|
Contact: Michael R. Sand,
President & CEO
Dean J. Brydon, CFO
(360) 533-4747
www.timberlandbank.com
|
Timberland Bancorp 2020 Fiscal Year Net Income Increases to $24.27 Million
|
•
|
Reports 10th Consecutive Year of Increased Net Income and Earnings per Share
|
|
•
|
Loan Deferrals Decreased to Less Than 1% of Loan Portfolio
|
|
•
|
Fiscal Year Diluted Earnings per Share Increases to $2.88
|
|
•
|
Fiscal Year Return on Average Assets of 1.75%
|
|
•
|
Fiscal Year Return on Average Equity of 13.59%
|
|
•
|
Announces $0.20 Quarterly Cash Dividend
|
|
•
|
Announces Plans to Resume Purchases Under Existing Stock Repurchase Program
|
HOQUIAM, WA – October 29, 2020 – Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”) today reported net income increased 1% to $24.27 million for the fiscal year ended September 30, 2020 from $24.02
million for the fiscal year ended September 30, 2019. Earnings per diluted common share (“EPS”) increased 1% to $2.88 for the 2020 fiscal year from $2.84 for the 2019 fiscal year.
Timberland also reported quarterly net income of $6.36 million, or $0.76 per diluted common share, for the quarter ended September 30, 2020. This compares to net income of $6.21 million, or $0.74 per diluted common
share, for the preceding quarter and net income of $6.33 million, or $0.75 per diluted common share, for the quarter ended September 30, 2019.
Timberland’s Board of Directors declared a quarterly cash dividend to shareholders of $0.20 per common share payable on November 27, 2020, to shareholders of record on November 13, 2020.
“We are pleased to report record net income for our fiscal year ended September 30, 2020 and, for the tenth consecutive year, increased net income and earnings per share,” stated Michael Sand, President and CEO. “Net
loans outstanding increased 14% for the year primarily as a result of Timberland’s commitment to serving applicants seeking economic relief through the Paycheck Protection Program (“PPP”). Deposit growth, year over year, trended well above average
increasing nearly 27% primarily as a result of PPP loan proceeds being placed on deposit, organic growth in customer relationships and depositors opting to build liquidity in the midst of an uncertain economic environment. The result for Timberland
was a significant increase in on balance sheet liquidity. Given continuing uncertainties regarding the economy and the interest rate environment we will continue with our measured approach to investing a significant portion of this excess
liquidity.”
“We remain committed to our borrowers whom have been affected by COVID related declines in business revenues,” Sand continued. “At June 30th, we had approved deferrals for 209 loans representing balances
aggregating to approximately 13% of the Bank’s net loan portfolio. We are pleased to report at September 30th that loans remaining in a deferred payment status had decreased to less than 1% of net loans outstanding.”
“In September 2020, we were honored for the second consecutive year to be included in the prestigious Piper Sandler Bank and Thrift Sm-All Stars: Class of 2020, which identified Timberland Bank as one of the 35 top
performing, publicly traded small-cap banks and thrifts in the nation based on growth, profitability, credit quality and capital strength. In May 2020, we were awarded, for the third consecutive year, the Raymond James Community Bankers Cup, which
recognized the top 10% of community banks in the country based on profitability, operational efficiency and various balance sheet metrics. Being recognized once again for both of these awards is great affirmation of our extraordinary staff and their
commitment to supporting our customers and communities,” said Sand. “After temporarily suspending our existing stock repurchase plan in March as a result of the pandemic, we plan to resume purchasing stock in November under the terms of our existing
stock repurchase, subject to market conditions. We believe our stock is an attractive investment,” Sand concluded. The Company has 144,852 shares available to be repurchased under its existing stock repurchase plan.
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 2
2020 Fiscal Year Earnings and Balance Sheet Highlights (at or for the period ended September 30, 2020, compared to September 30, 2019 or June 30, 2020):
Earnings Highlights:
|
•
|
Net income increased to $24.27 million for the 2020 fiscal year from $24.02 million for the 2019 fiscal year; EPS increased to $2.88 for the 2020 fiscal year from $2.84 for the 2019 fiscal year;
|
|
•
|
Net income increased to $6.36 million for the current quarter from $6.21 million for the preceding quarter and $6.33 million for the comparable quarter one year ago; EPS increased to $0.76 for the current
quarter from $0.74 for the preceding quarter and $0.75 for the comparable quarter one year ago;
|
|
•
|
Return on average equity (“ROE”) and return on average assets (“ROA”) for the 2020 fiscal year were 13.59% and 1.75%, respectively; ROE and ROA for the current quarter were 13.78% and 1.65%, respectively;
|
|
•
|
Net interest margin was 3.90% for the 2020 fiscal year and 3.44% for the current quarter; and
|
|
•
|
The efficiency ratio improved to 50.04% for the 2020 fiscal year from 54.32% for the 2019 fiscal year.
|
Balance Sheet Highlights:
|
•
|
Total assets increased 26% year-over-year and 3% from the prior quarter;
|
|
•
|
Total deposits increased 27% year-over-year and 3% from the prior quarter;
|
|
•
|
Net loans receivable increased 14% year-over-year and increased slightly from the prior quarter; and
|
|
•
|
Book and tangible book (non-GAAP) values per common share increased to $22.58 and $20.56, respectively, at September 30, 2020.
|
Operating Results
Operating revenue (net interest income before the provision for loan losses, plus non-interest income excluding recoveries on investment securities, gains on sale of investment securities, and BOLI death benefit
claims) increased 6% to $67.95 million for the 2020 fiscal year from $64.37 million for the 2019 fiscal year. For the current quarter, operating revenue increased 3% to $17.23 million from $16.72 million for the comparable quarter one year ago and
decreased 1% from $17.33 million for the preceding quarter.
Net interest income for the 2020 fiscal year decreased 1% to $50.88 million from $51.16 million for the 2019 fiscal year. The year-over-year decrease was primarily due to a 64 basis point decrease in the average yield
on interest-earning assets, which was partially offset by a $166.51 million increase in the average balance of interest-earning assets. Timberland’s net interest margin (“NIM”) for the fiscal year ended September 30, 2020 was 3.90% compared to 4.50%
for the fiscal year ended September 30, 2019.
