- Quarterly EPS Increases 23% to $0.85 from $0.69 for the Preceding Quarter
- Quarterly Return on Average Assets Increases to 1.51%
- Quarterly Return on Average Equity Increases to 13.06%
- Quarterly Net Interest Margin Expands 53 Basis Points to 3.64%
- Loan Portfolio (Excluding PPP Loans) Increased 22% Year-Over-Year
- Announces a $0.22 Quarterly Cash Dividend and a $0.10 Special Cash Dividend
HOQUIAM, Wash., Oct. 31, 2022 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) ("Timberland" or "the Company"), the holding company for Timberland Bank (the "Bank"), today reported net income of $7.05 million, or $0.85 per diluted common share, for the quarter ended September 30, 2022. This compares to net income of $5.74 million, or $0.69 per diluted common share, for the preceding quarter and $6.02 million, or $0.71 per diluted common share, for the comparable quarter one year ago.
Timberland also reported net income of $23.60 million, or $2.82 per diluted common share, for the fiscal year ended September 30, 2022 compared to net income of $27.58 million, or $3.27 per diluted common share, for the fiscal year ended September 30, 2021.
Timberland's Board of Directors declared a quarterly cash dividend to shareholders of $0.22 per share and a special cash dividend of $0.10 per share. Both dividends are payable on November 25, 2022, to shareholders of record on November 10, 2022.
"We are pleased to report strong fiscal fourth quarter results," stated Michael Sand, CEO. "Continued growth in the loan and investment portfolios and a Fed orchestrated higher rate environment combined to significantly increase Company revenue and profitability relative to the prior quarter. "Our decision to build liquidity during the mid and post pandemic periods while patiently awaiting higher interest rates is now proving beneficial to the Company's earnings profile. As noted throughout this release, key financial metrics moved sharply higher this quarter and tangible book value per share continued its upward trajectory."
"Asset quality continues to be strong with no charge-offs recorded during the quarter and non-performing assets reported at 12 basis points of total assets at quarter end," added Sand. "The tangible common equity to tangible assets ratio, a non-GAAP ratio, reached 10.98% this quarter."
"The 53 basis point expansion in the net interest margin helped increase net income and earnings per share by 23% compared to the preceding quarter, said Dean Brydon, President and CFO. "There was a slight outflow of deposits during the current quarter, and we are beginning to see more pressure to increase rates to retain rate-sensitive deposits. However, we remain well positioned to benefit from additional Federal Reserve actions to increase interest rates, and we anticipate additional opportunities to deploy excess liquidity during the next several quarters."
"In addition to the regular quarterly cash dividend, Timberland's Board of Directors also declared a one-time special cash dividend of $0.10 per share. Timberland's continued solid financial performance has allowed us to pay a special cash dividend to our shareholders while continuing to maintain a strong capital position," added Brydon.
Earnings and Balance Sheet Highlights (at or for the periods ended September 30, 2022, compared to September 30, 2021, or June 30, 2022):
Earnings Highlights:
- Earnings per diluted common share ("EPS") increased 23% to $0.85 for the current quarter from $0.69 for the preceding quarter and increased 20% from $0.71 for the comparable quarter one year ago;
- Net income increased 23% to $7.05 million for the current quarter from $5.74 million for the preceding quarter and increased 17% from $6.02 million for the comparable quarter one year ago;
- Return on average equity ("ROE") and return on average assets ("ROA") for the current quarter were 13.06% and 1.51%, respectively; ROE and ROA for the 2022 fiscal year were 11.14% and 1.27%, respectively;
- Net interest margin ("NIM") for the current quarter improved to 3.64% from 3.11% for the preceding quarter and 3.13% for the comparable quarter one year ago; and
- The efficiency ratio for the current quarter improved to 52.72% from 57.80% for the preceding quarter and 54.45% for the comparable quarter one year ago.
Balance Sheet Highlights:
- Total assets increased 4% year-over-year and decreased 1% from the prior quarter;
- Total deposits increased 4% year-over-year and decreased 2% from the prior quarter;
- Net loans receivable (excluding SBA PPP loans) increased 22% year-over-year and 4% from the prior quarter;
- Net loans receivable (including SBA PPP loans) increased 17% year-over-year and 4% from the prior quarter;
- Non-performing assets to total assets ratio improved to 0.12% from 0.18% one year ago;
- Total shareholders' equity increased 6% to $218.57 million, from $206.90 million at September 30, 2021; and
- Book and tangible book (non-GAAP) values per common share increased to $26.58 and $24.63, respectively, at September 30, 2022.
Operating Results
Operating revenue (net interest income before the provision for loan losses plus non-interest income) for the current quarter increased 16% to $19.26 million from $16.56 million for the comparable quarter one year ago and increased 13% from $17.08 million for the preceding quarter. The increase in operating revenue compared to the preceding quarter was primarily due to increased interest income from overnight funds, investment securities, and loans. The increased interest income in these categories was primarily a result of increased short-term market interest rates and the continued deployment of liquidity into higher-yielding loans and investment securities. Operating revenue for the 2022 fiscal year decreased 1% to $68.46 million from $69.02 million for the 2021 fiscal year. The year-over-year revenue decrease was primarily due to a decrease in gain on sales of loans, which was partially offset by increased net interest income.
Net interest income increased $2.28 million, or 16%, to $16.26 million for the current quarter from $13.98 million for the preceding quarter and increased $3.15 million, or 24%, from $13.11 million for the comparable quarter one year ago. The increase in net interest income was primarily due to increased market interest rates and higher average balances in loans and investment securities, which more than offset the decreased SBA PPP loan income and increased deposit costs. Timberland's NIM for the current quarter improved to 3.64% compared to 3.11% for the preceding quarter and 3.13% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately three basis points due to the accretion of $28,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $91,000 in pre-payment penalties, non-accrual interest, and late fees. The NIM for the preceding quarter was increased by approximately five basis points due to the accretion of $63,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $147,000 in pre-payment penalties, non-accrual interest and late fees. The NIM for the comparable quarter one year ago was increased by approximately five basis points due to the accretion of $50,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $174,000 in pre-payment penalties, non-accrual interest and late fees.
