-----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, BMlxBDwgo922tN3wyZlzLd3gGh1FR7KkQK4/PlS529exLg160SD+GiswHDvt13Bs v59zXr+VKFyn3JGfXKZNlA== 0001157523-04-004024.txt : 20040428 0001157523-04-004024.hdr.sgml : 20040428 20040428165210 ACCESSION NUMBER: 0001157523-04-004024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040427 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040428 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: 04761142 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 a4627873.txt TIMBERLAND BANCORP 8-K DOCUMENT 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): April 27, 2004 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 Not Applicable -------------- (Former name or former address, if changed since last report) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits - -------------------------------------------------------------------------- (c) Exhibits 99.1 Press Release of Timberland Bancorp, Inc. dated April 27, 2004 Item 9. Results of Operations and Financial Condition - ----------------------------------------------------- On April 27, 2004, Timberland Bancorp, Inc. issued its earnings release for the quarter ended March 31, 2004. A copy of the earnings release is attached hereto as Exhibit 99.1, which is incorporated herein by reference. 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: April 27, 2004 By: Dean J. Brydon ----------------------------------- Dean J. Brydon Chief Financial Officer EX-99.1 2 a4627873ex99.txt PRESS RELEASE Exhibit 99.1 Timberland Bancorp, Inc. Announces Second Quarter Earnings HOQUIAM, Wash.--(BUSINESS WIRE)--April 27, 2004--Timberland Bancorp, Inc. (Nasdaq:TSBK): -- Earnings Per Share Increases 6% from Prior Quarter -- Company Repurchases 11% of Outstanding Shares During Quarter -- Non-Performing Assets Decrease by 37% from December 31, 2003 -- Gig Harbor Branch Scheduled to Open in June 2004 Timberland Bancorp, