-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S/S6VXfYIkcRyUAXPCccwXBpVxlmm2fd2aaz6XtSN+RDHpfErIvAMptId+DFetQ1 s/2YbS9u8Dxw3Q+R6lTjcw== 0000939057-06-000020.txt : 20060124 0000939057-06-000020.hdr.sgml : 20060124 20060124112321 ACCESSION NUMBER: 0000939057-06-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060123 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060124 DATE AS OF CHANGE: 20060124 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIMBERLAND BANCORP INC CENTRAL INDEX KEY: 0001046050 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 911863696 STATE OF INCORPORATION: WA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23333 FILM NUMBER: 06545379 BUSINESS ADDRESS: STREET 1: 624 SIMPSON AVE CITY: HOQUIAM STATE: WA ZIP: 98550 BUSINESS PHONE: 3605334747 MAIL ADDRESS: STREET 1: 624 SIMPSON AVE CITY: HOQUIAM STATE: WA ZIP: 98550 8-K 1 k8012306.txt TIMBERLAND BANCORP, INC. FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 23, 2006 Timberland Bancorp, Inc. (Exact name of registrant as specified in its charter) Washington 0-23333 91-1863696 - --------------------------- ----------- ------------------ State or other jurisdiction Commission (I.R.S. Employer Of incorporation File Number Identification No.) 624 Simpson Avenue, Hoquiam, Washington 98550 - ---------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number (including area code) (360) 533-4747 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions. [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition - -------------------------------------------------------- On January 23, 2006, Timberland Bancorp, Inc. issued its earnings release for the quarter ended December 31, 2005. A copy of the earnings release is attached hereto as Exhibit 99.1, which is incorporated herein by reference. Item 9.01 Financial Statements and Exhibits - -------------------------------------------- (c) Exhibits 99.1 Press Release of Timberland Bancorp, Inc. dated January 23, 2006 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. TIMBERLAND BANCORP,INC. DATE: January 23, 2006 By: /s/Dean J. Brydon -------------------------- Dean J. Brydon Chief Financial Officer Exhibit 99.1 ============================================================================== PRESS RELEASE: FOR IMMEDIATE PUBLICATION ---------------------------------------- For further information contact: Michael R. Sand, President & CEO Dean J. Brydon, CFO At (360) 533-4747 ============================================================================== Timberland Bancorp, Inc. Announces Record Earnings * Net Income Increases by 34% * Diluted Earnings Per Share Increases by 38% * Return on Equity Increases by 31% HOQUIAM, Wash. - January 23, 2006 - Timberland Bancorp, Inc. (Nasdaq: TSBK), ("Company") the holding company for Timberland Bank, ("Bank"), today reported record net income of $2.01 million, or $0.55 per diluted share, for the quarter ended December 31, 2005. This compares to net income of $1.49 million, or $0.40 per diluted share that the Company earned for the quarter ended December 31, 2004. The increased earnings per share was primarily a result of increased net interest income and decreased non-interest expenses. "We are pleased with the operating results achieved during our first fiscal quarter," stated Timberland's President and CEO, Michael Sand. "While the current interest rate environment introduces challenges to margin management, the Company's expanded interest margin contributed to increased profitability for the quarter. The Company recorded increases in net income and return on equity of 34% and 31% respectively, while diluted earnings per share increased by 38% as compared to the like quarter in the prior fiscal year. Loan originations increased by 7% to nearly $66 million for the quarter ended December 31, 2005 from $61 million for the quarter ended December 31, 2004. Assets decreased slightly as the determination was made to liquidate lower yielding assets to reduce higher cost advances from the Federal Home Loan Bank of Seattle," Sand also stated. The Company also announced that it has declared a quarterly cash dividend of $0.16 per share of common stock for shareholders of record as of the close of business on February 9, 2006, payable on February 23, 2006. This will be the 32nd consecutive quarter that Timberland has paid a cash dividend. Disclaimer This report contains certain "forward-looking statements." The Company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protection of such safe harbor with forward looking statements. These forward-looking statements may describe future plans or strategies and include the Company's expectations of future financial results. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated objectives. These risk factors include but are not limited to the effect of interest rate changes, competition in the financial services market for both deposits and loans as well as regional and general economic conditions. The words "believe," "expect," "anticipate," "estimate," "project," and similar expressions identify forward-looking statements. The Company's ability to predict results or the effect of future plans or strategies is inherently uncertain and undue reliance should not be placed on such statements 1 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT For the three months ended December 31, 2005 and 2004 (Dollars in thousands, except per share data) (Unaudited) Three Months Ended December 31, 2005 2004 -------------------------- Interest and Dividend Income Loans receivable $ 7,485 $ 6,507 Investments and mortgage-backed securities 536 389 Dividends 323 266 Federal funds sold 77 112 Interest bearing deposits in banks 24 28 -------------------------- Total interest and dividend income 8,445 7,302 Interest Expense Deposits 1,688 1,179 Federal Home Loan Bank advances 720 750 Other borrowings - repurchase agreements 10 5 -------------------------- Total interest expense 2,418 1,934 -------------------------- Net interest income 6,027 5,368 Provision for Loan Losses -- -- -------------------------- Net interest income after provision for loan losses 6,027 5,368 Non-Interest Income Service charges on deposits 720 698 Gain on sale of loans, net 116 348 BOLI net earnings 111 99 Escrow fees 32 35 Servicing income on loans sold 108 40 ATM transaction fees 235 196 Other 233 123 -------------------------- Total non-interest income 1,555 1,539 Non-interest Expense Salaries and employee benefits 2,630 2,650 Premises and equipment 609 511 Advertising 136 166 Loss (gain) from real estate operations (53) (27) ATM expenses 98 112 Postage and courier 115 158 Amortization of core deposit intangible 82 85 State and local taxes 160 94 Professional fees 208 185 Other 652 826 -------------------------- Total non-interest expense 4,637 4,760 Income before federal income taxes 2,945 2,147 Federal Income Taxes 939 653 -------------------------- Net Income $ 2,006 $ 1,494 Earnings Per Common Share: Basic $0.57 $0.42 Diluted $0.55 $0.40 Weighted average shares outstanding: Basic 3,504,526 3,550,007 Diluted 3,625,620 3,717,162 2 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES SUMMARY BALANCE SHEETS December 31, 2005 and September 30, 2005 (Dollars in thousands) (unaudited) December 31, September 30, 2005 2005 ------------------------- ASSETS Cash and due from financial institutions: Non-interest bearing $ 17,557 $ 20,015 Interest bearing deposits in banks 1,104 3,068 Federal funds sold 3,875 5,635 ------------------------- 22,536 28,718 Investments and mortgage-backed securities: Held to maturity 90 104 Available for sale 87,814 89,595 Federal Home Loan Bank stock 5,705 5,705 ------------------------- 93,609 95,404 Loans receivable 393,772 389,853 Loans held for sale 1,889 2,355 Less: Allowance for loan losses (4,117) (4,099) ------------------------- Total loans 391,544 388,109 Accrued interest receivable 2,319 2,294 Premises and equipment 16,050 15,862 Real estate owned and other repossessed items 144 509 Bank owned life insurance ("BOLI") 11,612 11,502 Goodwill 5,650 5,650 Core deposit intangible 1,752 1,834 Mortgage servicing rights 929 928 Other assets 1,602 1,955 ------------------------- TOTAL ASSETS $ 547,747 $ 552,765 ========================= LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Deposits $ 410,676 $ 411,665 Federal Home Loan Bank advances 56,805 62,353 Other borrowings: repurchase agreements 1,305 781 Other liabilities and accrued expenses 3,006 3,324 ------------------------- TOTAL LIABILITIES 471,792 478,123 ------------------------- SHAREHOLDERS' EQUITY Common stock - $.01 par value; 50,000,000 shares authorized; December 31, 2005 - 3,757,037 shares issued and outstanding September 30, 2005 - 3,759,937 shares issued and outstanding 38 38 Additional paid in capital 22,013 22,040 Unearned shares - Employee Stock Ownership Plan (3,701) (3,833) Retained earnings 58,672 57,268 Accumulated other comprehensive loss (1,067) (871) ------------------------- TOTAL