FORM 11-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 2002 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-23333
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Timberland Bank 401(k) Profit Sharing Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principle executive office:
Timberland Bank
624 Simpson Avenue
Hoquiam, Washington 98550
Financial Statements and Exhibits
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(a) Financial Statements
The Timberland Bank 401(k) Profit Sharing Plan became effective as of
December 4, 1970, and was restated effective October 1, 2000. Filed as a part
of this report on Form 11-K are the audited financial statements of the Plan
as of and for the years ended September 30, 2002 and 2001.
(b) Exhibit 23 Consent of Independent Auditors
Signatures
The Plan. Pursuant to the requirements of the Securities and Exchange
Act of 1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
/s/Dean J. Brydon
----------------------------------------------------
Administrator, Timberland Bank 401(k) Profit
Sharing Plan
/s/Dean J. Brydon
By: -------------------------------------
Dean J. Brydon
-------------------------------------(name)
Chief Financial Officer
-------------------------------------(title)
Timberland Bank
-------------------------------------(bank)
Date: March 31, 2003
Timberland
Bank
401(k)
Profit
Sharing
Plan
Financial
Report
September 30
2002
Contents
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Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . 1
Financial Statements
Statements of Net Assets Available for Benefits. . . . . . . . . . . . . . 2
Statement of Changes in Net Assets Available for Benefits. . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . .4-6
Supplemental Schedule
Schedule of Assets Held for Investment Purposes. . . . . . . . . . . . . . 7
Independent Auditor's Report
To the Administrative Committee of the
Timberland Bank 401(k) Profit Sharing Plan
Hoquiam, Washington
We have audited the accompanying statements of net assets available for
benefits of Timberland Bank 401(k) Profit Sharing Plan (the Plan) as of
September 30, 2002 and 2001, and the related statement of changes in net
assets available for benefits for the year ended September 30, 2002. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
September 30, 2002 and 2001, and the changes in net assets available for
benefits for the year ended September 30, 2002, in conformity with accounting
principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule as of
September 30, 2002 is presented for the purpose of additional analysis and is
not a required part of the basic financial statements, but is supplementary
information required by the United States Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated, in all material respects, in relation
to those basic financial statements taken as a whole.
/s/McGladrey & Pullen, LLP
Tacoma, Washington
March 12, 2003
Financial
Statements
Statements of Net Assets Available for Benefits
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2002 and 2001
2002 2001
Assets
Investments, at fair value $4,510,790 $3,728,517
Contributions receivable:
Employer 384,700 360,095
Participant -- 79
Total contributions receivable 384,700 360,174
Accrued income 4,741 1,911
Total assets 4,900,231 4,090,602
Liabilities -- --
Net assets available for benefits $4,900,231 $4,090,602
See notes to financial statements.
2
Statement of Changes in Net Assets Available for Benefits
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Timberland Bank 401(k) Profit Sharing Plan
Year Ended September 30, 2002
Additions to Net Assets
Investment income:
Net appreciation in fair value of investments $ 227,753
Dividends 73,118
Total investment income 300,871
Contributions:
Employer 384,700
Participant 181,385
Total contributions 566,085
Total additions 866,956
Deductions from Net Assets
Benefits paid to participants 42,586
Administrative expenses 14,741
Total deductions 57,327
Net increase 809,629
Net Assets Available for Benefits
Beginning of year 4,090,602
End of year $4,900,231
See notes to financial statements.
3
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2002
Note 1 - Description of Plan
The following description of the Timberland Bank 401(k) Profit Sharing Plan
(the Plan) provides only general information. Participants should refer to
the Plan agreement for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering substantially all full-time
employees of Timberland Bank (the Company) who have one year of service and
are age twenty-one or older. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The Company is the wholly
owned subsidiary of Timberland Bancorp, Inc.
Contributions and Participant Investment Options
Participants of the Plan may contribute up to the maximum of pretax annual
compensation as set by law. Participants may also contribute amounts
representing distributions from other qualified defined benefit or defined
contribution plans. The Company may contribute additional amounts at the
option of the Company's Board of Directors. For the year ended September 30,
2002, the Company contributed 10% of total eligible participant compensation.
Effective October 1, 2002, the Company will make an annual safe harbor
contribution of 3% of eligible compensation. Additional amounts will be
contributed at the option of the Company's Board of Directors.
Participants must direct their salary deferral contributions and their
allocated share of employer contributions, if any, into a variety of
investment choices as made available and determined by the Plan Administrator,
which are more fully described in the Plan's literature.
Participant Accounts
Each participant's account is credited with the participant's contribution and
allocations of (a) the Company's contributions, (b) Plan earnings, and (c)
forfeitures of terminated participants' nonvested accounts and charged with an
allocation of administrative expenses. Allocations are based on participant
earnings or account balances, as defined. The benefit to which a participant
is entitled is the benefit that can be provided from the participant's vested
account.
