Timberland Bancorp Announces Third Fiscal Quarter Earnings
Timberland Bancorp Announces Third Fiscal Quarter Earnings
Timberland Bancorp, Inc.

Timberland Bancorp, Inc.

  • Third Fiscal Quarter Net Income of $5.74 Million

  • Quarterly Return on Average Equity of 10.80%

  • Loan Portfolio (Excluding PPP Loans) Increased 5.7% During Quarter

  • Announces $0.22 Quarterly Cash Dividend

HOQUIAM, Wash., July 26, 2022 (GLOBE NEWSWIRE) — Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”), the holding company for Timberland Bank (the “Bank”), today reported net income of $5.74 million, or $0.69 per diluted common share, for the quarter ended June 30, 2022. This compares to net income of $5.33 million, or $0.63 per diluted common share, for the preceding quarter and $7.02 million, or $0.83 per diluted common share, for the comparable quarter one year ago.

For the first nine months of fiscal 2022, Timberland earned $16.55 million, or $1.97 per diluted common share, compared to $21.57 million or $2.55 per diluted common share for the first nine months of fiscal 2021.

Timberland’s Board of Directors declared a quarterly cash dividend to shareholders of $0.22 per share, payable on August 26, 2022, to shareholders of record on August 12, 2022.

“Timberland generated strong fiscal third quarter financial results,” stated Michael Sand, CEO. “Compared to the prior quarter, net income and earnings per share increased 8% and 10%, respectively, largely on the strength of continued solid loan growth and higher interest rates. This quarter we experienced continued strong loan growth, with net loans receivable, excluding Paycheck Protection Program (“PPP”) loans, increasing 5.7%, or 22.8% on an annualized basis. Loan growth was primarily due to increases in multi-family, commercial business, commercial real estate and residential mortgage loans originated within our western Washington market footprint. Increased interest income from the larger loan portfolio more than offset the quarter’s $584,000 decrease in income from the soon to be completely forgiven PPP loan portfolio.”

“Our net interest margin expanded 16 basis points compared to the prior quarter, benefitting from the recent interest rate increases enacted by the Federal Reserve,” added Dean Brydon, President and CFO. “This expansion was a result of deploying excess liquidity to fund loan growth, and from investing in short and moderate duration investments to supplement interest income. The Company continues to be well positioned to benefit from additional Federal Reserve actions to increase interest rates, and we anticipate additional opportunities to invest excess liquidity during the next several quarters.”

Third Fiscal Quarter 2022 Earnings and Balance Sheet Highlights (at or for the period ended June 30, 2022, compared to June 30, 2021, or March 31, 2022):
  
    Earnings Highlights:

  • Net income was $5.74 million for the current quarter compared to $5.33 million for the preceding quarter and $7.02 million for the comparable quarter one year ago; Earnings per diluted common share (“EPS”) was $0.69 for the current quarter compared to $0.63 for the preceding quarter and $0.83 for the comparable quarter one year ago;

  • Net income was $16.55 million for the first nine months of fiscal 2022 compared to $21.57 million for the first nine months of fiscal 2021; EPS was $1.97 for the first nine months of fiscal 2022 compared to $2.55 for the first nine months of fiscal 2021;

  • Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were 10.80% and 1.22%, respectively;

  • Net interest margin (“NIM”) was 3.11% for the current quarter compared to 2.95% for the preceding quarter and 3.22% for the comparable quarter one year ago; and

  • The efficiency ratio was 57.80% for the current quarter compared to 58.42% for the preceding quarter and 49.43% for the comparable quarter one year ago.

Balance Sheet Highlights:

  • Total assets increased 8% year-over-year and 1% from the prior quarter;

  • Total deposits increased 9% year-over-year and increased slightly (less than 1%) from the prior quarter;

  • Net loans receivable (excluding SBA PPP loans) increased 19.9% year-over-year and 5.7% from the prior quarter;

  • Net loans receivable (including SBA PPP loans) increased 5.2% from the prior quarter;

  • Non-performing assets to total assets ratio improved to 0.13% from 0.16% at March 31, 2022;

  • Total shareholders’ equity increased $2.05 million, or 1%, to $214.32 million, from $212.27 million at March 31, 2022; and

  • Book and tangible book (non-GAAP) values per common share increased to $25.98 and $24.02, respectively, at June 30, 2022.