Net interest income for the 2022 fiscal year increased $3.98 million, or 8% to $55.83 million from $51.86 million for the 2021 fiscal year. The year-over-year increase was primarily due to a $173.46 million increase in the average balance of interest-earning assets, which was partially offset by a 14 basis point decrease in the average yield on interest-earning assets. Timberland's NIM for the 2022 fiscal year decreased to 3.16% from 3.25% for the 2021 fiscal year.
U.S. Small Business Administration ("SBA") PPP loans contributed to interest income through the 1.00% interest rate earned on outstanding loan balances and also through the accretion of loan origination fees into interest income over the life of each PPP loan. At September 30, 2022, Timberland had SBA PPP deferred loan origination fees of $42,000 remaining to be accreted into interest income over the remaining life of the loans. The following table details the interest income recognized from SBA PPP loans:
| SBA PPP Loan Income ($ in thousands) Three Months Ended | ||||||||
| Sept. 30, 2022 | June 30, 2022 | Sept. 30, 2021 | ||||||
| Interest income | $ | 3 | $ | 9 | $ | 167 | ||
| Loan origination fee accretion | 10 | 146 | 1,488 | |||||
| Total SBA PPP loan income | $ | 13 | $ | 155 | $ | 1,655 | ||
| Year Ended | ||||||||
| Sept. 30, 2022 | Sept. 30, 2021 | |||||||
| Interest income | $ | 114 | $ | 1,060 | ||||
| Loan origination fee accretion | 1,792 | 5,071 | ||||||
| Total SBA PPP loan income | $ | 1,906 | $ | 6,131 | ||||
A $270,000 provision for loan losses was recorded for the quarter ended September 30, 2022. The provision was made primarily due to loan portfolio growth. No provision for loan losses was made during the quarters ended June 30, 2022 and September 30, 2021.
Non-interest income decreased $106,000, or 3%, to $3.00 million for the current quarter from $3.10 million for the preceding quarter and decreased $454,000, or 13%, from $3.45 million for the comparable quarter one year ago. The decrease in non-interest income compared to the preceding quarter was primarily due to an $85,000 decrease in gain on sales of loans and a $67,000 decrease in service charges on deposits. The quarter's year-over-year decrease in non-interest income was primarily due to a $364,000 decrease in gain on sales of loans and an $87,000 reduction in the valuation recovery on loan servicing rights. Non-interest income for the 2022 fiscal year decreased $4.54 million, or 26%, to $12.62 million from $17.16 million for the 2021 fiscal year. The decrease was primarily due to a $4.39 million decrease in gain on sale of loans. The decreases in gain on sales of loans were primarily due to decreases in the dollar amount of fixed-rate one- to four-family loans originated and sold (as refinance demand slowed) and decreases in the average pricing margin compared to the same periods last year.
Total operating (non-interest) expenses for the current quarter increased $280,000, or 3%, to $10.15 million from $9.87 million for the preceding quarter and increased $1.14 million, or 13%, from $9.02 million for the comparable quarter one year ago. The increase in operating expenses compared to the preceding quarter was primarily due to increases in data processing expense, deposit operations expenses, and smaller increases in several other expense categories. The efficiency ratio for the current quarter improved to 52.72% from 57.80% for the preceding quarter and 54.45% for the comparable quarter one year ago. For the 2022 fiscal year, total operating expenses increased $4.04 million, or 12%, to $38.63 million from $34.59 million for the 2021 fiscal year. The increase was primarily due to a $2.07 million increase in salaries and employee benefits expense, a $741,000 increase in professional fees expense, a $209,000 increase in data processing and telecommunications expense, a $144,000 increase in deposit operations expense and smaller increases in several other expense categories. The increase in salaries and employee benefits expense was primarily due to annual salary adjustments and the hiring of additional lending personnel. The increase in professional fees expense was primarily due to higher legal and consulting fees. The efficiency ratio for the 2022 fiscal year was 56.42% compared to 50.12% for the 2021 fiscal year.
The provision for income taxes for the current quarter increased $314,000 to $1.79 million from $1.47 million for the preceding quarter, primarily due to higher taxable income. Timberland's effective income tax rate was 20.2% for the quarter ended September 30, 2022 compared to 20.4% for the quarter ended June 30, 2022 and 20.2% for the quarter ended September 30, 2021. The provision for income taxes for the 2022 fiscal year decreased $883,000 to $5.96 million from $6.85 million for the 2021 fiscal year, primarily due to lower taxable income. The effective tax rate was 20.2% for the 2022 fiscal year and 19.9% for the 2021 fiscal year.
Balance Sheet Management
Total assets increased $68.33 million, or 4%, during the fiscal year to $1.86 billion at September 30, 2022 from $1.79 billion at September 30, 2021. The year over-year increase was primarily due to a $170.04 million increase in investment securities and CDs held for investment and a $163.97 million increase in net loans receivable, partially offset by a $263.44 million decrease in total cash and cash equivalents. The year-over-year increase in total assets was funded primarily by an increase in total deposits.
Total assets decreased by $27.29 million, or 1%, during the quarter to $1.86 billion at September 30, 2022 from $1.89 billion at June 30, 2022. The quarter's decrease was primarily due to a $105.40 million decrease in total cash and cash equivalents, which was partially offset by a $44.46 million increase in net loans receivable and a $33.66 million increase in investment securities and CDs held for investment.
Loans
Net loans receivable increased $163.97 million, or 17%, during the fiscal year to $1.13 billion at September 30, 2022 from $968.45 million at September 30, 2021. This increase was primarily due to a $66.00 million increase in commercial real estate loans, a $56.18 million increase in one- to four-family loans, a $50.46 million increase in commercial business loans (excluding SBA PPP loans), a $22.41 million increase in construction loans and smaller increases in several other loan categories. These increases to net loans receivable were partially offset by a $39.92 million decrease in SBA PPP loans and smaller decreases in several other loan categories.
