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 24, 2007
Timberland Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Washington 0-23333 91-1863696
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State or other jurisdiction Commission (I.R.S. Employer
Of incorporation File Number Identification No.)
624 Simpson Avenue, Hoquiam, Washington 98550
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(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 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 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
--------------------------------------------------------
On April 24, 2007, Timberland Bancorp, Inc. issued its earnings release for
the quarter ended March 31, 2007. 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
--------------------------------------------
(c) Exhibits
99.1 Press Release of Timberland Bancorp, Inc. dated April 24, 2007
SIGNATURES
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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 25, 2007 By:/s/Dean J. Brydon
--------------------
Dean J. Brydon
Chief Financial Officer
Exhibit 99.1
Contact: Michael R. Sand,
President & CEO
Timberland Bancorp, Inc. Dean J. Brydon, CFO
(360) 533-4747
www.timberlandbank.com
----------------------
Timberland Bancorp, Inc. Announces Strong Fiscal Second Quarter Earnings of
$0.54 Per Share Led by Solid Loan Growth and Strong Net Interest Margin
HOQUIAM, Wash. - April 24, 2007 - Timberland Bancorp, Inc. (NASDAQ: TSBK),
("Company") the holding company for Timberland Bank, ("Bank") today reported
that loan portfolio growth and a strong net interest margin contributed to solid
fiscal second quarter 2007 results. Net income for the quarter ended March 31,
2007 totaled $1.92 million, or $0.54 per diluted share compared to net income of
$1.95 million, or $0.53 per diluted share, for the quarter ended March 31, 2006.
Quarterly Highlights -
* Loan portfolio increased 22% year-over year and increased $28 million during
quarter to $480 million.
* Total assets increased 11% year-over year to $618 million.
* Loan originations for quarter increased 96% to $86 million compared to same
period a year ago.
* Net interest margin remained strong at 4.75%, an increase of 1 basis point
from the preceding quarter.
* Asset quality remained strong, with non-performing assets at just 0.06% of
total assets.
"Our presence in the fast growing Pierce and South King County markets with a
seasoned team of lenders has generated steady growth in our loan portfolio and
contributed to solid margins," said Michael Sand, President and CEO. "While the
yield curve continues to be challenging we are pleased to be operating in a
region of the country where the prospects for continued economic and population
growth appear bright."
Operating Results
Fiscal second quarter revenue (net interest income before provision for loan
losses plus non-interest income) increased 5% to $7.9 million from $7.6 million
for the second fiscal quarter of 2006. Net interest income before the provision
for loan losses increased 7% to $6.5 million with interest income increasing 18%
and interest expense increasing 42%. For the first half of fiscal 2007,
revenues increased 3% to $15.7 million from $15.2 million in the first half of
fiscal 2006. Net interest income before provision for loan losses increased 6%
to $12.8 million, with interest income increasing 17% and interest expenses
increasing 43%. Loan growth contributed to the increase in net interest income
and helped offset increased funding costs.
"Despite excellent asset quality, we made a $156,000 provision for loan losses
in the second quarter due to the growth in our loan portfolio. This is the
first time in six quarters we have added to our allowance for loan loss
reserves," said Dean Brydon, Chief Financial Officer. "We remain confident that
our underwriting standards are strong."
Despite the challenging yield curve environment, Timberland's net interest
margin increased to 4.75% for the second quarter from 4.74% in the first quarter
of fiscal 2007 and decreased 9 basis points from the second quarter one year
ago. Year-to-date, the net interest margin was 4.74% compared to 4.85% in the
first half of fiscal 2006.
Non-interest income decreased 6% to $1.4 million for the second quarter from
$1.5 million for the second fiscal quarter of 2006, primarily due to a reduction
in service charges on deposits and a reduction in the gain on sale of loans.
Non-interest income for the first six months of fiscal 2007 declined 5% to $2.9
million from $3.1 million for the same period of 2006.
Total operating (non-interest) expenses increased 5% to $4.9 million for the
current quarter from $4.7 million for the second quarter of fiscal 2006.
