | % | | | 154,856 | | | | 0.76 | % | | | 163,016 | | | | 0.79 | % |
| Total interest-bearing deposits | | | 548,210 | | | | 0.36 | % | | | 535,074 | | | | 0.38 | % | | | 509,430 | | | | 0.40 | % |
| FHLB advances | | | 45,000 | | | | 4.21 | % | | | 45,000 | | | | 4.19 | % | | | 45,000 | | | | 4.18 | % |
| Total interest-bearing liabilities | | | 593,210 | | | | 0.66 | % | | | 580,074 | | | | 0.67 | % | | | 554,430 | | | | 0.70 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-interest-bearing deposits | | | 142,518 | | | | | | | | 133,657 | | | | | | | | 110,976 | | | | | |
| Other liabilities | | | 3,788 | | | | | | | | 3,883 | | | | | | | | 2,629 | | | | | |
| Shareholders' equity | | | 89,844 | | | | | | | | 87,768 | | | | | | | | 83,299 | | | | | |
| Total liabilities and shareholders' equity | | $ | 829,360 | | | | | | | $ | 805,382 | | | | | | | $ | 751,334 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate spread | | | | | | | 3.85 | % | | | | | | | 3.61 | % | | | | | | | 3.75 | % |
| Net interest margin (1) | | | | | | | 4.00 | % | | | | | | | 3.76 | % | | | | | | | 3.88 | % |
| Average interest-bearing assets to | | | | | | | | | | | | | | | | | | | | | | | | |
| average interest-bearing liablilities | | | 130.00 | % | | | | | | | 128.88 | % | | | | | | | 124.71 | % | | | | |
_______________________________________
(1)Net interest margin = annualized net interest income /
average interest-bearing assets