Net interest income increased slightly to $12.52 million for the current quarter from $12.48 million for the preceding quarter and decreased 5% from $13.15 million for the comparable quarter one year ago. Timberland’s
NIM for the current quarter was 3.44% compared to 3.63% for the preceding quarter and 4.54% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately ten basis points due to the accretion of $173,000 of
the fair value discount on loans acquired in the South Sound Acquisition and the collection of $181,000 in pre-payment penalties, non-accrual interest, and late fees. The NIM for the preceding quarter was increased by approximately ten basis points
due to the accretion of $170,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $177,000 in pre-payment penalties, non-accrual interest and late fees. The NIM for the comparable quarter one year ago
was increased by approximately 12 basis points due to the accretion of $188,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $158,000 in pre-payment penalties, non-accrual interest and late fees.
The NIM compression during the current quarter and current fiscal year was primarily due to decreased market interest rates, increased levels of liquidity and PPP loans. In March 2020, the Federal Reserve reduced the
targeted federal funds interest rate by 150 basis points in response to the COVID-19 pandemic. Timberland’s liquid funds also increased during the current quarter and current fiscal year as deposit balances increased more than did the loan
portfolio. As a result, average interest-earning deposits in banks and CDs increased $61.07 million, or 22%, to $339.22 million for the quarter ended September 30, 2020 from $278.16 million for the quarter ended June 30, 2020 and increased $119.66
million, or 54%, from $219.57 million for the quarter ended September 30, 2019. Through September 30, 2020, Timberland originated $126.82 million in PPP loans at the program’s prescribed 1.00% interest rate. PPP loans are subject to loan
origination fees which are accreted into interest income over the life of each loan. During the quarter ended September 30, 2020, Timberland recorded $316,000 in interest
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 3
income on PPP loans and accreted $599,000 in PPP loan origination fees into income. At September 30, 2020, Timberland had $3.72 million in PPP deferred loan origination fees remaining to be accreted into interest
income during the remaining life of the loans.
Provisions for loan losses of $3.70 million were made during the 2020 fiscal year compared to no provision made for loan losses in the 2019 fiscal year. A $500,000 provision for loan losses was made during the current
quarter compared to a $1.00 million provision for loan losses for the preceding quarter and no provision for loan losses for the comparable quarter one year ago. This fiscal year’s provisions for loan losses were primarily due to economic
uncertainties associated with the COVID-19 pandemic. As a result of these provisions and net recoveries during the year, Timberland’s allowance for loan losses (“ALL”) increased by 38% to $13.41 million at September 30, 2020 from $9.69 million at
September 30, 2019.
Non-interest income for the 2020 fiscal year increased $2.85 million, or 20%, to $17.19 million from $14.34 million for the 2019 fiscal year. The increase was primarily due to a $4.23 million increase in gain on sales
of loans, recoveries of $483,000 of previously charged off receivables acquired in the South Sound Acquisition (which are recorded in the “Other, net” non-interest category), and smaller increases in several other categories. These increases were
partially offset by a $1.05 million decrease in BOLI net earnings, a $757,000 decrease in service charges on deposits and smaller decreases in several other categories. The increase in gain on sales of loans was primarily due to an increase in the
dollar amount of fixed rate one- to four-family loans originated and sold during the current year and an increase in the average pricing margin. The increased mortgage banking volumes were largely due to increased refinance activity for single family
homes due to lower mortgage interest rates. Net BOLI earnings were higher for the comparable period one year ago primarily due to a BOLI death benefit claim. The decrease in service charges on deposits was primarily due to a decrease in overdraft
fee income.
Non-interest income increased 31% to $4.71 million for the current quarter from $3.60 million for the comparable quarter one year ago and decreased 3% from $4.86 million for the preceding quarter. The decrease in
non-interest income compared to the preceding quarter was primarily due to a $197,000 valuation allowance on servicing rights and a $200,000 decrease in recoveries of previously charged off receivables acquired in the South Sound Acquisition (as
discussed above). The valuation allowance on servicing rights was primarily the result of prepayment speeds increasing on mortgages being serviced in this low interest rate environment. Partially offsetting these decreases were increases in service
charges on deposits (due to increased overdraft fee income) and debit card interchange transaction fee income (due to higher volumes).
For the 2020 fiscal year, total (non-interest) operating expenses decreased $1.52 million, or 4%, to $34.06 million from $35.58 million for the prior fiscal year. The decrease was primarily due to a $1.42 million
decrease in data processing and telecommunications expense and smaller decreases in several other categories. Data processing related expenses were elevated in the 2019 fiscal year due to Timberland’s core operating system and ancillary technology
systems conversions. The efficiency ratio for the 2020 fiscal year improved to 50.04% from 54.32% for the 2019 fiscal year.
Total operating expenses for the current quarter decreased $30,000 to $8.74 million from $8.77 million for the comparable quarter one year ago and increased $82,000, or 1%, from $8.66 million for the preceding
quarter. The increase in operating expenses compared to the preceding quarter was primarily due to a $204,000 increase in OREO expense and was partially offset by decreases in salaries and employee benefits expense and smaller decreases in several
other categories. The increase in OREO expense was primarily due to a market value write-down on the Company’s largest remaining OREO property in conjunction with the acceptance of a purchase offer. The efficiency ratio for the current quarter was
50.73% compared to 52.39% for the comparable quarter one year ago and 49.96% for the preceding quarter.
The provision for income taxes for the 2020 fiscal year increased $137,000 to $6.04 million from $5.90 million for the 2019 fiscal year, primarily due to higher taxable income. Timberland’s effective income tax rate
for the year ended September 30, 2020 was 19.9% compared to 19.7% for the year ended September 30, 2019. The provision for income taxes for the current quarter increased $172,000 to $1.64 million from $1.46 million for the preceding quarter,
primarily due to higher taxable income. Timberland’s effective income tax rate was 20.5% for the quarter ended September 30, 2020, compared to 19.1% for the quarter ended June 30, 2020.
Balance Sheet Management
Total assets increased $318.85 million, or 26%, to $1.57 billion at September 30, 2020 from $1.25 billion one year ago and increased $44.34 million, or 3%, from $1.52 billion at June 30, 2020. The year-over-year
increase in asset size was primarily
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 4
due to increases in total cash and cash equivalents and net loans receivable. The quarterly increase in asset size was primarily due to increases in total cash and cash equivalents and investment securities. The
increases in total assets were funded primarily by increases in total deposits.
Loans
Net loans receivable increased $127.21 million, or 14%, to $1.014 billion at September 30, 2020 from $886.66 million one year ago. The increase was primarily due to a $126.82 million increase in PPP loans, a $34.58
million increase in commercial real estate loans, and smaller increases in several other categories. These increases were partially offset by a $14.08 million decrease in one- to four-family loans and smaller decreases in several other categories.
