- Quarterly EPS Increased 12% to $0.77 from $0.69 One Year Ago
- Quarterly Return on Average Assets of 1.42%
- Quarterly Return on Average Equity of 11.07%
- Quarterly Net Interest Margin of 3.94%
- Announces $0.23 Quarterly Cash Dividend
- Announces New Stock Repurchase Program
HOQUIAM, Wash., July 25, 2023 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”), the holding company for Timberland Bank (the “Bank”), today reported net income of $6.31 million, or $0.77 per diluted common share, for the quarter ended June 30, 2023. This compares to net income of $5.74 million, or $0.69 per diluted common share for the comparable quarter one year ago and $6.66 million, or $0.80 per diluted common share, for the preceding quarter.
For the first nine months of fiscal 2023, Timberland’s net income increased 24% to $20.48 million, or $2.47 per diluted common share, compared to $16.55 million, or $1.97 per diluted common share for the first nine months of fiscal 2022.
“Timberland’s third fiscal quarter produced strong financial results, with net income and EPS increasing 10% and 12%, respectively, compared to the year ago quarter,” stated Dean Brydon, Chief Executive Officer. “Strong quarterly loan portfolio growth of 4% in conjunction with a higher interest rate environment compared to a year ago contributed to our solid quarterly and year-to-date results. As a result of the Company’s strong earnings and capital position, Timberland’s Board of Directors announced a quarterly cash dividend of $0.23 per share, payable on August 25, 2023, to shareholders of record on August 11, 2023. This represents the 43rd consecutive quarter Timberland will have paid a cash dividend. In addition, the Company also announced the adoption of a new stock repurchase program. Under the new repurchase program, Timberland may repurchase up to 5% of the outstanding shares, or 404,708 shares. The new stock repurchase program replaces our existing stock repurchase program, which had 74,212 shares available to be repurchased.”
“Asset quality metrics remain excellent, with quarter end non-performing assets at 9 basis points of total assets,” Brydon continued. “Loan origination volumes remained steady and net loans receivable grew by $50 million during the quarter. Due primarily to loan portfolio growth, a $610,000 provision for loan losses was made for the quarter. At the same time, both on-balance sheet and off-balance sheet liquidity remained strong with only $15 million in borrowings at June 30, 2023 and additional secured borrowing line capacity of $691 million available through the Federal Home Loan Bank (“FHLB”) and the Federal Reserve.”
“Net interest margin remained strong at 3.94% for the quarter, just 5 basis points lower than the prior quarter’s margin and 83 basis points higher compared to the year ago quarter,” said Jonathan Fischer, President and Chief Operating Officer. “Deposit growth and pricing was competitive during the quarter, and we have not been immune to the effects of the Federal Reserve’s tightening monetary policy. As anticipated, funding costs increased during the quarter as we continue to increase short-term deposit rates to retain rate sensitive customer deposits. We added $38 million in brokered deposits and saw a slight increase in total deposits during the quarter.”
Earnings and Balance Sheet Highlights (at or for the periods ended June 30, 2023, compared to June 30, 2022, or March 31, 2023):
Earnings Highlights:
- Earnings per diluted common share (“EPS”) increased 12% to $0.77 for the current quarter from $0.69 for the comparable quarter one year ago and decreased 4% from $0.80 for the preceding quarter; EPS for the first nine months of fiscal 2023 increased 25% to $2.47 from $1.97 for the first nine months of fiscal 2022;
- Net income increased 10% to $6.31 million for the current quarter from $5.74 million for the comparable quarter one year ago and decreased 5% from $6.66 million for the preceding quarter; Net income increased 24% to $20.48 million for the first nine months of fiscal 2023 from $16.55 million for the first nine months of fiscal 2022;
- Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were 11.07% and 1.42%, respectively;
- Net interest margin (“NIM”) for the current quarter expanded to 3.94% from 3.11% for the comparable quarter one year ago and compressed from 3.99% for the preceding quarter; and
- The efficiency ratio for the current quarter was 56.01% compared to 57.80% for the comparable quarter one year ago and 55.31% for the preceding quarter.
Balance Sheet Highlights:
- Total assets decreased 4% year-over-year and increased 1% from the prior quarter;
- Net loans receivable increased 16% year-over-year and 4% from the prior quarter;
- Total deposits decreased 7% year-over-year and increased slightly (less than 1%) from the prior quarter;
- Total shareholders’ equity increased 7% year-over-year and 1% from the prior quarter;
- Non-performing assets to total assets ratio improved to 0.09% from 0.13% one year ago;
- Book and tangible book (non-GAAP) values per common share increased to $28.32 and $26.36, respectively, at June 30, 2023; and
- Liquidity (both on-balance sheet and off-balance sheet) remained strong at June 30, 2023 with only $15 million in borrowings and additional secured borrowing line capacity of $691 million available through the FHLB and the Federal Reserve.
Operating Results
Operating revenue (net interest income before the provision for loan losses plus non-interest income) for the current quarter increased 14% to $19.51 million from $17.08 million for the comparable quarter one year ago and decreased 1% from $19.79 million for the preceding quarter. The decrease in operating revenue compared to the preceding quarter was primarily due to a decrease in net interest income as funding costs increased at a greater pace than interest income increased. Operating revenue increased by 21% to $59.74 million for the first nine months of fiscal 2023 from $49.20 million for the first nine months of fiscal 2022, primarily due to increased interest income from loans, overnight funds, and investment securities, which were partially offset by an increase in total interest expense and a decrease in gain on sales of 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.
