- Quarterly EPS Increased 27% to $0.80 from $0.63 One Year Ago
- Quarterly Return on Average Assets of 1.48%
- Quarterly Return on Average Equity of 11.86%
- Quarterly Net Interest Margin of 3.99%
- Loan Portfolio Increased 17% Year-Over-Year
HOQUIAM, Wash., April 25, 2023 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ: TSBK) ("Timberland" or "the Company"), the holding company for Timberland Bank (the "Bank"), today reported net income of $6.66 million, or $0.80 per diluted common share, for the quarter ended March 31, 2023. This compares to net income of $5.33 million, or $0.63 per diluted common share for the comparable quarter one year ago and $7.51 million, or $0.90 per diluted common share, for the preceding quarter.
For the first six months of fiscal 2023, Timberland's net income increased 31% to $14.17 million, or $1.70 per diluted common share, compared to $10.81 million, or $1.28 per diluted common share for the first six months of fiscal 2022.
"We are pleased to report strong financial results for our second fiscal quarter, with net income and EPS increasing 25% and 27%, respectively, compared to the year ago quarter," stated Dean Brydon, Chief Executive Officer. "Our results benefited from continued strong loan portfolio growth in conjunction with a higher interest rate environment compared to a year ago. As a result of the Company's strong earnings and capital position, Timberland's Board of Directors announced a quarterly cash dividend of $0.23 per share, payable on May 26, 2023, to shareholders of record on May 12, 2023. This represents the 42nd consecutive quarter that Timberland will have paid a cash dividend."
"Asset quality remains strong with quarter end non-performing assets at 12 basis points of total assets," Brydon continued. "Although loan origination volumes have moderated, loan prepayments have declined considerably resulting in a $38 million increase in net loans receivable for the quarter. As a result of this loan growth, we recorded a provision for loan losses of $475,000 for the quarter. Additionally, liquidity, both on-balance sheet and off-balance sheet, remained strong with no borrowings at March 31, 2023 and secured borrowing line capacity of $647 million available through the Federal Home Loan Bank ("FHLB") and the Federal Reserve. While recent developments in the banking markets have been unsettling in the short term, we believe that with our strong capital position, excellent credit quality and ample sources of liquidity, we are well positioned to continue to deliver strong financial results."
"The current quarter's net interest margin remained strong at 3.99% and was 104 basis points higher compared to the year ago quarter. The year-over-year increase was primarily due to Federal Reserve rate increases and the continued deployment of overnight funds into higher yielding loans and investment securities," said Jonathan Fischer, President and Chief Operating Officer. "Deposit retention and acquisition remains competitive, and as a result we saw a 3% outflow of deposits during the quarter. As expected, funding costs increased during the quarter as we continue to increase short-term deposit rates to retain rate sensitive customer deposits. We have a strong and diversified deposit base of consumer and commercial customers and only 12% of our deposits were uninsured (or uncollateralized) at quarter end."
Earnings and Balance Sheet Highlights (at or for the periods ended March 31, 2023, compared to March 31, 2022, or December 31, 2022):
Earnings Highlights:
- Earnings per diluted common share ("EPS") increased 27% to $0.80 for the current quarter from $0.63 for the comparable quarter one year ago and decreased 11% from $0.90 for the preceding quarter; EPS for the first six months of fiscal 2023 increased 33% to $1.70 from $1.28 for the first six months of fiscal 2022;
- Net income increased 25% to $6.66 million for the current quarter from $5.33 million for the comparable quarter one year ago and decreased 11% from $7.51 million for the preceding quarter; Net income increased 31% to $14.17 million for the first six months of fiscal 2023 compared to $10.81 million for the first six months of fiscal 2022;
- Return on average equity ("ROE") and return on average assets ("ROA") for the current quarter were 11.86% and 1.48%, respectively;
- Net interest margin ("NIM") for the current quarter expanded to 3.99% from 2.95% for the comparable quarter one year ago and compressed slightly from 4.03% for the preceding quarter; and
- The efficiency ratio for the current quarter was 55.31% compared to 58.42% for the comparable quarter one year ago and 51.52% for the preceding quarter.
Balance Sheet Highlights:
- Total assets decreased 5% year-over-year and 3% from the prior quarter;
- Net loans receivable (excluding SBA PPP loans) increased 18% year-over-year and 3% from the prior quarter;
- Net loans receivable (including SBA PPP loans) increased 17% year-over-year and 3% from the prior quarter;
- Total deposits decreased 6% year-over-year and 3% from the prior quarter;
- Non-performing assets to total assets ratio improved to 0.12% from 0.16% one year ago;
- Total shareholders' equity increased 7% year-over-year and 2% from prior quarter; and
- Book and tangible book (non-GAAP) values per common share increased to $27.75 and $25.81, respectively, at March 31, 2023
- Liquidity (both on-balance sheet and off-balance sheet) remained strong with no borrowings at March 31, 2023 and secured borrowing line capacity of $647 million available through the Federal Home Loan Bank ("FHLB") and the Federal Reserve.
Operating Results
Operating revenue (net interest income before the provision for loan losses plus non-interest income) for the current quarter increased 24% to $19.79 million from $15.98 million for the comparable quarter one year ago and decreased 3% from $20.45 million for the preceding quarter. The decrease in operating revenue compared to the preceding quarter was primarily due to a decrease in net interest income as funding costs increased at a greater pace than interest income increased. Operating revenue increased by 25% to $40.24 million for the first six months of fiscal 2023 from $32.11 million for the first six months of fiscal 2022, primarily due to increased interest income from loans, overnight funds, and investment securities, which were partially offset by an increase in total interest expense. The increased interest income in these categories was primarily a result of increased short-term market interest rates and the continued deployment of liquidity into higher-yielding loans and investment securities.
