FORM 11-K
U.S SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2006
and short period ended October 3, 2006 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-23333
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Timberland Bank 401 (k) Profit Sharing Plan
B: Name of issuer of securities held pursuant to the plan and the
address of its principal executive Office:
Timberland Bank
624 Simpson Avenue
Hoquiam, Washington 98550
Financial Statements and Exhibits
(a) Financial Statements
The Timberland Bank 401(k) Profit Sharing Plan became effective as of
December 4, 1970, and was restated effective October 1, 2000. Filed as a
part of this report on Form 11-K are the audited financial statements of
the Plan as of October 3, 2006, September 30, 2006 and 2005 and for the
three day period ended October 3, 2006 and for the year ended September
30, 2006.
(b) Exhibit 23 Consent of Independent Auditors
Signatures
The Plan: Pursuant to the requirements of the Securities and
Exchange Act of 1934, the trustees (or other persons who administer
employees benefit plan) have duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
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Administrator, Timberland Bank 401 (k) Profit Sharing Plan
By: /s/ Dean J. Brydon
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Dean J. Brydon (name)
-------------------------------------
Chief Financial Officer (title)
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Timberland Bank (bank)
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Date: March 29, 2007
2
Timberland Bank 401(k) Profit Sharing Plan
Financial Report
October 3, 2006
Timberland
Bank
401(k)
Profit
Sharing
Plan
Financial
Report
October 3
2006
Contents
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Report of Independent Registered Public Accounting Firm. . . . . . . . . 1
Financial Statements
Statements of Net Assets Available for Benefits. . . . . . . . . . . . . 2
Statements of Changes in Net Assets Available for Benefits. . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 4-7
Supplemental Schedules
Schedule of Assets (Held at End of Year) . . . . . . . . . . . . . . . . 8
Schedule of Delinquent Contributions . . . . . . . . . . . . . . . . . . 9
Report of Independent Registered Public Accounting Firm
To the Audit Committee
Timberland Bank 401(k) Profit Sharing Plan
Hoquiam, Washington
We have audited the accompanying statements of net assets available for
benefits of Timberland Bank 401(k) Profit Sharing Plan (the Plan) as of
October 3, 2006 and September 30, 2006 and 2005, and the related statements of
changes in net assets available for benefits for the period ended October 3,
2006 and for the year ended September 30, 2006. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
October 3, 2006 and September 30, 2006 and 2005, and the changes in its net
assets available for benefits for the period ended October 3, 2006 and for the
year ended September 30, 2006, in conformity with accounting principles
generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules as of
September 30, 2006, are presented for the purpose of additional analysis and
are not a required part of the basic financial statements, but are
supplementary information required by the United States Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
As discussed in Note 6 to the financial statements, the Board of Directors of
Timberland Bank, the Plan's sponsor, voted on September 26, 2006, to merge the
Plan into the Timberland Bank Employee Stock Ownership Plan effective October
1, 2006. All plan assets were transferred to Timberland Bank Employee Stock
Ownership and 401(k) Plan on October 3, 2006.
/s/McGladrey & Pullen, LLP
Tacoma, Washington
March 16, 2007
Financial
Statements
Statements of Net Assets Available for Benefits
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Timberland Bank 401(k) Profit Sharing Plan
October 3, 2006, September 30, 2006 and 2005
October 3, September 30, September 30,
2006 2006 2005
Assets
Investments (participant-directed) $ - - $ 10,533,494 $ 6,882,117
Employer contributions receivable - - - - 640,660
Employee receivable - - - - 305
Cash - - 12,814 10,696
Accrued income - - 2,927 1,667
Total assets - - 10,549,235 7,535,445
Liabilities - - - - - -
Net assets available for benefits $ - - $ 10,549,235 $ 7,535,445
See notes to financial statements.
2
Statement of Changes in Net Assets Available for Benefits
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Timberland Bank 401(k) Profit Sharing Plan
Period Ended October 3, 2006 and
Year Ended September 30, 2006
October 3, September 30,
2006 2006
Additions to Net Assets
Investment income:
Net appreciation (depreciation) in fair
value of investments ($15,276) $ 2,292,733
Dividends - - 147,403
Total investment income (loss) (15,276) 2,440,136
Contributions:
Employer - - 558,417
Participant - - 426,691
Total contributions - - 985,108
Total additions (15,276) 3,425,244
Deductions from Net Assets
Benefits paid - - 380,146
Administrative expenses 2,661 31,308
Total deductions 2,661 411,454
Net increase (decrease) before transfer
of assets to other qualified plan (17,937) 3,013,790
Transfer to Timberland Bank Employee
Stock Ownership and 401(k) Plan 10,531,298 - -
Net increase (decrease) (10,549,235) 3,013,790
Net Assets Available for Benefits
Beginning of period 10,549,235 7,535,445
End of period $ - - $ 10,549,235
See notes to financial statements.