Net interest income increased $2.65 million, or 19%, to $16.63 million for the current quarter from $13.98 million for the comparable quarter one year ago and decreased $517,000 or 3%, from $17.15 million for the preceding quarter. The decrease in net interest income compared to the preceding quarter was primarily due to increased funding costs and a decrease in average interest-earning assets. The weighted average cost of total interest-bearing liabilities increased to 1.22% for the current quarter from 0.84% for the preceding quarter as market interest rates increased. Partially offsetting the increase in interest expense was an increase in the weighted average yield on total interest-earning assets to 4.72% for the current quarter from 4.51% for the preceding quarter. Total average interest-earning assets decreased by $31.71 million, or 2%, to $1.69 billion for the current quarter from $1.72 billion for the preceding quarter. Timberland’s NIM for the current quarter compressed to 3.94% from 3.99% for the preceding quarter and expanded from 3.11% 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 $22,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $87,000 in pre-payment penalties, non-accrual interest, and late fees. The NIM for the preceding quarter was increased by approximately three basis points due to the accretion of $15,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $99,000 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 $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. Net interest income for the first nine months of fiscal 2023 increased $11.96 million, or 30%, to $51.53 million from $39.57 million for the first nine months of fiscal 2022. Timberland’s net interest margin for the first nine months of fiscal 2023 expanded to 3.99% from 2.99% for the first nine months of fiscal 2022.
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, 2023, Timberland had SBA PPP deferred loan origination fees of $19,000 remaining to be accreted into interest income over the remaining life of the loans. The following table details the interest income recognized from SBA PPP loans:
| SBA PPP Loan Income ($ in thousands) | ||||||||
| Three Months Ended | ||||||||
| June 30, 2023 | March 31, 2023 | June 30, 2022 | ||||||
| Interest income | $ | 1 | $ | 1 | $ | 9 | ||
| Loan origination fee accretion | 2 | 4 | 146 | |||||
| Total SBA PPP loan income | $ | 3 | $ | 5 | $ | 155 | ||
| Nine Months Ended | |||||||
| June 30, 2023 | June 30, 2022 | ||||||
| Interest income | $ | 4 | $ | 111 | |||
| Loan origination fee accretion | 23 | 1,782 | |||||
| Total SBA PPP loan income | $ | 27 | $ | 1,893 | |||
A $610,000 provision for loan losses was recorded for the quarter ended June 30, 2023. The provision was made primarily due to loan portfolio growth. A $475,000 provision for loans losses was recorded for the quarter ended March 31, 2023. No provision for loan losses was made during the quarter ended June 30, 2022.
Non-interest income increased $239,000 or 9%, to $2.88 million for the current quarter from $2.64 million for the preceding quarter and decreased $227,000, or 7%, from $3.10 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter was primarily due to a $95,000 gain on sale of investment securities, a $77,000 increase in service charges on deposits, a $60,000 increase in ATM and debit card interchange transaction fees and smaller increases in several other categories. Fiscal year-to-date non-interest income decreased 15% to $8.22 million from $9.63 million for the first nine months of fiscal 2022, primarily due to a $1.19 million decrease in gain on sales of loans as the dollar amount of fixed-rate one-to four-family loans originated and sold decreased as demand slowed and a larger portion of single family loan originations were retained in the portfolio rather than being sold.
Total operating (non-interest) expenses for the current quarter decreased slightly (less than 1%) to $10.93 million from $10.94 million for the preceding quarter and increased $1.05 million, or 11%, from $9.87 million for the comparable quarter one year ago. The decrease in operating expenses compared to the preceding quarter was primarily due to a $186,000 decrease in salaries and employee benefits (primarily due to fewer employees) and smaller decreases in several other expense categories. These decreases were partially offset by a $184,000 increase in deposit operations expense (primarily due to an increase in unrecovered overdrafts and fraud related expenses) and smaller increases in several other expense categories. The efficiency ratio for the current quarter was 56.01% compared to 55.31% for the preceding quarter and 57.80% for the comparable quarter one year ago. Fiscal year-to-date operating expenses increased 14% to $32.41 million from $28.47 million for the first nine months of fiscal 2022. The year-to-date increase in operating expenses was primarily due to a $2.20 million increase in salaries and employee benefits, a $632,000 increase in data processing and telecommunications expense, and smaller increases in several other expense categories. The efficiency ratio for the first nine months of fiscal 2023 improved to 54.24% from 57.87% for the first nine months of fiscal 2022.
The provision for income taxes for the current quarter decreased $39,000, or 2%, to $1.67 million from $1.71 million for the preceding quarter, primarily due to lower taxable income. Timberland’s effective income tax rate was 20.9% for the quarter ended June 30, 2023 compared to 20.4% for the quarter ended March 31, 2023 and 20.4% for the quarter ended June 30, 2022. Timberland’s effective income tax rate was 20.4% for the first nine months of fiscal 2023 compared to 20.1% for the first nine months of fiscal 2022.
Balance Sheet Management
Total assets increased $21.10 million, or 1%, during the quarter to $1.81 billion at June 30, 2023 from $1.79 billion at March 31, 2023 and decreased $80.08 million, or 4%, from $1.89 billion one year ago. The quarter’s increase was primarily due to a $50.45 million increase in net loans receivable which was partially offset by a $17.10 million decrease in investment securities and CDs held for investment and a $12.53 million decrease in total cash and cash equivalents.
Liquidity
Timberland has continued to maintain a strong liquidity position (both on-balance sheet and off-balance sheet) while deploying overnight funds into loans and investment securities during the past year. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 12.1% of total liabilities at June 30, 2023, compared to 14.0% at March 31, 2023, and 29.4% one year ago. Timberland had secured borrowing line capacity of $691 million available through the FHLB and the Federal Reserve at June 30, 2023. With a strong and diversified deposit base, only 21% of Timberland’s deposits were uninsured (or uncollateralized) at June 30, 2023. (Note: The uninsured deposit calculation excludes public deposits that are fully collateralized.)