Net loans receivable increased $44.46 million, or 4%, during the quarter to $1.13 billion at September 30, 2022 from $1.09 billion at June 30, 2022. This increase was primarily due to a $31.43 million increase in one- to four-family loans, a $7.79 million increase in construction loans and smaller increases in several other loan categories.
Loan Portfolio
($ in thousands)
| September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||
| Mortgage loans: | |||||||||||||||||||||
| One- to four-family (a) | $ | 176,116 | 14 | % | $ | 144,682 | 12 | % | $ | 119,935 | 11 | % | |||||||||
| Multi-family | 95,025 | 8 | 98,718 | 8 | 87,563 | 8 | |||||||||||||||
| Commercial | 536,650 | 43 | 532,167 | 44 | 470,650 | 43 | |||||||||||||||
| Construction - custom and owner/builder | 119,240 | 9 | 117,724 | 10 | 109,152 | 10 | |||||||||||||||
| Construction - speculative one-to four-family | 12,254 | 1 | 13,954 | 1 | 17,813 | 2 | |||||||||||||||
| Construction - commercial | 40,364 | 3 | 40,108 | 3 | 43,365 | 4 | |||||||||||||||
| Construction - multi-family | 64,480 | 5 | 54,804 | 5 | 52,071 | 5 | |||||||||||||||
| Construction - land | |||||||||||||||||||||
| development | 19,280 | 2 | 21,240 | 2 | 10,804 | 1 | |||||||||||||||
| Land | 26,854 | 2 | 24,490 | 2 | 19,936 | 2 | |||||||||||||||
| Total mortgage loans | 1,090,263 | 87 | 1,047,887 | 87 | 931,289 | 86 | |||||||||||||||
| Consumer loans: | |||||||||||||||||||||
| Home equity and second mortgage | 35,187 | 3 | 32,821 | 3 | 32,988 | 3 | |||||||||||||||
| Other | 2,128 | -- | 2,545 | -- | 2,512 | -- | |||||||||||||||
| Total consumer loans | 37,315 | 3 | 35,366 | 3 | 35,500 | 3 | |||||||||||||||
| Commercial loans: | |||||||||||||||||||||
| Commercial business loans | 125,039 | 10 | 122,822 | 10 | 74,579 | 7 | |||||||||||||||
| SBA PPP loans | 1,001 | -- | 1,320 | -- | 40,922 | 4 | |||||||||||||||
| Total commercial loans | 126,040 | 10 | 124,142 | 10 | 115,501 | 11 | |||||||||||||||
| Total loans | 1,253,618 | 100 | % | 1,207,395 | 100 | % | 1,082,290 | 100 | % | ||||||||||||
| Less: | |||||||||||||||||||||
| Undisbursed portion of construction loans in process | (103,168 | ) | (102,044 | ) | (95,224 | ) | |||||||||||||||
| Deferred loan origination fees | (4,321 | ) | (3,951 | ) | (5,143 | ) | |||||||||||||||
| Allowance for loan losses | (13,703 | ) | (13,433 | ) | (13,469 | ) | |||||||||||||||
| Total loans receivable, net | $ | 1,132,426 | $ | 1,087,967 | $ | 968,454 | |||||||||||||||
_______________________
(a) Does not include one- to four-family loans held for sale totaling $748, $700, and $3,217 at September 30, 2022, June 30, 2022, and September 30, 2021, respectively.
The following table provides a breakdown of commercial real estate ("CRE") mortgage loans by collateral type as of September 30, 2022:
CRE Loan Portfolio Breakdown by Collateral
($ in thousands)
Collateral Type | Amount | Percent of CRE Portfolio | Percent of Total Loan Portfolio | ||||||
| Industrial warehouse | $ | 104,005 | 19 | % | 8 | % | |||
| Medical/dental offices | 76,706 | 14 | 6 | ||||||
| Office buildings | 69,805 | 13 | 6 | ||||||
| Other retail buildings | 46,516 | 9 | 4 | ||||||
| Restaurants | 29,394 | 6 | 2 | ||||||
| Hotel/motel | 25,676 | 5 | 2 | ||||||
| Mini-storage | 24,697 | 5 | 2 | ||||||
| Convenience stores | 22,850 | 4 | 2 | ||||||
| Nursing homes | 18,415 | 3 | 1 | ||||||
| Shopping centers | 10,537 | 2 | 1 | ||||||
| Mobile home parks | 10,454 | 2 | 1 | ||||||
| Churches | 8,006 | 1 | 1 | ||||||
| Additional CRE | 89,589 | 17 | 7 | ||||||
| Total CRE | $ | 536,650 | 100 | % | 43 | % | |||
Timberland originated $136.55 million in loans during the quarter ended September 30, 2022, compared to $128.90 million for the preceding quarter and $132.91 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. Timberland also periodically sells the guaranteed portion of SBA loans. During the current quarter, fixed-rate one- to four-family mortgage loans totaling $8.06 million were sold compared to $11.61 million for the preceding quarter and $14.01 million for the comparable quarter one year ago. During the past two quarters a larger percentage of single-family loan originations were retained in the portfolio rather than being sold as the yield available on such loans increased.
Timberland's investment securities and CDs held for investment increased $170.03 million, or 105%, during the fiscal year to $331.75 million at September 30, 2022, from $161.72 million at September 30, 2021. During the quarter, total investments and CDs held for investment increased $33.66 million, or 11%, to $331.75 million at September 30, 2022, from $298.10 million at June 30, 2022. These increases were primarily due to the purchase of additional U.S. Treasury securities and mortgage-backed investment securities.
Timberland's liquidity continues to remain strong. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 23.2% of total liabilities at September 30, 2022, compared to 29.4% at June 30, 2022, and 42.4% one year ago.
