8-K
TIMBERLAND BANCORP INC (TSBK)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 28, 2021
Timberland Bancorp, Inc.
(Exact name of registrant as specified in its charter)
| Washington | 0-23333 | 91-1863696 |
|---|---|---|
| State or other jurisdiction<br><br> <br>Of incorporation | Commission<br><br> <br>File Number | (I.R.S. Employer<br><br> <br>Identification No.) |
| 624 Simpson Avenue, Hoquiam, Washington | 98550 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number (including area code) (360) 533-4747
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the<br> registrant under any of the following provisions. |
|---|
| ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR<br> 230.425) |
| ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR<br> 240.14a-12) |
| ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange<br> Act (17 CFR<br><br> <br>240.14d-2(b)) |
| ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange<br> Act (17 CFR<br><br> <br>240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on<br><br> <br>which registered |
|---|---|---|
| Common Stock, par value $.01 per share | TSBK | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02 Results of Operations and Financial Condition
On October 28, 2021, Timberland Bancorp, Inc. (the “Company”) issued its earnings release for the quarter ended September 30, 2021. The release also announced the declaration of a quarterly cash dividend of $0.21 per common share. A copy of the earnings release is attached hereto as Exhibit 99.1, which is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1
Earnings Release of Timberland Bancorp, Inc. dated October 28, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| TIMBERLAND BANCORP, INC. | |
|---|---|
| DATE: October 28, 2021 | By: /s/ Dean J. Brydon |
| Dean J. Brydon<br><br> <br>Chief Financial Officer |
Exhibit 99.1
Contact: Michael R. Sand,
President & CEO
Dean J. Brydon, CFO
\(360\) 533-4747
www.timberlandbank.com
Timberland Bancorp’s 2021 Fiscal Year Net Income Increases to $27.58 Million
| • | Reports 11^th^ Consecutive Year of Increased Net Income and Earnings per Share |
|---|---|
| • | Fiscal Year Diluted Earnings per Share Increases to $3.27 |
| --- | --- |
| • | Fiscal Year Return on Average Assets of 1.64% |
| --- | --- |
| • | Fiscal Year Return on Average Equity of 13.98% |
| --- | --- |
| • | Announces $0.21 Quarterly Cash Dividend |
| --- | --- |
HOQUIAM, WA – October 28, 2021 – Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”), the holding company for Timberland Bank (the “Bank”), today reported that net income increased 14% to $27.58 million for the fiscal year ended September 30, 2021 from $24.27 million for the fiscal year ended September 30, 2020, which year was affected by a $3.70 million ($2.92 million after income taxes) provision to the loan loss reserves. Earnings per diluted common share (“EPS”) increased 14% to $3.27 for the 2021 fiscal year from $2.88 for the 2020 fiscal year.
Timberland also reported quarterly net income of $6.02 million, or $0.71 per diluted common share for the quarter ended September 30, 2021. This compares to net income of $6.36 million, or $0.76 per diluted common share for the comparable quarter one year ago, which quarter was affected by a $500,000 ($395,000 after income taxes) provision for loan loss reserves, and net income of $7.02 million, or $0.83 per diluted common share for the preceding quarter.
Timberland’s Board of Directors declared a quarterly cash dividend to shareholders of $0.21 per common share, payable on November 26, 2021, to shareholders of record on November 12, 2021.
“We are pleased to report record net income for our fiscal year ended September 30, 2021 and, for the eleventh consecutive year, increased net income and earnings per share,” stated Michael Sand, President and CEO. “Strong gain on sale of loans income persisted during the fiscal year and the accretion of loan origination fees linked to the Paycheck Protection Program (“PPP”) was also a robust contributor to the year’s net income. Compared to the fiscal year just ended, gain on sale of loans income and the benefit derived from PPP loan fee accretion is expected to diminish during our 2022 fiscal year. As we have continued to build liquidity we have been reticent to commit significant amounts to fixed income investments during the past year, believing better opportunities would become available at such time as the Federal Reserve initiated its tapering protocol. We are encouraged by the uptick in interest rates during the past month and year as well as by the likelihood of Fed tapering beginning in the near term. The general level of interest rates has increased during the past several months and we have begun purchasing certain Treasury and mortgage backed securities to supplement interest income. However, we continue to commit funds to such investments at a measured pace. We will review the post meeting narrative issued by the Fed after the conclusion of its November 8^th^ meeting before considering a departure from this stance. We are most encouraged by opportunities for increased loan originations in our strong, western Washington markets. In spite of the persistence of loan prepayments this past quarter, net loans outstanding, net of PPP loan balances, increased at an annualized rate of 9%. With a strong regional economy and likely customer dislocation resulting from recently announced M&A activity, we anticipate increased opportunities to develop new lending relationships within our local markets. Recently, additional loan personnel have been hired whom we anticipate will be successful in originating quality loans for the Bank’s portfolio. The Bank continues to be positioned to benefit significantly from rising interest rates.”
”Deposit balances increased $212.15 million during the past twelve months including an increase of $47.90 million during the quarter just ended. This 16% increase in deposit balances year-over-year has increased the Bank’s liquidity significantly above normal levels and continues to put pressure on the Bank’s net interest margin.”
“We were pleased to have participated in each of the SBA’s PPP lending rounds. PPP loans totaling $192.43 million were originated for both new and existing clients,” said Sand. “Our staff continues to diligently and successfully engage in the task of filing SBA loan forgiveness applications for businesses that obtained PPP financing through Timberland Bank. PPP loans were reduced by $54.71 million during the quarter ended September 30, 2021, leaving $40.92 million of PPP loans on the
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 2
Bank’s balance sheet at quarter end. We anticipate a majority of these remaining PPP loans will be forgiven during the quarters ending December 31, 2021 and March 31, 2022. Consequently, we also expect the recognition of most of the remaining deferred PPP loan origination fees of $1.83 million to occur during these two quarters.”
