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Regulatory Matters
 12 Months Ended
Sep. 30, 2016
Regulatory Capital Requirements [Abstract]  
Regulatory Matters
Regulatory Matters

The Bank, as a state-chartered, federally insured savings bank, is subject to the capital requirements established by the FDIC. Under the FDIC's capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

Effective January 1, 2015 (with some changes transitioned into full effectiveness over two to four years), the Bank became subject to new capital adequacy requirements. The capital adequacy requirements are quantitative measures established by regulation that require the Bank to maintain minimum amounts and ratios of capital. The new capital requirements adopted by the FDIC created a new required ratio for common equity Tier 1 ("CET1") capital, increased the leverage and Tier 1 capital ratios, changed the risk-weightings of certain assets for purposes of the risk-based capital ratios, created an additional capital conservation buffer over the required capital ratios and changed what qualifies as capital for purpose of meeting these various capital requirements. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by bank regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements.

The minimum requirements are a ratio of CET1 capital to total risk-weighted assets (the "CET1 risk-based ratio") of 4.5%, a Tier 1 capital ratio of 6.0%, a total capital ratio of 8.0% and a leverage ratio of 4.0%. In addition to the minimum CET1, Tier 1 and total capital ratios, the Bank must maintain a capital conservation buffer consisting of additional CET1 capital above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. This capital conservation buffer requirement began to be phased in beginning in January 2016 at 0.625% of risk-weighted assets and will increase each year to an amount equal to 2.5% of risk-weighted assets when fully implemented in January 2019.

In addition to the capital requirements, there are a number of changes in what constitutes regulatory capital, subject to transition periods. These changes include the phasing-out of certain instruments as qualifying capital. As of September 30, 2016, the Bank did not have any of these instruments. MSRs and deferred tax assets over designated percentages of CET1 capital will be deducted from capital, subject to a four-year transition period. CET1 capital will consist of Tier 1 capital less all capital components that are not considered common equity. In addition, Tier 1 capital will include accumulated other comprehensive income (loss), which includes all unrealized gains and losses on available for sale investment securities, subject to a four-year transition period. In addition, the Bank elected in the first quarter of calendar year 2015 to take the one-time option of deciding to permanently opt-out of the inclusion of unrealized gains and losses on available for sale investment securities in its capital calculations.

Under the new standards, in order to be considered well-capitalized, the Bank must have a CET1 risk-based capital ratio of 6.5% (new), a Tier 1 risk-based capital ratio of 8.0% (increased from 6.0%), a total risk-based capital ratio of 10.0% (unchanged) and a Tier 1 leverage capital ratio of 5.0% (unchanged). At September 30, 2016 and 2015 the Bank exceeded all regulatory capital requirements. The Bank was categorized as "well capitalized" at September 30, 2016 and 2015 under the regulations of the FDIC.








The following tables compare the Bank’s actual capital amounts at September 30, 2016 and 2015 to its minimum regulatory capital requirements and "Well Capitalized" regulatory capital at those dates (dollars in thousands):
September 30, 2016
Actual
 
Regulatory Minimum To Be "Adequately Capitalized"
 
To Be "Well Capitalized" Under Prompt Corrective Action Provisions
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
Leverage Capital Ratio:
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
$
90,266

 
10.3
%
 
$
35,183

 
4.0
%
 
$
43,979

 
5.0
%
 
 
 
 
 
 
 
 
 
 
 
 
Risk-based Capital Ratios:
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
90,266

 
14.3

 
28,318

 
4.5

 
40,904

 
6.5

 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
90,266

 
14.3

 
37,758

 
6.0

 
50,344

 
8.0

 
 
 
 
 
 
 
 
 
 
 
 
Total capital
98,158

 
15.6

 
50,344

 
8.0

 
62,930

 
10.0

September 30, 2015
Actual
 
Regulatory Minimum To Be "Adequately Capitalized"
 
To Be "Well Capitalized" Under Prompt Corrective Action Provisions
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
Leverage Capital Ratio:
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
$
82,297

 
10.3
%
 
$
32,006

 
4.0
%
 
$
40,008

 
5.0
%
 
 
 
 
 
 
 
 
 
 
 
 
Risk-based Capital Ratios:
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
82,297

 
13.4

 
27,568

 
4.5

 
39,821

 
6.5

 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
82,297

 
13.4

 
36,758

 
6.0

 
49,010

 
8.0

 
 
 
 
 
 
 
 
 
 
 
 
Total capital
89,986

 
14.7

 
49,010

 
8.0

 
61,263

 
10.0



Timberland Bancorp is a bank holding company registered with the Federal Reserve. Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve. For a bank holding company with less than $1.0 billion in assets, the capital guidelines apply on a bank only basis, and the Federal Reserve expects the holding company's subsidiary bank to be well capitalized under the prompt corrective action regulations. If Timberland Bancorp were subject to regulatory guidelines for bank holding companies with $1.0 billion or more in assets at September 30, 2016, Timberland Bancorp would have exceeded all regulatory requirements.

The following table presents the regulatory capital ratios for Timberland Bancorp at September 30, 2016 and 2015 (dollars in thousands):
 
2016
2015
 
Actual
Actual
 
Amount
 
Ratio
Amount
 
Ratio
Leverage Capital Ratio:
 
 
 
 
 
 
Tier 1 capital
$
92,860

 
10.5
%
$
85,221

 
10.6
%
 
 
 
 
 
 
 
Risk-based Capital Ratios:
 
 
 
 
 
 
Common equity tier 1 capital
92,860

 
14.8

85,221

 
13.9

 
 
 
 
 
 
 
Tier 1 capital
92,860

 
14.8

85,221

 
13.9

 
 
 
 
 
 
 
Total capital
100,755

 
16.0

92,911

 
15.2