Operating expenses in the first half of fiscal 2007 increased 5% to $9.8 million
from $9.4 million a year ago. "We continue to invest in our franchise and in
technology to improve service and build customer relationships," said Sand. The
efficiency ratio for the second quarter improved to 62.42% from 63.13% in the
immediate prior quarter and increased 9 basis points from the same quarter one
year ago. Year-to-date the efficiency ratio was 62.78% compared to 61.74% for
the first half of fiscal 2006.
Return on equity ("ROE") was 9.91% for the second quarter of fiscal 2007,
compared to 10.18% for the second quarter of fiscal 2006. Return on average
assets ("ROA") was 1.28% for the second quarter compared to 1.41% for the same
period one year ago. For the first half of fiscal 2007, ROE was 9.92% compared
to 10.44 % one year ago and ROA was 1.32% compared to 1.44% in the first half of
fiscal 2006.
Timberland Q2 Earnings
April 24, 2007
Page 2
Balance Sheet Management
Total assets increased 16% on an annualized basis during the quarter and 11%
year-over-year. Assets increased to $618 million at March 31, 2007 compared to
$577 million at the end of fiscal 2006 and $557 million one year ago due to
strong loan portfolio growth. Total loans increased 25% on an annualized basis
to $480 million at March 31, 2007 from $452 million at December 31, 2006, and
increased 22% from the $393 million reported one year ago.
Loan originations increased 96% to $86.2 million for the second quarter of
fiscal 2007 from $44.0 million for the same period one year ago. In the first
half of fiscal 2007, loan originations increased 52% to $167.0 million from
$109.8 million in the first half of fiscal 2006. Timberland also continued to
sell fixed rate one-to-four family mortgage loans into the secondary market for
asset-liability management purposes. Fixed rate one-to-four family mortgage
loan sales totaled $6.6 million for the second quarter of fiscal 2007 compared
to $5.5 million for the same period one year ago.
LOAN PORTFOLIO
($ in thousands)
March 31, 2007 December 31, 2006 March 31, 2006
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Mortgage Loans:
One-to-four family (1) $104,697 19% $100,204 19% $ 96,300 21%
Multi family 17,156 3 18,391 4 22,058 5
Commercial 137,474 25 139,700 27 123,480 27
Construction and land
development 179,350 32 170,788 32 128,951 29
Land 48,331 9 34,986 7 28,314 6
------- - ------- - ------- --
Total mortgage loans 487,008 88 464,069 89 399,103 88
Consumer Loans:
Home equity and second
mortgage 41,357 7 38,434 7 34,704 8
Other 11,543 2 11,051 2 9,669 2
------- - ------- - ------- --
52,900 9 49,485 9 44,373 10
Commercial business loans 15,289 3 12,136 2 9,436 2
------- - ------- - ------- --
Total loans $555,197 100% $525,690 100% $452,912 100%
Less:
Undisbursed portion of
construction loans in
process (68,034) (66,810) (52,869)
Unearned income (3,003) (2,889) (2,687)
Allowance for loan losses (4,272) (4,121) (4,119)
------- ------- -------
Total loans receivable, net $479,888 $451,870 $393,237
======= ======= =======
____________________
(1) Includes loans held for sale
Timberland Q2 Earnings
April 24, 2007
Page 3
CONSTRUCTION LOAN COMPOSITION
($ in thousands)
March 31, 2007 December 31, 2006 March 31, 2006
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Custom and owner/builder $ 46,723 26% $ 47,556 28% $ 43,725 34%
Speculative 36,753 20 37,178 22 36,936 29
Commercial real estate 57,191 32 55,536 32 35,135 27
Multi-family 17,756 10 13,822 8 2,419 2
Land development 20,927 12 16,696 10 10,736 8
------- - ------- -- ------- ---
Total construction loans $179,350 100% $170,788 100% $128,951 100%
Total deposits increased $10 million to $444 million at March 31, 2007, compared
to $434 million at December 31, 2006, and increased $30 million or 7% from one
year ago. Core deposits (which exclude jumbo certificate of deposit accounts)
comprised 84% of Timberland's total deposits at March 31, 2007.
