Timberland Bancorp EPS Increases 62% To $0.34 For Second Fiscal Quarter Of 2016; Declares Quarterly Cash Dividend

HOQUIAM, Wash., April 26, 2016 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) (“Timberland” or “the Company”) today reported net income of $2.38 million, or $0.34 per diluted common share, for its second fiscal quarter ended March 31, 2016.  This compares to net income of $1.45 million, or $0.21 per diluted common share, for the quarter ended March 31, 2015 and net income of $2.53 million, or $0.36 per diluted common share, for the quarter ended December 31, 2015.  For the first six months of fiscal 2016, Timberland earned $4.90 million, or $0.69 per diluted common share, an increase of 53% from the $3.18 million, or $0.45 per diluted common share, reported for the first six months of fiscal 2015.

Timberland’s Board of Directors also declared a quarterly cash dividend of $0.08 per common share, payable on May 27, 2016 to shareholders of record on May 13, 2016.

“We continued our strong performance in the second quarter of our current fiscal year,” said Michael R. Sand, President and CEO.  “The financial results of the first half of our current fiscal year compare very favorably to the results posted last year for the comparable period with our ROA up 40%, our ROE up 43% and our efficiency ratio improving to 64.21% from 75.78%.  Net interest margin increased during the first half of our current fiscal year to 3.96% from 3.78% for the comparable period one year prior.  With steady balance sheet growth and significant and ongoing improvements in asset quality, we are continuing to produce and retain earnings while paying appropriate dividends to increase value for our shareholders.”          

Second Fiscal Quarter 2016 Highlights (at or for the period ended March 31, 2016, compared to March 31, 2015, or September 30, 2015):

  • EPS for the current quarter increased 62% to $0.34 from $0.21 for the comparable quarter one year ago;
  • EPS for the first six months of fiscal 2016 increased 53% to $0.69 from $0.45 for the first six months of fiscal 2015;
  • Declared a quarterly cash dividend of $0.08 per common share;
  • Return on average equity was 10.42% for the current quarter;
  • Return on average assets was 1.13% for the current quarter;
  • Operating revenue increased 16% to $10.21 million from $8.78 million for the comparable quarter one year ago;
  • Net interest margin remained strong at 3.92% for the current quarter;
  • Non-performing assets decreased 50% year-over-year and decreased 28% from the prior quarter, and are now at 1.16% of total assets;
  • Total delinquent and non-accrual loans decreased 70% year-over-year and decreased 33% from the prior quarter;
  • OREO and other repossessed assets decreased 31% year-over-year and decreased 29% from the prior quarter;
  • Total deposits increased 11% year-over-year and increased 2% from the prior quarter; and
  • Book and tangible book values per common share increased to $13.31 and $12.49, respectively, at March 31, 2016.

Operating Results

Operating revenue (net interest income before provision for loan losses, plus non-interest income excluding gains or losses on the sale of investment securities and other than temporary impairment [“OTTI”] charges on investment securities) increased 16% to $10.21 million for the current quarter from $8.78 million for the comparable quarter one year ago and decreased slightly from $10.23 million for the preceding quarter.  Operating revenue increased 16% to $20.44 million for the first six months of fiscal 2016 from $17.56 million for the comparable period one year ago.

Net interest income increased 17% to $7.67 million for the second quarter of fiscal 2016, from $6.57 million for the second fiscal quarter one year ago and decreased by less than 1% from $7.71 million for the preceding quarter.  Net interest income was increased during the current quarter by the collection of $189,000 in pre-payment penalties on three loans that paid off and the collection of $46,000 of non-accrual interest.  The net interest margin for the current quarter was 3.92% compared to 4.00% for the preceding quarter and 3.69% for the second fiscal quarter one year ago.  The collection of pre-payment penalties and non-accrual interest added approximately 12 basis points to the net interest margin for the current quarter, while for the quarter ended December 31, 2015, the collection of $475,000 of non-accrual interest added approximately 25 basis points to the net interest margin.  For the first six months of fiscal 2016, net interest income increased 16% to $15.38 million from $13.27 million for the first six months of fiscal 2015. Timberland’s net interest margin for the first six months of fiscal 2016 increased to 3.96% from 3.78% for the first six months of fiscal 2015.