SHAREHOLDERS' EQUITY 75,955 74,642 ------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 547,747 $ 552,765 ========================= 3 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES KEY FINANCIAL RATIOS AND DATA (Dollars in thousands, except per share data) For the Three Months Ended December 31, September 30, December 31, 2005 2005 2004 ----------------------------------------- PERFORMANCE RATIOS: Return on average assets (1) 1.46% 1.33% 1.15% Return on average equity (1) 10.70% 10.03% 8.17% Net interest margin (1) 4.87% 4.56% 4.58% Efficiency ratio 61.16% 62.96% 68.92% December 31, September 30, December 31, 2005 2005 2004 ----------------------------------------- ASSET QUALITY RATIOS: Non-performing loans $ 2,707 $ 2,926 $ 3,003 REO & other repossessed assets 144 509 346 Total non-performing assets 2,851 3,435 3,349 Non-performing assets to total assets 0.52% 0.62% 0.63% Allowance for loan losses to non-performing loans 152.09% 140.09% 133.00% Book Value Per Share(2) $ 20.22 $ 19.85 $ 19.03 Book Value Per Share(3) 21.64 21.30 20.52 Tangible Book Value Per Share(2)(4) 18.25 17.86 17.04 Tangible Book Value Per Share(3)(4) 19.53 19.16 18.37 - ------------------- (1) Annualized (2) Calculation includes ESOP shares not committed to be released (3) Calculation excludes ESOP shares not committed to be released (4) Calculation subtracts goodwill and core deposit intangible from equity component For the Three Months Ended December 31, September 30, December 31, 2005 2005 2004 ----------------------------------------- AVERAGE BALANCE SHEET: Average Total Loans $ 390,776 $ 392,596 $ 358,336 Average Total Interest Earning Assets 495,290 502,453 469,317 Average Total Assets 549,361 544,750 521,680 Average Total Interest Bearing Deposits 361,620 363,150 347,782 Average FHLB Advances and Other Borrowings 56,939 63,745 55,414 Average Shareholders' Equity 74,996 73,310 73,135 4 Comparison of Financial Condition at December 31, 2005 and September 30, 2005 Total Assets: Total assets decreased $5.02 million to $547.75 million at December 31, 2005 from $552.77 million at September 30, 2005 primarily due to a $6.18 million decrease in cash and due from financial institutions and a $1.80 million decrease in investments and mortgage backed securities. Approximately $5.55 million in net cash was used to repay higher cost advances from the Federal Home Loan Bank of Seattle. These decreases were partially offset by a $3.44 million increase in net loans receivable. Investments: Investment securities decreased by $1.80 million to $93.61 million at December 31, 2005 from $95.40 million at September 30, 2005, due to regular amortization and prepayments on mortgage-backed securities. Loans: Net loans receivable increased by $3.44 million to $391.54 million at December 31, 2005 from $388.11 million at September 30, 2005. The increase in the portfolio was primarily a result of a $3.37 million increase in commercial real estate loans, a $2.46 million increase in construction loans (net of undisbursed portion), a $1.94 million increase in land loans, a $1.24 million increase in consumer loans, and a $739,000 increase in multi-family loans. Partially offsetting these increases were decreases of $4.22 million in one-to-four family mortgage loans, and $2.16 million in commercial business loans. Loan demand remained strong during the current quarter as loan originations totaled $65.78 million compared to $61.44 million for the same period a year earlier. Loan portfolio growth during the quarter was, however, impacted by the repayment of $5.80 million in loans secured by a particularly successful ocean front condominium project and the sale of fixed rate one-to-four family mortgages. The Bank sold fixed rate one-to-four family mortgage loans totaling $7.53 million during the quarter ended December 31, 2005 compared to $3.32 million for the same period one year earlier. A portion of the loans originated during the quarter were construction loans. Undisbursed construction loan balances increased by $13.28 million to $56.05 million at December 31, 2005. Deposits: Deposits decreased by $989,000 to $410.68 million at December 31, 2005 from $411.67 million at September 30, 2005. The deposit decrease is comprised of a $2.99 million decrease in money market accounts, a $1.74 million decrease in N.O.W. checking accounts, a $1.72 million decrease in non-interest bearing accounts, and a $1.38 million decrease in savings accounts. These decreases were offset by a $6.83 