DEPOSIT BREAKDOWN
($ in thousands)
March 31, 2007 December 31, 2006 March 31, 2006
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Non-interest bearing $ 53,321 12% $ 55,121 13% $ 50,677 12%
N.O.W. checking 83,945 19 88,428 21 93,470 23
Savings 62,169 14 61,324 14 62,890 15
Money market accounts 45,950 10 44,660 10 41,961 10
Certificates of deposit
under $100 129,986 29 126,819 29 120,668 29
Certificates of deposit
$100 and over 68,751 16 57,897 13 44,369 11
------- - ------- -- ------- --
Total deposits $444,122 100% $434,249 100% $414,035 100%
======= === ======= === ======= ===
Total shareholders' equity was $77.8 million at March 31, 2007, compared to
$77.3 million at December 31, 2006, as Timberland continued to manage its
capital through asset growth, stock buybacks and dividends. During the quarter
Timberland repurchased 40,000 shares for $1.5 million (an average price of
$36.69 per share). There are 85,266 shares remaining to repurchase in the
current stock buyback plan. Cumulatively, Timberland has repurchased 3. 6
million shares or 55% of the 6.6 million shares that were issued in its initial
public offering in January 1998 at an average price of $16.86 per share. The
Company also paid an $0.18 per share dividend during the quarter, which
represents the 36th consecutive quarter a cash dividend has been paid to
shareholders.
Asset Quality
Asset quality remained excellent as the non-performing assets to total assets
ratio was 0.06% at March 31, 2007, with only $6,000 in net charge-offs during
the quarter. The allowance for loan losses totaled $4.3 million at March 31,
2007, or 0.89% of loans receivable and 1,327% of non-performing loans. The
allowance for loan losses was $4.1 million, or 0.91% of loans receivable and
1,724% of non-performing loans at December 31, 2006, and at March 31, 2006 the
allowance for loan losses was $4.1 million, or 1.04% of loans receivable and
202% of non-performing loans. The Company's non-performing loans totaled only
$322,000 at March 31, 2007, and consisted of a $200,000 commercial business
loan, a $34,000 single-family mortgage loan, two land loans totaling $86,000 and
a $2,000 consumer loan.
About Timberland Bancorp, Inc.
Timberland Bancorp, Inc. stock trades on the NASDAQ global market under the
symbol "TSBK." The Bank operates 21 branches in the state of Washington in
Hoquiam, Aberdeen, Ocean Shores, Montesano, Elma, Olympia, Lacey, Tumwater,
Yelm, Puyallup, Edgewood, Tacoma, Spanaway (Bethel Station), Gig Harbor,
Poulsbo, Silverdale, Auburn, Winlock, and Toledo.
Timberland Q2 Earnings
April 24, 2007
Page 4
TIMBERLAND BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT Three Months Ended
($ in thousands, except per share) March 31, December 31, March 31,
(unaudited) 2007 2006 2006
---- ---- ----
Interest and dividend income
Loans receivable $ 9,283 $ 8,786 $ 7,624
Investments and mortgage-backed securities 381 454 576
Dividends 413 420 342
Federal funds sold 77 65 95
Interest bearing deposits in banks 14 39 12
------ ------ ------
Total interest and dividend income 10,168 9,764 8,649
Interest expense
Deposits 2,657 2,589 1,809
Federal Home Loan Bank ("FHLB") advances 1,013 882 762
Other borrowings 10 17 16
------ ------ ------
Total interest expense 3,680 3,488 2,587
------ ------ ------
Net interest income 6,488 6,276 6,062
Provision for loan losses 156 -- --
Net interest income after provision ------ ------ ------
for loan losses 6,332 6,276 6,062
Non-interest income
Service charges on deposits 663 706 737
Gain on sale of loans, net 64 107 88
BOLI net earnings 114 114 111
Escrow fees 24 31 24
Servicing income on loans sold 115 132 78
ATM transaction fees 272 263 240
Other 172 128 231
------ ------ ------
Total non-interest income 1,424 1,481 1,509
Non-interest expense
Salaries and employee benefits 2,766 2,785 2,737
