Timberland Bancorp's Third Fiscal Quarter Earnings Per Diluted Share Increases 12% to $0.83
- Year-to-Date Net Income Increases 20% to $21.57 Million
- Quarterly Return on Average Assets of 1.63%
- Quarterly Return on Average Equity of 14.02%
- Announces $0.21 Quarterly Cash Dividend and a $0.10 Special Dividend
HOQUIAM, Wash., July 27, 2021 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) ("Timberland" or "the Company"), the holding company for Timberland Bank (the "Bank"), today reported that net income increased 13% to $7.02 million for the quarter ended June 30, 2021 from $6.21 million for the comparable quarter one year ago, which quarter was affected by a $1.00 million ($790,000 after income taxes) provision to the loan loss reserves, and decreased $227,000, or 3%, from $7.25 million for the preceding quarter. Earnings per diluted common share ("EPS") increased 12% to $0.83 for the current quarter from $0.74 for the comparable quarter one year ago and decreased 3% from $0.86 for the preceding quarter.
For the first nine months of fiscal 2021, Timberland earned a record $21.57 million, or $2.55 per diluted common share, a 20% increase in net income and EPS from $17.91 million, or $2.12 per diluted common share for the first nine months of fiscal 2020, which nine month period was affected by a $3.20 million ($2.53 million after income taxes) provision to the loan loss reserves.
Timberland's Board of Directors declared a quarterly cash dividend to shareholders of $0.21 per common share and a special cash dividend of $0.10 per common share. Both dividends are payable on August 27, 2021, to shareholders of record on August 13, 2021.
"We are pleased to report strong quarterly net income and record profitability for the first nine months of fiscal 2021," stated Michael Sand, President and CEO. "Paycheck Protection Program ("PPP") loan proceeds and federal stimulus payments contributed to strong deposit growth of $204.11 million during the past twelve months including $40.79 million during the quarter just ended. The 15% increase in deposits year-over-year has increased the Bank's liquidity significantly above normal levels. Net loans outstanding, net of PPP loans, increased this quarter at an annualized rate of 6% and we continue to be encouraged by the increased business activity we are seeing in our markets."
"Staff continues to be diligently and successfully engaged in the task of filing SBA loan forgiveness applications for businesses in our communities that obtained PPP financing through Timberland Bank. During the quarter ended June 30, 2021, PPP loans were reduced by $42.54 million and $95.63 million of PPP loans remained on the Bank's balance sheet at quarter end. Timberland participated in the origination of PPP loans during every phase of the program and originated $192.43 million of PPP loans for existing as well as new clients."
"Timberland's Board is also pleased to have announced today the appointment of Parul Bhandari to Timberland's Board of Directors. During the past few years Timberland has sought to acquire directors with strong technology backgrounds and Ms. Bhandari is the third Director with significant experience and expertise in the technology sector to join Timberland's Board. She brings to Timberland 20 plus years of experience scaling businesses through data, cloud and AI powered digital transformation. Ms. Bhandari leads the Partner Strategy for the Worldwide Media and Communications Industry group at Microsoft. Additional background information is included in a separate press release published today. With Ms. Bhandari's appointment, Timberland now has eight independent directors, equally balanced between men and women. We look forward to Ms. Bhandari's participation and counsel as a member of Timberland's Board of Directors."
Third Fiscal Quarter 2021 Earnings and Balance Sheet Highlights (at or for the period ended June 30, 2021, compared to March 31, 2021 or June 30, 2020):
Earnings Highlights:
- Net income increased 13% to $7.02 million for the current quarter from $6.21 million for the comparable quarter one year ago and decreased 3% from $7.25 million for the preceding quarter;
- EPS increased 12% to $0.83 for the current quarter from $0.74 for the comparable quarter one year ago and decreased 3% from $0.86 for the preceding quarter;
- Net income increased 20% to $21.57 million for the first nine months of fiscal 2021 from $17.91 million for the first nine months of fiscal 2020;
- EPS increased 20% to $2.55 for the first nine months of fiscal 2021 from $2.12 for the first nine months of fiscal 2020;
- Return on average equity ("ROE") and return on average assets ("ROA") for the current quarter were 14.02% and 1.63%, respectively;
- Net interest margin ("NIM") was 3.22% for the current quarter compared to 3.21% for the preceding quarter and 3.63% for the comparable quarter one year ago; and
- The efficiency ratio was relatively stable at 49.43% for the current quarter compared to 48.99% for the preceding quarter and 49.96% for the comparable quarter one year ago.
Balance Sheet Highlights:
- Total assets increased 14% year-over-year and 2% from the prior quarter;
- Total deposits increased 15% year-over-year and 3% from the prior quarter;
- Net loans receivable (including SBA PPP loans) decreased 1% year-over-year and decreased 3% from the prior quarter;
- Net loans receivable (excluding SBA PPP loans) increased 2% year-over-year and increased 2% from the prior quarter;
- Non-performing assets to total assets ratio improved to 0.14%; and
- Book and tangible book (non-GAAP) values per common share increased to $24.36 and $22.39, respectively, at June 30, 2021.
Operating Results
Operating revenue (net interest income before the provision for loan losses plus non-interest income) increased 1% to $17.42 million for the current quarter from $17.34 million for the comparable quarter one year ago and decreased slightly from $17.45 million for the preceding quarter. Operating revenue increased 3% to $52.46 million for the first nine months of fiscal 2021 from $50.84 million for the comparable period one year ago.