Non-interest income increased 14% to $2.51 million for the quarter ended March 31, 2016, from $2.21 million for the comparable quarter one year ago and decreased slightly from $2.52 million in the preceding quarter.  During the current quarter, service charges on deposits totaled $937,000, ATM and debit card interchange transaction fee income increased to $710,000 and the gain on sale of loans totaled $393,000.  Fiscal year-to-date non-interest income increased 16% to $5.03 million from $4.34 million for the first six months of fiscal 2015.

Total operating (non-interest) expenses decreased slightly to $6.63 million for the second fiscal quarter, from $6.65 million for the comparable quarter one year ago and increased 2% from $6.48 million for the preceding quarter.  The increased expenses for the current quarter compared to the preceding quarter were primarily due to a $66,000 increase in loan administration and foreclosure expense, a $62,000 increase in deposit operations expense and smaller increases in several other categories.  The increase in loan administration and foreclosure expense in the current quarter was primarily a result of a recovery of expenses in the December 31, 2015 quarter that affected the quarterly comparison by reducing the expense for that quarter.  The increase in deposit operations expense was primarily due to additional expenses associated with the Bank’s debit card rewards program and other deposit acquisition initiatives.  Fiscal year-to-date operating expenses increased 1% to $13.11 million from $12.93 million for the first six months of fiscal 2015.  The efficiency ratio for the first six months of fiscal 2016 improved to 64.21% from 75.78% for the first six months of fiscal 2015.

The provision for income taxes decreased $46,000 to $1.18 million for the quarter ended March 31, 2016, from $1.22 million for the preceding quarter, primarily due to lower income before income taxes.  The effective tax rate was 33.1% for the current quarter compared to 32.6% for the quarter ended December 31, 2015. 

Balance Sheet Management

Total assets increased $14.58 million, or 2%, to $851.96 million at March 31, 2016, from $837.38 million at December 31, 2015.  The increase was primarily due to a $16.43 million increase in cash and cash equivalents and a $1.66 million increase in CDs held for investment.  These increases were partially offset by a $2.21 million decrease in other real estate owned (“OREO”) and other repossessed assets and a $1.69 million decrease in net loans receivable.  The increase in total assets was funded primarily by a $14.27 million increase in total deposits.

Liquidity as measured by cash and cash equivalents, CDs held for investment and available for sale investments securities was 21.6% of total liabilities at March 31, 2016, compared to 19.5% at December 31, 2015 and 18.2% one year ago. 

Net loans receivable decreased $1.69 million, or less than 1%, to $622.85 million at March 31, 2016, from $624.54 million at December 31, 2015.  The decrease was primarily due to a $5.31 million decrease in multi-family loans, a $4.78 million decrease in commercial real estate loans and a $936,000 decrease in land loans.  These decreases to net loans receivable were partially offset by a $2.47 million increase in commercial business loans, a $1.96 million increase in custom and owner/builder construction loans, a $1.08 million increase in consumer loans and a $3.13 million decrease in the undisbursed portion of construction loans in process.

LOAN PORTFOLIO          
           
($ in thousands) March 31, 2016   December 31, 2015   March 31, 2015
  Amount   Percent   Amount   Percent   Amount   Percent
                       
Mortgage loans:                      
One- to four-family (a) $ 117,465       17 %   $ 117,203       17 %   $ 105,569       17 %
Multi-family   42,666       6       47,980       7       48,641       8  
Commercial   290,817       43       295,595       43       296,338       47  
Construction - Custom and owner/builder   69,817       10       67,861       10       60,889       10  
Construction - speculative one-to four-family   6,384       1       6,199       1       2,769       --  
Construction - commercial   22,487       3       22,213       3       3,395       --  
Construction - multi-family   20,570       3       20,570       3       10,380       2  
Land   24,322       4       25,258       4       28,464       4  
Total mortgage loans   594,528       87       602,879       88       556,445       88  
                       
Consumer loans:                      
Home equity and second                      
Mortgage   37,144       5       36,057       5       34,362       5  
Other   4,380       1       4,387       1       4,567       1  
Total consumer loans   41,524       6       40,444       6       38,929       6  
                       
Commercial business loans   43,355       7       40,886       6       34,911       6  
Total loans   679,407       100 %     684,209       100 %     630,285       100 %
Less:                      
Undisbursed portion of                      
Construction loans in                      
process   (44,465 )         (47,596 )         (35,990 )    
Deferred loan origination                      
fees   (2,048 )         (2,183 )         (1,893 )    
Allowance for loan losses   (10,043 )         (9,889 )         (10,382 )    
Total loans receivable, net $ 622,851         $ 624,541         $ 582,020      
                                   
                                   
                                   
(a) Does not include one- to four family loans held for sale totaling $1,584, $1,304 and $2,252 at March 31, 2016, December 31, 2015 and March 31, 2015, respectively.
 