Net interest income increased $4.26 million, or 33%, to $17.15 million for the current quarter from $12.89 million for the comparable quarter one year ago and decreased $592,000, or 3%, from $17.74 million for the preceding quarter. The decrease in net interest income compared to the preceding quarter was primarily due to increased funding costs and a decrease in average interest-earning assets. The weighted average cost of total interest-bearing liabilities increased to 0.84% for the current quarter from 0.50% for the preceding quarter as market interest rates increased. Partially offsetting the increase in interest expense was an increase in the weighted average yield on total interest-earning assets to 4.51% for the current quarter from 4.34% for the preceding quarter. Total average interest-earning assets decreased by $41.27 million, or 2%, to $1.72 billion for the current quarter from $1.76 billion for the preceding quarter. Timberland's NIM for the current quarter decreased to 3.99% from 4.03% for the preceding quarter and improved from 2.95% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately three basis points due to the accretion of $15,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $99,000 in pre-payment penalties, non-accrual interest, and late fees. The NIM for the preceding quarter was increased by approximately three basis points due to the accretion of $28,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $120,000 in pre-payment penalties, non-accrual interest and late fees. The NIM for the comparable quarter one year ago was increased by approximately six basis points due to the accretion of $34,000 of the fair value discount on loans acquired in the South Sound Acquisition and the collection of $246,000 in pre-payment penalties, non-accrual interest and late fees. Net interest income for the first six months of fiscal 2023 increased $9.31 million, or 36%, to $34.89 million from $25.29 million for the first six months of fiscal 2022. Timberland's net interest margin for the first six months of fiscal 2023 expanded to 4.02% from 2.93% for the first six months of fiscal 2022.
U.S. Small Business Administration ("SBA") PPP loans contribute to interest income through the 1.00% interest rate earned on outstanding loan balances and also through the accretion of loan origination fees into interest income over the life of each PPP loan. At March 31, 2023, Timberland had SBA PPP deferred loan origination fees of $21,000 remaining to be accreted into interest income over the remaining life of the loans. The following table details the interest income recognized from SBA PPP loans:
| SBA PPP Loan Income ($ in thousands) | ||||||||
| Three Months Ended | ||||||||
| March 31, 2023 | Dec. 31, 2022 | March 31, 2022 | ||||||
| Interest income | $ | 1 | $ | 2 | $ | 31 | ||
| Loan origination fee accretion | 4 | 17 | 708 | |||||
| Total SBA PPP loan income | $ | 5 | $ | 19 | $ | 739 | ||
A $475,000 provision for loan losses was recorded for the quarter ended March 31, 2023. The provision was made primarily due to loan portfolio growth. A $525,000 provision for loans losses was recorded for the quarter ended December 31, 2022. No provision for loan losses was made during the quarter ended March 31, 2022.
Non-interest income decreased $69,000 or 3%, to $2.64 million for the current quarter from $2.71 million for the preceding quarter and decreased $447,000, or 14%, from $3.08 million for the comparable quarter one year ago. The decrease in non-interest income compared to the preceding quarter was primarily due to a $54,000 decrease in service charges on deposits and smaller decreases in several other categories. Fiscal year-to-date non-interest income decreased 18% to $5.34 million from $6.53 million for the first six months of fiscal 2022, primarily due to a $1.01 million decrease in gain on sales of loans as the dollar amount of fixed-rate one-to four-family loans originated and sold decreased as demand slowed and a larger portion of single family loan originations were retained in the portfolio rather than being sold.
Total operating (non-interest) expenses for the current quarter increased $409,000, or 4%, to $10.94 million from $10.54 million for the preceding quarter and increased $1.61 million, or 17%, from $9.33 million for the comparable quarter one year ago. The increase in operating expenses compared to the preceding quarter was primarily due to a $146,000 increase in salaries and employee benefits, a $91,000 increase in data processing and telecommunications expense and smaller increases in several other expense categories. These increases were partially offset by a $100,000 decrease in deposit operations expense and smaller decreases in several other expense categories. The increase in salaries and employee benefits was primarily due to hiring additional personnel (which included filling a number of positions which had been open in prior quarters). The increase in data processing and telecommunications expense was primarily due to expenses associated with several new technology products and initiatives. The efficiency ratio for the current quarter was 55.31% compared to 51.52% for the preceding quarter and 58.42% for the comparable quarter one year ago. Fiscal year-to-date operating expenses increased 15% to $21.48 million from $18.60 million for the first six months of fiscal 2022. The year-to-date increase in operating expenses was primarily due to a $1.58 million increase in salaries and employee benefits, a $386,000 increase in data processing and telecommunications expense, a $309,000 increase in professional fees expense and smaller increases in several other expense categories. The efficiency ratio for the first six months of fiscal 2023 was 53.58% compared to 57.91% for the first six months of fiscal 2022.
The provision for income taxes for the current quarter decreased $176,000, or 9%, to $1.71 million from $1.88 million for the preceding quarter, primarily due to lower taxable income. Timberland's effective income tax rate was 20.4% for the quarter ended March 31, 2023 compared to 20.0% for the quarter ended December 31, 2022 and 19.8% for the quarter ended March 31, 2022. Timberland's effective income tax rate was 20.2% for the first six months of fiscal 2023 compared to 20.0% for the first six months of fiscal 2022.
Balance Sheet Management
Total assets decreased by $48.93 million, or 3%, during the quarter to $1.79 billion at March 31, 2023 from $1.84 billion at December 31, 2022 and decreased by $90.85 million, or 5%, from $1.88 billion one year ago. The quarter's decrease was primarily due to an $82.41 million decrease in total cash and cash equivalents, which was partially offset by a $37.63 million increase in net loans receivable.