Deposits
Total deposits increased $61.62 million, or 4%, during the fiscal year to $1.63 billion at September 30, 2022, from $1.57 billion at September 30, 2021. The increase consisted of a $38.11 million increase in money market account balances, a $22.53 million increase in savings account balances, and a $17.68 million increase in NOW checking account balances. These increases were partially offset by an $11.55 million decrease in certificates of deposit account balances and a $5.15 million decrease in non-interest checking account balances.
Total deposits decreased $31.94 million, or 2%, during the quarter to $1.63 billion at September 30, 2022, from $1.66 billion at June 30, 2022. The quarter's decrease consisted of a $26.44 million decrease in NOW checking account balances, an $8.45 million decrease in money market account balances, and a $2.86 million decrease in certificates of deposit account balances. These decreases were partially offset by a $3.63 million increase in savings account balances and a $2.18 million increase in non-interest-bearing account balances.
| Deposit Breakdown ($ in thousands) | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | ||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||
| Non-interest-bearing demand | $ | 530,058 | 33 | % | $ | 527,876 | 32 | % | $ | 535,212 | 34 | % | ||||||||||||||||
| NOW checking | 447,779 | 28 | 474,217 | 29 | 430,097 | 27 | ||||||||||||||||||||||
| Savings | 283,219 | 17 | 279,592 | 17 | 260,689 | 17 | ||||||||||||||||||||||
| Money market | 243,919 | 15 | 251,451 | 15 | 199,045 | 13 | ||||||||||||||||||||||
| Money market – reciprocal | 4,617 | -- | 5,533 | -- | 11,383 | 1 | ||||||||||||||||||||||
| Certificates of deposit under $250 | 100,754 | 6 | 102,752 | 6 | 112,348 | 7 | ||||||||||||||||||||||
| Certificates of deposit $250 and over | 21,830 | 1 | 22,693 | 1 | 21,781 | 1 | ||||||||||||||||||||||
| Total deposits | $ | 1,632,176 | 100 | % | $ | 1,664,114 | 100 | % | $ | 1,570,555 | 100 | % | ||||||||||||||||
Shareholders' Equity and Capital Ratios
Total shareholders' equity increased $4.25 million, or 2%, to $218.57 million at September 30, 2022, from $214.32 million at June 30, 2022. The increase in shareholders' equity was primarily due to net income of $7.05 million for the quarter, which was partially offset by the payment of $1.81 million in dividends to shareholders, the repurchase of 34,446 shares of common stock for $932,000 (an average price of $27.04 per share), and a $152,000 increase in the Company's accumulated other comprehensive loss. Timberland had 229,045 shares available to be repurchased in accordance with the terms of its existing stock repurchase plan at September 30, 2022.
Timberland remains well capitalized with a total risk-based capital ratio of 19.45%, a Tier 1 leverage capital ratio of 11.03%, and a tangible common equity to tangible assets ratio (non-GAAP) of 10.98% at September 30, 2022.
Asset Quality
Timberland's non-performing assets to total assets ratio improved to 0.12% at September 30, 2022, from 0.13% at June 30, 2022 and 0.18% one year ago. There were no net charge-offs for the current quarter, the proceeding quarter or for the comparable quarter one year ago. Due primarily to loan portfolio growth, a $270,000 provision for loan losses was made for the quarter ended September 30, 2022. No provisions for loan losses were made during the quarters ended June 30, 2022, and September 30, 2021.
The allowance for loan losses ("ALL") as a percentage of loans receivable was 1.20% at September 30, 2022, compared to 1.22% at June 30, 2022 and 1.37% one year ago.
The ALL as a percentage of loans receivable is also impacted by the loans acquired in the South Sound Acquisition. Included in the recorded value of loans acquired in acquisitions are net discounts which may reduce the need for an allowance for loan losses on such loans because they are carried at an amount below their outstanding principal balance. The initial recorded value of loans acquired in the South Sound Acquisition was $123.62 million and the related fair value discount was $2.08 million, or 1.68% of the loans acquired. The remaining fair value discount on loans acquired in the South Sound Acquisition was $267,000 at September 30, 2022. The allowance for loan losses to loans receivable (excluding SBA PPP loan balances and the remaining aggregate balance of the loans acquired in the South Sound Acquisition) was 1.22% (non-GAAP) at September 30, 2022.
The following table details the ALL as a percentage of loans receivable:
| Sept. 30, | June 30, | Sept. 30, | |||||||
| 2022 | 2022 | 2021 | |||||||
| ALL to loans receivable | 1.20 | % | 1.22 | % | 1.37 | % | |||
| ALL to loans receivable (excluding SBA PPP loans) (non-GAAP) | 1.20 | % | 1.22 | % | 1.43 | % | |||
| ALL to loans receivable (excluding SBA PPP loans and South Sound Acquisition loans) (non-GAAP) | 1.22 | % | 1.25 | % | 1.49 | % | |||
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $426,000, or 17%, to $2.11 million at September 30, 2022, from $2.53 million at June 30, 2022, and decreased $943,000, or 31%, from $3.04 million one year ago. Non-accrual loans decreased $232,000, or 10%, to $2.06 million at September 30, 2022, from $2.29 million at June 30, 2022 and decreased $795,000, or 28%, from $2.85 million one year ago.
Non-Accrual Loans
($ in thousands)
| September 30, 2022 | June 30, 2022 | September 30, 2021 | ||||||||||||
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |||||||||
| Mortgage loans: | ||||||||||||||
| One- to four-family | $ | 388 | 2 | $ | 393 | 2 | $ | 406 | 2 | |||||
| Commercial | 657 | 2 | 671 | 2 | 773 | 2 | ||||||||
| Land | 450 | 2 | 651 | 3 | 683 | 3 | ||||||||
| Total mortgage loans | 1,495 | 6 | 1,715 | 7 | 1,862 | 7 | ||||||||
| Consumer loans | ||||||||||||||
| Home equity and second mortgage | 252 | 2 | 260 | 2 | 516 | 5 | ||||||||
| Other | 3 | 1 | 4 | 1 | 17 | 2 | ||||||||
| Total consumer loans | 255 | 3 | 264 | 3 | 533 | 7 | ||||||||
| Commercial business loans | 309 | 6 | 312 | 6 | 459 | 6 | ||||||||
| Total loans | $ | 2,059 | 15 | $ | 2,291 | 16 | $ | 2,854 | 20 | |||||
At September 30, 2022 and June 30, 2022, the OREO and other repossessed asset portfolio consisted of two individual land parcels that have been written down to a book value of $0. OREO and other repossessed assets were $157,000 at September 30, 2021.