Timberland originated $59.58 million in loans during the quarter ended March 31, 2016, compared to $53.76 million for the preceding quarter and $55.46 million for the comparable quarter one year ago.  Timberland continues to sell fixed rate one- to four-family mortgage loans into the secondary market for asset-liability management purposes and to generate non-interest income.  During the quarter ended March 31, 2016, fixed-rate one- to four-family mortgage loans totaling $13.94 million were sold compared to $12.62 million for the preceding quarter and $12.76 million for the comparable quarter one year ago.

Timberland’s investment securities decreased slightly during the quarter to $9.11 million at March 31, 2016, from $9.19 million at December 31, 2015, primarily due to scheduled amortization.

DEPOSIT BREAKDOWN
($ in thousands)
 
    March 31, 2016   December 31, 2015   March 31, 2015
    Amount   Percent   Amount   Percent   Amount   Percent
Non-interest bearing   $ 148,980       21 %   $ 142,279       20 %   $ 117,481       18 %
N.O.W. checking     188,108       27       186,003       27       168,451       26  
Savings     115,461       16       110,475       16       104,246       16  
Money market     100,903       14       99,061       14       85,927       13  
Money market – brokered     7,591       1       7,153       1       5,867       1  
Certificates of deposit under $100     81,350       11       83,618       12       91,498       14  
Certificates of deposit $100 and over     66,448       9       65,984       9       66,610       11  
Certificates of deposit – brokered     3,197       1       3,197       1       3,193       1  
Total deposits   $ 712,038       100 %   $ 697,770       100 %   $ 643,273       100 %
                                                 

Total deposits increased $14.27 million, or 2%, to $712.04 million at March 31, 2016, from $697.77 million at December 31, 2015.  The increase was primarily due to a $6.70 million increase in non-interest bearing account balances, a $4.99 million increase in saving account balances, a $2.28 million increase in money market account balances and a $2.11 million increase in N.O.W. checking account balances.  These increases were partially offset by a $1.80 million decrease in certificates of deposit account balances.  

Shareholders’ Equity

Total shareholders’ equity increased $1.21 million to $92.26 million at March 31, 2016, from $91.05 million at December 31, 2015.  The increase in shareholders’ equity was primarily due to net income of $2.38 million for the quarter, which was partially offset by share repurchases of $820,000 and dividend payments of $560,000 to shareholders.  Book value per share increased to $13.31 and tangible book value per share increased to $12.49 at March 31, 2016.

During the quarter, Timberland repurchased 66,000 shares of its common stock for $820,000 (an average price of $12.42 per share).  Timberland had 221,893 shares remaining to be purchased on its existing stock repurchase plan at March 31, 2016.

Capital Ratios and Asset Quality

Timberland remains well capitalized with a total risk-based capital ratio of 15.46%, a Tier 1 leverage capital ratio of 10.56% and a tangible capital to tangible assets ratio of 10.23% at March 31, 2016.

There was no provision for loan losses made for the quarters ended March 31, 2016, December 31, 2015 and March 31, 2015. There was a net recovery for the current quarter of $154,000 compared to net charge-offs of $35,000 for the quarter ended December 31, 2015 and a net recovery of $60,000 for the quarter ended March 31, 2015.  The non-performing assets to total assets ratio improved to 1.16% at March 31, 2016 from 1.63% three months earlier and 2.55% one year ago.  The allowance for loan losses was 1.59% of loans receivable at March 31, 2016.

Total delinquent loans (past due 30 days or more) and non-accrual loans decreased 33% to $3.67 million at March 31, 2016, from $5.48 million at December 31, 2015 and decreased 70% from $12.24 million one year ago.  Non-accrual loans decreased 30% to $3.39 million at March 31, 2016, from $4.83 million at December 31, 2015 and decreased 69% from $10.92 million at March 31, 2015.