Liquidity
Timberland has continued to maintain a strong liquidity position (both on-balance sheet and off-balance sheet) while deploying overnight funds into loans and investment securities during the past year. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 14.0% of total liabilities at March 31, 2023, compared to 18.9% at December 31, 2022, and 34.3% one year ago. Timberland had no borrowings at March 31, 2023 and had secured borrowing line capacity of $647 million available through the Federal Home Loan Bank and the Federal Reserve. With a strong and diversified deposit base, only 12% of Timberland's deposits were uninsured at March 31, 2023. (Note: The uninsured deposit calculation excludes public deposits that are fully collateralized.)
Loans
Net loans receivable increased $37.63 million, or 3%, during the quarter to $1.21 billion at March 31, 2023 from $1.17 billion at December 31, 2022. This increase was primarily due to a $16.35 million increase in one- to four-family loans, a $12.84 million decrease in the undisbursed portion of construction loans in process, a $7.04 million increase in multi-family loans, a $5.31 million increase in commercial real estate loans, and smaller increases in several other loan categories. These increases to net loans receivable were partially offset by a $4.75 million decrease in construction and land development loans, and smaller decreases in several other loan categories.
Loan Portfolio
($ in thousands)
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||
| Mortgage loans: | ||||||||||||||||||||||||||
| One- to four-family (a) | $216,639 | 16% | $200,285 | 15% | $133,925 | 12% | ||||||||||||||||||||
| Multi-family | 103,870 | 8 | 96,831 | 7 | 82,526 | 7 | ||||||||||||||||||||
| Commercial | 547,876 | 41 | 542,571 | 42 | 523,479 | 45 | ||||||||||||||||||||
| Construction - custom and | ||||||||||||||||||||||||||
| owner/builder | 124,071 | 9 | 117,592 | 9 | 114,394 | 10 | ||||||||||||||||||||
| Construction - speculative | ||||||||||||||||||||||||||
| one-to four-family | 11,343 | 1 | 11,220 | 1 | 15,438 | 1 | ||||||||||||||||||||
| Construction - commercial | 31,458 | 3 | 36,825 | 3 | 35,416 | 3 | ||||||||||||||||||||
| Construction - multi-family | 83,051 | 6 | 89,040 | 7 | 64,141 | 6 | ||||||||||||||||||||
| Construction - land | ||||||||||||||||||||||||||
| development | 17,018 | 1 | 17,015 | 1 | 10,687 | 1 | ||||||||||||||||||||
| Land | 24,520 | 2 | 25,872 | 2 | 22,192 | 2 | ||||||||||||||||||||
| Total mortgage loans | 1,159,846 | 87 | 1,137,251 | 87 | 1,002,198 | 87 | ||||||||||||||||||||
| Consumer loans: | ||||||||||||||||||||||||||
| Home equity and second | ||||||||||||||||||||||||||
| mortgage | 36,896 | 3 | 35,967 | 3 | 32,980 | 3 | ||||||||||||||||||||
| Other | 2,283 | -- | 2,482 | -- | 2,277 | -- | ||||||||||||||||||||
| Total consumer loans | 39,179 | 3 | 38,449 | 3 | 35,257 | 3 | ||||||||||||||||||||
| Commercial loans: | ||||||||||||||||||||||||||
| Commercial business loans | 129,306 | 10 | 127,085 | 10 | 108,644 | 9 | ||||||||||||||||||||
| SBA PPP loans | 572 | -- | 631 | -- | 5,934 | 1 | ||||||||||||||||||||
| Total commercial loans | 129,878 | 10 | 127,716 | 10 | 114,578 | 10 | ||||||||||||||||||||
| Total loans | 1,328,903 | 100% | 1,303,416 | 100% | 1,152,033 | 100% | ||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Undisbursed portion of | ||||||||||||||||||||||||||
| construction loans in | ||||||||||||||||||||||||||
| process | (99,253 | ) | (112,096 | ) | (100,719 | ) | ||||||||||||||||||||
| Deferred loan origination | ||||||||||||||||||||||||||
| fees | (4,759 | ) | (4,532 | ) | (3,801 | ) | ||||||||||||||||||||
| Allowance for loan losses | (14,698 | ) | (14,229 | ) | (13,433 | ) | ||||||||||||||||||||
| Total loans receivable, net | $1,210,193 | $1,172,559 | $1,034,080 | |||||||||||||||||||||||
_______________________
(a) Does not include one- to four-family loans held for sale totaling $200, $0, and $2,772 at March 31, 2023, December 31, 2022, and March 31, 2022, respectively.
The following table provides a breakdown of commercial real estate ("CRE") mortgage loans by collateral type as of March 31, 2023:
CRE Loan Portfolio Breakdown by Collateral
($ in thousands)
| Collateral Type | Amount | Percent of CRE Portfolio | Percent of Total Loan Portfolio | ||||||||
| Industrial warehouse | $ | 107,514 | 20% | 8% | |||||||
| Medical/dental offices | 78,266 | 14 | 6 | ||||||||
| Office buildings | 67,797 | 12 | 5 | ||||||||
| Other retail buildings | 48,993 | 9 | 4 | ||||||||
| Hotel/motel | 29,430 | 6 | 2 | ||||||||
| Restaurants | 28,793 | 5 | 2 | ||||||||
| Mini-storage | 28,188 | 5 | 2 | ||||||||
| Convenience stores | 20,104 | 4 | 1 | ||||||||
| Nursing homes | 18,227 | 3 | 1 | ||||||||
| Shopping centers | 10,416 | 2 | 1 | ||||||||
| Mobile home parks | 10,263 | 2 | 1 | ||||||||
| Churches | 7,589 | 1 | 1 | ||||||||
| Additional CRE | 92,296 | 17 | 7 | ||||||||
| Total CRE | $ | 547,876 | 100% | 41% | |||||||
Timberland originated $77.15 million in loans during the quarter ended March 31, 2023, compared to $101.67 million for the preceding quarter and $130.41 million for the comparable quarter one year ago. Timberland continues to originate fixed-rate one- to four-family mortgage loans, a portion of which are sold into the secondary market for asset-liability management purposes and to generate non-interest income. During the past twelve months a larger percentage of single-family loan originations were retained in the portfolio rather than being sold due to the increased yield available on such loans. During the current quarter, fixed-rate one- to four-family mortgage loans totaling $2.39 million were sold compared to $1.16 million for the preceding quarter and $16.88 million for the comparable quarter one year ago.