Net loans receivable increased slightly to $1.014 billion at September 30, 2020 from $1.013 billion at June 30, 2020. The increase during the current quarter was primarily due to a $5.56 million increase in
multi-family loans, a $4.24 million in PPP loans, and smaller increases in several other categories. These increases were partially offset by a $4.77 million increase in the undisbursed portion of construction loans in process and smaller changes in
several other categories.
Loan Portfolio
($ in thousands)
|
September 30, 2020
|
June 30, 2020
|
September 30, 2019
|
||||||||||||||||||||||
|
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||||||||
|
Mortgage loans:
|
||||||||||||||||||||||||
|
One- to four-family (a)
|
$
|
118,580
|
10
|
%
|
$
|
120,514
|
11
|
%
|
$
|
132,661
|
13
|
%
|
||||||||||||
|
Multi-family
|
85,053
|
8
|
79,468
|
7
|
76,036
|
8
|
||||||||||||||||||
|
Commercial
|
453,574
|
40
|
455,454
|
40
|
419,117
|
42
|
||||||||||||||||||
|
Construction - custom and
|
||||||||||||||||||||||||
|
owner/builder
|
129,572
|
12
|
134,709
|
12
|
128,848
|
13
|
||||||||||||||||||
|
Construction - speculative
one-to four-family
|
14,592
|
1
|
12,136
|
1
|
16,445
|
2
|
||||||||||||||||||
|
Construction - commercial
|
33,144
|
3
|
33,166
|
3
|
39,566
|
4
|
||||||||||||||||||
|
Construction - multi-family
|
34,476
|
3
|
27,449
|
2
|
36,263
|
4
|
||||||||||||||||||
|
Construction - land
|
||||||||||||||||||||||||
|
Development
|
7,712
|
1
|
6,132
|
1
|
2,404
|
--
|
||||||||||||||||||
|
Land
|
25,571
|
2
|
27,009
|
3
|
30,770
|
3
|
||||||||||||||||||
|
Total mortgage loans
|
902,274
|
80
|
896,037
|
80
|
882,110
|
89
|
||||||||||||||||||
|
Consumer loans:
|
||||||||||||||||||||||||
|
Home equity and second
|
||||||||||||||||||||||||
|
Mortgage
|
32,077
|
3
|
34,405
|
3
|
40,190
|
4
|
||||||||||||||||||
|
Other
|
3,572
|
--
|
3,552
|
--
|
4,312
|
--
|
||||||||||||||||||
|
Total consumer loans
|
35,649
|
3
|
37,957
|
3
|
44,502
|
4
|
||||||||||||||||||
|
Commercial loans:
|
||||||||||||||||||||||||
|
Commercial business loans
|
69,540
|
6
|
71,586
|
6
|
64,764
|
7
|
||||||||||||||||||
|
SBA PPP loans
|
126,820
|
11
|
122,581
|
11
|
--
|
--
|
||||||||||||||||||
|
Total commercial loans
|
196,360
|
17
|
194,167
|
17
|
64,764
|
7
|
||||||||||||||||||
|
Total loans
|
1,134,283
|
100
|
%
|
1,128,161
|
100
|
%
|
991,376
|
100
|
%
|
|||||||||||||||
|
Less:
|
||||||||||||||||||||||||
|
Undisbursed portion of
|
||||||||||||||||||||||||
|
construction loans in
|
||||||||||||||||||||||||
|
process
|
(100,558
|
)
|
(95,785
|
)
|
(92,226
|
)
|
||||||||||||||||||
|
Deferred loan origination
|
||||||||||||||||||||||||
|
fees
|
(6,436
|
)
|
(6,723
|
)
|
(2,798
|
)
|
||||||||||||||||||
|
Allowance for loan losses
|
(13,414
|
)
|
(12,894
|
)
|
(9,690
|
)
|
||||||||||||||||||
|
Total loans receivable, net
|
$
|
1,013,875
|
$
|
1,012,759
|
$
|
886,662
|
||||||||||||||||||
_______________________
|
(a)
|
Does not include one- to four-family loans held for sale totaling $4,509, $9,837 and $6,071 at September 30, 2020, June 30, 2020 and September 30, 2019, respectively.
|
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 5
The following table highlights eight commercial real estate (“CRE”) segments generally presumed to have the potential to be more adversely affected by work at home and COVID related social
distancing practices than other segments of the loan portfolio.
CRE Portfolio Breakdown by Collateral
($ in thousands)
|
Collateral Type
|
Amount
|
Percent
of CRE
Portfolio
|
Percent of
Total Loan
Portfolio |
|||||||||
|
Office buildings
|
$
|
76,732
|
17
|
%
|
7
|
%
|
||||||
|
Medical/dental offices
|
56,653
|
12
|
5
|
|||||||||
|
Other retail buildings
|
40,725
|
9
|
4
|
|||||||||
|
Hotels/motels
|
27,440
|
6
|
2
|
|||||||||
|
Restaurants
|
25,481
|
6
|
2
|
|||||||||
|
Nursing homes
|
19,194
|
4
|
2
|
|||||||||
|
Shopping centers
|
14,483
|
3
|
1
|
|||||||||
|
Churches
|
12,464
|
3
|
1
|
|||||||||
|
Additional CRE
|
180,402
|
40
|
16
|
|||||||||
|
Total CRE
|
$
|
453,574
|
100
|
%
|
40
|
%
|
||||||
Within Timberland’s commercial business loan portfolio (non-CRE) resides a segment of restaurant loans totaling $16.82 million in outstanding balances at September 30, 2020. As additional security for these loans,
Timberland holds cash collateral of 25% of the segment’s associated outstanding loan balances. Unless prior arrangements are made, and Timberland consents, loans falling more than four weeks delinquent are eligible for purchase from Timberland’s
portfolio in accordance with a Marketing and Servicing Agreement in existence since March 6, 2014. As an accommodation, Timberland has agreed to temporarily extend the purchase requirement to 12 weeks before a purchase is required from the
portfolio.
Timberland originated $114.15 million in loans during the quarter ended September 30, 2020, compared to $96.41 million for the comparable quarter one year ago and $250.01 million for the preceding quarter. Loan
originations for the preceding quarter were elevated due to the origination of $122.58 million in PPP loans. 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 $46.85 million were sold compared to $19.77 million for
the comparable quarter one year ago and $52.08 million for the preceding quarter. The increase in loan sales during the current fiscal year was primarily a result of increased refinance activity for one- to four-family mortgage loans due to the
decrease in mortgage interest rates.
Timberland’s investment securities and CDs held for investment increased $6.3 million, or 4%, to $151.82 million at September 30, 2020, from $145.57 million at June 30, 2020. The increase was primarily due to the
purchase of additional mortgage-backed investment securities which was partially offset by CDs that matured during the quarter.