OREO and Other Repossessed Assets
($ in thousands)
| Sept. 30, 2022 | June 30, 2022 | Sept. 30, 2021 | ||||||||||||
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |||||||||
| Land | $ | -- | 2 | $ | -- | 2 | $ | 157 | 3 | |||||
| Total | $ | -- | 2 | $ | -- | 2 | $ | 157 | 3 | |||||
Acquisition of South Sound Bank
On October 1, 2018, the Company completed the acquisition of South Sound Bank, a Washington-state chartered bank, headquartered in Olympia, Washington ("South Sound Acquisition"). The Company acquired 100% of the outstanding common stock of South Sound Bank, and South Sound Bank was merged into Timberland Bank and the Company. Pursuant to the terms of the merger agreement, South Sound Bank shareholders received 0.746 of a share of the Company's common stock and $5.68825 in cash per share of South Sound Bank common stock. The Company issued 904,826 shares of its common stock (valued at $28,267,000 based on the Company's closing stock price on September 30, 2018 of $31.24 per share) and paid $6,903,000 in cash in the transaction for total consideration paid of $35,170,000.
About Timberland Bancorp, Inc.
Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank. The Bank opened for business in 1915 and primarily 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 23 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. These statements relate to our financial condition, results of operations, plan, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions 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 economic 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 or implied by our forward-looking statements, including, but not limited to: the effect of the novel coronavirus of 2019 ("COVID-19") pandemic, including the Company's credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; 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 which 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; uncertainty regarding the future of the London Interbank Offered Rate ("LIBOR"), and the potential transition away from LIBOR toward new interest rate benchmarks; 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, institute a formal or informal enforcement action against us or our bank subsidiary which could 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 on us, any of 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 implementing regulations; our ability to attract and retain deposits; 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 work force and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our business strategies; 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 ("FASB"), 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 including the Coronavirus Aid, Relief, and Economic Security Act of 2020 ("CARES Act"), the Consolidated Appropriations Act, 2021 ("CAA"), and the American Rescue Plan Act of 2021; 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 do not undertake and specifically disclaim any obligation to publicly update or revise any forward-looking statements included in this report to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements 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. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this document might not occur and we caution readers not to place undue reliance on any forward-looking statements. These risks could cause our actual results for fiscal 2023 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 consolidated financial condition and results of operations as well as its stock price performance.
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME | Three Months Ended | ||||||||||
| ($ in thousands, except per share amounts) (unaudited) | Sept. 30, | June 30, | Sept. 30, | ||||||||
| 2022 | 2022 | 2021 | |||||||||
| Interest and dividend income | |||||||||||
| Loans receivable | $ | 13,454 | $ | 12,628 | $ | 13,132 | |||||
| Investment securities | 1,476 | 1,016 | 318 | ||||||||
| Dividends from mutual funds, FHLB stock and other investments | 40 | 25 | 28 | ||||||||
| Interest bearing deposits in banks | 2,048 | 958 | 301 | ||||||||
| Total interest and dividend income | 17,018 | 14,627 | 13,779 | ||||||||
| Interest expense | |||||||||||
| Deposits | 755 | 645 | 654 | ||||||||
| Borrowings | -- | -- | 15 | ||||||||
| Total interest expense | 755 | 645 | 669 | ||||||||
| Net interest income | 16,263 | 13,982 | 13,110 | ||||||||
| Provision for loan losses | 270 | -- | -- | ||||||||
| Net interest income after provision for loan losses | 15,993 | 13,982 | 13,110 | ||||||||
| Non-interest income | |||||||||||
| Service charges on deposits | 985 | 1,052 | 967 | ||||||||
| ATM and debit card interchange transaction fees | 1,341 | 1,345 | 1,329 | ||||||||
| Gain on sales of loans, net | 173 | 258 | 537 | ||||||||
| Bank owned life insurance ("BOLI") net earnings | 157 | 151 | 152 | ||||||||
| Valuation recovery on loan servicing rights, net | -- | -- | 87 | ||||||||
| Recoveries on investment securities, net | 6 | 5 | 5 | ||||||||
| Other | 334 | 291 | 373 | ||||||||
| Total non-interest income, net | 2,996 | 3,102 | 3,450 | ||||||||
| Non-interest expense | |||||||||||
| Salaries and employee benefits | 5,210 | 5,243 | 4,805 | ||||||||
| Premises and equipment | 934 | 898 | 993 | ||||||||