Loans
Net loans receivable increased $50.45 million, or 4%, during the quarter to $1.26 billion at June 30, 2023 from $1.21 billion at March 30, 2023. This increase was primarily due to a $14.66 million increase in construction and land development loans, a $12.64 million increase in one- to four-family loans, a $9.14 million increase in commercial real estate loans, a $7.91 million increase in multi-family loans, a $7.76 million increase in commercial loans, and smaller increases in several other loan categories. These increases to net loans receivable were partially offset by a $5.52 million increase in the undisbursed portion of construction loans in process and smaller decreases in several other loan categories.
Loan Portfolio
($ in thousands)
| June 30, 2023 | March 31, 2023 | June 30, 2022 | |||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||
| Mortgage loans: | |||||||||||||||||
| One- to four-family (a) | $229,274 | 17 | % | $216,639 | 16 | % | $144,682 | 12 | % | ||||||||
| Multi-family | 111,777 | 8 | 103,870 | 8 | 98,718 | 8 | |||||||||||
| Commercial | 557,015 | 40 | 547,876 | 41 | 532,167 | 44 | |||||||||||
| Construction - custom and | |||||||||||||||||
| owner/builder | 136,595 | 10 | 124,071 | 9 | 117,724 | 10 | |||||||||||
| Construction - speculative | |||||||||||||||||
| one-to four-family | 12,522 | 1 | 11,343 | 1 | 13,954 | 1 | |||||||||||
| Construction - commercial | 42,657 | 3 | 31,458 | 3 | 40,108 | 3 | |||||||||||
| Construction - multi-family | 73,859 | 5 | 83,051 | 6 | 54,804 | 5 | |||||||||||
| Construction - land | |||||||||||||||||
| development | 15,968 | 1 | 17,018 | 1 | 21,240 | 2 | |||||||||||
| Land | 25,908 | 2 | 24,520 | 2 | 24,490 | 2 | |||||||||||
| Total mortgage loans | 1,205,575 | 87 | 1,159,846 | 87 | 1,047,887 | 87 | |||||||||||
| Consumer loans: | |||||||||||||||||
| Home equity and second | |||||||||||||||||
| mortgage | 40,008 | 3 | 36,896 | 3 | 32,821 | 3 | |||||||||||
| Other | 2,469 | -- | 2,283 | -- | 2,545 | -- | |||||||||||
| Total consumer loans | 42,477 | 3 | 39,179 | 3 | 35,366 | 3 | |||||||||||
| Commercial loans: | |||||||||||||||||
| Commercial business loans | 137,114 | 10 | 129,306 | 10 | 122,822 | 10 | |||||||||||
| SBA PPP loans | 519 | -- | 572 | -- | 1,320 | -- | |||||||||||
| Total commercial loans | 137,633 | 10 | 129,878 | 10 | 124,142 | 10 | |||||||||||
| Total loans | 1,385,685 | 100 | % | 1,328,903 | 100 | % | 1,207,395 | 100 | % | ||||||||
| Less: | |||||||||||||||||
| Undisbursed portion of | |||||||||||||||||
| construction loans in | |||||||||||||||||
| process | (104,774 | ) | (99,253 | ) | (102,044 | ) | |||||||||||
| Deferred loan origination | |||||||||||||||||
| fees | (4,957 | ) | (4,759 | ) | (3,951 | ) | |||||||||||
| Allowance for loan losses | (15,307 | ) | (14,698 | ) | (13,433 | ) | |||||||||||
| Total loans receivable, net | $1,260,647 | $1,210,193 | $1,087,967 | ||||||||||||||
_______________________
(a) Does not include one- to four-family loans held for sale totaling $0, $200, and $700 at June 30, 2023, March 31, 2023, and June 30, 2022, respectively.
The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of June 30, 2023:
CRE Loan Portfolio Breakdown by Collateral
($ in thousands)
| Collateral Type | Amount | Percent of CRE Portfolio | Percent of Total Loan Portfolio | ||||||
| Industrial warehouse | $ | 111,548 | 20 | % | 8 | % | |||
| Medical/dental offices | 77,710 | 14 | 5 | ||||||
| Office buildings | 68,583 | 12 | 5 | ||||||
| Other retail buildings | 48,643 | 9 | 4 | ||||||
| Hotel/motel | 30,972 | 6 | 2 | ||||||
| Restaurants | 29,802 | 5 | 2 | ||||||
| Mini-storage | 27,964 | 5 | 2 | ||||||
| Gas station/convenience stores | 20,478 | 4 | 1 | ||||||
| Nursing homes | 18,137 | 3 | 1 | ||||||
| Mobile home parks | 10,492 | 2 | 1 | ||||||
| Shopping centers | 10,353 | 2 | 1 | ||||||
| Churches | 7,507 | 1 | 1 | ||||||
| Additional CRE | 94,826 | 17 | 7 | ||||||
| Total CRE | $ | 557,015 | 100 | % | 40 | % | |||
Timberland originated $93.72 million in loans during the quarter ended June 30, 2023, compared to $77.15 million for the preceding quarter and $128.90 million for the comparable quarter one year ago. Timberland continues to originate fixed-rate one- to four-family mortgage loans, a portion of which are sold into the secondary market for asset-liability management purposes and to generate non-interest income. During the past twelve months, a larger percentage of single-family loan originations were retained in the portfolio rather than being sold due to the increased yield available on such loans. During the current quarter, fixed-rate one- to four-family mortgage loans totaling $3.41 million were sold compared to $2.39 million for the preceding quarter and $11.61 million for the comparable quarter one year ago.