Operating Results

Operating revenue (net interest income before the provision for loan losses plus non-interest income) increased 7% to $17.08 million for the third fiscal quarter from $15.98 million for the preceding quarter and decreased 2% from $17.34 million for the comparable quarter one year ago. The increase in operating revenue compared to the preceding quarter was primarily due to increased interest income from investment securities and interest bearing deposits in banks. Increased interest income from growth in the loan portfolio more than offset a $584,000 decrease in SBA PPP loan income.   Operating revenue decreased 6% to $49.20 million for the first nine months of fiscal 2022 from $52.46 million for the comparable period one year ago, primarily due to a decrease in mortgage banking revenue.

Net interest income increased 8% to $13.98 million for the current quarter from $12.89 million for the preceding quarter and increased 6% from $13.16 million for the comparable quarter one year ago.   Timberland’s NIM for the current quarter was 3.11% compared to 2.95% for the preceding quarter and 3.22% for the comparable quarter one year ago.   The NIM for the current quarter was increased by approximately five basis points due to the accretion of $63,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $147,000 in pre-payment penalties, non-accrual interest, and late fees. The NIM for the preceding quarter was increased by approximately six basis points due to the accretion of $34,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $246,000 in pre-payment penalties, non-accrual interest and late fees. The NIM for the comparable quarter one year ago 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. Net interest income increased 2% to $39.57 million for the first nine months of fiscal 2022 from $38.75 million for the first nine months of fiscal 2021. Timberland’s net interest margin for the first nine months of fiscal 2022 was 2.99% compared to 3.30% for the first nine months of fiscal 2021.

U.S. Small Business Administration (“SBA”) PPP loans contributed to interest income through the 1.00% interest rate earned on outstanding loan balances and also through the accretion of loan origination fees into interest income over the life of each PPP loan. At June 30, 2022, Timberland had SBA PPP deferred loan origination fees of $52,000 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, 2022

 

March 31, 2022

 

June 30, 2021

Interest income

$

9

 

$

      31   

 

$

                293

Loan origination fee accretion

 

146

 

 

708

 

 

1,296

Total SBA PPP loan income

$

           155

 

$

                739

 

$

                   1,589

 

 

 

 

 

 

 

Nine Months Ended

 

June 30, 2022

 

 

 

June 30, 2021

Interest income

$

111

 

 

 

$

893

Loan origination fee accretion

 

1,782

 

 

 

 

3,583

Total SBA PPP loan income

$

             1,893

 

 

 

$

                   4,476

 

 

 

 

 

 

No provision for loan losses was made during the quarters ended June 30, 2022, March 31, 2022, and June 30, 2021.

Non-interest income increased 1% to $3.10 million for the current quarter from $3.08 million for the preceding quarter and decreased 27% from $4.27 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter was primarily due to a $98,000 increase in ATM and debit card interchange transaction fees and smaller increases in several other categories.   These increases were partially offset by a $158,000 decrease in gain on sales of loans. The quarterly year-over-year decrease in non-interest income was primarily due to a $1.35 million decrease in gain on sales of loans, which was partially offset by a $179,000 reduction in the valuation allowance on loan servicing rights. Fiscal year-to-date non-interest income decreased 30% to $9.63 million from $13.71 million for the first nine months of fiscal 2021, primarily due to a $4.03 million decrease in gain on sales of loans.   The decrease in gain on sales of loans for the three and nine month periods ended June 30, 2022 was primarily due to decreases in the dollar amount of fixed-rate one- to four-family loans originated and sold (as refinance demand slowed) and decreases in the average pricing margin compared to the same periods last year.

Total operating expenses for the current quarter increased $541,000, or 6%, to $9.87 million from $9.33 million for the preceding quarter and increased $1.26 million, or 15%, from $8.61 million for the comparable quarter one year ago.   The increase in operating expenses compared to the preceding quarter was primarily due to a $258,000 increase in professional fees expense and smaller increases in several other expense categories. These increases were partially offset by smaller decreases in several expense categories. The increase in professional fees expense was primarily due to higher legal and consulting fees.   Fiscal year-to-date operating expenses increased 11% to $28.47 million from $25.57 million for the first nine months of fiscal 2021.   The year-to-date increase in operating expenses was primarily due to a $1.66 million increase in salaries and employee benefits expense and a $498,000 increase in professional fees expense. The increase in salaries and employee benefits expense was primarily due to annual salary adjustments (effective October 1st) and the hiring of additional lending personnel. The efficiency ratio for the current quarter was 57.80% compared to 58.42% for the preceding quarter and 49.43% for the comparable quarter one year ago. The efficiency ratio for the first nine months of fiscal 2022 was 57.87% compared to 48.75% for the first nine months of fiscal 2021.