Vesting
Participants are immediately vested in all deferral, rollover and safe harbor
contributions plus actual earnings. Vesting in the Company's discretionary
contribution portion of accounts plus earnings is based on years of continuous
service. Participants are fully vested after six years of credited service.
A participant's accrued benefit derived from employer contributions is also
100% non-forfeitable upon attaining age 65, or if the participant's separation
from service is a result of death or disability.
Payment of Benefits
On termination of service, a participant with an accrued benefit of $5,000 or
less will receive a lump-sum amount equal to the value of the vested interest
in his or her account. The distribution date will be the earliest
administratively feasible date determined by the Trustee. Participants with
an accrued benefit in excess of $5,000 may leave the funds in the Plan or
elect to receive a lump-sum distribution.
(continued)
4
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2002
Note 1 - Description of Plan (concluded)
Forfeitures
Forfeitures of participant non-vested account balances are reallocated to
remaining participants, in the year the balances are forfeited, in the same
manner as employer contributions.
Note 2 - Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
Payment of Benefits
Benefits are recorded when paid.
Use of Estimates
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
the changes in assets and liabilities, and the disclosure of contingent assets
and liabilities. Actual results could differ from these estimates.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Quoted market prices are
used to value investments. Shares of mutual funds are valued at the net asset
value of shares held by the Plan at year-end. Purchases and sales of
securities are recorded on a trade-date basis. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date.
Note 3 - Investments
The following presents separately investments that represent 5% or more of the
Plan's net assets at September 30:
2002 2001
Timberland Bancorp stock $3,115,180 $2,283,728
First American Prime Obligations Fund 766,615 730,817
First American Strategy Growth Allocation Fund 306,193 321,329
First American Strategy Aggressive Allocation Fund 201,073 304,977
Other 121,729 87,666
$4,510,790 $3,728,517
(continued)
5
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2002
Note 3 - Investments (concluded)
During 2002, the Plan's investments, including gains and losses on investments
bought and sold, as well as held during the year, appreciated or (depreciated)
in value as follows:
Mutual funds ($109,281)
Common stock 337,034
Net appreciation in fair value of investments $227,753
During 2002, the Plan's investments generated $73,118 in dividend earnings.
Note 4 - Plan Termination
Although they have not expressed any intent to do so, the Company has the
right under the Plan to discontinue contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100% vested in their accounts.
Note 5 - Tax Status/Non-Standardized Prototype Plan
Effective October 1, 1997, the Plan adopted a non-standardized form of a
prototype plan sponsored by Actuarial Planning Group, Inc. The prototype plan
has received an opinion letter from the Internal Revenue Service concerning
its qualified status; however, adopters of a non-standardized version of the
prototype plan cannot rely on this opinion letter. The Plan administrator
believes the Plan is designed and being operated in compliance with the
applicable provisions of the Internal Revenue Code.
Note 6 - Administration of Plan Assets
Certain Plan investments are shares of mutual funds management by US Bank. US
Bank is the trustee as defined by the Plan and, therefore, these transactions
qualify as party-in-interest transactions. Fees paid by the Plan for the
investment management services amounted to $14,741 for the year ended
September 30, 2002.
Certain administrative functions of the Plan are performed by officers or
employees of the Company. No such officer or employee receives compensation
from the Plan. Other administrative and management fees of the Plan are paid
directly by the Company.
6
Supplemental
Schedule
Schedule of Assets Held for Investment Purposes
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2002
EIN: 91-0260220
Plan Number: 001
(a) and (b) (c) (d) (e)
Identity of Issue, Description of Investment Including Cost Current
Borrower, Lessor, Maturity Date, Rate of Interest, Value
or Similar Party Collateral, Par or Maturity Value
(pv or mv)
US Bank First American Strategy Aggressive
Allocation Fund * $ 201,073
US Bank First American Small Cap Growth Fund * 61,622
US Bank First American Equity Index Fund * 60,107
US Bank First American Strategy Growth
Allocation Fund * 306,193
US Bank First American Prime Obligations Fund * 766,615
Timberland
Bancorp, Inc. Common Stock, $0.01 par value * 3,115,180
$4,510,790
* Historical cost not required for participant directed accounts.
7
Exhibit 23
Consent of Independent Auditors
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 333-32386, filed March 14, 2000) of Timberland
Bancorp, Inc. of our report dated March 12, 2003, appearing in this Annual
Report on Form 11-K of Timberland Bank 401(k) Profit Sharing Plan for the year
ended September 30, 2002.
/s/McGladrey & Pullen, LLP
McGladrey & Pullen, LLP
Tacoma, Washington
March 25, 2003