Investment Securities
Timberland’s investment securities and CDs held for investment decreased $17.10 million, or 5%, to $336.66 million at June 30, 2023, from $353.77 million at March 31, 2023. The decrease was primarily due to the sale of $8.86 million of available for sale investment securities (for a gain of $95,000), maturities and scheduled amortization.
Deposits
Total deposits increased $3.96 million during the quarter to $1.55 billion at June 30, 2023, from $1.55 billion at March 31, 2022. The quarter’s increase consisted of a $65.20 million increase in certificates of deposit balances (including an increase of $38.32 million in brokered deposits). This increase was partially offset by a $27.87 million decrease in savings account balance, a $26.55 million decrease in non-interest bearing deposit balances, $5.70 million decrease in NOW checking account balances, and a $1.11 million decrease in money market account balances.
| Deposit Breakdown ($ in thousands) | ||||||||||||||||||
| June 30, 2023 | March 31, 2023 | June 30, 2022 | ||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||
| Non-interest-bearing demand | $452,729 | 29 | % | $479,283 | 31 | % | $527,876 | 32 | % | |||||||||
| NOW checking | 397,761 | 26 | 403,463 | 26 | 474,217 | 29 | ||||||||||||
| Savings | 241,651 | 16 | 269,522 | 17 | 279,592 | 17 | ||||||||||||
| Money market | 209,276 | 13 | 210,390 | 14 | 256,984 | 15 | ||||||||||||
| Certificates of deposit under $250 | 148,142 | 10 | 129,331 | 8 | 102,752 | 6 | ||||||||||||
| Certificates of deposit $250 and over | 64,849 | 4 | 56,778 | 4 | 22,693 | 1 | ||||||||||||
| Certificates of deposit – brokered | 38,322 | 2 | -- | -- | -- | -- | ||||||||||||
| Total deposits | $1,552,730 | 100 | % | $1,548,767 | 100 | % | $1,664,114 | 100 | % | |||||||||
Borrowings
Total borrowings increased to $15.00 million at June 30, 2023, as the Company utilized borrowings to supplement on-balance sheet liquidity during the current quarter. At June 30, 2023, the borrowings consisted of three-year FHLB borrowings with a weighted average rate of 3.95%.
Shareholders’ Equity and Capital Ratios
Total shareholders’ equity increased $1.60 million, or 1%, to $229.26 million at June 30, 2023, from $227.66 million at March 31, 2023. The increase in shareholders’ equity was primarily due to net income of $6.31 million for the quarter and $17,000 from the exercise of stock options, which was partially offset by the payment of $1.88 million in dividends to shareholders and the repurchase of 110,000 shares of common stock for $2.67 million (an average price of $24.31 per share).
Timberland remains well capitalized with a total risk-based capital ratio of 19.36%, a Tier 1 leverage capital ratio of 12.27%, a tangible common equity to tangible assets ratio (non-GAAP) of 11.91%, and a shareholders’ equity to total assets ratio of 12.68% at June 30, 2023. Timberland’s held to maturity investment securities were $275.05 million at June 30, 2023, with a net unrealized loss of $14.59 million (pre-tax). Although not permitted by U.S. Generally Accepted Accounting Principles (“GAAP”), including these unrealized losses in accumulated other comprehensive income (loss) (“AOCI”) would result in a ratio of shareholders’ equity to total assets of 12.04%, compared to 12.68%, as reported.
New Stock Repurchase Program
The Company announced a new stock repurchase program today. Under the repurchase program, the Company may repurchase up to 5% of the Company’s outstanding shares, or 404,708 shares. The new stock repurchase program replaces the existing stock repurchase program which had 74,212 shares available to be repurchased.
The repurchase program permits shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission (“SEC”). Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interest of both the Company and its shareholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. Open market purchases will be conducted in accordance with the limitations set forth in Rule 10b-18 of the SEC and other applicable legal requirements. The repurchase program may be suspended, terminated, or modified at any time for any reason, including market conditions, the cost of repurchasing the shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase any particular number of shares.
Asset Quality
Timberland’s non-performing assets to total assets ratio improved to 0.09% at June 30, 2023 from 0.12% at March 31, 2023 and 0.13% at June 30, 2022. There were net charge-offs of $1,000 for the current quarter, compared to net charge-offs of $6,000 for the preceding quarter and no charge-offs for the comparable quarter one year ago. Due primarily to loan portfolio growth, a $610,000 provision for loan losses was made for the quarter ended June 30, 2023 and a $475,000 provision for loan losses was made for the quarter ended March 31, 2023. No provision for loan losses was made during the quarter ended June 30, 2022.
The allowance for loan losses (“ALL”) as a percentage of loans receivable was 1.20% at June 30, 2023, compared to 1.20% at March 31, 2023 and 1.22% 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 $203,000 at June 30, 2023. 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 1.21% (non-GAAP) at June 30, 2023.
The following table details the ALL as a percentage of loans receivable:
| June 30, | March 31, | June 30, | ||||||
| 2023 | 2023 | 2022 | ||||||
| ALL to loans receivable | 1.20 | % | 1.20 | % | 1.22 | % | ||
| ALL to loans receivable (excluding SBA PPP loans) (non-GAAP) | 1.20 | % | 1.20 | % | 1.22 | % | ||
| ALL to loans receivable (excluding SBA PPP loans and South Sound Acquisition loans) (non-GAAP) | 1.21 | % | 1.21 | % | 1.25 | % |
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $689,000 or 27%, to $1.84 million at June 30, 2023, from $2.53 million one year ago, and decreased $348,000, or 16%, from $2.19 million at March 31, 2023. Non-accrual loans decreased $705,000, or 31%, to $1.59 million at June 30, 2023, from $2.29 million one year ago, and decreased $383,000, or 19%, from $1.97 million at March 31, 2023.