2021 Fiscal Year Earnings and Balance Sheet Highlights (at or for the period ended September 30, 2021, compared to September 30, 2020 or June 30, 2021):
Earnings Highlights:
| • | Net income increased to $27.58 million for the 2021 fiscal year from $24.27 million for the 2020 fiscal year; EPS increased to<br> $3.27 for the 2021 fiscal year from $2.88 for the 2020 fiscal year; |
|---|---|
| • | Net income was $6.02 million for the current quarter compared to $6.36 million for the comparable quarter one year ago and<br> $7.02 million for preceding quarter; EPS was $0.71 for the current quarter compared to $0.76 for the comparable quarter one year ago and $0.83 for the preceding quarter; |
| --- | --- |
| • | Return on average equity (“ROE”) and return on average assets (“ROA”) for the 2021 fiscal year were 13.98% and 1.64%,<br> respectively; ROE and ROA for the current quarter were 11.77% and 1.36%, respectively; |
| --- | --- |
| • | Net interest margin (“NIM”) was 3.25% for the 2021 fiscal year and 3.13% for the current quarter; and |
| --- | --- |
| • | The efficiency ratio was 50.12% for the 2021 fiscal year and 54.45% for the current quarter. |
| --- | --- |
Balance Sheet Highlights:
| • | Total assets increased 14% year-over-year and 3% from the prior quarter; |
|---|---|
| • | Total deposits increased 16% year-over-year and 3% from the prior quarter; |
| --- | --- |
| • | Net loans receivable (including SBA PPP loans) decreased 4% year-over-year and decreased 3% from the prior quarter; |
| --- | --- |
| • | Net loans receivable (excluding SBA PPP loans) increased 5% year-over-year and increased 2% from the prior quarter; |
| --- | --- |
| • | Non-performing assets to total assets ratio improved to 0.18% from 0.27% one year ago; and |
| --- | --- |
| • | Book and tangible book (non-GAAP) values per common share increased to $24.76 and $22.80, respectively, at September 30, 2021. |
| --- | --- |
Operating Results
Operating revenue (net interest income before the provision for loan losses plus non-interest income) increased 1% to $69.02 million for the 2021 fiscal year from $68.01 million for the 2020 fiscal year. For the current quarter, operating revenue decreased 4% to $16.56 million from $17.24 million for the comparable quarter one year ago and decreased 5% from $17.42 million for the preceding quarter.
Net interest income for the 2021 fiscal year increased 2% to $51.86 million from $50.88 million for the 2020 fiscal year. The year-over-year increase was primarily due to an increase in the average balance of interest-earning assets and a decrease in the average cost of deposits, which was partially offset by a decrease in the yield on interest-earning assets. Timberland’s NIM for the fiscal year ended September 30, 2021 decreased to 3.25% from 3.90% for the fiscal year ended September 30, 2020. NIM compression over the past year has largely been a result of the continued low interest rate environment and an increase in the level of liquidity held in overnight funds.
Net interest income increased 5% to $13.11 million for the current quarter from $12.52 million for the comparable quarter one year ago and decreased slightly from $13.16 million for the preceding quarter. Timberland’s NIM for the current quarter was 3.13% compared to 3.22% for the preceding quarter and 3.44% 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 $50,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $174,000 in pre-payment penalties, non-accrual interest, and late fees. The NIM for the preceding quarter was increased by approximately 13 basis points due to the accretion of $84,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $443,000 in pre-payment penalties, non-accrual interest and late fees. The NIM for the comparable quarter one year ago was increased by approximately ten basis points due to the accretion of $173,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $181,000 in pre-payment penalties, non-accrual interest and late fees.
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 3
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 September 30, 2021, Timberland had SBA PPP deferred loan origination fees of $1.83 million remaining to be accreted into interest income over the remaining life of the loans. The following table details the interest income recognized from SBA PPP loans:
| SBA PPP Loan Income<br> ( in thousands) | |||||
|---|---|---|---|---|---|
| June 30, 2021 | Sept. 30, 2020 | ||||
| Interest income | 167 | $ | 293 | $ | 316 |
| Loan origination fee accretion | 1,488 | 1,296 | 599 | ||
| Total SBA PPP loan income | 1,655 | $ | 1,589 | $ | 915 |
All values are in US Dollars.
No provision for loans losses was made during the 2021 fiscal year compared to a $3.70 million ($2.92 million after income tax) provision for loan losses for the 2020 fiscal year. No provision for loan losses was made during the current and preceding quarter, compared to a $500,000 ($395,000 after income taxes) provision for loan losses for the comparable quarter one year ago.
Non-interest income for the 2021 fiscal year decreased slightly to $17.16 million from $17.19 million for the 2020 fiscal year. The decrease was primarily due to a $483,000 decrease in recoveries of previously charged off receivables acquired in the South Sound Acquisition (which are recorded in the “Other” non-interest income category for the 2020 fiscal year), a $236,000 decrease in service charges on deposits, a $186,000 decrease in servicing income on loans sold, and smaller decreases in several other categories. These decreases were partially offset by a $706,000 increase in ATM and debit card interchange fees, a $110,000 valuation recovery on loan servicing rights (compared to a $221,000 valuation allowance on loan servicing rights for the 2020 fiscal year), and smaller increases in several other categories.
Non-interest income decreased 27% to $3.45 million for the current quarter from $4.72 million for the comparable quarter one year ago and decreased 19% from $4.27 million for the preceding quarter. The decrease in non-interest income compared to the preceding quarter was primarily due to a $1.07 million decrease in gain on sales of loans and smaller decreases in several other categories. The decrease in gain on sales of loans was primarily due to a decrease in the dollar amount of fixed rate one- to four-family refinance loans originated and sold as refinance activity for single family homes slowed. These decreases were partially offset by smaller increases in several categories including an $87,000 valuation recovery on loan servicing rights for the current quarter (compared to a $179,000 valuation allowance on loan servicing rights for the preceding quarter). The valuation recovery on loan servicing rights was primarily due to decreases in projected mortgage prepayment speeds as mortgage interest rates increased during the quarter.