Timberland's investment securities and CDs held for investment decreased $4.89 million, or 1%, to $353.77 million at March 31, 2023, from $358.66 million at December 31, 2022. The decrease was primarily due to maturities and scheduled amortization.
Deposits
Total deposits decreased $52.32 million, or 3%, during the quarter to $1.55 billion at March 31, 2023, from $1.60 billion at December 31, 2022. The quarter's decrease consisted of a $41.28 million decrease in NOW checking account balances, a $19.25 million decrease in money market account balances, a $15.09 million decrease in non-interest-bearing account balances, and a $9.99 million decrease in savings account balances. These decreases were partially offset by a $33.29 million increase in certificates of deposit account balances. The net decrease in deposits was primarily due to competitive pricing pressure and customers moving excess funds to alternative higher yielding investments as well as general declines in individual customer balances.
| Deposit Breakdown ($ in thousands) | ||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||
| Non-interest-bearing demand | $479,283 | 31% | $494,370 | 31% | $525,488 | 32% | ||||||||||||||||
| NOW checking | 403,463 | 26 | 444,742 | 28 | 457,874 | 28 | ||||||||||||||||
| Savings | 269,522 | 17 | 279,514 | 17 | 288,361 | 18 | ||||||||||||||||
| Money market | 210,390 | 14 | 229,643 | 14 | 258,057 | 15 | ||||||||||||||||
| Certificates of deposit under $250 | 129,331 | 8 | 110,897 | 7 | 106,208 | 6 | ||||||||||||||||
| Certificates of deposit $250 and over | 56,778 | 4 | 41,924 | 3 | 20,438 | 1 | ||||||||||||||||
| Total deposits | $1,548,767 | 100% | $1,601,090 | 100% | $1,656,426 | 100% | ||||||||||||||||
Shareholders' Equity and Capital Ratios
Total shareholders' equity increased $4.11 million, or 2%, to $227.66 million at March 31, 2023, from $223.55 million at December 31, 2022. The increase in shareholders' equity was primarily due to net income of $6.66 million for the quarter and $122,000 from the exercise of stock options, which was partially offset by the payment of $1.89 million in dividends to shareholders and the repurchase of 34,263 shares of common stock for $1.10 million (an average price of $32.04 per share). Timberland had 184,212 shares available to be repurchased in accordance with the terms of its existing stock repurchase plan at March 31, 2023.
Timberland remains well capitalized with a total risk-based capital ratio of 19.41%, a Tier 1 leverage capital ratio of 11.95%, a tangible common equity to tangible assets ratio (non-GAAP) of 11.96%, and a shareholders' equity to total assets ratio of 12.74% at March 31, 2023. Timberland's held to maturity investment securities were $277.91 million at March 31, 2023, with a net unrealized loss of $12.83 million (pre-tax). Although not permitted by U.S. Generally Accepted Accounting Principles, including these unrealized losses in accumulated other comprehensive income (loss) ("AOCI") would result in a ratio of shareholders' equity to total assets of 12.18%, compared to 12.74%, as reported.
Asset Quality
Timberland's non-performing assets to total assets ratio was 0.12% at March 31, 2023 and December 31, 2022, an improvement from 0.16% at March 31, 2022. There were net charge-offs of $6,000 for the current quarter, compared to net recoveries of $1,000 for the preceding quarter and net charge-offs of $35,000 for the comparable quarter one year ago. Due primarily to loan portfolio growth, a $475,000 provision for loan losses was made for the quarter ended March 31, 2023 and a $525,000 provision for loan losses was made for the quarter ended December 31, 2022. No provision for loan losses was made during the quarter ended March 31, 2022.
The allowance for loan losses ("ALL") as a percentage of loans receivable was 1.20% at March 31, 2023, compared to 1.20% at December 31, 2022 and 1.28% one year ago.
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 $225,000 at March 31, 2023. The allowance for loan losses to loans receivable (excluding SBA PPP loan balances and the remaining aggregate balance of the loans acquired in the South Sound Acquisition) was 1.21% (non-GAAP) at March 31, 2023.
The following table details the ALL as a percentage of loans receivable:
| March 31, | Dec. 31, | March 31, | |||||||
| 2023 | 2022 | 2022 | |||||||
| ALL to loans receivable | 1.20 | % | 1.20 | % | 1.28 | % | |||
| ALL to loans receivable (excluding SBA PPP loans) (non-GAAP) | 1.20 | % | 1.20 | % | 1.29 | % | |||
| ALL to loans receivable (excluding SBA PPP loans and South Sound Acquisition loans) (non-GAAP) | 1.21 | % | 1.22 | % | 1.33 | % | |||
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $755,000 or 26%, to $2.19 million at March 31, 2023, from $2.95 million one year ago, and decreased $62,000, or 3%, from $2.25 million at December 31, 2022. Non-accrual loans decreased $682,000, or 26%, to $1.97 million at March 31, 2023, from $2.65 million one year ago, and decreased $66,000, or 3%, from $2.04 million at December 31, 2022.