Non-Accrual Loans
($ in thousands)
| June 30, 2023 | March 31, 2023 | June 30, 2022 | ||||||||||||
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |||||||||
| Mortgage loans: | ||||||||||||||
| One- to four-family | $373 | 2 | $378 | 2 | $393 | 2 | ||||||||
| Commercial | 686 | 2 | 694 | 2 | 671 | 2 | ||||||||
| Land | 54 | 1 | 362 | 1 | 651 | 3 | ||||||||
| Total mortgage loans | 1,113 | 5 | 1,434 | 5 | 1,715 | 7 | ||||||||
| Consumer loans: | ||||||||||||||
| Home equity and second | ||||||||||||||
| Mortgage | 184 | 1 | 241 | 2 | 260 | 2 | ||||||||
| Other | -- | 1 | 1 | 1 | 4 | 1 | ||||||||
| Total consumer loans | 184 | 2 | 242 | 3 | 264 | 3 | ||||||||
| Commercial business loans | 289 | 4 | 293 | 4 | 312 | 6 | ||||||||
| Total loans | $1,586 | 11 | $1,969 | 12 | $2,291 | 16 | ||||||||
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, plans, 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: potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth caused by increasing political instability from acts of war including Russia's invasion of Ukraine, as well as increasing oil prices and supply chain disruptions, and any governmental or societal responses to novel coronavirus disease 2019 ("COVID-19") pandemic, including the possibility of new COVID-19 variants; 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 loans in our loan portfolio 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 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 of 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 banking, securities and tax law, in regulatory policies and principles, or the interpretation of regulatory capital or other rules and including changes as a result of COVID-19; 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 risks associated with the loans in 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 stock; the quality and composition of our securities portfolio and the impact if any adverse changes in the securities markets, including on market liquidity; 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 climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and other risks described in our reports filed with or furnished to 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 press release 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) | June 30, | March 31, | June 30, | ||||||||
| 2023 | 2023 | 2022 | |||||||||
| Interest and dividend income | |||||||||||
| Loans receivable | $ | 16,215 | $ | 14,950 | $ | 12,628 | |||||
| Investment securities | 2,384 | 2,460 | 1,016 | ||||||||
| Dividends from mutual funds, FHLB stock and other investments | 70 | 64 | 25 | ||||||||
| Interest bearing deposits in banks | 1,220 | 1,913 | 958 | ||||||||
| Total interest and dividend income | 19,889 | 19,387 | 14,627 | ||||||||
| Interest expense | |||||||||||
| Deposits | 3,123 | 2,236 | 645 | ||||||||
| Borrowings | 132 | -- | -- | ||||||||
| Total interest expense | 3,255 | 2,236 | 645 | ||||||||
| Net interest income | 16,634 | 17,151 | 13,982 | ||||||||
| Provision for loan losses | 610 | 475 | -- | ||||||||
| Net interest income after provision for loan losses | 16,024 | 16,676 | 13,982 | ||||||||
| Non-interest income | |||||||||||
| Service charges on deposits | 970 | 893 | 1,052 | ||||||||
| ATM and debit card interchange transaction fees | 1,335 | 1,275 | 1,345 | ||||||||
| Gain on sales of loans, net | 80 | 46 | 258 | ||||||||
| Bank owned life insurance (“BOLI”) net earnings | 157 | 157 | 151 | ||||||||
| Gain on sale of investment securities, net | 95 | -- | -- | ||||||||
| Recoveries on investment securities, net | 2 | 2 | 5 | ||||||||
| Other | 236 | 263 | 291 | ||||||||
| Total non-interest income, net | 2,875 | 2,636 | 3,102 | ||||||||
| Non-interest expense | |||||||||||
| Salaries and employee benefits | 5,860 | 6,046 | 5,243 | ||||||||
| Premises and equipment | 1,010 | 1,001 | 904 | ||||||||
| Gain on sale of premises and equipment, net | (32 | ) | -- | (6 | ) | ||||||
| Advertising | 179 | 178 | 187 | ||||||||
| OREO and other repossessed assets, net | -- | -- | (2 | ) | |||||||
| ATM and debit card processing | 491 | 489 | 515 | ||||||||
| Postage and courier | 128 | 147 | 140 | ||||||||
| State and local taxes | 297 | 298 | 265 | ||||||||
| Professional fees | 577 | 473 | 580 | ||||||||
| FDIC insurance expense | 191 | 202 | 123 | ||||||||
| Loan administration and foreclosure | 126 | 138 | 180 | ||||||||
| Data processing and telecommunications | 944 | 880 | 698 | ||||||||
| Deposit operations | 430 | 246 | 316 | ||||||||
| Amortization of core deposit intangible (“CDI”) | 68 | 67 | 79 | ||||||||
| Other, net | 658 | 779 | 652 | ||||||||
