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): April 26, 2022
Timberland Bancorp, Inc.
(Exact name of registrant as specified in its charter)
| Washington | 000-23333 | 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 230.425) | ||
| ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
| ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR <br><br> 240.14d-2(b)) | ||
| ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange 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 April 26, 2022, Timberland Bancorp, Inc. (the “Company”) issued its earnings release for the quarter ended March 31, 2022. The release also announced the declaration of a quarterly cash dividend of $0.22 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 April 26, 2022
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: April 26, 2022 | By: /s/ Dean J. Brydon |
| Dean J. Brydon<br><br> <br>President & Chief Financial Officer |
Exhibit 99.1
Contact: Michael R. Sand, CEO
Dean J. Brydon, President & CFO
\(360\) 533-4747
www.timberlandbank.com
Timberland Bancorp Announces Second Fiscal Quarter Earnings
| • | Second Fiscal Quarter Net Income of $5.33 Million |
|---|---|
| • | Quarterly Return on Average Equity of 10.10% |
| --- | --- |
| • | Loan Portfolio (Excluding PPP Loans) Increased 6% During Quarter |
| --- | --- |
| • | Announces $0.22 Quarterly Cash Dividend |
| --- | --- |
HOQUIAM, WA – April 26, 2022 – Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”), the holding company for Timberland Bank (the “Bank”), today reported net income of $5.33 million, or $0.63 per diluted common share, for the quarter ended March 31, 2022. This compares to net income of $5.49 million, or $0.65 per diluted common share, for the preceding quarter and $7.25 million, or $0.86 per diluted common share, for the comparable quarter one year ago.
For the first six months of fiscal 2022, Timberland earned $10.81 million, or $1.28 per diluted common share, compared to $14.54 million or $1.73 per diluted common share for the first six months of fiscal 2021.
Timberland’s Board of Directors declared a quarterly cash dividend to shareholders of $0.22 per share, payable on May 27, 2022, to shareholders of record on May 13, 2022.
“We are pleased to report strong growth during the past quarter,” stated Michael Sand, CEO. “Net loans receivable, excluding Paycheck Protection Program loans (“PPP”), increased 5.7% (22.8% annualized) primarily due to increases in commercial real estate and commercial business loans originated within our western Washington market footprint. We continue to see opportunities for loan originations within our local markets and are pleased to observe reduced prepayment activity which has allowed loan originations to be more additive to net loans receivable.”
“In addition to using excess liquidity to fund loan growth, we also deployed funds into short and moderate duration investments to supplement interest income,” said Sand. “The Bank continues to be positioned to benefit from Federal Reserve actions to increase interest rates and we anticipate continued opportunities to invest excess liquidity during the next several quarters as the Fed begins reducing its balance sheet in conjunction with anticipated rate increases.”
Second Fiscal Quarter 2022 Earnings and Balance Sheet Highlights (at or for the period ended March 31, 2022, compared to March 31, 2021, or December 31, 2021):
Earnings Highlights:
| • | Net income was $5.33 million for the current quarter compared to $5.49 million for the preceding quarter and $7.25 million<br> for the comparable quarter one year ago; EPS was $0.63 for the current quarter compared to $0.65 for the preceding quarter and $0.86 for the comparable quarter one year ago; |
|---|---|
| • | Net income was $10.81 million for the first six months of fiscal 2022 compared to $14.54 million for the first six months of<br> fiscal 2021; EPS was $1.28 for the first six months of fiscal 2022 compared to $1.73 for the first six months of fiscal 2021; |
| --- | --- |
| • | Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were 10.10% and 1.16%,<br> respectively; |
| --- | --- |
| • | Net interest margin (“NIM”) was 2.95% for the current quarter compared to 2.92% for the preceding quarter and 3.21% for the<br> comparable quarter one year ago; and |
| --- | --- |
| • | The efficiency ratio was 58.42% for the current quarter compared to 57.40% for the preceding quarter and 48.99% for the<br> comparable quarter one year ago. |
| --- | --- |
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 2
Balance Sheet Highlights:
| • | Total assets increased 10% year-over-year and 3% from the prior quarter; |
|---|---|
| • | Total deposits increased 12% year-over-year and 3% from the prior quarter; |
| --- | --- |
| • | Net loans receivable (excluding SBA PPP loans) increased 15% year-over-year and 6% from the prior quarter; |
| --- | --- |
| • | Net loans receivable (including SBA PPP loans) increased 4% from the prior quarter; |
| --- | --- |
| • | Non-performing assets to total assets ratio improved to 0.16% from 0.17% at December 31, 2021; and |
| --- | --- |
| • | Book and tangible book (non-GAAP) values per common share increased to $25.56 and $23.60, respectively, at March 31, 2022. |
| --- | --- |
Operating Results
Operating revenue (net interest income before the provision for loan losses plus non-interest income) decreased 1% to $15.98 million for the first fiscal quarter from $16.14 million for the preceding quarter and decreased 8% from $17.45 million for the comparable quarter one year ago. The decrease in operating revenue compared to the preceding quarter was primarily due to a $259,000 decrease in PPP loan income and a $247,000 decrease in gain on sales of loans. Operating revenue decreased 8% to $32.11 million for the first six months of fiscal 2022 from $35.04 million for the comparable period one year ago, primarily due to a $2.68 million decrease in gain on sales of loans and a $1.15 million decrease in PPP loan income.