The provision for income taxes for the current quarter increased $156,000 to $1.47 million from $1.32 million for the preceding quarter, primarily due to higher taxable income.   Timberland’s effective income tax rate was 20.4% for the quarter ended June 30, 2022 compared to 19.8% for the quarter ended March 31, 2022 and 20.3% for the quarter ended quarter ended June 30, 2021.   Timberland’s effective income tax rate was 20.1% for the first nine months of fiscal 2022 compared to 19.8% for the first nine months of fiscal 2021.

Balance Sheet Management

Total assets increased $10.33 million, or 1%, to $1.89 billion at June 30, 2022 from $1.88 billion at March 31, 2022.   The quarter’s increase was primarily due to a $53.89 million increase in net loans receivable, a $28.55 million increase in investment securities and CDs held for investment, and smaller increases in several other categories. These increases were partially offset by a $70.15 million decrease in total cash and cash equivalents, and smaller decreases in several other categories. The increase in total assets was funded primarily by an increase in total deposits.

Loans

Net loans receivable increased $53.89 million, or 5%, to $1.09 billion at June 30, 2022 from $1.03 billion at March 31, 2022. This increase was primarily due to a $16.19 million increase in multi-family loans, a $14.18 million increase in commercial business loans (non-PPP), a $10.76 million increase in one- to four-family loans, an $8.69 million increase in commercial real estate loans, a $7.75 million increase in construction loans and smaller increases in several other loan categories. These increases to net loans receivable were partially offset by a $4.61 million decrease in SBA PPP loans and smaller decreases in several other loan categories.

Loan Portfolio
($ in thousands)

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

Mortgage loans:

 

 

 

 

 

 

 

 

 

 

 

One- to four-family (a)

$

144,682

 

 

12

%

 

$

133,925

 

 

12

%

 

$

119,173

 

 

11

%

Multi-family

 

98,718

 

 

8

 

 

 

82,526

 

 

7

 

 

 

94,756

 

 

9

 

Commercial

 

532,167

 

 

44

 

 

 

523,479

 

 

45

 

 

 

458,889

 

 

41

 

Construction – custom and owner/builder

 

117,724

 

 

10

 

 

 

114,394

 

10

 

 

 

105,484

 

 

9

 

Construction – speculative one-to four-family

 

13,954

 

 

1

 

 

 

15,438

 

 

1

 

 

 

18,038

 

 

2

 

Construction – commercial

 

40,108

 

 

3

 

 

 

35,416

 

 

3

 

 

 

43,879

 

 

4

 

Construction – multi-family

 

54,804

 

 

5

 

 

 

64,141

 

 

6

 

 

 

45,624

 

 

4

 

Construction – land development

 

21,240

 

 

2

 

 

 

10,687

 

 

1

 

 

 

4,434

 

 

 

Land

 

24,490

 

 

2

 

 

 

22,192

 

 

2

 

 

 

18,289

 

 

2

 

Total mortgage loans

 

1,047,887

 

 

87

 

 

 

1,002,198

 

 

87

 

 

 

908,566

 

 

82

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans:

 

 

 

 

 

 

 

 

 

 

 

Home equity and second mortgage

 

32,821

 

 

3

 

 

 

32,980

 

 

3

 

 

 

31,891

 

 

3

 

Other

 

2,545

 

 

 

 

 

2,277

 

 

 

 

 

2,725

 

 

 

Total consumer loans

 

35,366

 

 

3

 

 

 

35,257

 

 

3

 

 

 

34,616

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial business loans

 

122,822

 

 

10

 

 

 

108,644

 

 

9

 

 

 

72,890

 

 

6

 

SBA PPP loans

 

1,320

 

 

 

 

 

5,934

 

 

1

 

 

 

95,633

 

 

9

 

Total commercial loans

 

124,142

 

 

10

 

 

 

114,578

 

 

10

 

 

 

168,523

 

 

15

 

Total loans

 

1,207,395

 

 

100

%

 

 

1,152,033

 

 

100

%

 

 

1,111,705

 

 

100

%

Less:

 

 

 

 

 

 

 

 

 

 

 

Undisbursed portion of construction loans in process

 

(102,044

)

 

 

 

 

(100,719

)

 

 

 

 

(90,332

)

 

 

Deferred loan origination fees

 

(3,951

)

 

 

 

 

(3,801

)

 

 

 

 

(6,339

)

 

 

Allowance for loan losses

 

(13,433

)

 

 

 

 

(13,433

)

 

 

 

 

(13,469

)

 

 

Total loans receivable, net

$

1,087,967

 

 

 

 

$

1,034,080

 

 

 

 

$

1,001,565

 

 

 

_______________________
(a)   Does not include one- to four-family loans held for sale totaling $700, $2,772 and $3,359 at June 30, 2022, March 31, 2022, and June 30, 2021, respectively.  

The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of June 30, 2022:

CRE Loan Portfolio Breakdown by Collateral
($ in thousands)

Collateral Type

 

Amount

 

Percent of CRE Portfolio

 

Percent of Total Loan Portfolio

Industrial warehouse

 

$

105,060

 

19

%

 

9

%

Medical/dental offices

 

 

71,874

 

14

 

 

6

 

Office buildings

 

 

70,931

 

13

 

 

6

 

Other retail buildings

 

 

45,894

 

9

 

 

4

 

Restaurants

 

 

30,718

 

6

 

 

2

 

Hotel/motel

 

 

25,915

 

5

 

 

2

 

Mini-storage

 

 

24,846

 

5

 

 

2

 

Convenience stores

 

 

21,844

 

4

 

 

2

 

Nursing homes

 

 

18,504

 

3

 

 

1

 

Mobile home parks

 

 

14,209

 

3

 

 

1

 

Shopping centers

 

 

10,596

 

2

 

 

1

 

Churches

 

 

8,097

 

1

 

 

1

 

Additional CRE

 

 

83,679

 

16

 

 

7

 

Total CRE

 

$

532,167

 

100

%

 

44

%

Timberland originated $128.90 million in loans during the quarter ended June 30, 2022, compared to $130.41 million for the preceding quarter and $146.60 million for the comparable quarter one year ago. Timberland continues to sell fixed-rate one- to four-family mortgage loans into the secondary market for asset-liability management purposes and to generate non-interest income. Timberland also periodically sells the guaranteed portion of SBA loans. During the current quarter, fixed-rate one- to four-family mortgage loans totaling $11.61 million were sold compared to $16.88 million for the preceding quarter and $41.06 million for the comparable quarter one year ago. The decrease in loans sold during the current quarter compared to the prior year was primarily due to a decrease in single-family refinance loans originated as mortgage refinance activity diminished.
        
Timberland’s investment securities and CDs held for investment increased $28.55 million, or 11%, to $298.10 million at June 30, 2022, from $269.55 million at March 31, 2022. The increase was primarily due to the purchase of additional U.S Treasury securities and mortgage-backed investment securities.

Timberland’s liquidity continues to remain strong. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 29.4% of total liabilities at June 30, 2022, compared to 34.3% at March 31, 2022, and 39.2% one year ago.

Deposits

Total deposits increased $7.69 million during the current quarter to $1.664 billion at June 30, 2022, from $1.656 billion at March 31, 2022. The quarter’s increase consisted of a $16.34 million increase in NOW checking account balances and a $2.39 million increase in non-interest account balances. These increases were partially offset by an $8.77 million decrease in savings account balances, a $1.07 million decrease in money market account balances and a $1.20 million decrease in certificates of deposit account balances.