Net interest income increased 5% to $13.16 million for the current quarter from $12.48 million for the comparable quarter one year ago and increased 5% from $12.57 million for the preceding quarter. Timberland's NIM for the current quarter was 3.22% compared to 3.21% for the preceding quarter and 3.63% for the comparable quarter one year ago. NIM compression over the past year has largely been a result of the low interest rate environment and an increase in the level of liquidity held in overnight funds. The NIM for the current quarter was increased by approximately 13 basis points due to the accretion of $84,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $443,000 in pre-payment penalties, non-accrual interest, and late fees. The NIM for the preceding quarter was increased by approximately six basis points due to the accretion of $86,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $129,000 in pre-payment penalties, non-accrual interest and late fees. The NIM for the comparable quarter one year ago was increased by approximately ten basis points due to the accretion of $170,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $177,000 in pre-payment penalties, non-accrual interest and late fees.
U.S. Small Business Administration ("SBA") PPP loans contribute 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 June 30, 2021, Timberland had SBA PPP deferred loan origination fees of $3.31 million remaining to be accreted into interest income over the remaining life of the loans. The following table details the interest income recognized from SBA PPP loans:
| SBA PPP Loan Income ($ in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||
| Interest income | $ | 293 | $ | 306 | $ | 240 | |||||
| Loan origination fee accretion | 1,296 | 1,143 | 443 | ||||||||
| Total SBA PPP loan income | $ | 1,589 | $ | 1,449 | $ | 683 | |||||
Net interest income increased 1% to $38.75 million for the first nine months of fiscal 2021 from $38.36 million for the first nine months of fiscal 2020. Timberland's net interest margin for the first nine months of fiscal 2021 was 3.30%, compared to 4.08% for the first nine months of fiscal 2020.
No provision for loan losses was made during the current and preceding quarter, compared to a $1.00 million ($790,000 after income taxes) provision for loan losses for the comparable quarter one year ago. No provision for loan losses was made during the nine months ended June 30, 2021 compared to a $3.20 million ($2.53 million after income taxes) provision for loan losses for the nine months ended June 30, 2020.
Non-interest income decreased 12% to $4.27 million for the current quarter from $4.86 million for the comparable quarter one year ago and decreased 13% from $4.89 million for the preceding quarter. The decrease in non-interest income compared to the preceding quarter was primarily due to a $179,000 valuation allowance on loan servicing rights for the current quarter (compared to a $438,000 valuation recovery on servicing rights for the preceding quarter) and a $151,000 decrease in gain on sales of loans. These decreases were partially offset by a $126,000 increase in ATM and debit card interchange transaction fees. The valuation allowance on loan servicing rights was primarily due to an increase in projected mortgage prepayment speeds due to declines in mortgage interest rates during the quarter. The increase in ATM and debit card interchange transaction fee income was primarily due to increased debit card activity. The decrease in gain on sales of loans compared to the prior quarter was primarily due to a decrease in the average pricing spread on loans sold during the current quarter. Fiscal year-to-date non-interest income increased 10% to $13.71 million from $12.47 million for the first nine months of fiscal 2020.
Total operating expenses for the current quarter increased 1% to $8.61 million from $8.55 million for the preceding quarter and decreased 1% from $8.66 million for the comparable quarter one year ago. The increase in operating expenses compared to the preceding quarter was primarily due to an $81,000 increase in professional fees, a $73,000 increase in OREO expense, a $58,000 increase in loan administration expenses, a $44,000 increase in deposit operations expense and smaller increases in several other expense categories. These increases were partially offset by a $224,000 decrease in salaries and employee benefit expense and smaller decreases in several other expense categories. The efficiency ratio for the current quarter was 49.43% compared to 48.99% for the preceding quarter and 49.96% for the comparable quarter one year ago. Fiscal year-to-date operating expenses increased 1% to $25.57 million from $25.32 million for the first nine months of fiscal 2020. The efficiency ratio for the first nine months of fiscal 2021 improved to 48.75% from 49.81% for the first nine months of fiscal 2020.
The provision for income taxes for the current quarter increased $135,000 to $1.79 million from $1.65 million for the preceding quarter, primarily due to a $143,000 decrease in the tax benefit from stock option dispositions. Timberland's effective income tax rate was 20.3% for the quarter ended June 30, 2021 compared to 18.6% for the quarter ended March 31, 2021. The fiscal year-to-date provision for income taxes increased $916,000 to $5.32 million for the first nine months of fiscal 2021 from $4.40 million for the first nine months of fiscal 2020, primarily due to higher income before income taxes. Timberland's effective income tax rate for the nine month periods ended June 30, 2021 and 2020 was 19.8%.
Balance Sheet Management
Total assets increased $41.22 million, or 2%, to $1.74 billion at June 30, 2021 from $1.70 billion at March 31, 2021. The increase was primarily due to a $70.38 million increase in total cash and cash equivalents and a $5.70 million net increase in investment securities and CDs held for investment, and smaller increases in several other categories. This increase was partially offset by a $29.12 million decrease in net loans receivable (due to SBA PPP loan payoffs). Excluding SBA PPP loans, net loans receivable increased during the current quarter at an annualized rate of 6%. The increase in total assets was funded primarily by an increase in total deposits and by retained net income.