For the 2021 fiscal year, total (non-interest) operating expenses increased $528,000, or 2%, to $34.59 million from $34.06 million for the 2020 fiscal year. The increase was primarily due to a $399,000 increase in salaries and employee benefits expense, a $225,000 increase in data processing and telecommunications expense, a $211,000 increase in FDIC insurance expense, a $203,000 increase in ATM and debit card processing expense, and smaller increases in several other categories. These increases were partially offset by $363,000 decrease in OREO expenses and smaller decreases in several other categories. The efficiency ratio for the 2021 fiscal year was 50.12% compared to 50.04% for the 2020 fiscal year.
Total operating expenses for the current quarter increased $274,000, or 3%, to $9.02 million from $8.74 million for the comparable quarter one year ago and increased $404,000, or 5%, from $8.61 million for the preceding quarter. The increase in operating expenses compared to the preceding quarter was primarily due to a $251,000 increase in salaries and employee benefits expense and smaller increases in several other expense categories. These increases were partially offset by smaller increases in several expense categories. The efficiency ratio for the current quarter was 54.45% compared to 50.73% for the comparable quarter one year ago and 49.43% for the preceding quarter.
The provision for income taxes for the 2021 fiscal year increased $807,000 to $6.85 million from $6.04 million for the 2020 fiscal year, primarily due to higher taxable income. The effective income tax rate was 19.9% for both fiscal years. The provision for income taxes for the current quarter decreased $261,000 to $1.53 million from $1.79 million for the preceding
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 4
quarter, primarily due to lower taxable income. Timberland’s effective income tax rate was 20.2% for the quarter ended September 30, 2021 compared to 20.3% for the quarter ended June 30, 2021.
Balance Sheet Management
Total assets increased $226.21 million, or 14%, to $1.79 billion at September 30, 2021 from $1.57 billion at September 30, 2020 and increased $51.73 million, or 3%, from $1.74 billion at June 30, 2021. The quarterly increase was primarily due to a $76.47 million increase in total cash and cash equivalents, a $9.74 million net increase in investment securities and CDs held for investment, and smaller increases in several other categories. These increases were partially offset by a $33.11 million decrease in net loans receivable (due to SBA PPP loan payoffs). Excluding SBA PPP loans, net loans receivable increased during the current quarter at an annualized rate of 9%. The increase in total assets was funded primarily by an increase in total deposits and by retained net income.
Loans
Net loans receivable decreased $45.42 million, or 4%, to $968.45 million at September 30, 2021 from $1.01 billion at September 30, 2020. The year-over-year decrease was primarily due to an $85.90 million decrease in SBA PPP loans as forgiveness applications were successfully processed and smaller decreases in several other loan categories. These decreases were partially offset by a $17.08 million increase in commercial real estate mortgage loans, a $13.70 million increase in construction and land development loan and smaller increases in several other loan categories.
Primarily as a result of the successful processing of $54.71 million in SBA PPP loan forgiveness applications and smaller decreases in several other loan categories, net loans receivable decreased $33.11 million, or 3%, to $968.45 million at September 30, 2021 from $1.00 billion at June 30, 2021. These decreases were partially offset by a $15.75 million increase in construction and land development loans, an $11.76 million increase in commercial real estate mortgage loans and smaller increases in several other loan categories.
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 5
Loan Portfolio
($ in thousands)
| September 30, 2021 | June 30, 2021 | September 30, 2020 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||
| Mortgage loans: | ||||||||||||||||||
| One- to four-family (a) | $ | 119,935 | 11 | % | $ | 119,173 | 11 | % | $ | 118,580 | 10 | % | ||||||
| Multi-family | 87,563 | 8 | 94,756 | 9 | 85,053 | 8 | ||||||||||||
| Commercial | 470,650 | 43 | 458,889 | 41 | 453,574 | 40 | ||||||||||||
| Construction - custom and | ||||||||||||||||||
| owner/builder | 109,152 | 10 | 105,484 | 9 | 129,572 | 12 | ||||||||||||
| Construction - speculative<br><br> <br>one-to four-family | 17,813 | 2 | 18,038 | 2 | 14,592 | 1 | ||||||||||||
| Construction - commercial | 43,365 | 4 | 43,879 | 4 | 33,144 | 3 | ||||||||||||
| Construction - multi-family | 52,071 | 5 | 45,624 | 4 | 34,476 | 3 | ||||||||||||
| Construction - land | ||||||||||||||||||
| development | 10,804 | 1 | 4,434 | -- | 7,712 | 1 | ||||||||||||
| Land | 19,936 | 2 | 18,289 | 2 | 25,571 | 2 | ||||||||||||
| Total mortgage loans | 931,289 | 86 | 908,566 | 82 | 902,274 | 80 | ||||||||||||
| Consumer loans: | ||||||||||||||||||
| Home equity and second | ||||||||||||||||||
| mortgage | 32,988 | 3 | 31,891 | 3 | 32,077 | 3 | ||||||||||||
| Other | 2,512 | -- | 2,725 | -- | 3,572 | -- | ||||||||||||
| Total consumer loans | 35,500 | 3 | 34,616 | 3 | 35,649 | 3 | ||||||||||||
| Commercial loans: | ||||||||||||||||||
| Commercial business loans | 74,579 | 7 | 72,890 | 6 | 69,540 | 6 | ||||||||||||
| SBA PPP loans | 40,922 | 4 | 95,633 | 9 | 126,820 | 11 | ||||||||||||
| Total commercial loans | 115,501 | 11 | 168,523 | 15 | 196,360 | 17 | ||||||||||||
| Total loans | 1,082,290 | 100 | % | 1,111,705 | 100 | % | 1,134,283 | 100 | % | |||||||||