Net interest income increased 2% to $12.89 million for the current quarter from $12.70 million for the preceding quarter and increased 3% from $12.57 million for the comparable quarter one year ago. Timberland’s NIM for the current quarter was 2.95% compared to 2.92% for the preceding quarter and 3.21% for the comparable quarter one year ago. The NIM for the current 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 preceding quarter was increased by approximately four basis points due to the accretion of $57,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $114,000 in pre-payment penalties, non-accrual interest and late fees. The NIM for the comparable quarter one year ago was increased by approximately six basis points due to the accretion of $86,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $129,000 in pre-payment penalties, non-accrual interest and late fees. Net interest income was $25.59 million for both the first six months of fiscal 2022 and fiscal 2021. Timberland’s net interest margin for the first six months of fiscal 2022 was 2.93% compared to 3.34% for the first six 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 March 31, 2022, Timberland had SBA PPP deferred loan origination fees of $199,000 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<br> ( in thousands) | |||||
|---|---|---|---|---|---|
| Dec. 31, 2021 | March 31, 2021 | ||||
| Interest income | 31 | $ | 71 | $ | 306 |
| Loan origination fee accretion | 708 | 927 | 1,143 | ||
| Total SBA PPP loan income | 739 | $ | 998 | $ | 1,449 |
All values are in US Dollars.
No provision for loan losses was made during the quarters ended March 31, 2022, December 31, 2021, and March 31, 2021.
Non-interest income decreased 10% to $3.08 million for the current quarter from $3.44 million for the preceding quarter and decreased 37% from $4.89 million for the comparable quarter one year ago. The decrease in non-interest income compared to the preceding quarter was primarily due to a $247,000 decrease in gain on sales of loans, a $119,000 decrease in the valuation recovery on loan servicing rights, and smaller decreases in several other categories. These decreases were partially offset by a $101,000 increase in service charges on deposits. The year-over-year decrease in non-interest income was primarily due to a $1.34 million decrease in gain on sales of loans and a $438,000 decrease in the valuation recovery on loan servicing rights.
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 3
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 loans originated and sold during the current quarter (as refinance demand slowed) and a decrease in the average pricing margin compared to the same period last year. Fiscal year-to-date non-interest income decreased 31% to $6.53 million from $9.45 million for the first six months of fiscal 2021, primarily due to a $2.68 million decrease in gain on sales of loans.
Total operating expenses for the current quarter increased $69,000, or 1%, to $9.33 million from $9.26 million for the preceding quarter and increased $782,000, or 9%, from $8.55 million for the comparable quarter one year ago. The increase in operating expenses compared to the preceding quarter was primarily due to a $73,000 increase in professional fee expense and smaller increases in several other expense categories. These increases were partially offset by smaller decreases in several expense categories. Fiscal year-to-date operating expenses increased 10% to $18.60 million from $16.96 million for the first six months of fiscal 2021. The year-to-date increase in operating expenses was primarily due to annual salary adjustments (effective October 1^st^) and the hiring of additional lending personnel. The efficiency ratio for the current quarter was 58.42% compared to 57.40% for the preceding quarter and 48.99% for the comparable quarter one year ago. The efficiency ratio for the first six months of fiscal 2022 was 57.91% compared to 48.41% for the first six months of fiscal 2022.
The provision for income taxes for the current quarter decreased $73,000 to $1.32 million from $1.39 million for the preceding quarter, primarily due to lower taxable income. Timberland’s effective income tax rate was 19.8% for the quarter ended March 31, 2022 compared to 20.2% for the quarter ended December 31, 2021 and 18.6% for the quarter ended quarter ended March 31, 2021. Timberland’s effective income tax rate was 20.0% for the first six months of fiscal 2022 compared to 19.6% for the first six months of fiscal 2021.
Balance Sheet Management
Total assets increased $46.20 million, or 3%, to $1.88 billion at March 31, 2022 from $1.83 billion at December 31, 2021. The quarter’s increase was primarily due to a $72.80 million increase in investment securities and CDs held for investment, a $40.07 million increase in net loans receivable, and smaller increases in several other categories. These increases were partially offset by a $66.02 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 $40.07 million, or 4%, to $1.03 billion at March 31, 2022 from $994.01 million at December 31, 2021. This increase was primarily due to a $26.12 million increase in commercial real estate loans, a $23.64 million increase in commercial business loans (non-PPP), a $5.29 million decrease in the undisbursed portion of construction loans in process, a $4.77 million increase in one- to four-family loans and smaller increases in other loan categories. These increases to net loans receivable were partially offset by a $15.46 million decrease in SBA PPP loans, a $5.45 million decrease in construction loans, and smaller decreases in several other loan categories.