| Advertising | 182 | 187 | 153 | ||||||||
| OREO and other repossessed assets, net | 1 | (2 | ) | 2 | |||||||
| ATM and debit card processing | 514 | 515 | 489 | ||||||||
| Postage and courier | 137 | 140 | 159 | ||||||||
| State and local taxes | 308 | 265 | 267 | ||||||||
| Professional fees | 574 | 580 | 331 | ||||||||
| FDIC insurance expense | 129 | 123 | 113 | ||||||||
| Loan administration and foreclosure | 128 | 180 | 153 | ||||||||
| Data processing and telecommunications | 739 | 698 | 642 | ||||||||
| Deposit operations | 358 | 316 | 273 | ||||||||
| Amortization of core deposit intangible ("CDI") | 79 | 79 | 90 | ||||||||
| Other, net | 861 | 652 | 547 | ||||||||
| Total non-interest expense, net | 10,154 | 9,874 | 9,017 | ||||||||
| Income before income taxes | 8,835 | 7,210 | 7,543 | ||||||||
| Provision for income taxes | 1,786 | 1,472 | 1,525 | ||||||||
| Net income | $ | 7,049 | $ | 5,738 | $ | 6,018 | |||||
| Net income per common share: | |||||||||||
| Basic | $ | 0.86 | $ | 0.69 | $ | 0.72 | |||||
| Diluted | 0.85 | 0.69 | 0.71 | ||||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | 8,243,557 | 8,279,436 | 8,354,018 | ||||||||
| Diluted | 8,313,178 | 8,349,859 | 8,454,636 | ||||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME | Year Ended | ||||||||||
| ($ in thousands, except per share amounts) (unaudited) | Sept. 30, | Sept. 30, | |||||||||
| 2022 | 2021 | ||||||||||
| Interest and dividend income | |||||||||||
| Loans receivable | $ | 51,324 | $ | 52,539 | |||||||
| Investment securities | 3,488 | 1,195 | |||||||||
| Dividends from mutual funds, FHLB stock and other investments | 120 | 111 | |||||||||
| Interest bearing deposits in banks | 3,576 | 1,117 | |||||||||
| Total interest and dividend income | 58,508 | 54,962 | |||||||||
| Interest expense | |||||||||||
| Deposits | 2,657 | 3,013 | |||||||||
| Borrowings | 17 | 91 | |||||||||
| Total interest expense | 2,674 | 3,104 | |||||||||
| Net interest income | 55,834 | 51,858 | |||||||||
| Provision for loan losses | 270 | -- | |||||||||
| Net interest income after provision for loan losses | 55,564 | 51,858 | |||||||||
| Non-interest income | |||||||||||
| Service charges on deposits | 3,964 | 3,911 | |||||||||
| ATM and debit card interchange transaction fees | 5,210 | 5,084 | |||||||||
| Gain on sales of loans, net | 1,510 | 5,904 | |||||||||
| BOLI net earnings | 613 | 597 | |||||||||
| Valuation recovery on loan servicing rights, net | 119 | 110 | |||||||||
| Recoveries on investment securities, net | 22 | 20 | |||||||||
| Other | 1,186 | 1,535 | |||||||||
| Total non-interest income, net | 12,624 | 17,161 | |||||||||
| Non-interest expense | |||||||||||
| Salaries and employee benefits | 20,816 | 18,750 | |||||||||
| Premises and equipment | 3,749 | 3,942 | |||||||||
| Advertising | 695 | 625 | |||||||||
| OREO and other repossessed assets, net | (17 | ) | (87 | ) | |||||||
| ATM and debit card processing | 1,943 | 1,831 | |||||||||
| Postage and courier | 577 | 587 | |||||||||
| State and local taxes | 1,062 | 1,088 | |||||||||
| Professional fees | 1,747 | 1,006 | |||||||||
| FDIC insurance expense | 506 | 415 | |||||||||
| Loan administration and foreclosure | 508 | 471 | |||||||||
| Data processing and telecommunications | 2,719 | 2,510 | |||||||||
| Deposit operations | 1,235 | 1,091 | |||||||||
| Amortization of CDI | 316 | 361 | |||||||||
| Other, net | 2,770 | 2,001 | |||||||||
| Total non-interest expense, net | 38,626 | 34,591 | |||||||||
| Income before income taxes | 29,562 | 34,428 | |||||||||
| Provision for income taxes | 5,962 | 6,845 | |||||||||
| Net income | $ | 23,600 | $ | 27,583 | |||||||
| Net income per common share: | |||||||||||
| Basic | $ | 2.84 | $ | 3.31 | |||||||
| Diluted | 2.82 | 3.27 | |||||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | 8,304,002 | 8,340,983 | |||||||||
| Diluted | 8,383,335 | 8,444,333 | |||||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS | |||||||||||||
| ($ in thousands, except per share amounts) (unaudited) | Sept. 30, | June 30, | Sept. 30, | ||||||||||
| 2022 | 2022 | 2021 | |||||||||||
| Assets | |||||||||||||
| Cash and due from financial institutions | $ | 24,808 | $ | 23,610 | $ | 26,316 | |||||||
| Interest-bearing deposits in banks | 291,947 | 398,541 | 553,880 | ||||||||||
| Total cash and cash equivalents | 316,755 | 422,151 | 580,196 | ||||||||||
| Certificates of deposit ("CDs") held for investment, at cost | 22,894 | 23,888 | 28,482 | ||||||||||
| Investment securities: | |||||||||||||
| Held to maturity, at amortized cost | 266,608 | 228,196 | 69,102 | ||||||||||
| Available for sale, at fair value | 41,415 | 45,141 | 63,176 | ||||||||||
| Investments in equity securities, at fair value | 835 | 872 | 955 | ||||||||||
| FHLB stock | 2,194 | 2,194 | 2,103 | ||||||||||
| Other investments, at cost | 3,000 | 3,000 | 3,000 | ||||||||||
| Loans held for sale | 748 | 700 | 3,217 | ||||||||||
| Loans receivable | 1,146,129 | 1,101,400 | 981,923 | ||||||||||
| Less: Allowance for loan losses | (13,703 | ) | (13,433 | ) | (13,469 | ) | |||||||
| Net loans receivable | 1,132,426 | 1,087,967 | 968,454 | ||||||||||
| Premises and equipment, net | 21,898 | 22,154 | 22,367 | ||||||||||