Non-Accrual Loans
($ in thousands)
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |||||||||
| Mortgage loans: | ||||||||||||||
| One- to four-family | $378 | 2 | $383 | 2 | $578 | 3 | ||||||||
| Commercial | 694 | 2 | 658 | 2 | 671 | 3 | ||||||||
| Land | 362 | 1 | 425 | 2 | 723 | 4 | ||||||||
| Total mortgage loans | 1,434 | 5 | 1,466 | 6 | 1,972 | 10 | ||||||||
| Consumer loans: | ||||||||||||||
| Home equity and second | ||||||||||||||
| Mortgage | 241 | 2 | 263 | 3 | 269 | 2 | ||||||||
| Other | 1 | 1 | 2 | 1 | 5 | 1 | ||||||||
| Total consumer loans | 242 | 3 | 265 | 4 | 274 | 3 | ||||||||
| Commercial business loans | 293 | 4 | 304 | 6 | 405 | 6 | ||||||||
| Total loans | $1,969 | 12 | $2,035 | 16 | $2,651 | 19 | ||||||||
At March 31, 2023 and December 31, 2022, the OREO and other repossessed assets portfolio consisted of two individual land parcels that have been written down to a book value of $0. OREO and other repossessed assets were $157,000 at March 31, 2022.
OREO and Other Repossessed Assets
($ in thousands)
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |||||||||
| Land | $ | -- | 2 | $ | -- | 2 | $ | 157 | 3 | |||||
| Total | $ | -- | 2 | $ | -- | 2 | $ | 157 | 3 | |||||
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. The Bank opened for business in 1915 and primarily 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 23 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, plans, 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 economic 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: potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth caused by increasing political instability from acts of war including Russia's invasion of Ukraine, as well as increasing oil prices and supply chain disruptions, and any governmental or societal responses to novel coronavirus disease 2019 ("COVID-19") pandemic, including the possibility of new COVID-19 variants; 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 loans in our loan portfolio 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; uncertainty regarding the future of the London Interbank Offered Rate ("LIBOR"), and the transition away from LIBOR toward new interest rate benchmarks; 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 Federal Reserve and of 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 banking, securities and tax law, in regulatory policies and principles, or the interpretation of regulatory capital or other rules and including changes as a result of COVID-19; our ability to attract and retain deposits; 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 risks associated with the loans in our consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force 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 implement our business strategies; 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 stock; the quality and composition of our securities portfolio and the impact if any adverse changes in the securities markets, including on market liquidity; 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 ("FASB"), including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and other risks described in our reports filed with or furnished to 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 press release 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 2023 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 BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME | Three Months Ended | |||||||||
| ($ in thousands, except per share amounts) (unaudited) | March 31, | Dec. 31, | March 31, | |||||||
| 2023 | 2022 | 2022 | ||||||||
| Interest and dividend income | ||||||||||
| Loans receivable | $ | 14,950 | $ | 14,457 | $ | 12,620 | ||||
| Investment securities | 2,460 | 2,214 | 590 | |||||||
| Dividends from mutual funds, FHLB stock and other investments | 64 | 51 | 27 | |||||||
| Interest bearing deposits in banks | 1,913 | 2,390 | 283 | |||||||
| Total interest and dividend income | 19,387 | 19,112 | 13,520 | |||||||
| Interest expense | ||||||||||
| Deposits | 2,236 | 1,369 | 625 | |||||||
| Borrowings | -- | -- | 2 | |||||||
| Total interest expense | 2,236 | 1,369 | 627 | |||||||
| Net interest income | 17,151 | 17,743 | 12,893 | |||||||
| Provision for loan losses | 475 | 525 | -- | |||||||
| Net interest income after provision for loan losses | 16,676 | 17,218 | 12,893 | |||||||
| Non-interest income | ||||||||||
| Service charges on deposits | 893 | 947 | 1,014 | |||||||
| ATM and debit card interchange transaction fees | 1,275 | 1,251 | 1,247 | |||||||
| Gain on sales of loans, net | 46 | 21 | 416 | |||||||
| Bank owned life insurance ("BOLI") net earnings | 157 | 156 | 152 | |||||||
| Recoveries on investment securities, net | 2 | 3 | 3 | |||||||
| Other | 263 | 327 | 251 | |||||||
| Total non-interest income, net | 2,636 | 2,705 | 3,083 | |||||||
| Non-interest expense | ||||||||||
| Salaries and employee benefits | 6,046 | 5,900 | 5,192 | |||||||