Loans
Primarily as a result of the successful processing of SBA PPP loan forgiveness applications totaling $42.54 million, net loans receivable decreased $29.12 million, or 3%, to $1.002 billion at June 30, 2021 from $1.031 billion at March 31, 2021. The decrease in SBA PPP loans was partially offset by a $6.25 million increase in commercial business loans, a $6.02 million increase in construction and land development loans and smaller increases in several other categories.
| Loan Portfolio ($ in thousands) | ||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||
| Mortgage loans: | ||||||||||||||||||||
| One- to four-family (a) | $ | 119,173 | 11 | % | $ | 117,184 | 10 | % | $ | 120,514 | 11 | % | ||||||||
| Multi-family | 94,756 | 9 | 92,435 | 8 | 79,468 | 7 | ||||||||||||||
| Commercial | 458,889 | 41 | 461,966 | 40 | 455,454 | 40 | ||||||||||||||
| Construction - custom and owner/builder | 105,484 | 9 | 105,305 | 9 | 134,709 | 12 | ||||||||||||||
| Construction - speculative one-to four-family | 18,038 | 2 | 17,289 | 2 | 12,136 | 1 | ||||||||||||||
| Construction - commercial | 43,879 | 4 | 42,340 | 4 | 33,166 | 3 | ||||||||||||||
| Construction - multi-family | 45,624 | 4 | 44,266 | 4 | 27,449 | 2 | ||||||||||||||
| Construction - land | ||||||||||||||||||||
| Development | 4,434 | -- | 2,238 | -- | 6,132 | 1 | ||||||||||||||
| Land | 18,289 | 2 | 19,041 | 2 | 27,009 | 3 | ||||||||||||||
| Total mortgage loans | 908,566 | 82 | 902,064 | 79 | 896,037 | 80 | ||||||||||||||
| Consumer loans: | ||||||||||||||||||||
| Home equity and second mortgage | 31,891 | 3 | 32,026 | 3 | 34,405 | 3 | ||||||||||||||
| Other | 2,725 | -- | 2,756 | -- | 3,552 | -- | ||||||||||||||
| Total consumer loans | 34,616 | 3 | 34,782 | 3 | 37,957 | 3 | ||||||||||||||
| Commercial loans: | ||||||||||||||||||||
| Commercial business loans | 72,890 | 6 | 66,645 | 6 | 71,586 | 6 | ||||||||||||||
| SBA PPP loans | 95,633 | 9 | 138,175 | 12 | 122,581 | 11 | ||||||||||||||
| Total commercial loans | 168,523 | 15 | 204,820 | 18 | 194,167 | 17 | ||||||||||||||
| Total loans | 1,111,705 | 100 | % | 1,141,666 | 100 | % | 1,128,161 | 100 | % | |||||||||||
| Less: | ||||||||||||||||||||
| Undisbursed portion of construction loans in process | (90,332 | ) | (90,550 | ) | (95,785 | ) | ||||||||||||||
| Deferred loan origination fees | (6,339 | ) | (6,999 | ) | (6,723 | ) | ||||||||||||||
| Allowance for loan losses | (13,469 | ) | (13,434 | ) | (12,894 | ) | ||||||||||||||
| Total loans receivable, net | $ | 1,001,565 | $ | 1,030,683 | $ | 1,012,759 | ||||||||||||||
_______________________
(a) Does not include one- to four-family loans held for sale totaling $3,359, $8,455 and $9,837 at June 30, 2021, March 31, 2021 and June 30, 2020, respectively.
The following table highlights nine commercial real estate ("CRE") segments generally presumed to have the potential to be more adversely affected by work at home and COVID related social distancing practices than other segments of the loan portfolio.
| CRE Portfolio Breakdown by Collateral ($ in thousands) | ||||||||||
| Collateral Type | Amount | Percent of CRE Portfolio | Percent of Total Loan Portfolio | |||||||
| Office buildings | $ | 74,439 | 16 | % | 7 | % | ||||
| Medical/dental offices | 55,775 | 12 | 5 | |||||||
| Other retail buildings | 40,475 | 9 | 4 | |||||||
| Hotels/motels | 26,271 | 6 | 2 | |||||||
| Restaurants | 25,427 | 6 | 2 | |||||||
| Nursing homes | 18,902 | 4 | 2 | |||||||
| Shopping centers | 14,252 | 3 | 1 | |||||||
| Churches | 13,131 | 3 | 1 | |||||||
| Mini-Storage | 12,662 | 3 | 1 | |||||||
| Additional CRE | 177,555 | 38 | 16 | |||||||
| Total CRE | $ | 458,889 | 100 | % | 41 | % | ||||
Within Timberland's commercial business loan portfolio (non-CRE) resides a segment of restaurant loans totaling $7.40 million in outstanding balances at June 30, 2021. As additional security for these loans, Timberland holds cash collateral of 25% of the segment's associated outstanding loan balances. Unless prior arrangements are made, and Timberland consents, loans falling more than four weeks delinquent are eligible for purchase from Timberland's portfolio in accordance with a Marketing and Servicing Agreement in existence since March 6, 2014.
Timberland originated $146.60 million in loans (including $6.16 million of SBA PPP loans) during the quarter ended June 30, 2021, compared to $250.01 million (including $122.58 million of SBA PPP loans) for the comparable quarter one year ago and $167.15 million (including $58.70 million of SBA PPP loans) for the preceding quarter. 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 $41.06 million were sold compared to $52.08 million for the comparable quarter one year ago and $41.29 million for the preceding quarter.
Timberland's investment securities and CDs held for investment increased $5.70 million, or 4%, to $151.98 million at June 30, 2021, from $146.28 million at March 31, 2021. The increase was primarily due to the purchase of additional mortgage-backed investment securities and U.S. Treasury securities and was partially offset by CDs maturing during the quarter.
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 39.2% of total liabilities at June 30, 2021, compared to 36.1% at March 31, 2021, and 28.8% one year ago.