Premises and equipment 660 624 631
Advertising 201 177 179
Loss (gain) from real estate operations (11) (17) (39)
ATM expenses 107 119 97
Postage and courier 130 105 132
Amortization of core deposit intangible 71 72 82
State and local taxes 133 139 128
Professional fees 172 177 181
Other 710 716 591
------ ------ ------
Total non-interest expense 4,939 4,897 4,719
Income before federal income taxes 2,817 2,860 2,852
Federal income taxes 901 906 906
------ ------ ------
Net income $ 1,916 $ 1,954 $ 1,946
====== ====== ======
Earnings per common share:
Basic $ 0.56 $ 0.56 $ 0.55
Diluted $ 0.54 $ 0.54 $ 0.53
Weighted average shares outstanding:
Basic 3,433,332 3,503,883 3,511,880
Diluted 3,541,710 3,623,108 3,640,612
Timberland Q2 Earnings
April 24, 2007
Page 5
TIMBERLAND BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT Six Months Ended
($ in thousands, except per share) March 31, March 31,
(unaudited) 2007 2006
------ ------
Interest and dividend income
Loans receivable $ 18,070 $ 15,108
Investments and mortgage-backed securities 835 1,113
Dividends 833 665
Federal funds sold 142 172
Interest bearing deposits in banks 53 36
------ ------
Total interest and dividend income 19,933 17,094
Interest expense
Deposits 5,247 3,497
Federal Home Loan Bank ("FHLB") advances 1,895 1,482
Other borrowings 27 26
------ ------
Total interest expense 7,169 5,005
------ ------
Net interest income 12,764 12,089
Provision for loan losses 156 --
------ ------
Net interest income after provision for loan losses 12,608 12,089
Non-interest income
Service charges on deposits 1,369 1,457
Gain on sale of loans, net 171 204
BOLI net earnings 227 221
Escrow fees 55 55
Servicing income on loans sold 246 186
ATM transaction fees 535 476
Other 301 465
------ ------
Total non-interest income 2,904 3,064
Non-interest expense
Salaries and employee benefits 5,551 5,367
Premises and equipment 1,283 1,239
Advertising 379 315
Loss (gain) from real estate operations (29) (91)
ATM expenses 226 194
Postage and courier 235 247
Amortization of core deposit intangible 143 164
State and local taxes 272 288
Professional fees 349 389
Other 1,426 1,243
------ ------
Total non-interest expense 9,835 9,355
Income before federal income taxes 5,677 5,798
Federal income taxes 1,807 1,846
------ ------
Net income $ 3,870 $ 3,952
====== ======
Earnings per common share:
Basic $ 1.12 $ 1.13
Diluted $ 1.08 $ 1.09
Weighted average shares outstanding:
Basic 3,468,995 3,508,163
Diluted 3,582,849 3,633,034
Timberland Q2 Earnings
April 24, 2007
Page 6
TIMBERLAND BANCORP, INC.
CONSOLIDATED BALANCE SHEET
($ in thousands)(unaudited) March 31, December 31, September 30,
Assets 2007 2006 2006
------ ------ ------
Cash and due from financial institutions
Non-interest bearing $ 14,604 $ 17,764 $ 14,870
Interest-bearing deposits in banks 659 2,847 2,619
Federal funds sold 6,655 4,655 5,400
------- ------- -------
21,918 25,266 22,889
Investments and mortgage-backed securities:
Held to maturity 72 73 75
Available for sale 67,221 69,772 81,408
FHLB Stock 5,705 5,705 5,705
------- ------- -------
72,998 75,550 87,188
Loans receivable 482,226 454,736 426,318
Loans held for sale 1,934 1,255 2,449
Less: Allowance for loan losses (4,272) (4,121) (4,122)
------- ------- -------
Net loans receivable 479,888 451,870 424,645
Accrued interest receivable 3,177 2,884 2,806
Premises and equipment 16,736 16,756 16,730
Other Real estate owned ("OREO") and
other repossessed items 71 2 15
Bank owned life insurance ("BOLI") 12,178 12,065 11,951
Goodwill 5,650 5,650 5,650
Core deposit intangible 1,363 1,434 1,506
Mortgage servicing rights 986 964 932
Other assets 2,836 1,737 2,775
------- ------- -------
Total Assets $617,801 $594,178 $577,087
======= ======= =======
Liabilities and Shareholders' Equity
Non-interest-bearing deposits $ 53,321 $ 55,121 $ 57,905