| Total non-interest expense, net | 10,927 | 10,944 | 9,874 | ||||||||
| Income before income taxes | 7,972 | 8,368 | 7,210 | ||||||||
| Provision for income taxes | 1,666 | 1,705 | 1,472 | ||||||||
| Net income | $ | 6,306 | $ | 6,663 | $ | 5,738 | |||||
| Net income per common share: | |||||||||||
| Basic | $ | 0.77 | $ | 0.81 | $ | 0.69 | |||||
| Diluted | 0.77 | 0.80 | 0.69 | ||||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | 8,156,831 | 8,220,532 | 8,279,436 | ||||||||
| Diluted | 8,213,975 | 8,304,370 | 8,349,859 | ||||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME | Nine Months Ended | |||||||
| ($ in thousands, except per share amounts) (unaudited) | June 30, | June 30, | ||||||
| 2023 | 2022 | |||||||
| Interest and dividend income | ||||||||
| Loans receivable | $ | 45,622 | $ | 37,870 | ||||
| Investment securities | 7,058 | 2,012 | ||||||
| Dividends from mutual funds, FHLB stock and other investments | 185 | 80 | ||||||
| Interest bearing deposits in banks | 5,524 | 1,528 | ||||||
| Total interest and dividend income | 58,389 | 41,490 | ||||||
| Interest expense | ||||||||
| Deposits | 6,729 | 1,902 | ||||||
| Borrowings | 132 | 17 | ||||||
| Total interest expense | 6,861 | 1,919 | ||||||
| Net interest income | 51,528 | 39,571 | ||||||
| Provision for loan losses | 1,610 | -- | ||||||
| Net interest income after provision for loan losses | 49,918 | 39,571 | ||||||
| Non-interest income | ||||||||
| Service charges on deposits | 2,810 | 2,979 | ||||||
| ATM and debit card interchange transaction fees | 3,861 | 3,868 | ||||||
| Gain on sales of loans, net | 147 | 1,337 | ||||||
| Bank owned life insurance (“BOLI”) net earnings | 470 | 457 | ||||||
| Valuation recovery on loan servicing rights, net | -- | 119 | ||||||
| Gain on sale of investment securities, net | 95 | -- | ||||||
| Recoveries on investment securities, net | 7 | 16 | ||||||
| Other | 826 | 851 | ||||||
| Total non-interest income, net | 8,216 | 9,627 | ||||||
| Salaries and employee benefits | 17,806 | 15,606 | ||||||
| Premises and equipment | 2,935 | 2,814 | ||||||
| Gain on sales of premises and equipment, net | (32 | ) | -- | |||||
| Advertising | 551 | 513 | ||||||
| OREO and other repossessed assets, net | 1 | (18 | ) | |||||
| ATM and debit card processing | 1,463 | 1,429 | ||||||
| Postage and courier | 397 | 440 | ||||||
| State and local taxes | 894 | 754 | ||||||
| Professional fees | 1,479 | 1,173 | ||||||
| FDIC insurance expense | 517 | 377 | ||||||
| Loan administration and foreclosure | 385 | 380 | ||||||
| Data processing and telecommunications | 2,612 | 1,980 | ||||||
| Deposit operations | 1,022 | 878 | ||||||
| Amortization of CDI | 203 | 237 | ||||||
| Other, net | 2,173 | 1,909 | ||||||
| Total non-interest expense, net | 32,406 | 28,472 | ||||||
| Income before income taxes | 25,728 | 20,726 | ||||||
| Provision for income taxes | 5,252 | 4,176 | ||||||
| Net income | $ | 20,476 | $ | 16,550 | ||||
| Net income per common share: | ||||||||
| Basic | $ | 2.50 | $ | 1.99 | ||||
| Diluted | 2.47 | 1.97 | ||||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 8,203,255 | 8,324,371 | ||||||
| Diluted | 8,279,079 | 8,406,977 | ||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS | ||||||||||||
| ($ in thousands, except per share amounts) (unaudited) | June 30, | March 31, | June 30, | |||||||||
| 2023 | 2023 | 2022 | ||||||||||
| Assets | ||||||||||||
| Cash and due from financial institutions | $ | 28,308 | $ | 26,015 | $ | 23,610 | ||||||
| Interest-bearing deposits in banks | 101,645 | 116,468 | 398,541 | |||||||||
| Total cash and cash equivalents | 129,953 | 142,483 | 422,151 | |||||||||
| Certificates of deposit (“CDs”) held for investment, at cost | 16,931 | 20,168 | 23,888 | |||||||||
| Investment securities: | ||||||||||||
| Held to maturity, at amortized cost | 275,053 | 277,911 | 228,196 | |||||||||
| Available for sale, at fair value | 43,842 | 54,838 | 45,141 | |||||||||
| Investments in equity securities, at fair value | 837 | 850 | 872 | |||||||||
| FHLB stock | 2,802 | 2,202 | 2,194 | |||||||||
| Other investments, at cost | 3,000 | 3,000 | 3,000 | |||||||||
| Loans held for sale | -- | 200 | 700 | |||||||||
| Loans receivable | 1,275,954 | 1,224,891 | 1,101,400 | |||||||||
| Less: Allowance for loan losses | (15,307 | ) | (14,698 | ) | (13,433 | ) | ||||||
| Net loans receivable | 1,260,647 | 1,210,193 | 1,087,967 | |||||||||
| Premises and equipment, net | 21,574 | 21,744 | 22,154 | |||||||||
| BOLI | 23,276 | 23,119 | 22,649 | |||||||||
| Accrued interest receivable | 5,451 | 5,295 | 4,319 | |||||||||