| Less: | ||||||||||||||||||
| Undisbursed portion of | ||||||||||||||||||
| construction loans in | ||||||||||||||||||
| process | (95,224 | ) | (90,332 | ) | (100,558 | ) | ||||||||||||
| Deferred loan origination | ||||||||||||||||||
| fees | (5,143 | ) | (6,339 | ) | (6,436 | ) | ||||||||||||
| Allowance for loan losses | (13,469 | ) | (13,469 | ) | (13,414 | ) | ||||||||||||
| Total loans receivable, net | $ | 968,454 | $ | 1,001,565 | $ | 1,013,875 |
_______________________
| (a) | Does not include one- to four-family loans held for sale totaling $3,217, $3,359 and $4,509 at September 30, 2021, June 30,<br> 2021 and September 30, 2020, respectively. |
|---|
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 6
The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of September 30, 2021:
| CRE Loan Portfolio Breakdown by Collateral<br> ( in thousands) | |||||||
|---|---|---|---|---|---|---|---|
| Collateral Type | Percent<br><br> <br>of CRE<br><br> <br>Portfolio | Percent of<br><br> <br>Total Loan<br><br> <br>Portfolio | |||||
| Industrial warehouse | 80,242 | 17 | % | 7 | % | ||
| Office buildings | 75,451 | 16 | 7 | ||||
| Medical/dental offices | 60,232 | 13 | 6 | ||||
| Other retail buildings | 39,378 | 8 | 4 | ||||
| Restaurants | 25,158 | 5 | 2 | ||||
| Convenience stores | 22,409 | 5 | 2 | ||||
| Hotels/motels | 21,564 | 5 | 2 | ||||
| Nursing homes | 18,810 | 4 | 2 | ||||
| Shopping centers | 14,161 | 3 | 1 | ||||
| Churches | 12,984 | 3 | 1 | ||||
| Mini-Storage | 12,553 | 3 | 1 | ||||
| Additional CRE | 87,708 | 18 | 8 | ||||
| Total CRE | 470,650 | 100 | % | 43 | % |
All values are in US Dollars.
Timberland originated $132.91 million in loans during the quarter ended September 30, 2021, compared to $114.15 million (including $4.71 million of SBA PPP loans) for the comparable quarter one year ago and $146.60 million in loans (including $6.16 million of SBA PPP loans for the preceding quarter. Timberland continues to sell fixed-rate one- to four-family mortgage loans into the secondary market for asset-liability management purposes and to generate non-interest income. Timberland also periodically sells the guaranteed portion of SBA loans. During the current quarter, fixed-rate one- to four-family mortgage loans totaling $14.01 million were sold compared to $46.85 million for the comparable quarter one year ago and $41.06 million for the preceding quarter. The decrease in loans sold during the current quarter was primarily due to a decrease in single-family refinance loans originated as mortgage loan refinance activity diminished.
Timberland’s investment securities and CDs held for investment increased $9.74 million, or 6%, to $161.72 million at September 30, 2021, from $151.98 million at June 30, 2021. The increase was primarily due to the purchase of additional mortgage-backed investment securities and U.S. Treasury securities and was partially offset by CDs maturing during the quarter.
Timberland’s liquidity continues to remain strong. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 42.4% of total liabilities at September 30, 2021, compared to 39.2% at June 30, 2021, and 31.8% one year ago.
Deposits
Total deposits increased $212.15 million, or 16%, during the fiscal year to $1.57 billion at September 30, 2021 from $1.36 billion at September 30, 2020. The increase consisted of a $93.23 million increase in non-interest-bearing demand account balances, a $53.20 million in NOW checking account balances, a $49.20 million increase in money market account balances, and a $40.82 million increase in savings account balances. These increases were partially offset by a $24.40 million decrease in certificates of deposit account balances. Total deposits increased $47.90 million, or 3%, during the current quarter to $1.57 billion at September 30, 2021, from $1.52 billion at June 30, 2021. The quarter’s increase consisted of a $39.27 million increase in non-interest bearing account balances, an $8.73 million increase in money market account balances, a $5.59 million increase in savings account balances, and a $147,000 increase in NOW checking account balances. These increases were partially offset by a $5.84 million decrease in certificates of deposit account balances.
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 7
| Deposit Breakdown<br> ( in thousands) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2021 | September 30, 2020 | ||||||||||
| Percent | Amount | Percent | Amount | Percent | |||||||
| Non-interest-bearing demand | 535,212 | 34 | % | $ | 495,938 | 33 | % | $ | 441,889 | 32 | % |
| NOW checking | 430,097 | 27 | 429,950 | 28 | 376,899 | 28 | |||||
| Savings | 260,689 | 17 | 255,103 | 17 | 219,869 | 16 | |||||
| Money market | 199,045 | 13 | 189,443 | 12 | 149,922 | 11 | |||||
| Money market – reciprocal | 11,383 | 1 | 12,253 | 1 | 11,303 | 1 | |||||
| Certificates of deposit under 250 | 112,348 | 7 | 115,782 | 7 | 129,579 | 10 | |||||
| Certificates of deposit 250 and over | 21,781 | 1 | 24,183 | 2 | 28,945 | 2 | |||||
| Total deposits | 1,570,555 | 100 | % | $ | 1,522,652 | 100 | % | $ | 1,358,406 | 100 | % |
All values are in US Dollars.
Shareholders’ Equity and Capital Ratios
Total shareholders’ equity increased $3.41 million, or 2%, to $206.90 million at September 30, 2021, from $203.49 million at June 30, 2021. The increase in shareholders’ equity was primarily due to net income of $6.02 million for the quarter, which was partially offset by the payment of $2.59 million in dividends to shareholders. There were no shares repurchased during the quarter ended September 30, 2021. Timberland had 399,282 shares available to be repurchased on its existing stock repurchase plan at September 30, 2021.