| Premises and equipment | 1,001 | 924 | 988 | |||||||
| Advertising | 178 | 195 | 161 | |||||||
| OREO and other repossessed assets, net | -- | -- | 2 | |||||||
| ATM and debit card processing | 489 | 483 | 450 | |||||||
| Postage and courier | 147 | 121 | 164 | |||||||
| State and local taxes | 298 | 299 | 235 | |||||||
| Professional fees | 473 | 429 | 322 | |||||||
| FDIC insurance expense | 202 | 124 | 126 | |||||||
| Loan administration and foreclosure | 138 | 120 | 96 | |||||||
| Data processing and telecommunications | 880 | 789 | 669 | |||||||
| Deposit operations | 246 | 346 | 262 | |||||||
| Amortization of core deposit intangible ("CDI") | 67 | 68 | 79 | |||||||
| Other, net | 779 | 737 | 587 | |||||||
| Total non-interest expense, net | 10,944 | 10,535 | 9,333 | |||||||
| Income before income taxes | 8,368 | 9,388 | 6,643 | |||||||
| Provision for income taxes | 1,705 | 1,881 | 1,316 | |||||||
| Net income | $ | 6,663 | $ | 7,507 | $ | 5,327 | ||||
| Net income per common share: | ||||||||||
| Basic | $ | 0.81 | $ | 0.91 | $ | 0.64 | ||||
| Diluted | 0.80 | 0.90 | 0.63 | |||||||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 8,220,532 | 8,232,273 | 8,337,407 | |||||||
| Diluted | 8,304,370 | 8,318,733 | 8,421,875 | |||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME | Six Months Ended | |||||||||
| ($ in thousands, except per share amounts) (unaudited) | March 31, | March 31, | ||||||||
| 2023 | 2022 | |||||||||
| Interest and dividend income | ||||||||||
| Loans receivable | $ | 29,407 | $ | 25,242 | ||||||
| Investment securities | 4,674 | 996 | ||||||||
| Dividends from mutual funds, FHLB stock and other investments | 115 | 54 | ||||||||
| Interest bearing deposits in banks | 4,304 | 571 | ||||||||
| Total interest and dividend income | 38,500 | 26,863 | ||||||||
| Interest expense | ||||||||||
| Deposits | 3,606 | 1,257 | ||||||||
| Borrowings | -- | 17 | ||||||||
| Total interest expense | 3,606 | 1,274 | ||||||||
| Net interest income | 34,894 | 25,589 | ||||||||
| Provision for loan losses | 1,000 | -- | ||||||||
| Net interest income after provision for loan losses | 33,894 | 25,589 | ||||||||
| Non-interest income | ||||||||||
| Service charges on deposits | 1,840 | 1,927 | ||||||||
| ATM and debit card interchange transaction fees | 2,526 | 2,523 | ||||||||
| Gain on sales of loans, net | 67 | 1,079 | ||||||||
| Bank owned life insurance ("BOLI") net earnings | 312 | 305 | ||||||||
| Valuation recovery on loan servicing rights, net | -- | 119 | ||||||||
| Recoveries on investment securities, net | 5 | 11 | ||||||||
| Other | 591 | 561 | ||||||||
| Total non-interest income, net | 5,341 | 6,525 | ||||||||
| Non-interest expense | ||||||||||
| Salaries and employee benefits | 11,946 | 10,363 | ||||||||
| Premises and equipment | 1,925 | 1,916 | ||||||||
| Advertising | 372 | 327 | ||||||||
| OREO and other repossessed assets, net | -- | (16 | ) | |||||||
| ATM and debit card processing | 972 | 914 | ||||||||
| Postage and courier | 268 | 300 | ||||||||
| State and local taxes | 597 | 489 | ||||||||
| Professional fees | 902 | 593 | ||||||||
| FDIC insurance expense | 326 | 254 | ||||||||
| Loan administration and foreclosure | 259 | 200 | ||||||||
| Data processing and telecommunications | 1,668 | 1,282 | ||||||||
| Deposit operations | 592 | 561 | ||||||||
| Amortization of CDI | 135 | 158 | ||||||||
| Other, net | 1,517 | 1,256 | ||||||||
| Total non-interest expense, net | 21,479 | 18,597 | ||||||||
| Income before income taxes | 17,756 | 13,517 | ||||||||
| Provision for income taxes | 3,587 | 2,705 | ||||||||
| Net income | $ | 14,169 | $ | 10,812 | ||||||
| Net income per common share: | ||||||||||
| Basic | $ | 1.72 | $ | 1.30 | ||||||
| Diluted | 1.70 | 1.28 | ||||||||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 8,226,467 | 8,346,839 | ||||||||
| Diluted | 8,311,630 | 8,435,536 | ||||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS | |||||||||||||
| ($ in thousands, except per share amounts) (unaudited) | March 31, | Dec. 31, | March 31, | ||||||||||
| 2023 | 2022 | 2022 | |||||||||||
| Assets | |||||||||||||
| Cash and due from financial institutions | $ | 26,015 | $ | 31,237 | $ | 26,500 | |||||||
| Interest-bearing deposits in banks | 116,468 | 193,659 | 465,802 | ||||||||||
| Total cash and cash equivalents | 142,483 | 224,896 | 492,302 | ||||||||||
| Certificates of deposit ("CDs") held for investment, at cost | 20,168 | 23,392 | 28,619 | ||||||||||
| Investment securities: | |||||||||||||
| Held to maturity, at amortized cost | 277,911 | 278,585 | 189,405 | ||||||||||
| Available for sale, at fair value | 54,838 | 55,841 | 50,624 | ||||||||||
| Investments in equity securities, at fair value | 850 | 837 | 902 | ||||||||||
| FHLB stock | 2,202 | 2,194 | 2,194 | ||||||||||
| Other investments, at cost | 3,000 | 3,000 | 3,000 | ||||||||||
| Loans held for sale | 200 | -- | 2,772 | ||||||||||
| Loans receivable | 1,224,891 | 1,186,788 | 1,047,513 | ||||||||||