Deposits
Total deposits increased $40.79 million, or 3%, during the current quarter to $1.52 billion at June 30, 2021, from $1.48 billion at March 31, 2021. The quarter's increase consisted of a $26.14 million increase in NOW checking account balances, a $16.71 million increase in money market account balances, and a $4.37 million increase in savings account balances. These increases were partially offset by a $3.60 million decrease in non-interest-bearing demand account balances and a $2.82 million decrease in certificates of deposit account balances.
| Deposit Breakdown ($ in thousands) | ||||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||
| Non-interest-bearing demand | $ | 495,938 | 33 | % | $ | 499,541 | 34 | % | $ | 427,102 | 32 | % | ||||||||||
| NOW checking | 429,950 | 28 | 403,811 | 27 | 352,999 | 27 | ||||||||||||||||
| Savings | 255,103 | 17 | 250,736 | 17 | 212,645 | 16 | ||||||||||||||||
| Money market | 189,443 | 12 | 171,896 | 11 | 150,611 | 12 | ||||||||||||||||
| Money market – reciprocal | 12,253 | 1 | 13,094 | 1 | 11,257 | 1 | ||||||||||||||||
| Certificates of deposit under $250 | 115,782 | 7 | 119,388 | 8 | 131,980 | 10 | ||||||||||||||||
| Certificates of deposit $250 and over | 24,183 | 2 | 23,393 | 2 | 31,946 | 2 | ||||||||||||||||
| Total deposits | $ | 1,522,652 | 100 | % | $ | 1,481,859 | 100 | % | $ | 1,318,540 | 100 | % | ||||||||||
Shareholders' Equity and Capital Ratios
Total shareholders' equity increased $4.95 million, or 2%, to $203.49 million at June 30, 2021, from $198.54 million at March 31, 2021. The increase in shareholders' equity was primarily due to net income of $7.02 million for the quarter, which was partially offset by the payment of $1.76 million in dividends to shareholders and the repurchase of 16,688 shares of the Company's common stock for $469,000 (an average price of $28.08 per share). Timberland had 399,282 shares available to be repurchased on its existing stock repurchase plan at June 30, 2021.
Timberland remains well capitalized with a total risk-based capital ratio of 22.60% and a Tier 1 leverage capital ratio of 11.03% at June 30, 2021.
Asset Quality and Loan Deferrals
Timberland's non-performing assets to total assets ratio improved to 0.14% at June 30, 2021, from 0.31% one year ago and 0.16% at March 31, 2021. There were net recoveries of $35,000 for the current quarter compared to net recoveries of $2,000 for the preceding quarter and net recoveries of $4,000 for the comparable quarter one year ago. No provisions for loan losses were made during the current and preceding quarter compared to a $1.00 million provision for loan losses for the comparable quarter one year ago.
Timberland consistently worked with borrowers affected by the COVID-19 pandemic by offering loan deferral and forbearance plans during the pandemic. One year ago, at June 30, 2020, Timberland had granted deferrals on 209 loans with balances aggregating to $135.83 million (13.4% of net loans receivable). Deferrals were primarily approved for 90-day periods with interest continuing to accrue or with interest scheduled to be paid monthly. However, nearly all borrowers that were granted deferrals have resumed making regular payments and as of June 30, 2021, only one loan remained on deferral status. The following table notes the single COVID-19 related loan still on deferral status as of June 30, 2021. Interest is being paid monthly on this loan.
| COVID-19 Loan Modifications ($ in thousands) | |||||||
| Industry / Collateral Type | Amount | Percent of Net Loans Receivable | |||||
| Hotel | $ | 1,703 | 0.17 | % | |||
The allowance for loan losses ("ALL") as a percentage of loans receivable was 1.33% at June 30, 2021, compared to 1.26% one year ago and 1.29% at March 31, 2021. If SBA PPP loans, which are 100% SBA guaranteed, are excluded, the ALL to loans receivable (excluding SBA PPP loans) at June 30, 2021 was 1.46% (non-GAAP).
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 $499,000 at June 30, 2021. 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 1.53% (non-GAAP) at June 30, 2021.
The following table details the ALL as a percentage of loans receivable:
| June 30, | March 31, | June 30, | |||||||
| 2021 | 2021 | 2020 | |||||||
| ALL to loans receivable | 1.33 | % | 1.29 | % | 1.26 | % | |||
| ALL to loans receivable (excluding SBA PPP loans) (non-GAAP) | 1.46 | % | 1.48 | % | 1.43 | % | |||
| ALL to loans receivable (excluding SBA PPP loans and South Sound Acquisition loans) (non-GAAP) | 1.53 | % | 1.56 | % | 1.55 | % | |||
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $611,000, or 17%, to $2.94 million at June 30, 2021, from $3.55 million one year ago, and decreased $985,000, or 25%, from $3.93 million at March 31, 2021. Non-accrual loans decreased $986,000, or 33%, to $2.03 million at June 30, 2021, from $3.02 million one year ago and decreased $276,000, or 12%, from $2.31 million at March 31, 2021
| Non-Accrual Loans ($ in thousands) | |||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||||||||
| Amount | Quantity | Amount | Quantity | Amount | Quantity | ||||||||||||
| Mortgage loans: | |||||||||||||||||
| One- to four-family | $411 | 2 | $415 | 2 | $927 | 5 | |||||||||||
| Commercial | 373 | 1 | 643 | 2 | 875 | 3 | |||||||||||
| Land | 169 | 2 | 173 | 2 | 185 | 2 | |||||||||||
| Total mortgage loans | 953 | 5 | 1,231 | 6 | 1,987 | 10 | |||||||||||
| Consumer loans | |||||||||||||||||
| Home equity and second | |||||||||||||||||
| Mortgage | 545 | 6 | 539 | 6 | 586 | 7 | |||||||||||
| Other | 18 | 2 | 8 | 1 | 10 | 1 | |||||||||||
| Total consumer loans | 563 | 8 | 547 | 7 | 596 | 8 | |||||||||||
| Commercial business loans | 513 | 7 | 527 | 7 | 432 | 6 | |||||||||||
| Total loans | $2,029 | 20 | $2,305 | 20 | $3,015 | 24 | |||||||||||
OREO and other repossessed assets decreased 89% to $157,000 at June 30, 2021, from $1.47 million at June 30, 2020, and remained unchanged from $157,000 at March 31, 2021. At June 30, 2021, the OREO and other repossessed asset portfolio consisted of three individual land parcels. No OREO properties were sold during the quarter ended June 30, 2021.