Timberland remains well capitalized with a total risk-based capital ratio of 22.17% and a Tier 1 leverage capital ratio of 10.97% at September 30, 2021.
Asset Quality and Loan Deferrals
Timberland’s non-performing assets to total assets ratio was 0.18% at September 30, 2021, compared to 0.27% one year ago and 0.14% at June 30, 2021. There were no net charge-offs/recoveries for the current quarter compared to net recoveries of $35,000 for the preceding quarter and net recoveries of $20,000 for the comparable quarter one year ago. No provisions for loan losses were made during the current and preceding quarters compared to a $500,000 provision for loan losses for the comparable quarter one year ago.
Timberland has consistently worked with borrowers affected by the COVID-19 pandemic by offering loan deferral and forbearance plans during the pandemic. Deferrals were primarily approved for 90-day periods with interest continuing to accrue or with interest scheduled to be paid monthly. Nearly all borrowers that were granted deferrals have resumed making regular payments and as of September 30, 2021, only one loan with a balance of $323,000 remained on deferral status.
The allowance for loan losses (“ALL”) as a percentage of loans receivable was 1.37% at September 30, 2021, compared to 1.31% one year ago and 1.33% at June 30, 2021. If SBA PPP loans, which are 100% SBA guaranteed, are excluded, the ALL to loans receivable (excluding SBA PPP loans) at September 30, 2021 was 1.43% (non-GAAP).
The ALL as a percentage of loans receivable is also impacted by the loans acquired in the South Sound Acquisition. Included in the recorded value of loans acquired in acquisitions are net discounts which may reduce the need for an allowance for loan losses on such loans because they are carried at an amount below their outstanding principal balance. The initial recorded value of loans acquired in the South Sound Acquisition was $123.62 million and the related fair value discount was $2.08 million, or 1.68% of the loans acquired. The remaining fair value discount on loans acquired in the South Sound Acquisition was $449,000 at September 30, 2021. The allowance for loan losses to loans receivable (excluding SBA PPP loan balances and the remaining aggregate balance of the loans acquired in the South Sound Acquisition) was 1.49% (non-GAAP) at September 30, 2021.
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 8
The following table details the ALL as a percentage of loans receivable:
| Sept. 30, | June 30, | Sept. 30, | |
|---|---|---|---|
| 2021 | 2021 | 2020 | |
| ALL to loans receivable | 1.37% | 1.33% | 1.31% |
| ALL to loans receivable (excluding SBA PPP loans) (non-GAAP) | 1.43% | 1.46% | 1.49% |
| ALL to loans receivable (excluding SBA PPP loans and South Sound<br><br> <br>Acquisition loans) (non-GAAP) | 1.49% | 1.53% | 1.60% |
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $709,000, or 19%, to $3.04 million at September 30, 2021, from $3.75 million one year ago, and increased $97,000, or 3%, from $2.94 million at June 30, 2021. Non-accrual loans decreased $51,000, or 2%, to $2.85 million at September 30, 2021, from $2.91 million one year ago and increased $825,000, or 41%, from $2.03 million at June 30, 2021.
Non-Accrual Loans
($ in thousands)
| September 30, 2021 | June 30, 2021 | September 30, 2020 | ||||
|---|---|---|---|---|---|---|
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |
| Mortgage loans: | ||||||
| One- to four-family | $406 | 2 | $411 | 2 | $659 | 3 |
| Commercial | 773 | 2 | 373 | 1 | 858 | 4 |
| Land | 683 | 3 | 169 | 2 | 394 | 3 |
| Total mortgage loans | 1,862 | 7 | 953 | 5 | 1,911 | 10 |
| Consumer loans | ||||||
| Home equity and second | ||||||
| mortgage | 516 | 5 | 545 | 6 | 555 | 6 |
| Other | 17 | 2 | 18 | 2 | 9 | 1 |
| Total consumer loans | 533 | 7 | 563 | 8 | 564 | 7 |
| Commercial business loans | 459 | 6 | 513 | 7 | 430 | 6 |
| Total loans | $2,854 | 20 | $2,029 | 20 | $2,905 | 23 |
OREO and other repossessed assets decreased 85% to $157,000 at September 30, 2021, from $1.05 million at September 30, 2020, and remained unchanged from $157,000 at June 30, 2021. At September 30, 2021, the OREO and other repossessed asset portfolio consisted of three individual land parcels. No OREO properties were sold during the quarter ended September 30, 2021.
OREO and Other Repossessed Assets
($ in thousands)
| September 30, 2021 | June 30, 2021 | September 30, 2020 | ||||
|---|---|---|---|---|---|---|
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |
| Land | $ 157 | 3 | $ 157 | 3 | $ 1,050 | 6 |
| Total | $ 157 | 3 | $ 157 | 3 | $ 1,050 | 6 |
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
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 9
and $5.68825 in cash per share of South Sound Bank common stock. The Company issued 904,826 shares of its common stock (valued at $28,267,000 based on the Company’s closing stock price on September 30, 2018 of $31.24 per share) and paid $6,903,000 in cash in the transaction for total consideration paid of $35,170,000.
About Timberland Bancorp, Inc.
Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank. The Bank opened for business in 1915 and serves consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties, Washington with a full range of lending and deposit services through its 24 branches (including its main office in Hoquiam).