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 31.8% of total liabilities
at September 30, 2020, compared to 28.9% at June 30, 2020, and 22.8% one year ago.
Deposits
Total deposits increased $290.18 million, or 27%, during the fiscal year to $1.36 billion at September 30, 2020 from $1.07 billion at September 30, 2019. This increase consisted of a $145.42 million increase in
non-interest bearing demand account balances, a $79.84 million increase in NOW checking account balances, a $55.36 million increase in savings account balances, and a $16.69 million increase in money market account balances. These increases were
partially offset by a $7.13 million decrease in certificates of deposit account balances. The increase in deposits during the year was primarily driven by proceeds
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 6
from PPP loans and government stimulus checks deposited directly into customer accounts, organic growth in customer relationships and reduced withdrawals from deposit accounts due to a change in spending habits as a
result of COVID-19. Total deposits increased $39.87 million, or 3%, during the current quarter to $1.36 billion at September 30, 2020, from $1.32 billion at June 30, 2020. The quarterly increase consisted of a $23.90 million increase in NOW
checking account balances, a $14.79 million increase in non-interest bearing demand account balances, and a $7.22 million increase in savings account balances. These increases were partially offset by a $5.40 million decrease in certificates of
deposit account balances and a small decrease in money market account balances.
|
Deposit Breakdown
($ in thousands)
|
|||||||||||||||
| September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||||||||||||
| Amount |
Percent |
Amount |
Percent |
Amount |
Percent |
|||||||||||||||||||
|
Non-interest-bearing demand
|
441,889
|
32
|
%
|
$
|
427,102
|
32
|
%
|
$
|
296,472
|
28
|
%
|
|||||||||||||
|
NOW checking
|
376,899
|
28
|
352,999
|
27
|
297,055
|
28
|
||||||||||||||||||
|
Savings
|
219,869
|
16
|
212,645
|
16
|
164,506
|
15
|
||||||||||||||||||
|
Money market
|
149,922
|
11
|
150,611
|
12
|
136,151
|
13
|
||||||||||||||||||
|
Money market – reciprocal
|
11,303
|
1
|
11,257
|
1
|
8,388
|
1
|
||||||||||||||||||
|
Certificates of deposit under $250
|
129,579
|
10
|
131,980
|
10
|
133,241
|
12
|
||||||||||||||||||
|
Certificates of deposit $250 and over
|
28,945
|
2
|
31,946
|
2
|
29,211
|
3
|
||||||||||||||||||
|
Certificates of deposit – brokered
|
--
|
--
|
--
|
--
|
3,203
|
--
|
||||||||||||||||||
|
Total deposits
|
$
|
1,358,406
|
100
|
%
|
$
|
1,318,540
|
100
|
%
|
$
|
1,068,227
|
100
|
%
|
||||||||||||
FHLB Borrowings
Timberland borrowed $10.00 million from the Federal Home Loan Bank of Des Moines (“FHLB”) for asset-liability purposes in March 2020 as long-term borrowing rates dropped to historic lows. The borrowings are comprised
of a $5.00 million five-year borrowing and a $5.00 million seven-year borrowing. The weighted average interest rate on these borrowings is 1.15%
Shareholders’ Equity and Capital Ratios
Total shareholders’ equity increased $4.82 million to $187.63 million at September 30, 2020, from $182.81 million at June 30, 2020. The increase in shareholders’ equity was primarily due to net income of $6.36 million
for the quarter, which was partially offset by the payment of $1.66 million in dividends to shareholders.
Timberland temporarily suspended purchasing shares under its existing stock repurchase plan on March 16, 2020 as a result of the COVID-19 pandemic, but plans to resume purchasing shares under the existing stock
repurchase plan in November 2020, subject to market conditions. There are 144,852 shares available to be repurchased under the existing stock repurchase plan.
Timberland remains well capitalized with a total risk-based capital ratio of 21.34% and a Tier 1 leverage capital ratio of 11.26% at September 30, 2020.
Asset Quality and Loan Deferrals
Timberland’s non-performing assets to total assets ratio improved to 0.27% at September 30, 2020 from 0.40% one year ago and 0.31% at June 30, 2020. There were net recoveries of $20,000 for the current quarter
compared to net recoveries of $4,000 for the preceding quarter and net recoveries of $59,000 for the comparable quarter one year ago.
A $500,000 provision for loan losses was made during the current quarter due to continued economic uncertainties associated with the COVID-19 pandemic. On March 24, 2020, Washington State Governor Jay Inslee signed a
statewide order requiring residents to stay at home unless involved in an essential activity. All businesses, except those considered essential were also ordered to close. As a result of the mandated shutdown, Timberland began working with loan
customers on loan deferral and forbearance plans. As of June 30, 2020, Timberland had granted deferrals (primarily 90-day payment deferrals with interest continuing to accrue or be paid monthly) for 209 loans with balances aggregating to $135.83
million (approximately 13% of
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 7
COVID-19 Loan Modifications
($ in thousands)
|
Industry / Collateral Type
|
Amount
|
Percent of
Net Loans
Receivable
|
||||||
|
Hotel
|
$
|
2,884
|
0.28
|
%
|
||||
|
Construction
|
1,402
|
0.14
|
||||||
|
Church
|
1,067
|
0.11
|
||||||
|
One- to four-family mortgage
|
467
|
0.05
|
||||||
|
Other consumer
|
50
|
--
|
||||||
|
Total loan modifications
|
$
|
5,870
|
0.58
|
%
|
||||
The ALL as a percentage of loans receivable increased to 1.31% at September 30, 2020 from 1.08% one year ago and 1.26% at June 30, 2020. If PPP loans, which are 100% SBA guaranteed, are excluded, the ALL to loans
receivable (excluding PPP loans) at September 30, 2020 was 1.49% (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 $790,000 at September 30, 2020. The allowance for loan losses to loans receivable
(excluding PPP loan balances and the remaining aggregate balance of the loans acquired in the South Sound Acquisition) was 1.60% (non-GAAP) at September 30, 2020.