| OREO and Other Repossessed Assets ($ in thousands) | |||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||||||||
| Amount | Quantity | Amount | Quantity | Amount | Quantity | ||||||||||||
| Land | $ | 157 | 3 | $ | 157 | 3 | $ | 1,466 | 8 | ||||||||
| Total | $ | 157 | 3 | $ | 157 | 3 | $ | 1,466 | 8 | ||||||||
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 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 24 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 2021 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) | June 30, | March 31, | June 30, | ||||||||||
| (unaudited) | 2021 | 2021 | 2020 | ||||||||||
| Interest and dividend income | |||||||||||||
| Loans receivable | $ | 13,298 | $ | 12,790 | $ | 12,871 | |||||||
| Investment securities | 292 | 284 | 345 | ||||||||||
| Dividends from mutual funds, FHLB stock and other investments | 28 | 27 | 23 | ||||||||||
| Interest bearing deposits in banks | 247 | 259 | 429 | ||||||||||
| Total interest and dividend income | 13,865 | 13,360 | 13,668 | ||||||||||
| Interest expense | |||||||||||||
| Deposits | 690 | 764 | 1,159 | ||||||||||
| Borrowings | 18 | 29 | 29 | ||||||||||
| Total interest expense | 708 | 793 | 1,188 | ||||||||||
| Net interest income | 13,157 | 12,567 | 12,480 | ||||||||||
| Provision for loan losses | -- | -- | 1,000 | ||||||||||
| Net interest income after provision for loan losses | 13,157 | 12,567 | 11,480 | ||||||||||
| Non-interest income | |||||||||||||
| Service charges on deposits | 948 | 941 | 858 | ||||||||||
| ATM and debit card interchange transaction fees | 1,363 | 1,237 | 1,069 | ||||||||||
| Gain on sales of loans, net | 1,607 | 1,758 | 2,141 | ||||||||||
| Bank owned life insurance ("BOLI") net earnings | 150 | 146 | 148 | ||||||||||
| Servicing income (expense) on loans sold, net | (9 | ) | (10 | ) | 35 | ||||||||
| Valuation recovery (allowance) on loan servicing rights, net | (179 | ) | 438 | -- | |||||||||
| Recoveries on investment securities, net | 6 | 3 | 6 | ||||||||||
| Other | 380 | 373 | 598 | ||||||||||
| Total non-interest income, net | 4,266 | 4,886 | 4,855 | ||||||||||
| Non-interest expense | |||||||||||||
| Salaries and employee benefits | 4,554 | 4,778 | 4,570 | ||||||||||
| Premises and equipment | 995 | 998 | 1,077 | ||||||||||
| Loss on disposition of premises and equipment, net | -- | -- | 4 | ||||||||||
| Advertising | 162 | 155 | 150 | ||||||||||
| OREO and other repossessed assets, net | 5 | (68 | ) | 11 | |||||||||
| ATM and debit card processing | 464 | 445 | 405 | ||||||||||
| Postage and courier | 141 | 149 | 137 | ||||||||||
| State and local taxes | 284 | 255 | 255 | ||||||||||
| Professional fees | 262 | 181 | 286 | ||||||||||
| FDIC insurance expense | 100 | 105 | 143 | ||||||||||
| Loan administration and foreclosure | 148 | 90 | 191 | ||||||||||
| Data processing and telecommunications | 627 | 634 | 603 | ||||||||||
| Deposit operations | 289 | 245 | 245 | ||||||||||
| Amortization of core deposit intangible ("CDI") | 90 | 91 | 101 | ||||||||||
| Other, net | 492 | 493 | 483 | ||||||||||
| Total non-interest expense, net | 8,613 | 8,551 | 8,661 | ||||||||||
| Income before income taxes | 8,810 | 8,902 | 7,674 | ||||||||||
| Provision for income taxes | 1,786 | 1,651 | 1,463 | ||||||||||
| Net income | $ | 7,024 | $ | 7,251 | $ | 6,211 | |||||||
| Net income per common share: | |||||||||||||
| Basic | $ | 0.84 | $ | 0.87 | $ | 0.75 | |||||||
| Diluted | 0.83 | 0.86 | 0.74 | ||||||||||
| Weighted average common shares outstanding: | |||||||||||||
| Basic | 8,365,350 | 8,331,121 | 8,309,947 | ||||||||||
| Diluted | 8,465,393 | 8,444,798 | 8,378,983 | ||||||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME | Nine Months Ended | ||||||||||||
| ($ in thousands, except per share amounts) | June 30, | June 30, | |||||||||||
| (unaudited) | 2021 | 2020 | |||||||||||
| Interest and dividend income | |||||||||||||
| Loans receivable | $ | 39,406 | $ | 38,457 | |||||||||
| Investment securities | 877 | 1,274 | |||||||||||
| Dividends from mutual funds, FHLB stock and other investments | 83 | 95 | |||||||||||
| Interest bearing deposits in banks | 816 | 2,164 | |||||||||||
| Total interest and dividend income | 41,182 | 41,990 | |||||||||||
| Interest expense | |||||||||||||