Disclaimer
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plan, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results anticipated or implied by our forward-looking statements, including, but not limited to: the effect of the novel coronavirus of 2019 (“COVID-19”) pandemic, including the Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets which may lead to increased losses and non-performing assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our loan loss reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; uncertainty regarding the future of the London Interbank Offered Rate (“LIBOR”), and the potential transition away from LIBOR toward new interest rate benchmarks; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; secondary market conditions for loans and our ability to sell loans in the secondary market; results of examinations of us by the Federal Reserve and our bank subsidiary by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action against us or our bank subsidiary which could require us to increase our allowance for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules including as a result of Basel III; the impact of the Dodd Frank Wall Street Reform and Consumer Protection Act and implementing regulations; our ability to attract and retain deposits; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risk associated with the loans on our consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our business strategies; our ability to manage loan delinquency rates; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common and stock; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board (“FASB”), including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of war or any terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations; pricing, products and services including the Coronavirus Aid, Relief, and Economic Security Act of
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 10
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.
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 11
| TIMBERLAND BANCORP INC. AND SUBSIDIARY<br> CONSOLIDATED STATEMENTS OF INCOME | Three Months Ended | ||
|---|---|---|---|
| ( in thousands, except per share amounts) | Sept. 30, | June 30, | Sept. 30, |
| (unaudited) | 2021 | 2021 | 2020 |
| $13,132 | $13,298 | $12,884 | |
| 318 | 292 | 305 | |
| 28 | 28 | 33 | |
| 301 | 247 | 371 | |
| 13,779 | 13,865 | 13,593 | |
| 654 | 690 | 1,044 | |
| 15 | 18 | 29 | |
| 669 | 708 | 1,073 | |
| 13,110 | 13,157 | 12,520 | |
| -- | -- | 500 | |
| 13,110 | 13,157 | 12,020 | |
| 967 | 948 | 1,011 | |
| 1,329 | 1,363 | 1,200 | |
| 537 | 1,607 | 2,149 | |
| 152 | 150 | 149 | |
| 12 | (9) | 22 | |
| 87 | (179) | (197) | |
| 5 | 6 | 7 | |
| 361 | 380 | 374 | |
| 3,450 | 4,266 | 4,715 | |
| 4,805 | 4,554 | 4,438 | |
| 993 | 995 | 1,048 | |
| 153 | 162 | 138 | |
| 2 | 5 | 215 | |
| 489 | 464 | 425 | |
| 159 | 141 | 152 | |
| 267 | 284 | 293 | |
| 331 | 262 | 342 | |
| 113 | 100 | 88 | |
| 153 | 148 | 89 | |
| 642 | 627 | 583 | |
| 273 | 289 | 278 | |
| 90 | 90 | 102 | |
| 547 | 492 | 552 | |
| 9,017 | 8,613 | 8,743 | |
| 7,543 | 8,810 | 7,992 | |
| 1,525 | 1,786 | 1,635 | |
| $ 6,018 | $ 7,024 | $ 6,357 | |
| $0.72 | $0.84 | $0.76 | |
| 0.71 | 0.83 | 0.76 | |
| 8,354,018 | 8,365,350 | 8,310,793 | |
| 8,454,636 | 8,465,393 | 8,379,170 |
All values are in US Dollars.
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 12
| TIMBERLAND BANCORP INC. AND SUBSIDIARY<br> CONSOLIDATED STATEMENTS OF INCOME | Year Ended | |
|---|---|---|
| ( in thousands, except per share amounts) | Sept. 30, | Sept. 30, |
| (unaudited) | 2021 | 2020 |
| $52,539 | $51,341 | |
| 1,195 | 1,579 | |
| 111 | 128 | |
| 1,117 | 2,535 | |
| 54,962 | 55,583 | |
| 3,013 | 4,635 | |
| 91 | 66 | |
| 3,104 | 4,701 | |
| 51,858 | 50,882 | |
| -- | 3,700 | |
| 51,858 | 47,182 | |
| 3,911 | 4,147 | |
| 5,084 | 4,378 | |
| 5,904 | 5,979 | |
| 597 | 591 | |
| 7 | 193 | |
| 110 | (221) | |
| 20 | 120 | |
| 1,528 | 2,001 | |
| 17,161 | 17,188 | |
| 18,750 | 18,351 | |
| 3,942 | 3,962 | |
| -- | (98) | |
| 625 | 631 | |
| (87) | 276 | |
| 1,831 | 1,628 | |
| 587 | 568 | |
| 1,088 | 998 | |
| 1,006 | 1,107 | |
| 415 | 204 | |
| 471 | 448 | |
| 2,510 | 2,285 | |
| 1,091 | 1,114 | |
| 361 | 406 | |
| 2,001 | 2,183 | |
| 34,591 | 34,063 | |
| 34,428 | 30,307 | |
| 6,845 | 6,038 | |
| $ 27,583 | $ 24,269 | |
| $3.31 | $2.91 | |
| 3.27 | 2.88 | |
| 8,340,983 | 8,326,600 | |
| 8,444,333 | 8,422,486 |
All values are in US Dollars.