The following table details the ALL as a percentage of loans receivable:
|
Sept. 30,
|
June 30,
|
Sept.30,
|
||||||||||
|
2020
|
2020
|
2019
|
||||||||||
|
ALL to loans receivable
|
1.31
|
%
|
1.26
|
%
|
1.08
|
%
|
||||||
|
ALL to loans receivable (excluding PPP loans) (non-GAAP)
|
1.49
|
%
|
1.43
|
%
|
1.08
|
%
|
||||||
|
ALL to loans receivable (excluding PPP loans and South Sound
Acquisition loans) (non-GAAP)
|
1.60
|
%
|
1.55
|
%
|
1.20
|
%
|
||||||
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $177,000, or 5%, to $3.75 million at September 30, 2020, from $3.93 million one year ago, and increased $195,000, or 5%, from $3.55
million at June 30, 2020. Non-accrual loans decreased $128,000, or 4%, to $2.91 million at September 30, 2020 from $3.03 million one year ago and decreased $110,000, or 4%, from $3.02 million at June 30, 2020.
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 8 Non-Accrual Loans
($ in thousands)
|
September 30, 2020
|
June 30, 2020
|
September 30, 2019
|
||||||||||||||||||||||
|
Amount
|
Quantity
|
Amount
|
Quantity
|
Amount
|
Quantity
|
|||||||||||||||||||
|
Mortgage loans:
|
||||||||||||||||||||||||
|
One- to four-family
|
$
|
659
|
3
|
$
|
927
|
5
|
$
|
699
|
3
|
|||||||||||||||
|
Commercial
|
858
|
4
|
875
|
3
|
779
|
2
|
||||||||||||||||||
|
Land
|
394
|
3
|
185
|
2
|
204
|
2
|
||||||||||||||||||
|
Total mortgage loans
|
1,911
|
10
|
1,987
|
10
|
1,682
|
7
|
||||||||||||||||||
|
Consumer loans
|
||||||||||||||||||||||||
|
Home equity and second
|
||||||||||||||||||||||||
|
mortgage
|
555
|
6
|
586
|
7
|
603
|
6
|
||||||||||||||||||
|
Other
|
9
|
1
|
10
|
1
|
23
|
2
|
||||||||||||||||||
|
Total consumer loans
|
564
|
7
|
596
|
8
|
626
|
8
|
||||||||||||||||||
|
Commercial business loans
|
430
|
6
|
432
|
6
|
725
|
10
|
||||||||||||||||||
|
Total loans
|
$
|
2,905
|
23
|
$
|
3,015
|
24
|
$
|
3,033
|
25
|
|||||||||||||||
OREO and other repossessed assets decreased 38% to $1.05 million at September 30, 2020, from $1.68 million at September 30, 2019, and decreased 28% from $1.47 million at June 30, 2020. At September 30, 2020, the OREO
and other repossessed asset portfolio consisted of six individual land parcels. During the quarter ended September 30, 2020, two OREO properties were sold, resulting in a $2,000 gain. Timberland also recorded a $149,000 market value write-down
expense on its largest remaining OREO property during the quarter in conjunction with accepting a purchase offer on the property. While there can be no assurances that this sale will close, the sale of this property (with a current book value of
$702,000) is expected to close during the quarter ending December 31, 2020.
OREO and Other Repossessed Assets
($ in thousands)
|
September 30, 2020
|
June 30, 2020
|
September 30, 2019
|
||||||||||||||||||||||
|
Amount
|
Quantity
|
Amount
|
Quantity
|
Amount
|
Quantity
|
|||||||||||||||||||
|
Commercial
|
$
|
--
|
--
|
$
|
--
|
--
|
$
|
25
|
1
|
|||||||||||||||
|
Land
|
1,050
|
6
|
1,466
|
8
|
1,658
|
11
|
||||||||||||||||||
|
Total
|
$
|
1,050
|
6
|
$
|
1,466
|
8
|
$
|
1,683
|
12
|
|||||||||||||||
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.
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 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,
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 9
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 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 expected cost savings, synergies and other financial benefits from our acquisition of South
Sound Bank might not be realized within the expected time frames or at all; the integration of the combined company, including personnel changes/retention, might not proceed as planned; and the combined company might not perform as well as expected;
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; 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 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; 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; 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 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; natural disasters; pandemics such as COVID-19; 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 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 2021 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 Q4 2020 Earnings
October 29, 2020
Page 10
|
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
|
Three Months Ended
|
||||||
|
($ in thousands, except per share amounts)
|
Sept. 30,
|
June 30,
|
Sept. 30,
|
||||
|
(unaudited)
|
2020
|
2020
|
2019
|
||||
|
Interest and dividend income
|
|||||||
|
Loans receivable
|
$12,884
|
$12,871
|
$12,670
|
||||
|
Investment securities
|
305
|
345
|
350
|
||||
|
Dividends from mutual funds, FHLB stock and other investments
|
33
|
23
|
40
|
||||
|
Interest bearing deposits in banks
|
371
|
429
|
1,323
|
||||
|
Total interest and dividend income
|
13,593
|
13,668
|
14,383
|
||||
|
Interest expense
|
|||||||
|
Deposits
|
1,044
|
1,159
|
1,233
|
||||
|
Borrowings
|
29
|
29
|
--
|
||||
|
Total interest expense
|
1,073
|
1,188
|
1,233
|
||||
|
Net interest income
|
12,520
|
12,480
|
13,150
|
||||
|
Provision for loan losses
|
500
|
1,000
|
--
|
||||
|