| OREO and other repossessed assets, net | -- | -- | 157 | ||||||||||
| BOLI | 22,806 | 22,649 | 22,193 | ||||||||||
| Accrued interest receivable | 4,483 | 4,319 | 3,745 | ||||||||||
| Goodwill | 15,131 | 15,131 | 15,131 | ||||||||||
| CDI | 948 | 1,027 | 1,264 | ||||||||||
| Loan servicing rights, net | 3,023 | 3,220 | 3,482 | ||||||||||
| Operating lease right-of-use assets | 1,980 | 2,051 | 2,283 | ||||||||||
| Other assets | 3,364 | 3,135 | 2,873 | ||||||||||
| Total assets | $ | 1,860,508 | $ | 1,887,795 | $ | 1,792,180 | |||||||
| Liabilities and shareholders' equity | |||||||||||||
| Deposits: Non-interest-bearing demand | $ | 530,058 | $ | 527,876 | $ | 535,212 | |||||||
| Deposits: Interest-bearing | 1,102,118 | 1,136,238 | 1,035,343 | ||||||||||
| Total deposits | 1,632,176 | 1,664,114 | 1,570,555 | ||||||||||
| Operating lease liabilities | 2,066 | 2,135 | 2,359 | ||||||||||
| FHLB borrowings | -- | -- | 5,000 | ||||||||||
| Other liabilities and accrued expenses | 7,697 | 7,227 | 7,367 | ||||||||||
| Total liabilities | 1,641,939 | 1,673,476 | 1,585,281 | ||||||||||
| Shareholders' equity | |||||||||||||
| Common stock, $.01 par value; 50,000,000 shares authorized; 8,221,952 shares issued and outstanding – September 30, 2022 8,249,448 shares issued and outstanding – June 30, 2022 8,355,469 shares issued and outstanding – September 30, 2021 | 38,751 | 39,585 | 42,673 | ||||||||||
| Retained earnings | 180,535 | 175,299 | 164,167 | ||||||||||
| Accumulated other comprehensive income (loss) | (717 | ) | (565 | ) | 59 | ||||||||
| Total shareholders' equity | 218,569 | 214,319 | 206,899 | ||||||||||
| Total liabilities and shareholders' equity | $ | 1,860,508 | $ | 1,887,795 | $ | 1,792,180 | |||||||
KEY FINANCIAL RATIOS AND DATA | Three Months Ended | |||||||||||
| ($ in thousands, except per share amounts) (unaudited) | Sept. 30, | June 30, | Sept. 30, | |||||||||
| 2022 | 2022 | 2021 | ||||||||||
| PERFORMANCE RATIOS: | ||||||||||||
| Return on average assets (a) | 1.51 | % | 1.22 | % | 1.36 | % | ||||||
| Return on average equity (a) | 13.06 | % | 10.80 | % | 11.77 | % | ||||||
| Net interest margin (a) | 3.64 | % | 3.11 | % | 3.13 | % | ||||||
| Efficiency ratio | 52.72 | % | 57.80 | % | 54.45 | % | ||||||
| Year Ended | ||||||||||||
| Sept. 30, | Sept. 30, | |||||||||||
| 2022 | 2021 | |||||||||||
| PERFORMANCE RATIOS: | ||||||||||||
| Return on average assets | 1.27 | % | 1.64 | % | ||||||||
| Return on average equity | 11.14 | % | 13.98 | % | ||||||||
| Net interest margin | 3.16 | % | 3.25 | % | ||||||||
| Efficiency ratio | 56.42 | % | 50.12 | % | ||||||||
| Three Months Ended | ||||||||||||
| Sept. 30, | June 30, | Sept. 30, | ||||||||||
| ASSET QUALITY RATIOS AND DATA: | 2022 | 2022 | 2021 | |||||||||
| Non-accrual loans | $ | 2,059 | $ | 2,291 | $ | 2,854 | ||||||
| Loans past due 90 days and still accruing | -- | -- | -- | |||||||||
| Non-performing investment securities | 106 | 114 | 159 | |||||||||
| OREO and other repossessed assets | -- | -- | 157 | |||||||||
| Total non-performing assets (b) | $ | 2,165 | $ | 2,405 | $ | 3,170 | ||||||
| Non-performing assets to total assets (b) | 0.12 | % | 0.13 | % | 0.18 | % | ||||||
| Net charge-offs (recoveries) during quarter | $ | -- | $ | -- | $ | -- | ||||||
| ALL to non-accrual loans, | 665.52 | % | 586.34 | % | 471.93 | % | ||||||
| ALL to loans receivable (c) | 1.20 | % | 1.22 | % | 1.37 | % | ||||||
| ALL to loans receivable (excluding SBA PPP loans) (d) (non-GAAP) | 1.20 | % | 1.22 | % | 1.43 | % | ||||||
| ALL to loans receivable (excluding SBA PPP loans and South Sound Acquisition loans) (d) (e) (non-GAAP) | 1.22 | % | 1.25 | % | 1.49 | % | ||||||
| Troubled debt restructured loans on accrual status (f) | $ | 2,472 | $ | 2,484 | $ | 2,371 | ||||||
| CAPITAL RATIOS: | ||||||||||||
| Tier 1 leverage capital | 11.03 | % | 10.72 | % | 10.97 | % | ||||||
| Tier 1 risk-based capital | 18.02 | % | 18.57 | % | 20.92 | % | ||||||
| Common equity Tier 1 risk-based capital | 18.02 | % | 18.57 | % | 20.92 | % | ||||||
| Total risk-based capital | 19.45 | % | 19.82 | % | 22.17 | % | ||||||
| Tangible common equity to tangible assets (non-GAAP) | 10.98 | % | 10.59 | % | 10.73 | % | ||||||
| BOOK VALUES: | ||||||||||||
| Book value per common share | $ | 26.58 | $ | 25.98 | $ | 24.76 | ||||||
| Tangible book value per common share (g) | 24.63 | 24.02 | 22.80 | |||||||||
________________________________________________
(a) Annualized
(b) Non-performing assets include non-accrual loans, loans past due 90 days and still accruing, non-performing investment securities and OREO and other repossessed assets. Troubled debt restructured loans on accrual status are not included.
(c) Does not include loans held for sale and is before the allowance for loan losses.
(d) Does not include PPP loans totaling $1,001, $1,320 and $40,922 at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(e) Does not include loans acquired in the South Sound Acquisition totaling $19,042, $21,431 and $36,491 at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(f) Does not include troubled debt restructured loans totaling $142, $158 and $182 reported as non-accrual loans at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(g) Tangible common equity divided by common shares outstanding (non-GAAP).