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 4
| Loan Portfolio<br> ( in thousands) | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2022 | December 31, 2021 | March 31, 2021 | |||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||
| Mortgage loans: | |||||||||||||||||
| One- to four-family (a) | 12 | % | $ | 129,151 | 12 | % | $ | 117,184 | 10 | % | |||||||
| Multi-family | 7 | 84,180 | 7 | 92,435 | 8 | ||||||||||||
| Commercial | 45 | 497,361 | 44 | 461,966 | 40 | ||||||||||||
| Construction - custom and | |||||||||||||||||
| owner/builder | 10 | 116,267 | 10 | 105,305 | 9 | ||||||||||||
| Construction - speculative<br><br> <br>one-to four-family | 1 | 18,255 | 2 | 17,289 | 2 | ||||||||||||
| Construction - commercial | 3 | 42,611 | 4 | 42,340 | 4 | ||||||||||||
| Construction - multi-family | 6 | 54,710 | 5 | 44,266 | 4 | ||||||||||||
| Construction - land | |||||||||||||||||
| development | 1 | 13,680 | 1 | 2,238 | -- | ||||||||||||
| Land | 2 | 18,568 | 2 | 19,041 | 2 | ||||||||||||
| Total mortgage loans | 87 | 974,783 | 87 | 902,064 | 79 | ||||||||||||
| Consumer loans: | |||||||||||||||||
| Home equity and second | |||||||||||||||||
| mortgage | 3 | 34,375 | 3 | 32,026 | 3 | ||||||||||||
| Other | -- | 2,462 | -- | 2,756 | -- | ||||||||||||
| Total consumer loans | 3 | 36,837 | 3 | 34,782 | 3 | ||||||||||||
| Commercial loans: | |||||||||||||||||
| Commercial business loans | 9 | 85,006 | 8 | 66,645 | 6 | ||||||||||||
| SBA PPP loans | 1 | 21,397 | 2 | 138,175 | 12 | ||||||||||||
| Total commercial loans | 10 | 106,403 | 10 | 204,820 | 18 | ||||||||||||
| Total loans | 100 | % | 1,118,023 | 100 | % | 1,141,666 | 100 | % | |||||||||
| Less: | |||||||||||||||||
| Undisbursed portion of | |||||||||||||||||
| construction loans in | |||||||||||||||||
| process | ) | (106,009 | ) | (90,550 | ) | ||||||||||||
| Deferred loan origination | |||||||||||||||||
| fees | ) | (4,539 | ) | (6,999 | ) | ||||||||||||
| Allowance for loan losses | ) | (13,468 | ) | (13,434 | ) | ||||||||||||
| Total loans receivable, net | $ | 994,007 | $ | 1,030,683 |
All values are in US Dollars.
_______________________
| (a) | Does not include one- to four-family loans held for sale totaling $2,772, $3,700 and $8,455 at March 31, 2022, December 31,<br> 2021, and March 31, 2021, respectively. |
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Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 5
The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of March 31, 2022:
| 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> Portfolio | |||||
| Industrial warehouse | 101,045 | 19 | % | 9 | % | ||
| Office buildings | 72,613 | 14 | 6 | ||||
| Medical/dental offices | 65,500 | 12 | 5 | ||||
| Other retail buildings | 47,518 | 9 | 4 | ||||
| Restaurants | 29,532 | 6 | 3 | ||||
| Hotel/motel | 26,152 | 5 | 2 | ||||
| Mini-storage | 23,226 | 4 | 2 | ||||
| Convenience stores | 22,645 | 4 | 2 | ||||
| Nursing homes | 18,591 | 4 | 2 | ||||
| Shopping centers | 10,655 | 2 | 1 | ||||
| Churches | 8,173 | 2 | 1 | ||||
| Additional CRE | 97,829 | 19 | 8 | ||||
| Total CRE | 523,479 | 100 | % | 45 | % |
All values are in US Dollars.
Timberland originated $130.41 million in loans during the quarter ended March 31, 2022, compared to $167.15 million for the comparable quarter one year ago and $178.84 million in 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 $16.88 million were sold compared to $41.29 million for the comparable quarter one year ago and $22.56 million for the preceding quarter. 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 $72.80 million, or 37%, to $269.55 million at March 31, 2022, from $196.75 million at December 31, 2021. The increase was primarily due to the purchase of additional U.S Treasury securities, mortgage-backed investment securities, and CDs held in other financial institutions.
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 34.3% of total liabilities at March 31, 2022, compared to 39.5% at December 31, 2021, and 36.1% one year ago.
Deposits
Total deposits increased $49.80 million, or 3%, during the current quarter to $1.66 billion at March 31, 2022, from $1.61 billion at December 31, 2021. The quarter’s increase consisted of a $35.60 million increase in money market account balances, an $18.94 million increase in savings account balances, and a $1.97 million increase in non-interest bearing account balances. These increases were partially offset by a $5.51 million decrease in certificates of deposit account balances and a $1.21 million decrease in NOW checking account balances.
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 6
| Deposit Breakdown<br> ( in thousands) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2021 | March 31, 2021 | |||||||||||||
| Percent | Amount | Percent | Amount | Percent | ||||||||||
| Non-interest-bearing demand | 525,488 | 32 | % | $ | 523,518 | 33 | % | $ | 499,541 | 34 | % | |||
| NOW checking | 457,874 | 28 | 459,079 | 28 | 403,811 | 27 | ||||||||
| Savings | 288,361 | 18 | 269,423 | 17 | 250,736 | 17 | ||||||||
| Money market | 251,631 | 15 | 211,837 | 13 | 171,896 | 11 | ||||||||
| Money market – reciprocal | 6,426 | -- | 10,619 | 1 | 13,094 | 1 | ||||||||
| Certificates of deposit under 250 | 106,208 | 6 | 110,168 | 7 | 119,388 | 8 | ||||||||
| Certificates of deposit 250 and over | 20,438 | 1 | 21,987 | 1 | 23,393 | 2 | ||||||||
| Total deposits | 1,656,426 | 100 | % | $ | 1,606,631 | 100 | % | $ | 1,481,859 | 100 | % |
All values are in US Dollars.