| Goodwill | 15,131 | 15,131 | 15,131 | |||||||||
| CDI | 745 | 813 | 1,027 | |||||||||
| Loan servicing rights, net | 2,321 | 2,535 | 3,220 | |||||||||
| Operating lease right-of-use assets | 1,845 | 1,844 | 2,051 | |||||||||
| Other assets | 4,305 | 4,292 | 3,135 | |||||||||
| Total assets | $ | 1,807,713 | $ | 1,786,618 | $ | 1,887,795 | ||||||
| Liabilities and shareholders’ equity | ||||||||||||
| Deposits: Non-interest-bearing demand | $ | 452,729 | $ | 479,283 | $ | 527,876 | ||||||
| Deposits: Interest-bearing | 1,100,001 | 1,069,484 | 1,136,238 | |||||||||
| Total deposits | 1,552,730 | 1,548,767 | 1,664,114 | |||||||||
| Operating lease liabilities | 1,939 | 1,935 | 2,135 | |||||||||
| FHLB borrowings | 15,000 | -- | -- | |||||||||
| Other liabilities and accrued expenses | 8,781 | 8,255 | 7,227 | |||||||||
| Total liabilities | 1,578,450 | 1,558,957 | 1,673,476 | |||||||||
| Shareholders’ equity | ||||||||||||
| Common stock, $.01 par value; 50,000,000 shares authorized; 8,094,174 shares issued and outstanding – June 30, 2023 8,203,174 shares issued and outstanding – March 31, 2023 8,249,448 shares issued and outstanding – June 30, 2022 | 35,401 | 37,979 | 39,585 | |||||||||
| Retained earnings | 194,606 | 190,177 | 175,299 | |||||||||
| Accumulated other comprehensive loss | (744 | ) | (495 | ) | (565 | ) | ||||||
| Total shareholders’ equity | 229,263 | 227,661 | 214,319 | |||||||||
| Total liabilities and shareholders’ equity | $ | 1,807,713 | $ | 1,786,618 | $ | 1,887,795 | ||||||
| KEY FINANCIAL RATIOS AND DATA | Three Months Ended | ||||||||||
| ($ in thousands, except per share amounts) (unaudited) | June 30, | March 31, | June 30, | ||||||||
| 2023 | 2023 | 2022 | |||||||||
| PERFORMANCE RATIOS: | |||||||||||
| Return on average assets (a) | 1.42 | % | 1.48 | % | 1.22 | % | |||||
| Return on average equity (a) | 11.07 | % | 11.86 | % | 10.80 | % | |||||
| Net interest margin (a) | 3.94 | % | 3.99 | % | 3.11 | % | |||||
| Efficiency ratio | 56.01 | % | 55.31 | % | 57.80 | % | |||||
| Nine Months Ended | |||||||||||
| June 30, | June 30, | ||||||||||
| 2023 | 2022 | ||||||||||
| PERFORMANCE RATIOS: | |||||||||||
| Return on average assets (a) | 1.51 | % | 1.19 | % | |||||||
| Return on average equity (a) | 12.17 | % | 10.48 | % | |||||||
| Net interest margin (a) | 3.99 | % | 2.99 | % | |||||||
| Efficiency ratio | 54.24 | % | 57.87 | % | |||||||
| ASSET QUALITY RATIOS AND DATA: | |||||||||||
| Non-accrual loans | $ | 1,586 | $ | 1,969 | $ | 2,291 | |||||
| Loans past due 90 days and still accruing | -- | -- | -- | ||||||||
| Non-performing investment securities | 87 | 93 | 114 | ||||||||
| OREO and other repossessed assets | -- | -- | -- | ||||||||
| Total non-performing assets (b) | $ | 1,673 | $ | 2,062 | $ | 2,405 | |||||
| Non-performing assets to total assets (b) | 0.09 | % | 0.12 | % | 0.13 | % | |||||
| Net charge-offs (recoveries) during quarter | $ | 1 | $ | 6 | $ | -- | |||||
| ALL to non-accrual loans, | 965.13 | % | 746.47 | % | 586.33 | % | |||||
| ALL to loans receivable (c) | 1.20 | % | 1.20 | % | 1.22 | % | |||||
| ALL to loans receivable (excluding SBA PPP loans) (d) (non-GAAP) | 1.20 | % | 1.20 | % | 1.22 | % | |||||
| ALL to loans receivable (excluding SBA PPP loans and South Sound Acquisition loans) (d) (e) (non-GAAP) | 1.21 | % | 1.21 | % | 1.25 | % | |||||
| Troubled debt restructured loans on accrual status (f) | $ | 2,604 | $ | 2,550 | $ | 2,484 | |||||
| CAPITAL RATIOS: | |||||||||||
| Tier 1 leverage capital | 12.27 | % | 11.95 | % | 10.72 | % | |||||
| Tier 1 risk-based capital | 18.11 | % | 18.16 | % | 18.57 | % | |||||
| Common equity Tier 1 risk-based capital | 18.11 | % | 18.16 | % | 18.57 | % | |||||
| Total risk-based capital | 19.36 | % | 19.41 | % | 19.82 | % | |||||
| Tangible common equity to tangible assets (non-GAAP) | 11.91 | % | 11.96 | % | 10.59 | % | |||||
| BOOK VALUES: | |||||||||||
| Book value per common share | $ | 28.32 | $ | 27.75 | $ | 25.98 | |||||
| Tangible book value per common share (g) | 26.36 | 25.81 | 24.02 | ||||||||
________________________________________________
(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 $519, $572 and $1,320 at June 30, 2023, March 31, 2023 and June 30, 2022, respectively.
(e) Does not include loans acquired in the South Sound Acquisition totaling $13,043, $13,917 and $21,431 at June 30, 2023, March 31, 2023 and June 30, 2022, respectively.
(f) Does not include troubled debt restructured loans totaling $0, $50 and $158 reported as non-accrual loans at June 30, 2023, March 31, 2023 and June 30, 2022, respectively.
(g) Tangible common equity divided by common shares outstanding (non-GAAP).