| Deposits | 2,358 | 3,591 | |||||||||||
| Borrowings | 76 | 37 | |||||||||||
| Total interest expense | 2,434 | 3,628 | |||||||||||
| Net interest income | 38,748 | 38,362 | |||||||||||
| Provision for loan losses | -- | 3,200 | |||||||||||
| Net interest income after provision for loan losses | 38,748 | 35,162 | |||||||||||
| Non-interest income | |||||||||||||
| Service charges on deposits | 2,943 | 3,136 | |||||||||||
| ATM and debit card interchange transaction fees | 3,755 | 3,178 | |||||||||||
| Gain on sales of loans, net | 5,367 | 3,829 | |||||||||||
| BOLI net earnings | 445 | 442 | |||||||||||
| Servicing income (expense) on loans sold, net | (4 | ) | 171 | ||||||||||
| Valuation recovery (allowance) on loan servicing rights, net | 23 | (23 | ) | ||||||||||
| Recoveries on investment securities, net | 14 | 113 | |||||||||||
| Other | 1,168 | 1,627 | |||||||||||
| Total non-interest income, net | 13,711 | 12,473 | |||||||||||
| Non-interest expense | |||||||||||||
| Salaries and employee benefits | 13,944 | 13,913 | |||||||||||
| Premises and equipment | 2,949 | 2,914 | |||||||||||
| Gain on disposition of premises and equipment, net | -- | (98 | ) | ||||||||||
| Advertising | 472 | 493 | |||||||||||
| OREO and other repossessed assets, net | (89 | ) | 60 | ||||||||||
| ATM and debit card processing | 1,341 | 1,203 | |||||||||||
| Postage and courier | 428 | 416 | |||||||||||
| State and local taxes | 822 | 705 | |||||||||||
| Professional fees | 675 | 766 | |||||||||||
| FDIC insurance expense (credit) | 301 | 116 | |||||||||||
| Loan administration and foreclosure | 319 | 358 | |||||||||||
| Data processing and telecommunications | 1,868 | 1,702 | |||||||||||
| Deposit operations | 818 | 836 | |||||||||||
| Amortization of CDI | 271 | 304 | |||||||||||
| Other, net | 1,455 | 1,631 | |||||||||||
| Total non-interest expense, net | 25,574 | 25,319 | |||||||||||
| Income before income taxes | 26,885 | 22,316 | |||||||||||
| Provision for income taxes | 5,320 | 4,404 | |||||||||||
| Net income | $ | 21,565 | $ | 17,912 | |||||||||
| Net income per common share: | |||||||||||||
| Basic | $ | 2.59 | $ | 2.15 | |||||||||
| Diluted | 2.55 | 2.12 | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||
| Basic | 8,336,590 | 8,331,908 | |||||||||||
| Diluted | 8,440,861 | 8,437,030 | |||||||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS | |||||||||||||
| ($ in thousands, except per share amounts) (unaudited) | June 30, | March 31, | June 30, | ||||||||||
| 2021 | 2021 | 2020 | |||||||||||
| Assets | |||||||||||||
| Cash and due from financial institutions | $ | 25,387 | $ | 21,707 | $ | 24,691 | |||||||
| Interest-bearing deposits in banks | 478,339 | 411,635 | 246,953 | ||||||||||
| Total cash and cash equivalents | 503,726 | 433,342 | 271,644 | ||||||||||
| Certificates of deposit ("CDs") held for investment, at cost | 31,218 | 39,674 | 72,014 | ||||||||||
| Investment securities: | |||||||||||||
| Held to maturity, at amortized cost | 52,314 | 36,465 | 30,660 | ||||||||||
| Available for sale, at fair value | 67,491 | 69,184 | 41,914 | ||||||||||
| Investments in equity securities, at fair value | 960 | 957 | 977 | ||||||||||
| FHLB stock | 2,103 | 2,303 | 1,922 | ||||||||||
| Other investments, at cost | 3,000 | 3,000 | 3,000 | ||||||||||
| Loans held for sale | 3,359 | 8,455 | 9,837 | ||||||||||
| Loans receivable | 1,015,034 | 1,044,117 | 1,025,653 | ||||||||||
| Less: Allowance for loan losses | (13,469 | ) | (13,434 | ) | (12,894 | ) | |||||||
| Net loans receivable | 1,001,565 | 1,030,683 | 1,012,759 | ||||||||||
| Premises and equipment, net | 22,519 | 22,763 | 23,119 | ||||||||||
| OREO and other repossessed assets, net | 157 | 157 | 1,466 | ||||||||||
| BOLI | 22,041 | 21,891 | 21,447 | ||||||||||
| Accrued interest receivable | 4,260 | 4,471 | 4,614 | ||||||||||
| Goodwill | 15,131 | 15,131 | 15,131 | ||||||||||
| CDI | 1,354 | 1,444 | 1,727 | ||||||||||
| Loan servicing rights, net | 3,548 | 3,604 | 3,073 | ||||||||||
| Operating lease right-of-use assets | 2,360 | 2,436 | 2,662 | ||||||||||
| Other assets | 3,354 | 3,284 | 3,676 | ||||||||||
| Total assets | $ | 1,740,460 | $ | 1,699,244 | $ | 1,521,642 | |||||||
| Liabilities and shareholders' equity | |||||||||||||
| Deposits: Non-interest-bearing demand | $ | 495,938 | $ | 499,541 | $ | 427,102 | |||||||