Shareholders’ Equity and Capital Ratios
Total shareholders’ equity increased $1.89 million, or 1%, to $212.27 million at March 31, 2022, from $210.37 million at December 31, 2021. The increase in shareholders’ equity was primarily due to net income of $5.33 million for the quarter, which was partially offset by the payment of $1.84 million in dividends to shareholders and the repurchase of 61,565 shares of common stock for $1.72 million (an average price of $27.88 per share). Timberland had 322,169 shares available to be repurchased on its existing stock repurchase plan at March 31, 2022.
Timberland remains well capitalized with a total risk-based capital ratio of 20.75% and a Tier 1 leverage capital ratio of 10.86% at March 31, 2022.
Asset Quality
Timberland’s non-performing assets to total assets ratio was 0.16% at March 31, 2022, compared to 0.17% at December 31, 2021 and 0.16% one year ago. There were net charge-offs of $35,000 for the current quarter compared to net charge-offs of $1,000 for the preceding quarter and net recoveries of $2,000 for the comparable quarter one year ago. No provisions for loan losses were made during the quarters ended March 31, 2022, December 31, 2021, and March 31, 2021.
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. All borrowers that were granted COVID-19 deferrals have resumed making regular payments as of March 31, 2022.
The allowance for loan losses (“ALL”) as a percentage of loans receivable was 1.28% at March 31, 2022, compared to 1.29% one year ago and 1.34% at December 31, 2021. If SBA PPP loans, which are 100% SBA guaranteed, are excluded, the ALL to loans receivable (excluding SBA PPP loans) at March 31, 2022 was 1.29% (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 $358,000 at March 31, 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 1.33% (non-GAAP) at March 31, 2022.
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 7
The following table details the ALL as a percentage of loans receivable:
| March 31, | Dec. 31, | March 31, | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2021 | |||||||
| ALL to loans receivable | 1.28 | % | 1.34 | % | 1.29 | % | |||
| ALL to loans receivable (excluding SBA PPP loans) (non-GAAP) | 1.29 | % | 1.37 | % | 1.48 | % | |||
| ALL to loans receivable (excluding SBA PPP loans and South Sound<br><br> <br>Acquisition loans) (non-GAAP) | 1.33 | % | 1.41 | % | 1.56 | % |
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $290,000, or 9%, to $2.95 million at March 31, 2022, from $3.24 million at December 31, 2021, and decreased $982,000, or 25%, from $3.93 million one year ago. Non-accrual loans decreased $202,000, or 7%, to $2.65 million at March 31, 2022, from $2.85 million at December 31, 2021 and increased $346,000, or 15%, from $2.31 million one year ago.
Non-Accrual Loans
($ in thousands)
| March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |||||||
| Mortgage loans: | ||||||||||||
| One- to four-family | $ | 578 | 3 | $ | 582 | 3 | $ | 415 | 2 | |||
| Commercial | 671 | 3 | 675 | 2 | 643 | 2 | ||||||
| Land | 723 | 4 | 676 | 3 | 173 | 2 | ||||||
| Total mortgage loans | 1,972 | 10 | 1,933 | 8 | 1,231 | 6 | ||||||
| Consumer loans | ||||||||||||
| Home equity and second | ||||||||||||
| mortgage | 269 | 2 | 456 | 4 | 539 | 6 | ||||||
| Other | 5 | 1 | 5 | 1 | 8 | 1 | ||||||
| Total consumer loans | 274 | 3 | 461 | 5 | 547 | 7 | ||||||
| Commercial business loans | 405 | 6 | 459 | 7 | 527 | 7 | ||||||
| Total loans | $ | 2,651 | 19 | $ | 2,853 | 20 | $ | 2,305 | 20 |
OREO and other repossessed assets were $157,000 at March 31, 2022, December 31, 2021 and March 31, 2021. At March 31, 2022, the OREO and other repossessed asset portfolio consisted of three individual land parcels. No OREO properties were sold during the quarter ended March 31, 2022.
OREO and Other Repossessed Assets
($ in thousands)
| March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |||||||
| Land | $ | 157 | 3 | $ | 157 | 3 | $ | 157 | 3 | |||
| Total | $ | 157 | 3 | $ | 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.
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 8
About Timberland Bancorp, Inc.
Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank. The Bank opened for business in 1915 and serves consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties, Washington with a full range of lending and deposit services through its 24 branches (including its main office in Hoquiam).