| Less: Allowance for loan losses | (14,698 | ) | (14,229 | ) | (13,433 | ) | |||||||
| Net loans receivable | 1,210,193 | 1,172,559 | 1,034,080 | ||||||||||
| Premises and equipment, net | 21,744 | 21,703 | 21,878 | ||||||||||
| OREO and other repossessed assets, net | -- | -- | 157 | ||||||||||
| BOLI | 23,119 | 22,962 | 22,498 | ||||||||||
| Accrued interest receivable | 5,295 | 5,508 | 3,927 | ||||||||||
| Goodwill | 15,131 | 15,131 | 15,131 | ||||||||||
| CDI | 813 | 880 | 1,106 | ||||||||||
| Loan servicing rights, net | 2,535 | 2,770 | 3,390 | ||||||||||
| Operating lease right-of-use assets | 1,844 | 1,912 | 2,129 | ||||||||||
| Other assets | 4,292 | 3,374 | 3,356 | ||||||||||
| Total assets | $ | 1,786,618 | $ | 1,835,544 | $ | 1,877,470 | |||||||
| Liabilities and shareholders' equity | |||||||||||||
| Deposits: Non-interest-bearing demand | $ | 479,283 | $ | 494,370 | $ | 525,488 | |||||||
| Deposits: Interest-bearing | 1,069,484 | 1,106,720 | 1,130,938 | ||||||||||
| Total deposits | 1,548,767 | 1,601,090 | 1,656,426 | ||||||||||
| Operating lease liabilities | 1,935 | 2,001 | 2,210 | ||||||||||
| FHLB borrowings | -- | -- | -- | ||||||||||
| Other liabilities and accrued expenses | 8,255 | 8,904 | 6,565 | ||||||||||
| Total liabilities | 1,558,957 | 1,611,995 | 1,665,201 | ||||||||||
| Shareholders' equity | |||||||||||||
| Common stock, $.01 par value; 50,000,000 shares authorized; 8,203,174 shares issued and outstanding - March 31, 2023 8,231,197 shares issued and outstanding - December 31, 2022 8,305, 826 shares issued and outstanding - March 31, 2022 | 37,979 | 38,878 | 40,988 | ||||||||||
| Retained earnings | 190,177 | 185,406 | 171,388 | ||||||||||
| Accumulated other comprehensive loss | (495 | ) | (735 | ) | (107 | ) | |||||||
| Total shareholders' equity | 227,661 | 223,549 | 212,269 | ||||||||||
| Total liabilities and shareholders' equity | $ | 1,786,618 | $ | 1,835,544 | $ | 1,877,470 | |||||||
KEY FINANCIAL RATIOS AND DATA | Three Months Ended | |||||||||||
| ($ in thousands, except per share amounts) (unaudited) | March 31, | Dec. 31, | March 31, | |||||||||
| 2023 | 2022 | 2022 | ||||||||||
| PERFORMANCE RATIOS: | ||||||||||||
| Return on average assets (a) | 1.48% | 1.63% | 1.16% | |||||||||
| Return on average equity (a) | 11.86% | 13.63% | 10.10% | |||||||||
| Net interest margin (a) | 3.99% | 4.03% | 2.95% | |||||||||
| Efficiency ratio | 55.31% | 51.52% | 58.42% | |||||||||
| Six Months Ended | ||||||||||||
| March 31, | March 31, | |||||||||||
| 2023 | 2022 | |||||||||||
| PERFORMANCE RATIOS: | ||||||||||||
| Return on average assets (a) | 1.55% | 1.18% | ||||||||||
| Return on average equity (a) | 12.74% | 10.33% | ||||||||||
| Net interest margin (a) | 4.02% | 2.93% | ||||||||||
| Efficiency ratio | 53.38% | 57.91% | ||||||||||
| ASSET QUALITY RATIOS AND DATA: | ||||||||||||
| Non-accrual loans | $1,969 | $2,035 | $2,651 | |||||||||
| Loans past due 90 days and still accruing | -- | -- | -- | |||||||||
| Non-performing investment securities | 93 | 98 | 127 | |||||||||
| OREO and other repossessed assets | -- | -- | 157 | |||||||||
| Total non-performing assets (b) | $2,062 | $2,133 | $2,935 | |||||||||
| Non-performing assets to total assets (b) | 0.12% | 0.12% | 0.16% | |||||||||
| Net charge-offs (recoveries) during quarter | $6 | $(1) | $35 | |||||||||
| ALL to non-accrual loans, | 746.47% | 699.21% | 506.71% | |||||||||
| ALL to loans receivable (c) | 1.20% | 1.20% | 1.28% | |||||||||
| ALL to loans receivable (excluding SBA PPP loans) (d) (non-GAAP) | 1.20% | 1.20% | 1.29% | |||||||||
| ALL to loans receivable (excluding SBA PPP loans and South Sound Acquisition loans) (d) (e) (non-GAAP) | 1.21% | 1.22% | 1.33% | |||||||||
| Troubled debt restructured loans on accrual status (f) | $2,550 | $2,464 | $2,496 | |||||||||
| CAPITAL RATIOS: | ||||||||||||
| Tier 1 leverage capital | 11.95% | 11.46% | 10.86% | |||||||||
| Tier 1 risk-based capital | 18.16% | 18.07% | 19.50% | |||||||||
| Common equity Tier 1 risk-based capital | 18.16% | 18.07% | 19.50% | |||||||||
| Total risk-based capital | 19.41% | 19.32% | 20.75% | |||||||||
| Tangible common equity to tangible assets (non-GAAP) | 11.96% | 11.41% | 10.53% | |||||||||
| BOOK VALUES: | ||||||||||||
| Book value per common share | $27.75 | $27.16 | $25.56 | |||||||||
| Tangible book value per common share (g) | 25.81 | 25.21 | 23.60 | |||||||||
________________________________________________
(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 $572, $631 and $5,934 at March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
(e) Does not include loans acquired in the South Sound Acquisition totaling $13,917, $16,794 and $28,549 at March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
(f) Does not include troubled debt restructured loans totaling $50, $116 and $172 reported as non-accrual loans at March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
(g) Tangible common equity divided by common shares outstanding (non-GAAP).