Net interest income after provision for loan losses
|
12,020
|
11,480
|
13,150
|
||||
|
Non-interest income
|
|||||||
|
Service charges on deposits
|
1,011
|
858
|
1,324
|
||||
|
ATM and debit card interchange transaction fees
|
1,200
|
1,069
|
1,140
|
||||
|
Gain on sales of loans, net
|
2,149
|
2,141
|
559
|
||||
|
Bank owned life insurance (“BOLI”) net earnings
|
149
|
148
|
139
|
||||
|
Servicing income on loans sold
|
22
|
35
|
91
|
||||
|
Valuation allowance on servicing rights, net
|
(197)
|
--
|
(4)
|
||||
|
Recoveries on investment securities, net
|
7
|
6
|
25
|
||||
|
Other
|
374
|
598
|
323
|
||||
|
Total non-interest income, net
|
4,715
|
4,855
|
3,597
|
||||
|
Non-interest expense
|
|||||||
|
Salaries and employee benefits
|
4,438
|
4,570
|
4,572
|
||||
|
Premises and equipment
|
1,048
|
1,077
|
885
|
||||
|
Loss (gain) on disposition of premises and equipment, net
|
--
|
4
|
(1)
|
||||
|
Advertising
|
138
|
150
|
153
|
||||
|
OREO and other repossessed assets, net
|
215
|
11
|
(26)
|
||||
|
ATM and debit card processing
|
425
|
405
|
408
|
||||
|
Postage and courier
|
152
|
137
|
135
|
||||
|
State and local taxes
|
293
|
255
|
232
|
||||
|
Professional fees
|
342
|
286
|
332
|
||||
|
FDIC insurance expense (credit)
|
88
|
143
|
(55)
|
||||
|
Loan administration and foreclosure
|
89
|
191
|
137
|
||||
|
Data processing and telecommunications
|
583
|
603
|
1,040
|
||||
|
Deposit operations
|
278
|
245
|
309
|
||||
|
Amortization of core deposit intangible (“CDI”)
|
102
|
101
|
113
|
||||
|
Other, net
|
552
|
483
|
539
|
||||
|
Total non-interest expense, net
|
8,743
|
8,661
|
8,773
|
||||
|
Income before income taxes
|
7,992
|
7,674
|
7,974
|
||||
|
Provision for income taxes
|
1,635
|
1,463
|
1,640
|
||||
|
Net income
|
$ 6,357
|
$ 6,211
|
$ 6,334
|
||||
|
Net income per common share:
|
|||||||
|
Basic
|
$0.76
|
$0.75
|
$0.76
|
||||
|
Diluted
|
0.76
|
0.74
|
0.75
|
||||
|
Weighted average common shares outstanding:
|
|||||||
|
Basic
|
8,310,793
|
8,309,947
|
8,333,812
|
||||
|
Diluted
|
8,379,170
|
8,378,983
|
8,468,266
|
||||
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 11
|
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
|
Year Ended
|
||||
|
($ in thousands, except per share amounts)
|
Sept. 30,
|
Sept. 30,
|
|||
|
(unaudited)
|
2020
|
2019
|
|||
|
Interest and dividend income
|
|||||
|
Loans receivable
|
$51,341
|
$49,127
|
|||
|
Investment securities
|
1,579
|
1,264
|
|||
|
Dividends from mutual funds, FHLB stock and other investments
|
128
|
162
|
|||
|
Interest bearing deposits in banks
|
2,535
|
5,172
|
|||
|
Total interest and dividend income
|
55,583
|
55,725
|
|||
|
Interest expense
|
|||||
|
Deposits
|
4,635
|
4,565
|
|||
|
Borrowings
|
66
|
--
|
|||
|
Total interest expense
|
4,701
|
4,565
|
|||
|
Net interest income
|
50,882
|
51,160
|
|||
|
Provision for loan losses
|
3,700
|
--
|
|||
|
Net interest income after provision for loan losses
|
47,182
|
51,160
|
|||
|
Non-interest income
|
|||||
|
Service charges on deposits
|
4,147
|
4,904
|
|||
|
ATM and debit card interchange transaction fees
|
4,378
|
4,036
|
|||
|
Gain on sales of loans, net
|
5,979
|
1,754
|
|||
|
BOLI net earnings
|
591
|
1,641
|
|||
|
Servicing income on loans sold
|
193
|
466
|
|||
|
Valuation allowance on servicing rights, net
|
(221)
|
(4)
|
|||
|
Gain on sale of investment securities, net
|
--
|
47
|
|||
|
Recoveries on investment securities, net
|
120
|
59
|
|||
|
Other
|
2,001
|
1,438
|
|||
|
Total non-interest income, net
|
17,188
|
14,341
|
|||
|
Non-interest expense
|
|||||
|
Salaries and employee benefits
|
18,351
|
18,545
|
|||
|
Premises and equipment
|
3,962
|
3,831
|
|||
|
Loss (gain) on disposition of premises and equipment, net
|
(98)
|
7
|
|||
|
Advertising
|
631
|
696
|
|||
|
OREO and other repossessed assets, net
|
276
|
221
|
|||
|
ATM and debit card processing
|
1,628
|
1,583
|
|||
|
Postage and courier
|
568
|
514
|
|||
|
State and local taxes
|
998
|
873
|
|||
|
Professional fees
|
1,107
|
1,019
|
|||
|
FDIC insurance expense
|
204
|
187
|
|||
|
Loan administration and foreclosure
|
448
|
382
|
|||
|
Data processing and telecommunications
|
2,285
|
3,707
|
|||
|
Deposit operations
|
1,114
|
1,358
|
|||
|
Amortization of CDI
|
406
|
452
|
|||
|
Other, net
|
2,183
|
2,205
|
|||
|
Total non-interest expense, net
|
34,063
|
35,580
|
|||
|
Income before income taxes
|
30,307
|
29,921
|
|||
|
Provision for income taxes
|
6,038
|
5,901
|
|||
|
Net income
|
$ 24,269
|
$ 24,020
|
|||
|
Net income per common share:
|
|||||
|
Basic
|
$2.91
|
$2.89
|
|||
|
Diluted
|
2.88
|
2.84
|
|||
|
Weighted average common shares outstanding:
|
|||||
|
Basic
|
8,326,600
|
8,318,928
|
|||
|
Diluted
|
8,422,486
|
8,468,226
|
|||
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 12
|
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
|
|||||||
|
($ in thousands, except per share amounts) (unaudited)
|
Sept. 30,
|
June 30,
|
Sept. 30,
|
||||
|
2020
|
2020
|
2019
|
|||||
|
Assets
|
|||||||
|
Cash and due from financial institutions
|
$ 21,877
|
$ 24,691
|
$ 25,179
|
||||
|
Interest-bearing deposits in banks
|
292,575
|
246,953
|
117,836
|
||||
|
Total cash and cash equivalents
|
314,452
|
271,644
|
143,015
|
||||
|
Certificates of deposit (“CDs”) held for investment, at cost