Disclaimer
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plan, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results anticipated or implied by our forward-looking statements, including, but not limited to: the effect of the novel coronavirus of 2019 (“COVID-19”) pandemic, including the Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets which may lead to increased losses and non-performing assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our loan loss reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; uncertainty regarding the future of the London Interbank Offered Rate (“LIBOR”), and the potential transition away from LIBOR toward new interest rate benchmarks; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; secondary market conditions for loans and our ability to sell loans in the secondary market; results of examinations of us by the Federal Reserve and our bank subsidiary by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action against us or our bank subsidiary which could require us to increase our allowance for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules including as a result of Basel III; the impact of the Dodd Frank Wall Street Reform and Consumer Protection Act and implementing regulations; our ability to attract and retain deposits; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risk associated with the loans on our consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our business strategies; our ability to manage loan delinquency rates; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common and stock; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board (“FASB”), including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of war or any terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations; pricing, products and services including the Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES Act”), the Consolidated Appropriations Act, 2021 (“CAA”), and the American Rescue Plan Act of 2021; and other risks detailed in our reports filed with the Securities and Exchange Commission.
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 9
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 Q2 2022 Earnings
April 26, 2022
Page 10
| TIMBERLAND BANCORP INC. AND SUBSIDIARY<br><br> <br>CONSOLIDATED STATEMENTS OF INCOME | Three Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share amounts) (unaudited) | March 31, | Dec. 31, | March 31, | |||||
| 2022 | 2021 | 2021 | ||||||
| Interest and dividend income | ||||||||
| Loans receivable | $ | 12,620 | $ | 12,622 | $ | 12,790 | ||
| Investment securities | 590 | 405 | 284 | |||||
| Dividends from mutual funds, FHLB stock and other investments | 27 | 27 | 27 | |||||
| Interest bearing deposits in banks | 283 | 288 | 259 | |||||
| Total interest and dividend income | 13,520 | 13,342 | 13,360 | |||||
| Interest expense | ||||||||
| Deposits | 625 | 631 | 764 | |||||
| Borrowings | 2 | 15 | 29 | |||||
| Total interest expense | 627 | 646 | 793 | |||||
| Net interest income | 12,893 | 12,696 | 12,567 | |||||
| Provision for loan losses | -- | -- | -- | |||||
| Net interest income after provision for loan losses | 12,893 | 12,696 | 12,567 | |||||
| Non-interest income | ||||||||
| Service charges on deposits | 1,014 | 913 | 941 | |||||
| ATM and debit card interchange transaction fees | 1,247 | 1,277 | 1,237 | |||||
| Gain on sales of loans, net | 416 | 663 | 1,758 | |||||
| Bank owned life insurance (“BOLI”) net earnings | 152 | 154 | 146 | |||||
| Valuation recovery on loan servicing rights, net | -- | 119 | 438 | |||||
| Recoveries on investment securities, net | 3 | 8 | 3 | |||||
| Other | 251 | 308 | 363 | |||||
| Total non-interest income, net | 3,083 | 3,442 | 4,886 | |||||
| Non-interest expense | ||||||||
| Salaries and employee benefits | 5,192 | 5,171 | 4,778 | |||||
| Premises and equipment | 988 | 928 | 998 | |||||
| Advertising | 161 | 166 | 155 | |||||
| OREO and other repossessed assets, net | 2 | (18 | ) | (68 | ) | |||
| ATM and debit card processing | 450 | 464 | 445 | |||||
| Postage and courier | 164 | 136 | 149 | |||||
| State and local taxes | 235 | 255 | 255 | |||||
| Professional fees | 322 | 271 | 181 | |||||
| FDIC insurance expense | 126 | 128 | 105 | |||||
| Loan administration and foreclosure | 96 | 104 | 90 | |||||
| Data processing and telecommunications | 669 | 613 | 634 | |||||
| Deposit operations | 262 | 299 | 245 | |||||
| Amortization of core deposit intangible (“CDI”) | 79 | 79 | 91 | |||||
| Other, net | 587 | 668 | 493 | |||||
| Total non-interest expense, net | 9,333 | 9,264 | 8,551 | |||||
| Income before income taxes | 6,643 | 6,874 | 8,902 | |||||
| Provision for income taxes | 1,316 | 1,389 | 1,651 | |||||
| Net income | $ | 5,327 | $ | 5,485 | $ | 7,251 | ||
| Net income per common share: | ||||||||
| Basic | $ | 0.64 | $ | 0.66 | $ | 0.87 | ||
| Diluted | 0.63 | 0.65 | 0.86 | |||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 8,337,407 | 8,356,066 | 8,331,121 | |||||
| Diluted | 8,421,875 | 8,448,900 | 8,444,798 |
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 11
| TIMBERLAND BANCORP INC. AND SUBSIDIARY<br><br> <br>CONSOLIDATED STATEMENTS OF INCOME | Six Months Ended | |||||
|---|---|---|---|---|---|---|