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($ in thousands)
(unaudited)
| For the Three Months Ended | |||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||||
| Loans receivable and loans held for sale | $ | 1,200,872 | 4.98 | % | $ | 1,164,369 | 4.97 | % | $ | 1,029,582 | 4.90 | % | |||||||||||||
| Investment securities and FHLB stock (1) | 340,317 | 2.97 | 329,396 | 2.75 | 209,868 | 1.18 | |||||||||||||||||||
| Interest-earning deposits in banks and CDs | 177,748 | 4.30 | 266,439 | 3.59 | 510,211 | 0.22 | |||||||||||||||||||
| Total interest-earning assets | 1,718,937 | 4.51 | 1,760,204 | 4.34 | 1,749,661 | 3.09 | |||||||||||||||||||
| Other assets | 84,072 | 84,806 | 84,252 | ||||||||||||||||||||||
| Total assets | $ | 1,803,009 | $ | 1,845,010 | $ | 1,833,913 | |||||||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||||||
| NOW checking accounts | $ | 412,642 | 0.83 | % | $ | 439,750 | 0.45 | % | $ | 441,259 | 0.13 | % | |||||||||||||
| Money market accounts | 218,718 | 0.68 | 239,424 | 0.53 | 244,250 | 0.29 | |||||||||||||||||||
| Savings accounts | 274,877 | 0.14 | 279,832 | 0.12 | 277,888 | 0.08 | |||||||||||||||||||
| Certificates of deposit accounts | 170,547 | 2.22 | 135,467 | 1.39 | 128,588 | 0.80 | |||||||||||||||||||
| Total interest-bearing deposits | 1,076,784 | 0.84 | 1,094,473 | 0.50 | 1,091,985 | 0.23 | |||||||||||||||||||
| Borrowings | 6 | 5.43 | -- | -- | 677 | 1.18 | |||||||||||||||||||
| Total interest-bearing liabilities | 1,076,790 | 0.84 | 1,094,473 | 0.50 | 1,092,662 | 0.23 | |||||||||||||||||||
| Non-interest-bearing demand deposits | 492,294 | 519,307 | 521,284 | ||||||||||||||||||||||
| Other liabilities | 9,136 | 11,002 | 9,072 | ||||||||||||||||||||||
| Shareholders' equity | 224,789 | 220,228 | 210,895 | ||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,803,009 | $ | 1,845,010 | $ | 1,833,913 | |||||||||||||||||||
| Interest rate spread | 3.67 | % | 3.84 | % | 2.86 | % | |||||||||||||||||||
| Net interest margin (2) | 3.99 | % | 4.03 | % | 2.95 | % | |||||||||||||||||||
| Average interest-earning assets to | |||||||||||||||||||||||||
| average interest-bearing liabilities | 159.64 | % | 160.83 | % | 160.13 | % | |||||||||||||||||||
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets
| For the Six Months Ended | ||||||||||||||||||||||
| March 31, 2023 | March 31, 2022 | |||||||||||||||||||||
| Amount | Rate | Amount | Rate | |||||||||||||||||||
| Assets | ||||||||||||||||||||||
| Loans receivable and loans held for sale | $ | 1,182,420 | 4.97 | % | $ | 1,013,293 | 4.98 | % | ||||||||||||||
| Investment securities and FHLB stock (1) | 332,815 | 2.88 | 185,710 | 1.13 | ||||||||||||||||||
| Interest-earning deposits in banks and CDs | 222,569 | 3.87 | 545,651 | 0.21 | ||||||||||||||||||
| Total interest-earning assets | 1,737,804 | 4.43 | 1,744,654 | 3.08 | ||||||||||||||||||
| Other assets | 86,171 | 83,908 | ||||||||||||||||||||
| Total assets | $ | 1,823,975 | $ | 1,828,562 | ||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||
| NOW checking accounts | $ | 426,345 | 0.63 | % | $ | 440,999 | 0.13 | % | ||||||||||||||
| Money market accounts | 229,185 | 0.60 | 233,480 | 0.29 | ||||||||||||||||||
| Savings accounts | 277,382 | 0.13 | 271,197 | 0.08 | ||||||||||||||||||
| Certificates of deposit accounts | 152,814 | 1.84 | 130,611 | 0.81 | ||||||||||||||||||
| Total interest-bearing deposits | 1,085,726 | 0.67 | 1,076,287 | 0.23 | ||||||||||||||||||
| Borrowings | 3 | 5.43 | 2,862 | 1.19 | ||||||||||||||||||
| Total interest-bearing liabilities | 1,085,729 | 0.67 | 1,079,149 | 0.24 | ||||||||||||||||||
| Non-interest-bearing demand deposits | 505,949 | 530,171 | ||||||||||||||||||||
| Other liabilities | 9,813 | 9,824 | ||||||||||||||||||||
| Shareholders' equity | 222,484 | 209,418 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,823,975 | $ | 1,828,562 | ||||||||||||||||||
| Interest rate spread | 3.76 | % | 2.84 | % | ||||||||||||||||||
| Net interest margin (2) | 4.02 | % | 2.93 | % | ||||||||||||||||||
| Average interest-earning assets to | ||||||||||||||||||||||
| average interest-bearing liabilities | 160.06 | % | 161.67 | % | ||||||||||||||||||
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets
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) | March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||
| Shareholders' equity | $ | 227,661 | $ | 223,549 | $ | 212,269 | |||||||
| Less goodwill and CDI | (15,944 | ) | (16,011 | ) | (16,237 | ) | |||||||
| Tangible common equity | $ | 211,717 | $ | 207,538 | $ | 196,032 | |||||||
| Total assets | $ | 1,786,618 | $ | 1,835,544 | $ | 1,877,470 | |||||||
| Less goodwill and CDI | (15,944 | ) | (16,011 | ) | (16,237 | ) | |||||||
| Tangible assets | $ | 1,770,674 | $ | 1,819,533 | $ | 1,861,233 | |||||||
Contact:
Dean J. Brydon, CEO
Jonathan A. Fischer, President & COO
Marci A. Basich, CFO
(360) 533-4747
www.timberlandbank.com