|
65,545
|
72,014
|
78,346
|
||||
|
Investment securities:
|
|||||||
|
Held to maturity, at amortized cost
|
27,390
|
30,660
|
31,102
|
||||
|
Available for sale, at fair value
|
57,907
|
41,914
|
22,532
|
||||
|
Investments in equity securities, at fair value
|
977
|
977
|
958
|
||||
|
FHLB stock
|
1,922
|
1,922
|
1,437
|
||||
|
Other investments, at cost
|
3,500
|
3,000
|
3,000
|
||||
|
Loans held for sale
|
4,509
|
9,837
|
6,071
|
||||
|
Loans receivable
|
1,027,289
|
1,025,653
|
896,352
|
||||
|
Less: Allowance for loan losses
|
(13,414)
|
(12,894)
|
(9,690)
|
||||
|
Net loans receivable
|
1,013,875
|
1,012,759
|
886,662
|
||||
|
Premises and equipment, net
|
23,035
|
23,119
|
22,830
|
||||
|
OREO and other repossessed assets, net
|
1,050
|
1,466
|
1,683
|
||||
|
BOLI
|
21,596
|
21,447
|
21,005
|
||||
|
Accrued interest receivable
|
4,484
|
4,614
|
3,598
|
||||
|
Goodwill
|
15,131
|
15,131
|
15,131
|
||||
|
CDI
|
1,625
|
1,727
|
2,031
|
||||
|
Servicing rights, net
|
3,095
|
3,073
|
2,408
|
||||
|
Operating lease right-of-use assets
|
2,587
|
2,662
|
--
|
||||
|
Other assets
|
3,298
|
3,676
|
5,323
|
||||
|
Total assets
|
$1,565,978
|
$1,521,642
|
$1,247,132
|
||||
|
Liabilities and shareholders’ equity
|
|||||||
|
Deposits: Non-interest-bearing demand
|
$ 441,889
|
$ 427,102
|
$ 296,472
|
||||
|
Deposits: Interest-bearing
|
916,517
|
891,438
|
771,755
|
||||
|
Total deposits
|
1,358,406
|
1,318,540
|
1,068,227
|
||||
|
Operating lease liabilities
|
2,630
|
2,695
|
--
|
||||
|
FHLB borrowings
|
10,000
|
10,000
|
--
|
||||
|
Other liabilities and accrued expenses
|
7,312
|
7,601
|
7,838
|
||||
|
Total liabilities
|
1,378,348
|
1,338,836
|
1,076,065
|
||||
|
Shareholders’ equity
|
|||||||
|
Common stock, $.01 par value; 50,000,000 shares authorized;
8,310,793 shares issued and outstanding – September 30, 2020
8,310,793 shares issued and outstanding – June 30, 2020
8,329,419 shares issued and outstanding – September 30, 2019
|
42,396
|
42,352
|
43,030
|
||||
|
Retained earnings
|
145,173
|
140,478
|
127,987
|
||||
|
Accumulated other comprehensive income (loss)
|
61
|
(24)
|
50
|
||||
|
Total shareholders’ equity
|
187,630
|
182,806
|
171,067
|
||||
|
Total liabilities and shareholders’ equity
|
$1,565,978
|
$1,521,642
|
$1,247,132
|
||||
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 13
|
|
|
|||||
| KEY FINANCIAL RATIOS AND DATA |
Three Months Ended | |||||
|
($ in thousands, except per share amounts) (unaudited)
|
Sept. 30,
|
June 30,
|
Sept. 30,
|
|||
|
2020
|
2020
|
2019
|
||||
|
PERFORMANCE RATIOS:
|
||||||
|
Return on average assets (a)
|
1.65%
|
1.70%
|
2.04%
|
|||
|
Return on average equity (a)
|
13.78%
|
13.83%
|
15.07%
|
|||
|
Net interest margin (a)
|
3.44%
|
3.63%
|
4.54%
|
|||
|
Efficiency ratio
|
50.73%
|
49.96%
|
52.39%
|
|||
|
Year Ended
|
||||||
|
Sept. 30,
2020
|
Sept. 30,
2019
|
|||||
|
PERFORMANCE RATIOS:
|
||||||
|
Return on average assets (a)
|
1.75%
|
1.96%
|
||||
|
Return on average equity (a)
|
13.59%
|
14.91%
|
||||
|
Net interest margin (a)
|
3.90%
|
4.50%
|
||||
|
Efficiency ratio
|
50.04%
|
54.32%
|
||||
|
Sept. 30,
|
June 30,
|
Sept. 30,
|
||||
|
2020
|
2020
|
2019
|
||||
|
ASSET QUALITY RATIOS AND DATA:
|
||||||
|
Non-accrual loans
|
$2,905
|
$3,015
|
$3,033
|
|||
|
Loans past due 90 days and still accruing
|
--
|
--
|
--
|
|||
|
Non-performing investment securities
|
209
|
228
|
294
|
|||
|
OREO and other repossessed assets
|
1,050
|
1,466
|
1,683
|
|||
|
Total non-performing assets (b)
|
$4,164
|
$4,709
|
$5,010
|
|||
|
Non-performing assets to total assets (b)
|
0.27%
|
0.31%
|
0.40%
|
|||
|
Net charge-offs (recoveries) during quarter
|
$ (20)
|
$ (4)
|
$ (59)
|
|||
|
ALL to non-accrual loans
|
462%
|
428%
|
319%
|
|||
|
ALL to loans receivable (c)
|
1.31%
|
1.26%
|
1.08%
|
|||
|
ALL to loans receivable (excluding PPP loans) (d) (non-GAAP)
|
1.49%
|
1.43%
|
1.08%
|
|||
|
ALL to loans receivable (excluding PPP loans and South Sound
Acquisition loans) (d) (e) (non-GAAP)
|
1.60%
|
1.55%
|
1.20%
|
|||
|
Troubled debt restructured loans on accrual status (f)
|
$ 2,868
|
$ 2,876
|
$ 2,903
|
|||
|
CAPITAL RATIOS:
|
||||||
|
Tier 1 leverage capital
|
11.26%
|
11.55%
|
12.65%
|
|||
|
Tier 1 risk-based capital
|
20.08%
|
19.39%
|
18.40%
|
|||
|
Common equity Tier 1 risk-based capital
|
20.08%
|
19.39%
|
18.40%
|
|||
|
Total risk-based capital
|
21.34%
|
20.65%
|
19.57%
|
|||
|
Tangible common equity to tangible assets (non-GAAP)
|
11.03%
|
11.03%
|
12.51%
|
|||
|
BOOK VALUES:
|
||||||
|
Book value per common share
|
$ 22.58
|
$ 22.00
|
$ 20.54
|
|||
|
Tangible book value per common share (g)
|
20.56
|
19.97
|
18.48
|
________________________________________________
(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 $126,820, $122,581 and $0 at September 30, 2020, June 30, 2020 and September 30, 2019, respectively.
(e) Does not include loans acquired in the South Sound Acquisition totaling $63,721, $73,084 and $88,099 at September 30, 2020, June 30, 2020 and September 30, 2019, respectively.
(f) Does not include troubled debt restructured loans totaling $203, $207 and $366 reported as non-accrual loans at September 30, 2020, June 30, 2020 and September 30, 2019 respectively.