| Deposits: Interest-bearing | 1,026,714 | 982,318 | 891,438 | ||||||||||
| Total deposits | 1,522,652 | 1,481,859 | 1,318,540 | ||||||||||
| Operating lease liabilities | 2,432 | 2,499 | 2,695 | ||||||||||
| FHLB borrowings | 5,000 | 10,000 | 10,000 | ||||||||||
| Other liabilities and accrued expenses | 6,884 | 6,343 | 7,601 | ||||||||||
| Total liabilities | 1,536,968 | 1,500,701 | 1,338,836 | ||||||||||
| Shareholders' equity | |||||||||||||
| Common stock, $.01 par value; 50,000,000 shares authorized; 8,353,969 shares issued and outstanding – June 30, 2021 8,361,457 shares issued and outstanding – March 31, 2021 8,310,793 shares issued and outstanding – June 30, 2020 | 42,624 | 42,949 | 42,352 | ||||||||||
| Retained earnings | 160,739 | 155,473 | 140,478 | ||||||||||
| Accumulated other comprehensive income (loss) | 129 | 121 | (24 | ) | |||||||||
| Total shareholders' equity | 203,492 | 198,543 | 182,806 | ||||||||||
| Total liabilities and shareholders' equity | $ | 1,740,460 | $ | 1,699,244 | $ | 1,521,642 | |||||||
| KEY FINANCIAL RATIOS AND DATA | Three Months Ended | |||||||||||
| ($ in thousands, except per share amounts) (unaudited) | June 30, | March 31, | June 30, | |||||||||
| 2021 | 2021 | 2020 | ||||||||||
| PERFORMANCE RATIOS: | ||||||||||||
| Return on average assets (a) | 1.63 | % | 1.75 | % | 1.70 | % | ||||||
| Return on average equity (a) | 14.02 | % | 14.89 | % | 13.83 | % | ||||||
| Net interest margin (a) | 3.22 | % | 3.21 | % | 3.63 | % | ||||||
| Efficiency ratio | 49.43 | % | 48.99 | % | 49.96 | % | ||||||
| Nine Months Ended | ||||||||||||
| June 30, | June 30, | |||||||||||
| 2021 | 2020 | |||||||||||
| PERFORMANCE RATIOS: | ||||||||||||
| Return on average assets (a) | 1.74 | % | 1.79 | % | ||||||||
| Return on average equity (a) | 14.76 | % | 13.53 | % | ||||||||
| Net interest margin (a) | 3.30 | % | 4.08 | % | ||||||||
| Efficiency ratio | 48.75 | % | 49.81 | % | ||||||||
| June 30, | March 31, | June 30, | ||||||||||
| 2021 | 2021 | 2020 | ||||||||||
| ASSET QUALITY RATIOS AND DATA: | ||||||||||||
| Non-accrual loans | $ | 2,029 | $ | 2,305 | $ | 3,015 | ||||||
| Loans past due 90 days and still accruing | -- | -- | -- | |||||||||
| Non-performing investment securities | 179 | 188 | 228 | |||||||||
| OREO and other repossessed assets | 157 | 157 | 1,466 | |||||||||
| Total non-performing assets (b) | $ | 2,365 | $ | 2,650 | $ | 4,709 | ||||||
| Non-performing assets to total assets (b) | 0.14 | % | 0.16 | % | 0.31 | % | ||||||
| Net charge-offs (recoveries) during quarter | $ | (35 | ) | $ | (2 | ) | $ | (4 | ) | |||
| ALL to non-accrual loans | 664 | % | 583 | % | 428 | % | ||||||
| ALL to loans receivable (c) | 1.33 | % | 1.29 | % | 1.26 | % | ||||||
| ALL to loans receivable (excluding SBA PPP loans) (d) (non-GAAP) | 1.46 | % | 1.48 | % | 1.43 | % | ||||||
| ALL to loans receivable (excluding SBA PPP loans and South Sound Acquisition loans) (d) (e) (non-GAAP) | 1.53 | % | 1.56 | % | 1.55 | % | ||||||
| Troubled debt restructured loans on accrual status (f) | $ | 2,380 | $ | 2,864 | $ | 2,876 | ||||||
| CAPITAL RATIOS: | ||||||||||||
| Tier 1 leverage capital | 11.03 | % | 11.19 | % | 11.55 | % | ||||||
| Tier 1 risk-based capital | 21.34 | % | 19.47 | % | 19.39 | % | ||||||
| Common equity Tier 1 risk-based capital | 21.34 | % | 19.47 | % | 19.39 | % | ||||||
| Total risk-based capital | 22.60 | % | 20.72 | % | 20.65 | % | ||||||
| Tangible common equity to tangible assets (non-GAAP) | 10.85 | % | 10.81 | % | 11.03 | % | ||||||
| BOOK VALUES: | ||||||||||||
| Book value per common share | $ | 24.36 | $ | 23.75 | $ | 22.00 | ||||||
| Tangible book value per common share (g) | 22.39 | 21.76 | 19.97 | |||||||||
________________________________________________
(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 $95,633, $138,175 and $122,581 at June 30, 2021, March 31, 2021 and June 30, 2020, respectively.
(e) Does not include loans acquired in the South Sound Acquisition totaling $40,622, $46,626 and $73,084 at June 30, 2021, March 31, 2021 and June 30, 2020, respectively.
(f) Does not include troubled debt restructured loans totaling $187, $192 and $207 reported as non-accrual loans at June 30, 2021, March 31, 2021 and June 30, 2020, respectively.