NON-ACCRUAL LOANS   March 31, 2016   December 31, 2015   March 31, 2015
($ in thousands)   Amount   Quantity   Amount   Quantity   Amount   Quantity
                         
Mortgage loans:                        
One- to four-family   $ 1,365     11   $ 2,694     17   $ 3,751     17
Multi-family     --     --     --     --     760     1
Commercial     1,129     3     1,184     3     1,535     2
Construction     --     --     --     --     225     2
Land     451     3     546     4     4,214     5
Total mortgage loans     2,945     17     4,424     24     10,485     27
                         
Consumer loans:                        
Home equity and second                        
mortgage     413     7     300     4     401     7
Other     33     1     34     1     38     1
Total consumer loans     446     8     334     5     439     8
                         
Commercial business loans     --     --     73     1     --     --
Total loans   $ 3,391     25   $ 4,831     30   $ 10,924     35
                                     

OREO and other repossessed assets decreased 31% to $5.46 million at March 31, 2016, from $7.87 million at March 31, 2015 and decreased 29% from $7.67 million at December 31, 2015.  At March 31, 2016, the OREO and other repossessed asset portfolio consisted of 27 individual real estate properties and one mobile home.  During the quarter ended March 31, 2016, five OREO properties totaling $2.13 million were sold for a net gain of $16,000.

OREO and OTHER            
REPOSSESSED ASSETS   March 31, 2016   December 31, 2015   March 31, 2015
($ in thousands)   Amount   Quantity   Amount   Quantity   Amount   Quantity
                         
One- to four-family   $ 1,645     7   $ 2,763     10   $ 2,150     9
Commercial     446     2     1,449     3     2,073     4
Land     3,300     18     3,388     18     3,576     21
Mobile home     67     1     67     1     67     1
Total   $ 5,458     28   $ 7,667     32   $ 7,866     35
                                     

About Timberland Bancorp, Inc. 
Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank (“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 22 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. Forward-looking statements are not statements of historical fact 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 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, including, but not limited to: 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 and 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; 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 Board of Governors of the Federal Reserve System 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 or 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, 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 the implementation of related rules and regulations; our ability to attract and retain deposits;  increases in premiums for deposit insurance; 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 workforce and potential associated charges; computer systems on which we depend could fail or experience a security breach; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; 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, 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; and other risks detailed in our reports filed with the Securities and Exchange Commission.

Any of the forward-looking statements that we make in this press release and in the other public statements we make are based upon management’s beliefs and assumptions at the time they are made.  We undertake no obligation to publicly update or revise any forward-looking statements included in this report 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.  We caution readers not to place undue reliance on any forward-looking statements.  We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.  These risks could cause our actual results for fiscal 2016 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 operations and stock price performance.

TIMBERLAND BANCORP INC. AND SUBSIDIARY    
CONSOLIDATED STATEMENTS OF INCOME   Three Months Ended
($ in thousands, except per share amounts)   March 31,   Dec. 31,   March 31,
(unaudited)   2016   2015   2015
Interest and dividend income            
Loans receivable   $ 8,306     $ 8,429     $ 7,352  
Investment securities     74       69       55  
Dividends from mutual funds and Federal Home Loan Bank (“FHLB”) stock     39       22       6  
Interest bearing deposits in banks     231       171       114  
Total interest and dividend income     8,650       8,691       7,527  
             
Interest expense            
Deposits     507       504       495  
FHLB advances     472       477       465  
Total interest expense     979       981       960  
Net interest income     7,671       7,710       6,567  
             
Provision for loan losses     --       --       --  
Net interest income after provision for loan losses     7,671       7,710       6,567  
             
Non-interest income            
OTTI on investment securities, net     (23 )     --       (1 )
Service charges on deposits     937       972       852  
ATM and debit card interchange transaction fees     710       700       643  
Gain on sale of loans, net     393       394       348  
Bank owned life insurance (“BOLI”) net earnings     137       135       131  
Other     359       317       241  
Total non-interest income, net     2,513       2,518       2,214  
             