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 13
| TIMBERLAND BANCORP INC. AND SUBSIDIARY<br> CONSOLIDATED BALANCE SHEETS | |||
|---|---|---|---|
| ( in thousands, except per share amounts) (unaudited) | Sept. 30, | June 30, | Sept. 30, |
| 2021 | 2021 | 2020 | |
| Assets | |||
| Cash and due from financial institutions | $ 26,316 | $ 25,387 | $ 21,877 |
| Interest-bearing deposits in banks | 553,880 | 478,339 | 292,575 |
| 580,196 | 503,726 | 314,452 | |
| Certificates of deposit (“CDs”) held for investment, at cost | 28,482 | 31,218 | 65,545 |
| Investment securities: | |||
| 69,102 | 52,314 | 27,890 | |
| 63,176 | 67,491 | 57,907 | |
| Investments in equity securities, at fair value | 955 | 960 | 977 |
| FHLB stock | 2,103 | 2,103 | 1,922 |
| Other investments, at cost | 3,000 | 3,000 | 3,000 |
| Loans held for sale | 3,217 | 3,359 | 4,509 |
| Loans receivable | 981,923 | 1,015,034 | 1,027,289 |
| Less: Allowance for loan losses | (13,469) | (13,469) | (13,414) |
| 968,454 | 1,001,565 | 1,013,875 | |
| Premises and equipment, net | 22,367 | 22,519 | 23,035 |
| OREO and other repossessed assets, net | 157 | 157 | 1,050 |
| BOLI | 22,193 | 22,041 | 21,596 |
| Accrued interest receivable | 3,745 | 4,260 | 4,484 |
| Goodwill | 15,131 | 15,131 | 15,131 |
| CDI | 1,264 | 1,354 | 1,625 |
| Loan servicing rights, net | 3,482 | 3,548 | 3,095 |
| Operating lease right-of-use assets | 2,283 | 2,360 | 2,587 |
| Other assets | 2,873 | 3,354 | 3,298 |
| $1,792,180 | $1,740,460 | $1,565,978 | |
| Liabilities and shareholders’ equity | |||
| Deposits: Non-interest-bearing demand | $ 535,212 | $ 495,938 | $ 441,889 |
| Deposits: Interest-bearing | 1,035,343 | 1,026,714 | 916,517 |
| 1,570,555 | 1,522,652 | 1,358,406 | |
| Operating lease liabilities | 2,359 | 2,432 | 2,630 |
| FHLB borrowings | 5,000 | 5,000 | 10,000 |
| Other liabilities and accrued expenses | 7,367 | 6,884 | 7,312 |
| 1,585,281 | 1,536,968 | 1,378,348 | |
| Shareholders’ equity | |||
| Common stock, .01 par value; 50,000,000 shares authorized;<br> 8,355,469 shares issued and outstanding – September 30, 2021<br> 8,353,969 shares issued and outstanding – June 30, 2021<br> 8,310,793 shares issued and outstanding – September 30, 2020 | 42,673 | 42,624 | 42,396 |
| Retained earnings | 164,167 | 160,739 | 145,173 |
| Accumulated other comprehensive income | 59 | 129 | 61 |
| 206,899 | 203,492 | 187,630 | |
| $1,792,180 | $1,740,460 | $1,565,978 |
All values are in US Dollars.
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 14
| KEY FINANCIAL RATIOS AND DATA | Three Months Ended | ||
|---|---|---|---|
| ($ in thousands, except per share amounts) (unaudited) | Sept. 30, | June 30, | Sept. 30, |
| 2021 | 2021 | 2020 | |
| PERFORMANCE RATIOS: | |||
| Return on average assets (a) | 1.36% | 1.63% | 1.65% |
| Return on average equity (a) | 11.77% | 14.02% | 13.78% |
| Net interest margin (a) | 3.13% | 3.22% | 3.44% |
| Efficiency ratio | 54.45% | 49.43% | 50.73% |
| Year Ended | |||
| Sept. 30, | Sept. 30, | ||
| 2021 | 2020 | ||
| PERFORMANCE RATIOS: | |||
| Return on average assets (a) | 1.64% | 1.75% | |
| Return on average equity (a) | 13.98% | 13.59% | |
| Net interest margin (a) | 3.25% | 3.90% | |
| Efficiency ratio | 50.12% | 50.04% | |
| Sept. 30, | June 30, | Sept. 30, | |
| 2021 | 2021 | 2020 | |
| ASSET QUALITY RATIOS AND DATA: | |||
| Non-accrual loans | $2,854 | $2,029 | $2,905 |
| Loans past due 90 days and still accruing | -- | -- | -- |
| Non-performing investment securities | 159 | 179 | 209 |
| OREO and other repossessed assets | 157 | 157 | 1,050 |
| Total non-performing assets (b) | $3,170 | $2,365 | $4,164 |
| Non-performing assets to total assets (b) | 0.18% | 0.14% | 0.27% |
| Net charge-offs (recoveries) during quarter | $ -- | $ (35) | $ (20) |
| ALL to non-accrual loans | 472% | 664% | 462% |
| ALL to loans receivable (c) | 1.37% | 1.33% | 1.31% |
| ALL to loans receivable (excluding SBA PPP loans) (d) (non-GAAP) | 1.43% | 1.46% | 1.49% |
| ALL to loans receivable (excluding SBA PPP loans and South Sound<br><br> <br>Acquisition loans) (d) (e) (non-GAAP) | 1.49% | 1.53% | 1.60% |
| Troubled debt restructured loans on accrual status (f) | $ 2,371 | $ 2,380 | $ 2,868 |
| CAPITAL RATIOS: | |||
| Tier 1 leverage capital | 10.97% | 11.03% | 11.26% |
| Tier 1 risk-based capital | 20.92% | 21.34% | 20.08% |
| Common equity Tier 1 risk-based capital | 20.92% | 21.34% | 20.08% |
| Total risk-based capital | 22.17% | 22.60% | 21.34% |
| Tangible common equity to tangible assets (non-GAAP) | 10.73% | 10.85% | 11.03% |
| BOOK VALUES: | |||
| Book value per common share | $ 24.76 | $ 24.36 | $ 22.58 |
| Tangible book value per common share (g) | 22.80 | 22.39 | 20.56 |
________________________________________________
(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 $40,922, $95,633 and $126,820 at September 30, 2021, June 30, 2021 and September 30, 2020, respectively.
(e) Does not include loans acquired in the South Sound Acquisition totaling $36,491, $40,622 and $63,721 at September 30, 2021, June 30, 2021 and September 30, 2020, respectively.
(f) Does not include troubled debt restructured loans totaling $182, $187 and $203 reported as non-accrual loans at September 30, 2021, June 30, 2021 and September 30, 2020, respectively.
(g) Tangible common equity divided by common shares outstanding (non-GAAP).