(g) Tangible common equity divided by common shares outstanding (non-GAAP).
| AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY ($ in thousands) (unaudited) | |||||||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||||
| Loans receivable and loans held for sale | $ | 1,032,591 | 5.15 | % | $ | 1,044,476 | 4.90 | % | $ | 1,015,966 | 5.07 | % | |||||||||||||
| Investment securities and FHLB stock (1) | 115,839 | 1.10 | 101,675 | 1.23 | 81,086 | 1.82 | |||||||||||||||||||
| Interest-earning deposits in banks and CDs | 487,508 | 0.20 | 422,286 | 0.24 | 278,158 | 0.62 | |||||||||||||||||||
| Total interest-earning assets | 1,635,938 | 3.39 | 1,568,437 | 3.41 | 1,375,210 | 3.97 | |||||||||||||||||||
| Other assets | 87,638 | 85,203 | 87,905 | ||||||||||||||||||||||
| Total assets | $ | 1,723,576 | $ | 1,653,640 | $ | 1,463,115 | |||||||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||||||
| NOW checking accounts | $ | 416,234 | 0.13 | % | $ | 394,612 | 0.16 | % | $ | 332,502 | 0.26 | % | |||||||||||||
| Money market accounts | 196,187 | 0.29 | 178,768 | 0.30 | 156,537 | 0.47 | |||||||||||||||||||
| Savings accounts | 253,147 | 0.08 | 236,504 | 0.08 | 199,054 | 0.11 | |||||||||||||||||||
| Certificates of deposit accounts | 141,301 | 1.02 | 146,065 | 1.19 | 168,368 | 1.68 | |||||||||||||||||||
| Total interest-bearing deposits | 1,006,869 | 0.27 | 955,949 | 0.32 | 856,461 | 0.54 | |||||||||||||||||||
| Borrowings | 5,769 | 1.25 | 10,003 | 1.17 | 10,000 | 1.17 | |||||||||||||||||||
| Total interest-bearing liabilities | 1,012,638 | 0.28 | 965,952 | 0.33 | 866,461 | 0.55 | |||||||||||||||||||
| Non-interest-bearing demand deposits | 499,383 | 482,528 | 406,396 | ||||||||||||||||||||||
| Other liabilities | 11,217 | 10,365 | 10,684 | ||||||||||||||||||||||
| Shareholders' equity | 200,338 | 194,795 | 179,574 | ||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,723,576 | $ | 1,653,640 | $ | 1,463,115 | |||||||||||||||||||
| Interest rate spread | 3.11 | % | 3.08 | % | 3.42 | % | |||||||||||||||||||
| Net interest margin (2) | 3.22 | % | 3.21 | % | 3.63 | % | |||||||||||||||||||
| Average interest-earning assets to | |||||||||||||||||||||||||
| average interest-bearing liabilities | 161.55 | % | 162.37 | % | 158.72 | % | |||||||||||||||||||
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income / average interest-earning assets
| AVERAGE BALANCES, YIELDS, AND RATES – YEAR-TO-DATE ($ in thousands) (unaudited) | |||||||||||||||
| For the Nine Months Ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | ||||||||||||||
| Amount | Rate | Amount | Rate | ||||||||||||
| Assets | |||||||||||||||
| Loans receivable and loans held for sale | $ | 1,035,733 | 5.07 | % | $ | 949,822 | 5.40 | % | |||||||
| Investment securities and FHLB stock (1) | 103,821 | 1.23 | 76,282 | 2.40 | |||||||||||
| Interest-earning deposits in banks and CDs | 427,881 | 0.25 | 226,129 | 1.28 | |||||||||||
| Total interest-earning assets | 1,567,435 | 3.50 | 1,252,233 | 4.47 | |||||||||||
| Other assets | 85,636 | 85,405 | |||||||||||||
| Total assets | $ | 1,653,071 | $ | 1,337,638 | |||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||
| NOW checking accounts | $ | 396,140 | 0.16 | % | $ | 310,717 | 0.29 | % | |||||||
| Money market accounts | 181,115 | 0.30 | 144,663 | 0.54 | |||||||||||
| Savings accounts | 237,456 | 0.08 | 184,076 | 0.10 | |||||||||||
| Certificates of deposit accounts | 147,530 | 1.20 | 168,148 | 1.75 | |||||||||||
| Total interest-bearing deposits | 962,241 | 0.33 | 807,604 | 0.59 | |||||||||||
| Borrowings | 8,592 | 1.17 | 4,234 | 1.17 | |||||||||||
| Total interest-bearing liabilities | 970,833 | 0.34 | 811,838 | 0.60 | |||||||||||
| Non-interest-bearing demand deposits | 476,628 | 339,460 | |||||||||||||
| Other liabilities | 10,757 | 9,823 | |||||||||||||
| Shareholders' equity | 194,853 | 176,517 | |||||||||||||
| Total liabilities and shareholders' equity | $ | 1,653,071 | $ | 1,337,638 | |||||||||||
| Interest rate spread | 3.16 | % | 3.87 | % | |||||||||||
| Net interest margin (2) | 3.30 | % | 4.08 | % | |||||||||||
| Average interest-earning assets to | |||||||||||||||
| average interest-bearing liabilities | 161.45 | % | 154.25 | % | |||||||||||
_____________________________________
(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) | June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||
| Shareholders' equity | $ | 203,492 | $ | 198,543 | $ | 182,806 | ||||||
| Less goodwill and CDI | (16,485 | ) | (16,575 | ) | (16,858 | ) | ||||||
| Tangible common equity | $ | 187,007 | $ | 181,968 | $ | 165,948 | ||||||
| Total assets | $ | 1,740,460 | $ | 1,699,244 | $ | 1,521,642 | ||||||
| Less goodwill and CDI | (16,485 | ) | (16,575 | ) | (16,858 | ) | ||||||
| Tangible assets | $ | 1,723,975 | $ | 1,682,669 | $ | 1,504,784 | ||||||
| Contact: | Michael R. Sand, President & CEO Dean J. Brydon, CFO (360) 533-4747 www.timberlandbank.com |