(g) Tangible common
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 14
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($ in thousands)
(unaudited)
| For the Three Months Ended | ||||||||||||||||||||||||
| September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||||||||||||
|
Amount
|
Rate
|
Amount
|
Rate
|
Amount
|
Rate
|
|||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||
|
Loans receivable and loans held for sale
|
$
|
1,031,689
|
5.00
|
%
|
$
|
1,015,966
|
5.07
|
%
|
$
|
891,109
|
5.69
|
%
|
||||||||||||
|
Investment securities and FHLB stock (1)
|
84,756
|
1.59
|
81,086
|
1.82
|
47,660
|
3.27
|
||||||||||||||||||
|
Interest-earning deposits in banks and CDs
|
339,224
|
0.44
|
278,158
|
0.62
|
219,567
|
2.39
|
||||||||||||||||||
|
Total interest-earning assets
|
1,455,669
|
3.74
|
1,375,210
|
3.97
|
1,158,336
|
4.97
|
||||||||||||||||||
|
Other assets
|
87,140
|
87,905
|
83,308
|
|||||||||||||||||||||
|
Total assets
|
$
|
1,542,809
|
$
|
1,463,115
|
$
|
1,241,644
|
||||||||||||||||||
|
Liabilities and Shareholders’ Equity
|
||||||||||||||||||||||||
|
NOW checking accounts
|
$
|
360,622
|
0.23
|
%
|
$
|
332,502
|
0.26
|
%
|
$
|
295,612
|
0.30
|
%
|
||||||||||||
|
Money market accounts
|
159,951
|
0.38
|
156,537
|
0.47
|
147,885
|
0.70
|
||||||||||||||||||
|
Savings accounts
|
214,080
|
0.09
|
199,054
|
0.11
|
162,654
|
0.06
|
||||||||||||||||||
|
Certificates of deposit accounts
|
161,674
|
1.55
|
168,368
|
1.68
|
164,530
|
1.75
|
||||||||||||||||||
|
Total interest-bearing deposits
|
896,327
|
0.47
|
856,461
|
0.54
|
770,681
|
0.63
|
||||||||||||||||||
|
Borrowings
|
10,000
|
1.15
|
10,000
|
1.17
|
--
|
--
|
||||||||||||||||||
|
Total interest-bearing liabilities
|
906,327
|
0.47
|
866,461
|
0.55
|
770,681
|
0.63
|
||||||||||||||||||
|
Non-interest-bearing demand deposits
|
440,950
|
406,396
|
296,741
|
|||||||||||||||||||||
|
Other liabilities
|
10,966
|
10,684
|
6,050
|
|||||||||||||||||||||
|
Shareholders’ equity
|
184,566
|
179,574
|
168,172
|
|||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
1,542,809
|
$
|
1,463,115
|
$
|
1,241,644
|
||||||||||||||||||
|
Interest rate spread
|
3.27
|
%
|
3.42
|
%
|
4.34
|
%
|
||||||||||||||||||
|
Net interest margin (2)
|
3.44
|
%
|
3.63
|
%
|
4.54
|
%
|
||||||||||||||||||
|
Average interest-earning assets to
|
||||||||||||||||||||||||
|
average interest-bearing liabilities
|
160.61
|
%
|
158.72
|
%
|
150.30
|
%
|
||||||||||||||||||
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
Page 15
AVERAGE BALANCES, YIELDS, AND RATES
($ in thousands)
(unaudited)
| For the Year Ended | ||||||||||||||||
| September 30, 2020 | September 30, 2019 |
|||||||||||||||
|
Amount
|
Rate
|
Amount
|
Rate
|
|||||||||||||
|
Assets
|
||||||||||||||||
|
Loans receivable and loans held for sale
|
$
|
970,400
|
5.29
|
%
|
$
|
878,984
|
5.59
|
%
|
||||||||
|
Investment securities and FHLB Stock (1)
|
78,412
|
2.18
|
43,394
|
3.28
|
||||||||||||
|
Interest-earning deposits in banks and CD’s
|
254,558
|
1.00
|
214,481
|
2.41
|
||||||||||||
|
Total interest-earning assets
|
1,303,370
|
4.26
|
1,136,859
|
4.90
|
||||||||||||
|
Other assets
|
85,842
|
86,494
|
||||||||||||||
|
Total assets
|
$
|
1,389,212
|
$
|
1,223,353
|
||||||||||||
|
Liabilities and Shareholders’ Equity
|
||||||||||||||||
|
NOW checking accounts
|
$
|
323,261
|
0.27
|
%
|
$
|
291,348
|
0.29
|
%
|
||||||||
|
Money market accounts
|
148,506
|
0.49
|
154,375
|
0.72
|
||||||||||||
|
Savings accounts
|
191,618
|
0.10
|
162,266
|
0.07
|
||||||||||||
|
Certificate of deposit accounts
|
166,521
|
1.70
|
159,397
|
1.57
|
||||||||||||
|
Total interest-bearing deposits
|
829,906
|
0.56
|
767,386
|
0.59
|
||||||||||||
|
Borrowings
|
5,685
|
1.16
|
--
|
--
|
||||||||||||
|
Total interest-bearing liabilities
|
835,591
|
0.56
|
767,386
|
0.59
|
||||||||||||
|
Non-interest-bearing demand deposits
|
364,971
|
290,653
|
||||||||||||||
|
Other liabilities
|
10,110
|
4,229
|
||||||||||||||
|
Shareholders’ equity
|
178,540
|
161,085
|
||||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
1,389,212
|
$
|
1,223,353
|
||||||||||||
|
Interest rate spread
|
3.70
|
%
|
4.31
|
%
|
||||||||||||
|
Net interest margin (2)
|
3.90
|
%
|
4.50
|
%
|
||||||||||||
|
Average interest-earning assets to
|
||||||||||||||||
|
average interest-bearing liabilities
|
155.98
|
%
|
148.15
|
%
|
||||||||||||
_____________________________________
(1) Includes other investments
(2) Net interest margin = net interest income /
average interest-earning assets
Timberland Fiscal Q4 2020 Earnings
October 29, 2020
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)
|
September 30, 2020
|
June 30, 2020
|
September 30, 2019
|
|||||||||
|
Shareholders’ equity
|
$
|
187,630
|
$
|
182,806
|
$
|
171,067
|
||||||
|
Less goodwill and CDI
|
(16,756
|
)
|
(16,858
|
)
|
(17,162
|
)
|
||||||
|
Tangible common equity
|
$
|
170,874
|
$
|
165,948
|
$
|
153,905
|
||||||
|
Total assets
|
$
|
1,565,978
|
$
|
1,521,642
|
$
|
1,247,132
|
||||||
|
Less goodwill and CDI
|
(16,756
|
)
|
(16,858
|
)
|
(17,162
|
)
|
||||||
|
Tangible assets
|
$
|
1,549,222
|
$
|
1,504,784
|
$
|
1,229,970
|
||||||