Interest-bearing deposits 390,801 379,128 373,156
------- ------- -------
Total deposits 444,122 434,249 431,061
FHLB advances 92,230 78,446 62,761
Other borrowings: repurchase agreements 588 1,322 947
Other liabilities and accrued expenses 3,048 2,881 2,953
------- ------- -------
Total Liabilities 539,988 516,898 497,722
------- ------- -------
Shareholders' Equity
Common stock- $.01 par value; 50,000,000
shares authorized;
March 31, 2007 - 3,649,190 shares issued
and outstanding
December 31, 2006 - 3,670,871 shares issued
and outstanding
September 30, 2006 - 3,757,676 shares issued
and outstanding 36 37 38
Additional paid in capital 16,439 17,380 20,888
Unearned shares-Employee Stock
Ownership Plan (3,172) (3,239) (3,305)
Unearned shares-Management Recognition and
Development Plan (220) (233) (188)
Retained earnings 65,465 64,209 62,933
Accumulated other comprehensive loss (735) (874) (1,001)
------- ------- -------
Total Shareholders' Equity 77,813 77,280 79,365
------- ------- -------
Total Liabilities and Shareholders' Equity $617,801 $594,178 $577,087
======= ======= =======
Timberland Q2 Earnings
April 24, 2007
Page 7
KEY FINANCIAL RATIOS AND DATA Three Months Ended
($ in thousands, except per share)(unaudited) March 31, December 31, March 31,
2007 2006 2006
PERFORMANCE RATIOS: ------ ------ ------
Return on average assets (a) 1.28% 1.35% 1.41%
Return on average equity (a) 9.91% 9.94% 10.18%
Net interest margin (a) 4.75% 4.74% 4.84%
Efficiency ratio 62.42% 63.13% 62.33%
March 31, December 31, March 31,
2007 2006 2006
ASSET QUALITY RATIOS: ------ ------ ------
Non-performing loans $ 322 $ 239 $ 2,040
OREO & other repossessed assets 71 2 110
--- --- ---
Total non-performing assets $ 393 $ 241 $ 2,150
Non-performing assets to total assets 0.06% 0.04% 0.39%
Allowance for loan losses to non-
performing loans 1,327% 1,724% 202%
Book value per share (b) $ 21.32 $ 21.05 $ 20.59
Book value per share (c) $ 22.64 $ 22.37 $ 21.98
Tangible book value per share (b) (d) $ 19.40 $ 19.12 $ 18.65
Tangible book value per share (c) (d) $ 20.60 $ 20.32 $ 19.91
(a) Annualized
(b) Calculation includes ESOP shares not committed to be released
(c) Calculation excludes ESOP shares not committed to be released
(d) Calculation subtracts goodwill and core deposit intangible from the
equity component
AVERAGE BALANCE SHEET: Three Months Ended
March 31, December 31, March 31,
2007 2006 2006
------ ------ ------
Average total loans $465,460 $439,294 $397,880
Average total interest earning assets 546,870 529,572 500,835
Average total assets 597,015 580,114 553,210
Average total interest bearing deposits 380,916 376,365 361,893
Average FHLB advances & other borrowings 81,578 65,970 62,176
Average shareholders' equity 77,340 78,646 76,470
Disclaimer
This report contains certain "forward-looking statements." The Company desires
to take advantage of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 and is including this statement for the express
purpose of availing itself of the protection of such safe harbor with forward
looking statements. These forward-looking statements may describe future plans
or strategies and include the Company's expectations of future financial
results. Forward-looking statements are subject to a number of risks and
uncertainties that might cause actual results to differ materially from stated
objectives. These risk factors include but are not limited to the effect of
interest rate changes, competition in the financial services market for both
deposits and loans as well as regional and general economic conditions. The
words "believe," "expect," "anticipate," "estimate," "project," and similar
expressions identify forward-looking statements. The Company's ability to
predict results or the effect of future plans or strategies is inherently
uncertain and undue reliance should not be placed on such statements.