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 15
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($ in thousands)
(unaudited)
| For the Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2021 | June 30, 2021 | September 30, 2020 | |||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||
| Assets | |||||||||||||||
| Loans receivable and loans held for sale | $ | 1,000,063 | 5.25 | % | $ | 1,032,591 | 5.15 | % | $ | 1,031,689 | 5.00 | % | |||
| Investment securities and FHLB stock (1) | 125,627 | 1.10 | 115,839 | 1.10 | 84,756 | 1.59 | |||||||||
| Interest-earning deposits in banks and CDs | 551,918 | 0.22 | 487,508 | 0.20 | 339,224 | 0.44 | |||||||||
| Total interest-earning assets | 1,677,608 | 3.29 | 1,635,938 | 3.39 | 1,455,669 | 3.74 | |||||||||
| Other assets | 86,838 | 87,638 | 87,140 | ||||||||||||
| Total assets | $ | 1,764,446 | $ | 1,723,576 | $ | 1,542,809 | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||
| NOW checking accounts | $ | 421,095 | 0.13 | % | $ | 416,234 | 0.13 | % | $ | 360,622 | 0.23 | % | |||
| Money market accounts | 202,435 | 0.29 | 196,187 | 0.29 | 159,951 | 0.38 | |||||||||
| Savings accounts | 257,856 | 0.08 | 253,147 | 0.08 | 214,080 | 0.09 | |||||||||
| Certificates of deposit accounts | 137,518 | 0.91 | 141,301 | 1.02 | 161,674 | 1.55 | |||||||||
| Total interest-bearing deposits | 1,018,904 | 0.26 | 1,006,869 | 0.27 | 896,327 | 0.47 | |||||||||
| Borrowings | 5,000 | 1.19 | 5,769 | 1.25 | 10,000 | 1.15 | |||||||||
| Total interest-bearing liabilities | 1,023,904 | 0.26 | 1,012,638 | 0.28 | 906,327 | 0.47 | |||||||||
| Non-interest-bearing demand deposits | 525,047 | 499,383 | 440,950 | ||||||||||||
| Other liabilities | 10,991 | 11,217 | 10,966 | ||||||||||||
| Shareholders’ equity | 204,504 | 200,338 | 184,566 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,764,446 | $ | 1,723,576 | $ | 1,542,809 | |||||||||
| Interest rate spread | 3.03 | % | 3.11 | % | 3.27 | % | |||||||||
| Net interest margin (2) | 3.13 | % | 3.22 | % | 3.44 | % | |||||||||
| Average interest-earning assets to | |||||||||||||||
| average interest-bearing liabilities | 163.84 | % | 161.55 | % | 160.61 | % |
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 16
AVERAGE BALANCES, YIELDS, AND RATES – YEAR-TO-DATE
($ in thousands)
(unaudited)
| For the Year Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2021 | September 30, 2020 | |||||||||
| Amount | Rate | Amount | Rate | |||||||
| Assets | ||||||||||
| Loans receivable and loans held for sale | $ | 1,026,742 | 5.12 | % | $ | 970,400 | 5.29 | % | ||
| Investment securities and FHLB stock (1) | 109,317 | 1.19 | 78,412 | 2.18 | ||||||
| Interest-earning deposits in banks and CDs | 459,145 | 0.25 | 254,558 | 1.00 | ||||||
| Total interest-earning assets | 1,595,204 | 3.45 | 1,303,370 | 4.26 | ||||||
| Other assets | 85,939 | 85,842 | ||||||||
| Total assets | $ | 1,681,143 | $ | 1,389,212 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||
| NOW checking accounts | $ | 402,430 | 0.15 | % | $ | 323,261 | 0.27 | % | ||
| Money market accounts | 186,489 | 0.30 | 148,506 | 0.49 | ||||||
| Savings accounts | 242,598 | 0.08 | 191,618 | 0.10 | ||||||
| Certificates of deposit accounts | 145,006 | 1.14 | 166,521 | 1.70 | ||||||
| Total interest-bearing deposits | 976,523 | 0.31 | 829,906 | 0.56 | ||||||
| Borrowings | 7,686 | 1.18 | 5,685 | 1.16 | ||||||
| Total interest-bearing liabilities | 984,209 | 0.32 | 835,591 | 0.56 | ||||||
| Non-interest-bearing demand deposits | 488,833 | 364,971 | ||||||||
| Other liabilities | 10,816 | 10,110 | ||||||||
| Shareholders’ equity | 197,285 | 178,540 | ||||||||
| Total liabilities and shareholders’ equity | $ | 1,681,143 | $ | 1,389,212 | ||||||
| Interest rate spread | 3.13 | % | 3.70 | % | ||||||
| Net interest margin (2) | 3.25 | % | 3.90 | % | ||||||
| Average interest-earning assets to | ||||||||||
| average interest-bearing liabilities | 162.08 | % | 155.98 | % |
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets
Timberland Fiscal Q4 2021 Earnings
October 28, 2021
Page 17
Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. Timberland believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.
Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Timberland provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders’ equity less goodwill and CDI. In addition, tangible assets equal total assets less goodwill and CDI.
The following table provides a reconciliation of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP) and ending total assets (GAAP) to ending tangible assets (non-GAAP).
| ($ in thousands) | September 30, 2021 | June 30, 2021 | September 30, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Shareholders’ equity | $ | 206,899 | $ | 203,492 | $ | 187,630 | |||
| Less goodwill and CDI | (16,395 | ) | (16,485 | ) | (16,756 | ) | |||
| Tangible common equity | $ | 190,504 | $ | 187,007 | $ | 170,874 | |||
| Total assets | $ | 1,792,180 | $ | 1,740,460 | $ | 1,565,978 | |||
| Less goodwill and CDI | (16,395 | ) | (16,485 | ) | (16,756 | ) | |||
| Tangible assets | $ | 1,775,785 | $ | 1,723,975 | $ | 1,549,222 |