Deposit Breakdown
($ in thousands)

 

 

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

 

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

 

Non-interest-bearing demand

 

$527,876

 

32%

 

$525,488

 

32%

 

$495,938

 

33%

 

NOW checking

 

474,217

 

29

 

457,874

 

28

 

429,950

 

28

 

Savings

 

279,592

 

17

 

288,361

 

18

 

255,103

 

17

 

Money market

 

251,451

 

15

 

251,631

 

15

 

189,443

 

12

 

Money market – reciprocal

 

5,533

 

 

6,426

 

 

12,253

 

1

 

Certificates of deposit under $250

 

102,752

 

6

 

106,208

 

6

 

115,782

 

7

 

Certificates of deposit $250 and over

 

22,693

 

1

 

20,438

 

1

 

24,183

 

2

 

Total deposits

 

$1,664,114

 

100%

 

$1,656,426

 

100%

 

$1,522,652

 

100%

 

Shareholders’ Equity and Capital Ratios

Total shareholders’ equity increased $2.05 million, or 1%, to $214.32 million at June 30, 2022, from $212.27 million at March 31, 2022. The increase in shareholders’ equity was primarily due to net income of $5.74 million for the quarter, which was partially offset by the payment of $1.83 million in dividends to shareholders, the repurchase of 58,678 shares of common stock for $1.50 million (an average price of $25.60 per share), and a $458,000 increase in the Company’s accumulated other comprehensive loss.   Timberland had 263,491 shares available to be repurchased in accordance with the terms of its existing stock repurchase plan at June 30, 2022.

Timberland remains well capitalized with a total risk-based capital ratio of 19.82%, a Tier 1 leverage capital ratio of 10.72%, and a tangible common equity to tangible assets ratio (non-GAAP) of 10.59% at June 30, 2022.

Asset Quality

Timberland’s non-performing assets to total assets ratio improved to 0.13% at June 30, 2022, from 0.16% at March 31, 2022 and 0.14% one year ago. There were no net charge-offs for the current quarter compared to net charge-offs of $35,000 for the preceding quarter and net recoveries of $35,000 for the comparable quarter one year ago. No provisions for loan losses were made during the quarters ended June 30, 2022, March 31, 2022, and June 30, 2021.

The allowance for loan losses (“ALL”) as a percentage of loans receivable was 1.22% at June 30, 2022, compared to 1.28% at March 31, 2022 and 1.33% 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 $295,000 at June 30, 2022. The allowance for loan losses to loans receivable (excluding SBA PPP loan balances and the remaining aggregate balance of the loans acquired in the South Sound Acquisition) was 1.25% (non-GAAP) at June 30, 2022.

The following table details the ALL as a percentage of loans receivable:

 

 

June 30,

 

March 31,

 

June 30,

 

 

2022

 

2022

 

2021

 

ALL to loans receivable

 

1.22%

 

1.28%

 

1.33%

 

ALL to loans receivable (excluding SBA PPP loans) (non-GAAP)

 

1.22%

 

1.29%

 

1.46%

 

ALL to loans receivable (excluding SBA PPP loans and South Sound
Acquisition loans) (non-GAAP)

 

1.25%

 

1.33%

 

1.53%

 

Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $414,000, or 14%, to $2.53 million at June 30, 2022, from $2.95 million at March 31, 2022, and decreased $410,000, or 14%, from $2.94 million one year ago. Non-accrual loans decreased $360,000, or 14%, to $2.29 million at June 30, 2022, from $2.65 million at March 31, 2022 and increased $262,000, or 13%, from $2.03 million one year ago.

Non-Accrual Loans
($ in thousands)

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

Amount

 

Quantity

 

Amount

 

Quantity

 

Amount

 

Quantity

Mortgage loans:

 

 

 

 

 

 

 

 

 

 

 

One- to four-family

$393

 

2

 

$578

 

3

 

$411

 

2

Commercial

 

671

 

2

 

 

671

 

3

 

 

373

 

1

Land

 

651

 

3

 

 

723

 

4

 

 

169

 

2

Total mortgage loans

 

1,715

 

7

 

 

1,972

 

10

 

 

953

 

5

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

Home equity and second mortgage

 

260

 

2

 

 

269

 

2

 

 

545

 

6

Other

 

4

 

1

 

 

5

 

1

 

 

18

 

2

Total consumer loans

 

264

 

3

 

 

274

 

3

 

 

563

 

8

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business loans

 

312

 

6

 

 

405

 

6

 

 

513

 

7

Total loans

$2,291

 

16

 

$2,651

 

19

 

$2,029

 

20

        

At June 30, 2022, the OREO and other repossessed asset portfolio consisted of two individual land parcels that have been written down to a book value of $0. OREO and other repossessed assets were $157,000 at March 31, 2022 and June 30, 2021.      One OREO property was sold during the quarter ended June 30, 2022.