3
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
October 3, 2006, September 30, 2006 and 2005
Note 1 - Plan Description
The following description of Timberland Bank 401(k) Profit Sharing Plan (the
Plan) provides only general information. Participants should refer to the
Plan agreement for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering substantially all full-time
employees of Timberland Bank (the Company) who have one year of service and
are 21 years of age or older. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The Company is the wholly
owned subsidiary of Timberland Bancorp, Inc.
These financial statements include the year ended September 30, 2006 and the
three day period ended October 3, 2006. The Plan elected to defer the filing
of its financial statements with its Form 5500 for the short year ended
October 3, 2006, as permitted by 29 CFR 2520.104-50, since the following Plan
year ended September 30, 2007 is a short year of seven months or less.
Accordingly, the Plan has included statements of net assets as of October 3,
2006 and September 30, 2006 and 2005, along with statements of changes in net
assets for the period ended October 3, 2006 and year ended September 30, 2006,
as required by DOL regulations when such election is made.
Contributions and Participant Investment Options
The Plan participants may contribute up to the maximum of pretax annual
compensation as set by law. Participants may also contribute amounts
representing distributions from other qualified defined benefit or defined
contribution plans. The Company makes an annual safe harbor contribution of 3
percent of eligible compensation, with additional amounts contributed at the
option of its board of directors. For the year ended September 30, 2006, the
board of directors authorized a 5 percent profit sharing contribution of total
eligible participant compensation in addition to the safe harbor contribution.
Participants must direct their salary deferral contributions and their
allocated shares of the safe harbor contribution and the employer
contribution, if any, into a variety of investment choices, as made available
and determined by the Plan administrator, which are more fully described in
the Plan's literature.
Participant Accounts
Each participant's account is credited with the participant's contributions
and allocations of: (a) the Company's contributions, (b) Plan earnings, and
(c) the forfeitures of terminated participants' nonvested accounts, and
charged with an allocation of administrative expenses. Allocations are based
on participant earnings or account balances, as defined. The benefit to which
a participant is entitled is the benefit that can be provided from the
participant's vested account.
(continued)
4
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
October 3, 2006, September 30, 2006 and 2005
Note 1 - Plan Description (concluded)
Vesting
Participants are immediately vested in all deferral, rollover and safe harbor
contributions, plus actual earnings thereon. Vesting in the Company's
discretionary contribution portion of accounts, plus earnings thereon, is
based on years of credited service. Participants are fully vested after six
years of credited service. A participant's accrued benefit derived from
employer contributions is also 100% nonforfeitable upon attaining the age of
62, or if the participant's separation from service is a result of death or
disability.
Payment of Benefits
On termination of service, a participant with an accrued benefit of $1,000 or
less will receive a lump-sum amount equal to the value of the vested interest
in their account. A terminated participant with accrued benefits over $1,000,
but less than or equal to $5,000, who does not take a distribution after
termination, may have their accrued benefit directly transferred to an
Individual Retirement Account (IRA). The distribution date will be the
earliest administratively feasible date for participants who attain normal
retirement at the age of 62 or early retirement at the age of 55 with 10 years
of service. Distributions for participants who do not meet these requirements
will be made as soon as administratively feasible in the Plan year following
separation of service. A Participant with an accrued benefit in excess of
$5,000 may leave the funds in the Plan or elect to receive a lump sum
distribution equal to the value of the vested interest in his or her accounts.
Forfeited Accounts
Forfeited balances of terminated participant nonvested accounts are treated as
discretionary contributions for the Plan year in which the forfeitures occur.
Forfeitures allocated for the year ended September 30, 2006, totaled $22,012.
There are no unallocated forfeitures as of September 30, 2006 or October 3,
2006.
Note 2 - Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and changes
therein, and the disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
5
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
October 3, 2006, September 30, 2006 and 2005
Note 2 - Summary of Accounting Policies (concluded)
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Quoted market prices are
used to value common stock and mutual funds. Shares of mutual funds are
valued at the net asset value of shares held by the Plan at year-end.
Purchases and sales of securities are recorded on the trade-date basis.
Dividends are recorded on the ex-dividend date.
Payment of Benefits
Benefits are recorded when paid.