million increase in certificates of deposit accounts. Shareholders' Equity: Total shareholders' equity increased by $1.31 million to $75.96 million at December 31, 2005 from $74.64 million at September 30, 2005, primarily due to net income of $2.00 million and a $161,000 increase to additional paid in capital from the exercise of stock options and vesting associated with the Bank's benefit plans. Also increasing shareholders' equity was a decrease from September 30, 2005 of $132,000 in the equity component related to unearned shares issued to the Employee Stock Ownership Plan. Partially offsetting these increases to shareholders' equity were the payment of $602,000 in dividends to shareholders, the repurchase of 8,200 shares of the Company's stock for $193,000, and a $196,000 increase in accumulated other comprehensive loss. On April 7, 2005, the Company announced a plan to repurchase up to 5% of the Company's outstanding shares, or 187,955 shares. This represents the Company's 13th stock repurchase plan. As of December 31, 2005, the Company had repurchased 36,050 of these shares at an average price of $23.26. Cumulatively the Company has repurchased 3,375,321 (51.0%) of the 6,612,500 shares that were issued when the Company went public in January 1998. The 3,375,321 shares have been repurchased at an average price of $15.41 per share. Comparison of Operating Results for the Three Months Ended December 31, 2005 and 2004 Net Income: Net income for the quarter ended December 31, 2005 increased to $2.00 million, or $0.55 per diluted share ($0.57 per basic share) from $1.49 million, or $0.40 per diluted share ($0.42 per basic share) for the quarter ended December 31, 2004. The $0.15 increase in diluted earnings per share for the quarter ended December 31, 2005 was primarily a result of a $659,000 ($435,000 net of income tax - $0.12 per diluted share) increase in net interest income after provision for loan losses, a $123,000 ($81,000 net of income tax - $0.02 per diluted share) decrease in non-interest 5 expense, and a lower number of weighted average shares outstanding, which increased diluted earnings per share by approximately $0.01. Net Interest Income: Net interest income increased $659,000 to $6.03 million for the quarter ended December 31, 2005 from $5.37 million for the quarter ended December 31, 2004, primarily due to a larger interest earning asset base and an increase in the average yield on interest earning assets. Total interest income increased $1.14 million to $8.45 million for the quarter ended December 31, 2005 from $7.30 million for the quarter ended December 31, 2004 as average total interest earning assets increased by $25.97 million. The yield on interest earning assets increased to 6.82% for the quarter ended December 31, 2005 from 6.22% for the quarter ended December 31, 2004. The collection of delinquent interest on two non-accrual loans that paid off during the quarter contributed to a net decrease in non-accrual interest of $49,000. The repayment of these two non-accrual loans also contributed to a net increase of $82,000 in late fee income which is recorded as interest income. Partially offsetting the increased interest income was an increase in interest expense as average interest bearing deposits and borrowings increased and the interest rates paid for deposits increased. Total interest expense increased by $484,000 to $2.42 million for the quarter ended December 31, 2005 from $1.93 million for the quarter ended December 31, 2004 as average interest bearing liabilities increased $15.36 million. Also contributing to increased interest expense was an increase in the average rate paid for these funding sources to 2.29% for the quarter ended December 31, 2005 from 1.90% for the quarter ended December 31, 2004. As a result of these changes, the net interest margin increased to 4.87% for the quarter ended December 31, 2005 from 4.58% for the quarter ended December 31, 2004. Provision for Loan Losses: There was no provision for loan losses made in the current quarter. The allowance for loan losses, however, did increase during the current quarter due to a net recovery of $18,000. Based on its comprehensive analysis, management deemed the allowance for loan losses of $4.12 million at December 31, 2005 (1.05% of loans receivable and 152.09% of non-performing loans) adequate to provide for probable losses based on an evaluation of known and inherent risks in the loan portfolio at that date. The allowance for loan losses