OREO and Other Repossessed Assets
($ in thousands)

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

Amount

 

Quantity

 

Amount

 

Quantity

 

Amount

 

Quantity

Land

$

 

2

 

$

157

 

3

 

$

157

 

3

Total

$

 

2

 

$

157

 

3

 

$

157

 

3

        
Acquisition of South Sound Bank
On October 1, 2018, the Company completed the acquisition of South Sound Bank, a Washington-state chartered bank, headquartered in Olympia, Washington (“South Sound Acquisition”). The Company acquired 100% of the outstanding common stock of South Sound Bank, and South Sound Bank was merged into Timberland Bank and the Company. Pursuant to the terms of the merger agreement, South Sound Bank shareholders received 0.746 of a share of the Company’s common stock and $5.68825 in cash per share of South Sound Bank common stock. The Company issued 904,826 shares of its common stock (valued at $28,267,000 based on the Company’s closing stock price on September 30, 2018 of $31.24 per share) and paid $6,903,000 in cash in the transaction for total consideration paid of $35,170,000.

About Timberland Bancorp, Inc.
Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank. The Bank opened for business in 1915 and serves consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties, Washington with a full range of lending and deposit services through its 23 branches (including its main office in Hoquiam).

Disclaimer
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plan, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results anticipated or implied by our forward-looking statements, including, but not limited to: the effect of the novel coronavirus of 2019 (“COVID-19”) pandemic, including the Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets which may lead to increased losses and non-performing assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our loan loss reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; uncertainty regarding the future of the London Interbank Offered Rate (“LIBOR”), and the potential transition away from LIBOR toward new interest rate benchmarks; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; secondary market conditions for loans and our ability to sell loans in the secondary market; results of examinations of us by the Federal Reserve and our bank subsidiary by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action against us or our bank subsidiary which could require us to increase our allowance for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules including as a result of Basel III; the impact of the Dodd Frank Wall Street Reform and Consumer Protection Act and implementing regulations; our ability to attract and retain deposits; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risk associated with the loans on our consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our business strategies; our ability to manage loan delinquency rates; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common and stock; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board (“FASB”), including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of war or any terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations; pricing, products and services including the Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES Act”), the Consolidated Appropriations Act, 2021 (“CAA”), and the American Rescue Plan Act of 2021; and other risks detailed in our reports filed with the Securities and Exchange Commission.

Any of the forward-looking statements that we make in this press release and in the other public statements we make are based upon management’s beliefs and assumptions at the time they are made. We do not undertake and specifically disclaim any obligation to publicly update or revise any forward-looking statements included in this report to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this document might not occur and we caution readers not to place undue reliance on any forward-looking statements. These risks could cause our actual results for fiscal 2022 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.

Contact: Michael R. Sand, CEO
Dean J. Brydon, President & CFO                      
(360) 533-4747
www.timberlandbank.com

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,

 

 

 

2022

 

 

 

2022

 

 

2021

 

 

Interest and dividend income

 

 

 

 

 

 

 

Loans receivable

 

$12,628

 

 

$12,620

 

$13,298

 

 

Investment securities

 

 

1,016

 

 

 

590

 

 

292

 

 

Dividends from mutual funds, FHLB stock and other investments

 

 

25

 

 

 

27

 

 

28

 

 

Interest bearing deposits in banks

 

 

958

 

 

 

283

 

 

247

 

 

Total interest and dividend income

 

 

14,627

 

 

 

13,520

 

 

13,865

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

Deposits

 

 

645

 

 

 

625

 

 

690

 

 

Borrowings

 

 

 

 

 

2

 

 

18

 

 

Total interest expense

 

 

645

 

 

 

627

 

 

708

 

 

Net interest income

 

 

13,982

 

 

 

12,893

 

 

13,157

 

 

Provision for loan losses

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

 

13,982

 

 

 

12,893

 

 

13,157

 

 

 

 

 

 

 

 

 

 

Non-interest income

 

 

 

 

 

 

 

Service charges on deposits

 

 

1,052

 

 

 

1,014

 

 

948

 

 

ATM and debit card interchange transaction fees

 

 

1,345

 

 

 

1,247

 

 

1,363

 

 

Gain on sales of loans, net

 

 

258

 

 

 

416

 