Note 3 - Investments
The following presents, separately, identified investments that represent 5%
or more of the Plan's net assets at September 30:
2006 2005
Timberland Bancorp, Inc. Common Stock $6,148,292 $3,810,338
Mutual Funds
First American Prime Obligations Fund 1,244,773 632,186
First American Strategy Growth Allocation Fund 856,669 675,099
First American Small Cap Growth Fund 887,457 669,160
First American Strategy Aggressive Allocation Fund 789,896 586,755
First American Equity Index Fund 606,407 508,579
$10,533,494 $6,882,117
During the period ended October 3, 2006 and the year ended September 30, 2006
the Plan's investments, including gains and losses on investments bought and
sold, as well as held during each period, depreciated in value by $15,276 and
appreciated in value by $2,292,733 respectively as follows:
October 3, September 30,
2006 2006
Mutual funds ($15,276) $ 318,829
Common stock - - 1,973,904
Net appreciation (depreciation) in fair
value of investments ($15,276) $2,292,733
6
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
October 3, 2006, September 30, 2006 and 2005
Note 4 - Tax Status/Non-Standardized Prototype Plan
Effective October 1, 1997, the Plan adopted a nonstandardized form of a
prototype plan sponsored by Qualified Plan Consultants. The prototype plan
received an opinion letter dated April 8, 2002, from the Internal Revenue
Service, which stated that the Plan, as then designed, was in compliance with
the applicable requirements of the Internal Revenue Code. The Plan has been
amended subsequent to receiving the opinion letter. However, the Plan
administrator believes the Plan is designed and operated in compliance with
applicable provisions of the Internal Revenue Code.
Note 5 - Administration of Plan Assets
Certain Plan investments are shares of mutual funds managed by US Bank. US
Bank is the trustee, as defined by the Plan; therefore, these transactions
qualify as party-in-interest transactions. Fees paid by the Plan for
investment management services totaled $31,308 for the year ended September
30, 2006 and $2,661 for the period ended October 3, 2006.
Certain administrative functions of the Plan are performed by officers or
employees of the Company. No such officers or employees receive compensation
from the Plan. Other administrative and management fees of the Plan are paid
directly by the Company.
Note 6 - Plan Merger
Effective October 1, 2006, Timberland Bank 401(k) and Profit Sharing Plan and
Timberland Bank Employee Stock Ownership Plan were merged with the surviving
plan being the Timberland Bank Employee Stock Ownership Plan. The surviving
plan's name was changed to the Timberland Bank Employee Stock Ownership and
401(k) Profit Sharing Plan (KSOP). All plan assets were transferred to
Timberland Bank Employee Stock Ownership and 401(k) Plan on October 3, 2006.
The KSOP is administered by Pentegra Retirement Services, and the trustee for
the plan is HomeFederal Bank.
7
Supplemental
Schedules
Schedule of Assets (Held at End of Year)
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2006
EIN: 91-0260220
Plan Number: 001
(a) and (b) (c) (d) (e)
Identity of Issue, Description of Investment, Including Cost Current
Borrower, Lessor Maturity Date, Rate of Interest, Value
or Similar Party Collateral, Par or Maturity Value
(pv or mv)
** Timberland
Bancorp, Inc. Common Stock, $0.01 par value * $ 6,148,292
** US Bank First American Prime Obligations Fund * 1,244,773
** US Bank First American Small Cap Growth Fund * 887,457
** US Bank First American Strategy Growth
Allocation Fund * 856,669
** US Bank First American Strategy Aggressive
Allocation Fund * 789,896
** US Bank First American Equity Index Fund * 606,407
$10,533,494
* Historical cost not required for participant-directed accounts.
** Represents a party-in-interest.
8
Schedule of Delinquent Participant Contributions
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2006
EIN: 91-0260220
Plan Number: 001
Total that
Participant Constitutes
Contributions Non-exempt
Transferred Prohibited
Late to Plan Transactions
2005 Form 5500 Schedule H, Lina 4A $ - - $ - -
2004 Form 5500 Schedule H, Line 4A $ 33,715 $ 33,715
Certain participant contributions were not remitted timely during the year
ended September 30, 2005. Form 5330 will be filed and applicable excise taxes
will be paid by the Plan Sponsor in 2007. Lost earnings will also be remitted
to KSOP Plan in 2007.
9
[McGladrey & Pullen, LLP Letterhead]
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-116163, filed June 4, 2004) of Timberland
Bancorp, Inc. of our report dated March 16, 2007, appearing in this Annual
Report on Form 11-K of Timberland Bank 401(k) Profit Sharing Plan for the
period ended October 3, 2006 and for the year ended September 30, 2006.
/s/McGladrey & Pullen, LLP
McGladrey & Pullen, LLP
Tacoma, Washington
March 30, 2007