Non-interest expense            
Salaries and employee benefits     3,466       3,471       3,284  
Premises and equipment     771       760       751  
Advertising     193       205       173  
OREO and other repossessed assets, net     195       244       349  
ATM and debit card processing     331       322       255  
Postage and courier     110       100       114  
State and local taxes     138       132       119  
Professional fees     117       130       223  
FDIC insurance     127       107       148  
Other insurance     33       32       38  
Loan administration and foreclosure     95       29       76  
Data processing and telecommunications     474       450       471  
Deposit operations     234       172       219  
Other     345       325       434  
Total non-interest expense     6,629       6,479       6,654  
             
Income before income taxes   $ 3,555     $ 3,749     $ 2,127  
Provision for income taxes     1,175       1,221       676  
Net income   $ 2,380     $ 2,528     $ 1,451  
             
Net income per common share:            
Basic   $ 0.35     $ 0.37     $ 0.21  
Diluted     0.34       0.36       0.21  
             
Weighted average common shares outstanding:            
Basic     6,846,527       6,869,726       6,898,192  
Diluted     7,080,005       7,083,864       7,071,792  
                         

TIMBERLAND BANCORP INC. AND SUBSIDIARY    
CONSOLIDATED STATEMENTS OF INCOME   Six Months Ended
($ in thousands, except per share amounts)   March 31,   March 31,
(unaudited)   2016   2015
Interest and dividend income        
Loans receivable   $ 16,735     $ 14,861  
Investment securities     143       120  
Dividends from mutual funds and FHLB stock     61       13  
Interest bearing deposits in banks     402       219  
Total interest and dividend income     17,341       15,213  
         
Interest expense        
Deposits     1,012       1,004  
FHLB advances     948       940  
Total interest expense     1,960       1,944  
Net interest income     15,381       13,269  
                 
Provision for loan losses     --       --  
Net interest income after provision for loan losses     15,381       13,269  
         
Non-interest income        
OTTI on investment securities, net     (23 )     (1 )
Gain on sale of investment securities, net     --       45  
Service charges on deposits     1,909       1,737  
ATM and debit card interchange transaction fees     1,409       1,273  
Gain on sale of loans, net     787       584  
BOLI net earnings     272       268  
Other     677       432  
Total non-interest income, net     5,031       4,338  
         
Non-interest expense        
Salaries and employee benefits     6,936       6,680  
Premises and equipment     1,531       1,476  
Advertising     398       361  
OREO and other repossessed asset, net     438       425  
ATM and debit card processing     653       593  
Postage and courier     211       218  
State and local taxes     270       236  
Professional fees     247       399  
FDIC insurance     234       308  
Other insurance     65       75  
Loan administration and foreclosure     124       119  
Data processing and telecommunications     924       850  
Deposit operations     406       395  
Other     670       793  
Total non-interest expense     13,107       12,928  
         
Income before income taxes   $ 7,305     $ 4,679  
Provision for income taxes     2,397       1,501  
Net income   $ 4,908     $ 3,178  
         
Net income per common share:        
Basic   $ 0.72     $ 0.46  
Diluted     0.69       0.45  
         
Weighted average common shares outstanding:        
Basic     6,858,190       6,895,038  
Diluted     7,081,945       7,067,621  
                 

TIMBERLAND BANCORP INC. AND SUBSIDIARY  
CONSOLIDATED BALANCE SHEETS  
($ in thousands, except per share amounts) (unaudited)   March 31,   Dec. 31,   March 31,
    2016   2015   2015
Assets            
Cash and due from financial institutions   $ 17,121     $ 12,481     $ 12,474  
Interest-bearing deposits in banks     92,908       81,119       69,619  
  Total cash and cash equivalents     110,029       93,600       82,093  
               
Certificates of deposit (“CDs”) held for investment, at cost     52,524       50,865       41,868  
Investment securities:            
  Held to maturity, at amortized cost     7,743       7,824       5,106  
  Available for sale, at fair value     1,365       1,362       1,486  
FHLB stock     2,804       2,699       5,135  
               
Loans held for sale     1,584       1,304       2,252  
             
Loans receivable     632,894       634,430       592,402  
Less: Allowance for loan losses     (10,043 )     (9,889 )     (10,382 )
  Net loans receivable     622,851       624,541       582,020  
               