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($ in thousands)
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||
| June 30, 2023 | March 31, 2023 | June 30, 2022 | ||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||
| Assets | ||||||||||||||||||||
| Loans receivable and loans held for sale | $ | 1,254,044 | 5.17 | % | $ | 1,200,872 | 4.98 | % | $ | 1,072,933 | 4.71 | % | ||||||||
| Investment securities and FHLB stock (1) | 331,385 | 2.96 | 340,317 | 2.97 | 263,595 | 1.58 | ||||||||||||||
| Interest-earning deposits in banks and CDs | 101,798 | 4.79 | 177,748 | 4.30 | 460,657 | 0.83 | ||||||||||||||
| Total interest-earning assets | 1,687,227 | 4.72 | 1,718,937 | 4.51 | 1,797,185 | 3.26 | ||||||||||||||
| Other assets | 84,255 | 84,072 | 85,470 | |||||||||||||||||
| Total assets | $ | 1,771,482 | $ | 1,803,009 | $ | 1,882,655 | ||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||
| NOW checking accounts | $ | 387,426 | 1.02 | % | $ | 412,642 | 0.83 | % | $ | 462,085 | 0.14 | % | ||||||||
| Money market accounts | 205,023 | 0.84 | 218,718 | 0.68 | 258,240 | 0.30 | ||||||||||||||
| Savings accounts | 255,463 | 0.19 | 274,877 | 0.14 | 284,659 | 0.08 | ||||||||||||||
| Certificates of deposit accounts | 210,950 | 3.03 | 170,547 | 2.22 | 125,132 | 0.75 | ||||||||||||||
| Total interest-bearing deposits | 1,058,862 | 1.18 | 1,076,784 | 0.84 | 1,130,116 | 0.23 | ||||||||||||||
| Borrowings | 12,255 | 4.32 | 6 | 5.43 | -- | -- | ||||||||||||||
| Total interest-bearing liabilities | 1,071,117 | 1.22 | 1,076,790 | 0.84 | 1,130,116 | 0.23 | ||||||||||||||
| Non-interest-bearing demand deposits | 462,315 | 492,294 | 529,770 | |||||||||||||||||
| Other liabilities | 10,199 | 9,136 | 10,170 | |||||||||||||||||
| Shareholders’ equity | 227,851 | 224,789 | 212,599 | |||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,771,482 | $ | 1,803,009 | $ | 1,882,655 | ||||||||||||||
| Interest rate spread | 3.50 | % | 3.67 | % | 3.03 | % | ||||||||||||||
| Net interest margin (2) | 3.94 | % | 3.99 | % | 3.11 | % | ||||||||||||||
| Average interest-earning assets to | ||||||||||||||||||||
| average interest-bearing liabilities | 157.52 | % | 159.64 | % | 159.03 | % | ||||||||||||||
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets
| For the Nine Months Ended | |||||||||||||
| June 30, 2023 | June 30, 2022 | ||||||||||||
| Amount | Rate | Amount | Rate | ||||||||||
| Assets | |||||||||||||
| Loans receivable and loans held for sale | $ | 1,206,294 | 5.04 | % | $ | 1,033,173 | 4.89 | % | |||||
| Investment securities and FHLB stock (1) | 333,659 | 2.89 | 211,671 | 1.32 | |||||||||
| Interest-earning deposits in banks and CDs | 182,312 | 4.04 | 517,323 | 0.39 | |||||||||
| Total interest-earning assets | 1,722,265 | 4.52 | 1,762,167 | 3.14 | |||||||||
| Other assets | 84,167 | 84,426 | |||||||||||
| Total assets | $ | 1,806,432 | $ | 1,846,593 | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||
| NOW checking accounts | $ | 413,372 | 0.75 | % | $ | 448,028 | 0.13 | % | |||||
| Money market accounts | 221,131 | 0.67 | 241,734 | 0.29 | |||||||||
| Savings accounts | 270,076 | 0.15 | 275,684 | 0.08 | |||||||||
| Certificates of deposit accounts | 172,193 | 2.33 | 128,784 | 0.79 | |||||||||
| Total interest-bearing deposits | 1,076,772 | 0.84 | 1,094,230 | 0.23 | |||||||||
| Borrowings | 4,087 | 4.32 | 1,909 | 1.19 | |||||||||
| Total interest-bearing liabilities | 1,080,859 | 0.85 | 1,096,139 | 0.23 | |||||||||
| Non-interest-bearing demand deposits | 491,404 | 530,038 | |||||||||||
| Other liabilities | 9,896 | 9,938 | |||||||||||
| Shareholders’ equity | 224,273 | 210,478 | |||||||||||
| Total liabilities and shareholders’ equity | $ | 1,806,432 | $ | 1,846,593 | |||||||||
| Interest rate spread | 3.67 | % | 2.91 | % | |||||||||
| Net interest margin (2) | 3.99 | % | 2.99 | % | |||||||||
| Average interest-earning assets to | |||||||||||||
| average interest-bearing liabilities | 159.34 | % | 160.76 | % | |||||||||
_____________________________________
(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 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, 2023 | March 31, 2023 | June 30, 2022 | ||||||||
| Shareholders’ equity | $ | 229,263 | $ | 227,661 | $ | 214,319 | |||||
| Less goodwill and CDI | (15,876 | ) | (15,944 | ) | (16,158 | ) | |||||
| Tangible common equity | $ | 213,387 | $ | 211,717 | $ | 198,161 | |||||
| Total assets | $ | 1,807,713 | $ | 1,786,618 | $ | 1,887,795 | |||||
| Less goodwill and CDI | (15,876 | ) | (15,944 | ) | (16,158 | ) | |||||
| Tangible assets | $ | 1,791,837 | $ | 1,770,674 | $ | 1,871,637 | |||||
Contact:
Dean J. Brydon, CEO
Jonathan A. Fischer, President & COO
Marci A. Basich, CFO
(360) 533-4747
www.timberlandbank.com