| ($ in thousands, except per share amounts) (unaudited) | March 31, | March 31, | ||||
| 2022 | 2021 | |||||
| Interest and dividend income | ||||||
| Loans receivable | $ | 25,242 | $ | 26,108 | ||
| Investment securities | 996 | 585 | ||||
| Dividends from mutual funds, FHLB stock and other investments | 54 | 55 | ||||
| Interest bearing deposits in banks | 571 | 569 | ||||
| Total interest and dividend income | 26,863 | 27,317 | ||||
| Interest expense | ||||||
| Deposits | 1,257 | 1,668 | ||||
| Borrowings | 17 | 58 | ||||
| Total interest expense | 1,274 | 1,726 | ||||
| Net interest income | 25,589 | 25,591 | ||||
| Provision for loan losses | -- | -- | ||||
| Net interest income after provision for loan losses | 25,589 | 25,591 | ||||
| Non-interest income | ||||||
| Service charges on deposits | 1,927 | 1,996 | ||||
| ATM and debit card interchange transaction fees | 2,523 | 2,393 | ||||
| Gain on sales of loans, net | 1,079 | 3,760 | ||||
| Bank owned life insurance (“BOLI”) net earnings | 305 | 295 | ||||
| Valuation recovery on loan servicing rights, net | 119 | 202 | ||||
| Recoveries on investment securities, net | 11 | 8 | ||||
| Other | 561 | 791 | ||||
| Total non-interest income, net | 6,525 | 9,445 | ||||
| Non-interest expense | ||||||
| Salaries and employee benefits | 10,363 | 9,391 | ||||
| Premises and equipment | 1,916 | 1,955 | ||||
| Advertising | 327 | 311 | ||||
| OREO and other repossessed assets, net | (16 | ) | (94 | ) | ||
| ATM and debit card processing | 914 | 876 | ||||
| Postage and courier | 300 | 287 | ||||
| State and local taxes | 489 | 538 | ||||
| Professional fees | 593 | 412 | ||||
| FDIC insurance expense | 254 | 201 | ||||
| Loan administration and foreclosure | 200 | 171 | ||||
| Data processing and telecommunications | 1,282 | 1,240 | ||||
| Deposit operations | 561 | 529 | ||||
| Amortization of CDI | 158 | 181 | ||||
| Other, net | 1,256 | 963 | ||||
| Total non-interest expense, net | 18,597 | 16,961 | ||||
| Income before income taxes | 13,517 | 18,075 | ||||
| Provision for income taxes | 2,705 | 3,534 | ||||
| Net income | $ | 10,812 | $ | 14,541 | ||
| Net income per common share: | ||||||
| Basic | $ | 1.30 | $ | 1.75 | ||
| Diluted | 1.28 | 1.73 | ||||
| Weighted average common shares outstanding: | ||||||
| Basic | 8,346,839 | 8,322,210 | ||||
| Diluted | 8,435,536 | 8,428,595 |
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 12
| TIMBERLAND BANCORP INC. AND SUBSIDIARY<br> CONSOLIDATED BALANCE SHEETS | ||||||||
|---|---|---|---|---|---|---|---|---|
| ( in thousands, except per share amounts) (unaudited) | Dec. 31, | March 31, | ||||||
| 2021 | 2021 | |||||||
| Assets | ||||||||
| Cash and due from financial institutions | 26,500 | $ | 20,539 | $ | 21,707 | |||
| Interest-bearing deposits in banks | 465,802 | 537,789 | 411,635 | |||||
| Total cash and cash equivalents | 492,302 | 558,328 | 433,342 | |||||
| Certificates of deposit (“CDs”) held for investment, at cost | 28,619 | 24,648 | 39,674 | |||||
| Investment securities: | ||||||||
| Held to maturity, at amortized cost | 189,405 | 114,600 | 36,465 | |||||
| Available for sale, at fair value | 50,624 | 56,552 | 69,184 | |||||
| Investments in equity securities, at fair value | 902 | 946 | 957 | |||||
| FHLB stock | 2,194 | 2,103 | 2,303 | |||||
| Other investments, at cost | 3,000 | 3,000 | 3,000 | |||||
| Loans held for sale | 2,772 | 3,700 | 8,455 | |||||
| Loans receivable | 1,047,513 | 1,007,475 | 1,044,117 | |||||
| Less: Allowance for loan losses | (13,433 | ) | (13,468 | ) | (13,434 | ) | ||
| Net loans receivable | 1,034,080 | 994,007 | 1,030,683 | |||||
| Premises and equipment, net | 21,878 | 22,108 | 22,763 | |||||
| OREO and other repossessed assets, net | 157 | 157 | 157 | |||||
| BOLI | 22,498 | 22,347 | 21,891 | |||||
| Accrued interest receivable | 3,927 | 3,938 | 4,471 | |||||
| Goodwill | 15,131 | 15,131 | 15,131 | |||||
| CDI | 1,106 | 1,185 | 1,444 | |||||
| Loan servicing rights, net | 3,390 | 3,524 | 3,604 | |||||
| Operating lease right-of-use assets | 2,129 | 2,206 | 2,436 | |||||
| Other assets | 3,356 | 2,795 | 3,284 | |||||
| Total assets | 1,877,470 | $ | 1,831,275 | $ | 1,699,244 | |||
| Liabilities and shareholders’ equity | ||||||||
| Deposits: Non-interest-bearing demand | 525,488 | $ | 523,518 | $ | 499,541 | |||
| Deposits: Interest-bearing | 1,130,938 | 1,083,113 | 982,318 | |||||
| Total deposits | 1,656,426 | 1,606,631 | 1,481,859 | |||||
| Operating lease liabilities | 2,210 | 2,285 | 2,499 | |||||
| FHLB borrowings | -- | 5,000 | 10,000 | |||||
| Other liabilities and accrued expenses | 6,565 | 6,984 | 6,343 | |||||
| Total liabilities | 1,665,201 | 1,620,900 | 1,500,701 | |||||
| Shareholders’ equity | ||||||||
| Common stock, .01 par value; 50,000,000 shares authorized;<br> 8,305,826 shares issued and outstanding – March 31, 2022<br> 8,348,821 shares issued and outstanding – December 31, 2021<br> 8,361,457 shares issued and outstanding – March 31, 2021 | 40,988 | 42,436 | 42,949 | |||||
| Retained earnings | 171,388 | 167,897 | 155,473 | |||||
| Accumulated other comprehensive income (loss) | (107 | ) | 42 | 121 | ||||
| Total shareholders’ equity | 212,269 | 210,375 | 198,543 | |||||
| Total liabilities and shareholders’ equity | 1,877,470 | $ | 1,831,275 | $ | 1,699,244 |
All values are in US Dollars.