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($ in thousands)
(unaudited)
| For the Three Months Ended | |||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||||
| Loans receivable and loans held for sale | $ | 1,122,290 | 4.80 | % | $ | 1,072,933 | 4.71 | % | $ | 1,000,063 | 5.25 | % | |||||||||||||
| Investment securities and FHLB stock (1) | 287,841 | 2.11 | 263,595 | 1.58 | 125,627 | 1.10 | |||||||||||||||||||
| Interest-earning deposits in banks and CDs | 376,220 | 2.18 | 460,657 | 0.83 | 551,918 | 0.22 | |||||||||||||||||||
| Total interest-earning assets | 1,786,351 | 3.81 | 1,797,185 | 3.26 | 1,677,608 | 3.29 | |||||||||||||||||||
| Other assets | 83,922 | 85,470 | 86,838 | ||||||||||||||||||||||
| Total assets | $ | 1,870,273 | $ | 1,882,655 | $ | 1,764,446 | |||||||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||||||
| NOW checking accounts | $ | 454,161 | 0.18 | % | $ | 462,085 | 0.14 | % | $ | 421,095 | 0.13 | % | |||||||||||||
| Money market accounts | 252,699 | 0.37 | 258,240 | 0.30 | 202,435 | 0.29 | |||||||||||||||||||
| Savings accounts | 284,974 | 0.08 | 284,659 | 0.08 | 257,856 | 0.08 | |||||||||||||||||||
| Certificates of deposit accounts | 122,803 | 0.80 | 125,132 | 0.75 | 137,518 | 0.91 | |||||||||||||||||||
| Total interest-bearing deposits | 1,114,637 | 0.27 | 1,130,116 | 0.23 | 1,018,904 | 0.26 | |||||||||||||||||||
| Borrowings | -- | -- | -- | -- | 5,000 | 1.19 | |||||||||||||||||||
| Total interest-bearing liabilities | 1,114,637 | 0.27 | 1,130,116 | 0.23 | 1,023,904 | 0.26 | |||||||||||||||||||
| Non-interest-bearing demand deposits | 528,706 | 529,770 | 525,047 | ||||||||||||||||||||||
| Other liabilities | 11,078 | 10,170 | 10,991 | ||||||||||||||||||||||
| Shareholders' equity | 215,852 | 212,599 | 204,504 | ||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,870,273 | $ | 1,882,655 | $ | 1,764,446 | |||||||||||||||||||
| Interest rate spread | 3.54 | % | 3.03 | % | 3.03 | % | |||||||||||||||||||
| Net interest margin (2) | 3.64 | % | 3.11 | % | 3.13 | % | |||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 160.26 | % | 159.03 | % | 163.84 | % | |||||||||||||||||||
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income / average interest-earning assets
AVERAGE BALANCES, YIELDS, AND RATES
($ in thousands)
(unaudited)
| For the Year Ended | ||||||||||||||||
| September 30, 2022 | September 30, 2021 | |||||||||||||||
| Amount | Rate | Amount | Rate | |||||||||||||
| Assets | ||||||||||||||||
| Loans receivable and loans held for sale | $ | 1,055,635 | 4.86 | % | $ | 1,026,742 | 5.12 | % | ||||||||
| Investment securities and FHLB stock (1) | 230,871 | 1.56 | 109,317 | 1.19 | ||||||||||||
| Interest-earning deposits in banks and CDs | 482,162 | 0.74 | 459,145 | 0.25 | ||||||||||||
| Total interest-earning assets | 1,768,668 | 3.31 | 1,595,204 | 3.45 | ||||||||||||
| Other assets | 83,895 | 85,939 | ||||||||||||||
| Total assets | $ | 1,852,563 | $ | 1,681,143 | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||
| NOW checking accounts | $ | 449,574 | 0.14 | % | $ | 402,430 | 0.15 | % | ||||||||
| Money market accounts | 244,498 | 0.31 | 186,489 | 0.30 | ||||||||||||
| Savings accounts | 278,025 | 0.08 | 242,598 | 0.08 | ||||||||||||
| Certificates of deposit accounts | 127,277 | 0.79 | 145,006 | 1.14 | ||||||||||||
| Total interest-bearing deposits | 1,099.374 | 0.24 | 976,523 | 0.31 | ||||||||||||
| Borrowings | 1,430 | 1.19 | 7,686 | 1.18 | ||||||||||||
| Total interest-bearing liabilities | 1,100,804 | 0.24 | 984,209 | 0.32 | ||||||||||||
| Non-interest-bearing demand deposits | 529,702 | 488,833 | ||||||||||||||
| Other liabilities | 10,224 | 10,816 | ||||||||||||||
| Shareholders' equity | 211,833 | 197,285 | ||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,852,563 | $ | 1,681,143 | ||||||||||||
| Interest rate spread | 3.07 | % | 3.13 | % | ||||||||||||
| Net interest margin (2) | 3.16 | % | 3.25 | % | ||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 160.67 | % | 162.08 | % | ||||||||||||
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income / average interest-earning assets
Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures. Timberland believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company's financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.
Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Timberland provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders' equity less goodwill and CDI. In addition, tangible assets equal total assets less goodwill and CDI.
The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible shareholders' equity (non-GAAP) and ending total assets (GAAP) to ending tangible assets (non-GAAP).
| ($ in thousands) | September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||||
| Shareholders' equity | $ | 218,569 | $ | 214,319 | $ | 206,899 | ||||||
| Less goodwill and CDI | (16,079 | ) | (16,158 | ) | (16,395 | ) | ||||||
| Tangible common equity | $ | 202,490 | $ | 198,161 | $ | 190,504 | ||||||
| Total assets | $ | 1,860,508 | $ | 1,887,795 | $ | 1,792,180 | ||||||
| Less goodwill and CDI | (16,079 | ) | (16,158 | ) | (16,395 | ) | ||||||
| Tangible assets | $ | 1,844,429 | $ | 1,871,637 | $ | 1,775,785 | ||||||
| Contact: | Michael R. Sand, CEO |
| Dean J. Brydon, President & CFO | |
| (360) 533-4747 | |
| www.timberlandbank.com |