was $3.99 million (1.10% of loans receivable and 133.00% of non-performing loans) at December 31, 2004. For the quarters ended December 31, 2005 and 2004, the Company had net recoveries of $18,000 and $3,000, respectively. The Company's non-performing assets to total assets ratio decreased to 0.52% at December 31, 2005 from 0.62% at September 30, 2005 and 0.63% at December 31, 2004. The non-performing loan total of $2.71 million at December 31, 2005 consisted of a $1.37 million commercial construction loan, $1.07 million in one-to-four family mortgage loans, $263,000 in commercial real estate loans, and $10,000 in consumer loans. Non-interest Income: Total non-interest income increased $16,000 to $1.56 million for the quarter ended December 31, 2005 from $1.54 million for the quarter ended December 31, 2004. Total non-interest income increased as income from service charges on deposits, ATM transaction fees, bank owned life insurance and the sale of non-deposit investment products all increased from a year ago. Partially offsetting these increases was a decrease in income from loan sales, (gain on sale of loans and servicing income on loans sold) which decreased by $164,000 to $224,000 for the current quarter from $388,000 for the same period a year earlier. Income from loan sales was larger in the period a year ago due the sale of the Bank's credit card portfolio, which resulted in a gain of $245,000 ($162,000 net of income tax). Non-interest Expense: Total non-interest expense decreased by $123,000 to $4.64 million for the quarter ended December 31, 2005 from $4.76 million for the quarter ended December 31, 2004. Non-interest expenses were higher a year ago primarily due to expenses of $183,000 related to the branch acquisition in October 2004 and vesting expenses of $167,000 related to one of the Company's benefit plans. Partially offsetting these expense decreases during the current quarter were increases in expenses related to premises and equipment and state and local taxes. As a result of the decreased expenses and increased revenue, the Company's efficiency ratio decreased to 61.16% for the quarter ended December 31, 2005 from 68.92% for the quarter ended December 31, 2004. The Company also began expensing stock options under SFAS 123(R), which became effective for the Company on October 1, 2005. Total stock option expenses of $5,000 were recorded for the quarter ended December 31, 2005. 6 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES LOANS RECEIVABLE BREAKDOWN (Dollars in thousands) At December 31, At September 30, 2005 2005 Amount Percent Amount Percent ------------------- ------------------ Mortgage Loans: One-to-four family (1) $ 97,544 21.46% $101,763 23.24% Multi family 20,909 4.60 20,170 4.61 Commercial 128,216 28.21 124,849 28.51 Construction and land development 128,210 28.21 112,470 25.68 Land 26,921 5.92 24,981 5.71 -------- ------ -------- ------ Total mortgage loans 401,800 88.40 384,233 87.75 Consumer Loans: Home equity and second mortgage 33,669 7.41 32,298 7.38 Other 9,199 2.02 9,330 2.13 -------- ------ -------- ------ 42,868 9.43 41,628 9.51 Commercial business loans 9,855 2.17 12,013 2.74 -------- ------ -------- ------ Total loans 454,523 100.00% 437,874 100.00% Less: Undisbursed portion of construction loans in process (56,049) (42,771) Unearned income (2,813) (2,895) Allowance for loan losses (4,117) (4,099) -------- -------- Total loans receivable, net $391,544 $388,109 ======== ======== - ---------------- (1) Includes loans held-for-sale. 7 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES DEPOSIT BREAKDOWN (Dollars in thousands) December 31, 2005 September 30, 2005 ----------------- ------------------ Non-interest bearing $ 50,070 $ 51,792 N.O.W checking 91,741 93,477 Savings 62,895 64,274 Money market accounts 46,309 49,295 Certificates of deposit under $100,000 121,737 117,618 Certificates of deposit $100,000 and over 37,924 35,209 -------- -------- Total deposits $410,676 $411,665 ======== ======== Timberland Bancorp, Inc. stock trades on the NASDAQ national market under the symbol "TSBK." The Bank owns and operates branches in the state of Washington in Hoquiam, Aberdeen, Ocean Shores, Montesano, Elma, Olympia, Lacey, Tumwater, Yelm, Puyallup, Edgewood, Tacoma, Spanaway (Bethel Station), Gig Harbor, Poulsbo, Silverdale, Auburn, Winlock, and Toledo. CONTACT: Timberland Bancorp, Inc. Michael Sand, President & CEO or Dean Brydon, CFO 360/533-4747 8 -----END PRIVACY-ENHANCED MESSAGE-----