 

1,607

 

 

Bank owned life insurance (“BOLI”) net earnings

 

 

151

 

 

 

152

 

 

150

 

 

Valuation allowance on loan servicing rights, net

 

 

 

 

 

 

 

(179)

 

 

Recoveries on investment securities, net

 

 

5

 

 

 

3

 

 

6

 

 

Other

 

 

291

 

 

 

251

 

 

371

 

 

Total non-interest income, net

 

 

3,102

 

 

 

3,083

 

 

4,266

 

 

 

 

 

 

 

 

 

 

Non-interest expense

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

5,243

 

 

 

5,192

 

 

4,554

 

 

Premises and equipment

 

 

898

 

 

 

988

 

 

995

 

 

Advertising

 

 

187

 

 

 

161

 

 

162

 

 

OREO and other repossessed assets, net

 

 

(2)

 

 

 

2

 

 

5

 

 

ATM and debit card processing

 

 

515

 

 

 

450

 

 

464

 

 

Postage and courier

 

 

140

 

 

 

164

 

 

141

 

 

State and local taxes

 

 

265

 

 

 

235

 

 

284

 

 

Professional fees

 

 

580

 

 

 

322

 

 

262

 

 

FDIC insurance expense

 

 

123

 

 

 

126

 

 

100

 

 

Loan administration and foreclosure

 

 

180

 

 

 

96

 

 

148

 

 

Data processing and telecommunications

 

 

698

 

 

 

669

 

 

627

 

 

Deposit operations

 

 

316

 

 

 

262

 

 

289

 

 

Amortization of core deposit intangible (“CDI”)

 

 

79

 

 

 

79

 

 

90

 

 

Other, net

 

 

652

 

 

 

587

 

 

492

 

 

Total non-interest expense, net

 

 

9,874

 

 

 

9,333

 

 

8,613

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

7,210

 

 

 

6,643

 

 

8,810

 

 

Provision for income taxes

 

 

1,472

 

 

 

1,316

 

 

1,786

 

 

Net income

 

$5,738

 

 

$5,327

 

$7,024

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

Basic

 

$0.69

 

 

$0.64

 

$0.84

 

 

Diluted

 

 

0.69

 

 

 

0.63

 

 

0.83

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

8,279,436

 

 

 

8,337,407

 

 

8,365,350

 

 

Diluted

 

 

8,349,859

 

 

 

8,421,875

 

 

8,465,393

 

TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME

 

Nine Months Ended

($ in thousands, except per share amounts) (unaudited)

 

June 30,

 

 

 

June 30,

 

 

 

2022

 

 

 

 

 

2021

 

 

Interest and dividend income

 

 

 

 

 

 

 

Loans receivable

 

$37,870

 

 

 

 

$39,406

 

 

Investment securities

 

 

2,012

 

 

 

 

 

877

 

 

Dividends from mutual funds, FHLB stock and other investments

 

 

80

 

 

 

 

 

83

 

 

Interest bearing deposits in banks

 

 

1,528

 

 

 

 

 

816

 

 

Total interest and dividend income

 

 

41,490

 

 

 

 

 

41,182

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

Deposits

 

 

1,902

 

 

 

 

 

2,358

 

 

Borrowings

 

 

17

 

 

 

 

 

76

 

 

Total interest expense

 

 

1,919

 

 

 

 

 

2,434

 

 

Net interest income

 

 

39,571

 

 

 

 

 

38,748

 

 

Provision for loan losses

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

 

39,571

 

 

 

 

 

38,748

 

 

 

 

 

 

 

 

 

 

Non-interest income

 

 

 

 

 

 

 

Service charges on deposits

 

 

2,979

 

 

 

 

 

2,943

 

 

ATM and debit card interchange transaction fees

 

 

3,868

 

 

 

 

 

3,755

 

 

Gain on sales of loans, net

 

 

1,337

 

 

 

 

 

5,367

 

 

BOLI net earnings

 

 

457

 

 

 

 

 

445

 

 

Valuation recovery on loan servicing rights, net

 

 

119

 

 

 

 

 

23

 

 

Recoveries on investment securities, net

 

 

16

 

 

 

 

 

14

 

 

Other

 

 

851

 

 

 

 

 

1,164

 

 

Total non-interest income, net

 

 

9,627

 

 

 

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