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 13
| KEY FINANCIAL RATIOS AND DATA | Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share amounts) (unaudited) | March 31, | Dec. 31, | March 31, | ||||||
| 2022 | 2021 | 2021 | |||||||
| PERFORMANCE RATIOS: | |||||||||
| Return on average assets (a) | 1.16 | % | 1.20 | % | 1.75 | % | |||
| Return on average equity (a) | 10.10 | % | 10.55 | % | 14.89 | % | |||
| Net interest margin (a) | 2.95 | % | 2.92 | % | 3.21 | % | |||
| Efficiency ratio | 58.42 | % | 57.40 | % | 48.99 | % | |||
| Six Months Ended | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, | March 31, | ||||||||
| 2022 | 2021 | ||||||||
| PERFORMANCE RATIOS: | 1.18 | % | 1.80 | % | |||||
| Return on average assets (a) | 10.33 | % | 15.14 | % | |||||
| Return on average equity (a) | 2.93 | % | 3.34 | % | |||||
| Net interest margin (a) | 57.91 | % | 48.41 | % | |||||
| Efficiency ratio | |||||||||
| March 31, | Dec. 31, | March 31, | |||||||
| 2022 | 2021 | 2021 | |||||||
| ASSET QUALITY RATIOS AND DATA: | |||||||||
| Non-accrual loans | $ | 2,651 | $ | 2,853 | $ | 2,305 | |||
| Loans past due 90 days and still accruing | -- | -- | -- | ||||||
| Non-performing investment securities | 127 | 140 | 188 | ||||||
| OREO and other repossessed assets | 157 | 157 | 157 | ||||||
| Total non-performing assets (b) | $ | 2,935 | $ | 3,150 | $ | 2,650 | |||
| Non-performing assets to total assets (b) | 0.16 | % | 0.17 | % | 0.16 | % | |||
| Net charge-offs (recoveries) during quarter | $ | 35 | $ | 1 | $ | (2 | ) | ||
| ALL to non-accrual loans, | 507 | % | 472 | % | 583 | % | |||
| ALL to loans receivable (c) | 1.28 | % | 1.34 | % | 1.29 | % | |||
| ALL to loans receivable (excluding SBA PPP loans) (d) (non-GAAP) | 1.29 | % | 1.37 | % | 1.48 | % | |||
| ALL to loans receivable (excluding SBA PPP loans and South Sound<br><br> <br>Acquisition loans) (d) (e) (non-GAAP) | 1.33 | % | 1.41 | % | 1.56 | % | |||
| Troubled debt restructured loans on accrual status (f) | $ | 2,496 | $ | 2,361 | $ | 2,864 | |||
| CAPITAL RATIOS: | |||||||||
| Tier 1 leverage capital | 10.86 | % | 10.81 | % | 11.19 | % | |||
| Tier 1 risk-based capital | 19.50 | % | 20.24 | % | 19.47 | % | |||
| Common equity Tier 1 risk-based capital | 19.50 | % | 20.24 | % | 19.47 | % | |||
| Total risk-based capital | 20.75 | % | 21.49 | % | 20.72 | % | |||
| Tangible common equity to tangible assets (non-GAAP) | 10.53 | % | 10.69 | % | 10.81 | % | |||
| BOOK VALUES: | |||||||||
| Book value per common share | $ | 25.56 | $ | 25.20 | $ | 23.75 | |||
| Tangible book value per common share (g) | 23.60 | 23.24 | 21.76 |
________________________________________________
(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 $5,934, $21,397 and $138,175 at March 31, 2022, December 31, 2021 and March 31, 2021, respectively.
(e) Does not include loans acquired in the South Sound Acquisition totaling $28,459, $31,907 and $46,626 at March 31, 2022, December 31, 2021 and March 31, 2021, respectively.
(f) Does not include troubled debt restructured loans totaling $172, $177 and $192 reported as non-accrual loans at March 31, 2022, December 31, 2021 and March 31, 2021, respectively.
(g) Tangible common equity divided by common shares outstanding (non-GAAP).