Premises and equipment, net     16,355       16,589       17,422  
OREO and other repossessed assets, net     5,458       7,667       7,866  
BOLI     18,443       18,306       17,900  
Accrued interest receivable     2,232       2,234       2,060  
Goodwill     5,650       5,650       5,650  
Mortgage servicing rights, net     1,488       1,475       1,484  
Other assets     3,436       3,263       3,928  
  Total assets   $ 851,962     $ 837,379     $ 776,270  
               
Liabilities and shareholders’ equity            
Deposits: Non-interest-bearing demand   $ 148,980     $ 142,279     $ 117,481  
Deposits: Interest-bearing     563,058       555,491       525,792  
  Total deposits     712,038       697,770       643,273  
               
FHLB advances     45,000       45,000       45,000  
Other liabilities and accrued expenses     2,662       3,558       2,573  
  Total liabilities     759,700       746,328       690,846  
             
Shareholders’ equity            
Common stock, $.01 par value; 50,000,000 shares authorized;                        
7,052,636 shares issued and outstanding – March 31, 2015                        
6,994,148 shares issued and outstanding – December 31, 2015                        
6,933,068 shares issued and outstanding – March 31, 2016     9,698       10,402       10,892  
Unearned shares issued to Employee Stock Ownership Plan (“ESOP”)     (793 )     (859 )     (1,058 )
Retained earnings     83,643       81,823       75,937  
Accumulated other comprehensive loss     (286 )     (315 )     (347 )
  Total shareholders’ equity     92,262       91,051       85,424  
  Total liabilities and shareholders’ equity   $ 851,962     $ 837,379     $ 776,270  
                           

KEY FINANCIAL RATIOS AND DATA  Three Months Ended
($ in thousands, except per share amounts) (unaudited)  March 31,   Dec. 31,   March 31,
  2016   2015   2015
             
PERFORMANCE RATIOS:            
Return on average assets (a)     1.13 %     1.22 %     0.75 %
Return on average equity (a)     10.42 %     11.26 %     6.86 %
Net interest margin (a)     3.92 %     4.00 %     3.69 %
Efficiency ratio     65.09 %     63.35 %     75.78 %
             
             
    Six Months Ended
      March 31,       March 31,
      2016       2015
PERFORMANCE RATIOS:            
Return on average assets       1.18 %         0.84 %
Return on average equity       10.84 %         7.57 %
Net interest margin       3.96 %         3.78 %
Efficiency ratio       64.21 %         75.78 %
             
    March 31,   Dec. 31,   March 31,
    2016   2015   2015
ASSET QUALITY RATIOS AND DATA:            
Non-accrual loans   $ 3,391     $ 4,831     $ 10,924  
Loans past due 90 days and still accruing     135       285       --  
Non-performing investment securities     868       891       1,009  
OREO and other repossessed assets     5,458       7,667       7,866  
Total non-performing assets (b)   $ 9,852     $ 13,674     $ 19,799  
             
             
Non-performing assets to total assets (b)     1.16 %     1.63 %     2.55 %
Net charge-offs (recoveries) during quarter   $ (154 )   $ 35     $ (60 )
Allowance for loan losses to non-accrual loans     296 %     205 %     95 %
Allowance for loan losses to loans receivable (c)     1.59 %     1.56 %     1.75 %
Troubled debt restructured loans on accrual status (d)   $ 7,923     $ 7,971     $ 12,673  
             
             
CAPITAL RATIOS:            
Tier 1 leverage capital     10.56 %     10.56 %     10.63 %
Tier 1 risk-based capital     14.21 %     13.91 %     13.97 %
Total risk-based capital     15.46 %     15.17 %     15.23 %
Tangible capital to tangible assets (e)     10.23 %     10.27 %     10.35 %
             
             
BOOK VALUES:            
Book value per common share   $ 13.31     $ 13.02     $ 12.11  
Tangible book value per common share (e)     12.49       12.21       11.31  
             
             
(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 includes loans held for sale and is before the allowance for loan losses.
(d)  Does not include troubled debt restructured loans totaling $531, $1,229 and $2,121 reported as non-accrual loans at March 31, 2016, December 31, 2015 and March 31, 2015, respectively.
(e)  Calculation subtracts goodwill from the equity component and from assets.
             

AVERAGE BALANCES, YIELDS AND RATES - QUARTERLY                
($ in thousands)                      
(unaudited)                      
                       
  For the Three Months Ended
  March 31, 2016   December 31, 2015   March 31, 2015
  Average
Balance
  Average
Yield/Rate
  Average
Balance
  Average
Yield/Rate
  Average
Balance
  Average
Yield/Rate
Assets                      
Loans and loans held for sale $ 631,708       5.26 %   $ 625,558       5.39 %   $ 592,000       4.97 %
Investment securities and FHLB Stock   11,844       3.82 %     11,955       3.04 %     11,823       2.06 %
Interest-bearing deposits and CD's   139,732       0.66 %     133,643       0.50 %     108,298       0.42 %
Total interest-bearing assets   783,284       4.42 %     771,156       4.51 %     712,121       4.23 %
Other assets   57,072           58,204           58,224      
Total assets $ 840,356         $ 829,360         $ 770,345      
                                               
Liabilities and Shareholders' Equity                      
N.O.W. checking accounts $ 184,414       0.24 %   $ 179,611       0.25 %   $ 165,314       0.26 %
Money market accounts   105,670       0.30 %     104,377       0.30 %     92,683       0.26 %
Savings accounts   112,064       0.05 %     110,356       0.05 %     100,997       0.05 %
Certificates of deposit accounts   151,837       0.80 %     153,866       0.76 %     162,446       0.76 %
Total interest-bearing deposits   553,985       0.37 %     548,210       0.36 %     521,440       0.38 %
FHLB advances   45,000       4.22 %     45,000       4.21 %     45,000       4.19 %
Total interest-bearing liabilities   598,985       0.66 %     593,210       0.66 %     566,440       0.69 %
                       
Non-interest-bearing demand deposits   146,581           142,518           116,177      
Other liabilities   3,455           3,788           3,092      
Shareholders' equity   91,335           89,844           84,636      
Total liabilities and shareholders' equity $ 840,356         $ 829,360         $ 770,345      
                       
Net interest income and spread       3.76 %         3.85 %         3.54 %
Net interest margin (1)       3.92 %         4.00 %         3.69 %
Average interest-bearing assets to                      
average interest-bearing liabilities   130.77 %         130.00 %         125.72 %    
                       
(1)Net interest margin = annualized net interest income /
average interest-bearing assets
                     
                       

AVERAGE BALANCES, YIELDS AND RATES – YEAR TO DATE          
($ in thousands)                
(unaudited)                
                 
  For the Six Months Ended
  March 31, 2016     March 31, 2015
  Average
Balance
  Average
Yield/Rate
    Average
Balance
  Average
Yield/Rate
Assets                
Loans and loans held for sale $ 628,616       5.32 %     $ 586,853       5.06 %
Investment securities and FHLB Stock   11,900       3.43 %       12,553       2.12 %
Interest-bearing deposits and CD's   136,666       0.59 %       102,258       0.43 %
Total interest-bearing assets   777,182       4.46 %       701,664       4.34 %
Other assets   57,645             59,072      
Total assets $ 834,827           $ 760,736      
                 
Liabilities and Shareholders' Equity                
N.O.W. checking accounts $ 181,999       0.25 %     $ 162,374       0.27 %
Money market accounts   105,020       0.30 %       98,801       0.25 %
Savings accounts   111,205       0.05 %       91,455       0.05 %
Certificates of deposit accounts   152,858       0.78 %       162,734       0.78 %
Total interest-bearing deposits   551,082       0.37 %       515,364       0.39 %
FHLB advances   45,000       4.21 %       45,000       4.19 %
Total interest-bearing liabilities   596,082       0.66 %       560,364       0.70 %
                 
Non-interest-bearing demand deposits   144,544             113,548      
Other liabilities   3,616             2,864      
Shareholders' equity   90,585             83,960      
Total liabilities and shareholders' equity $ 834,827           $ 760,736      
                 
Net interest income and spread       3.80 %           3.64 %
Net interest margin (1)       3.96 %           3.78 %
Average interest-bearing assets to                
average interest-bearing liabilities   130.38 %           125.22 %    
                 
(1)Net interest margin = annualized net interest income /
average interest-bearing assets
               
                 

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

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