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 14
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($ in thousands)
(unaudited)
| For the Three Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||
| Assets | ||||||||||||||||||
| Loans receivable and loans held for sale | $ | 1,029,582 | 4.90 | % | $ | 997,358 | 5.06 | % | $ | 1,044,476 | 4.90 | % | ||||||
| Investment securities and FHLB stock (1) | 209,868 | 1.18 | 162,077 | 1.07 | 101,675 | 1.23 | ||||||||||||
| Interest-earning deposits in banks and CDs | 510,211 | 0.22 | 580,337 | 0.20 | 422,286 | 0.24 | ||||||||||||
| Total interest-earning assets | 1,749,661 | 3.09 | 1,739,772 | 3.07 | 1,568,437 | 3.41 | ||||||||||||
| Other assets | 84,252 | 83,563 | 85,203 | |||||||||||||||
| Total assets | $ | 1,833,913 | $ | 1,823,335 | $ | 1,653,640 | ||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||
| NOW checking accounts | $ | 441,259 | 0.13 | % | $ | 440,744 | 0.13 | % | $ | 394,612 | 0.16 | % | ||||||
| Money market accounts | 244,250 | 0.29 | 222,945 | 0.29 | 178,768 | 0.30 | ||||||||||||
| Savings accounts | 277,888 | 0.08 | 264,651 | 0.08 | 236,504 | 0.08 | ||||||||||||
| Certificates of deposit accounts | 128,588 | 0.80 | 132,590 | 0.83 | 146,065 | 1.19 | ||||||||||||
| Total interest-bearing deposits | 1,091,985 | 0.23 | 1,060,930 | 0.24 | 955,949 | 0.32 | ||||||||||||
| Borrowings | 677 | 1.18 | 5,000 | 1.20 | 10,003 | 1.17 | ||||||||||||
| Total interest-bearing liabilities | 1,092,662 | 0.23 | 1,065,930 | 0.24 | 965,952 | 0.33 | ||||||||||||
| Non-interest-bearing demand deposits | 521,284 | 538,865 | 482,528 | |||||||||||||||
| Other liabilities | 9,072 | 10,567 | 10,365 | |||||||||||||||
| Shareholders’ equity | 210,895 | 207,973 | 194,795 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,833,913 | $ | 1,823,335 | $ | 1,653,640 | ||||||||||||
| Interest rate spread | 2.86 | % | 2.83 | % | 3.08 | % | ||||||||||||
| Net interest margin (2) | 2.95 | % | 2.92 | % | 3.21 | % | ||||||||||||
| Average interest-earning assets to | ||||||||||||||||||
| average interest-bearing liabilities | 160.13 | % | 163.22 | % | 162.37 | % |
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 15
AVERAGE BALANCES, YIELDS, AND RATES
($ in thousands)
(unaudited)
| For the Six Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2022 | March 31, 2021 | |||||||||||
| Amount | Rate | Amount | Rate | |||||||||
| Assets | ||||||||||||
| Loans receivable and loans held for sale | $ | 1,013,293 | 4.98 | % | $ | 1,037,304 | 5.03 | % | ||||
| Investment securities and FHLB stock (1) | 185,710 | 1.13 | 97,812 | 1.31 | ||||||||
| Interest-earning deposits in banks and CDs | 545,651 | 0.21 | 398,067 | 0.29 | ||||||||
| Total interest-earning assets | 1,744,654 | 3.08 | 1,533,183 | 3.56 | ||||||||
| Other assets | 83,908 | 84,635 | ||||||||||
| Total assets | $ | 1,828,562 | $ | 1,617,818 | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| NOW checking accounts | $ | 440,999 | 0.13 | % | $ | 386,093 | 0.17 | % | ||||
| Money market accounts | 233,480 | 0.29 | 173,579 | 0.31 | ||||||||
| Savings accounts | 271,197 | 0.08 | 229,610 | 0.08 | ||||||||
| Certificates of deposit accounts | 130,611 | 0.81 | 150,645 | 1.29 | ||||||||
| Total interest-bearing deposits | 1,076,287 | 0.23 | 939,927 | 0.36 | ||||||||
| Borrowings | 2,862 | 1.19 | 10,002 | 1.16 | ||||||||
| Total interest-bearing liabilities | 1,079,149 | 0.24 | 949,929 | 0.36 | ||||||||
| Non-interest-bearing demand deposits | 530,171 | 465,251 | ||||||||||
| Other liabilities | 9,824 | 10,528 | ||||||||||
| Shareholders’ equity | 209,418 | 192,110 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 1,828,562 | $ | 1,617,818 | ||||||||
| Interest rate spread | 2.84 | % | 3.20 | % | ||||||||
| Net interest margin (2) | 2.93 | % | 3.34 | % | ||||||||
| Average interest-earning assets to | ||||||||||||
| average interest-bearing liabilities | 161.67 | % | 161.40 | % |
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets
Timberland Fiscal Q2 2022 Earnings
April 26, 2022
Page 16
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) | March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Shareholders’ equity | $ | 212,269 | $ | 210,375 | $ | 198,543 | |||
| Less goodwill and CDI | (16,237 | ) | (16,316 | ) | (16,575 | ) | |||
| Tangible common equity | $ | 196,032 | $ | 194,059 | $ | 181,968 | |||
| Total assets | $ | 1,877,470 | $ | 1,831,275 | $ | 1,699,244 | |||
| Less goodwill and CDI | (16,237 | ) | (16,316 | ) | (16,575 | ) | |||
| Tangible assets | $ | 1,861,233 | $ | 1,814,959 | $ | 1,682,669 |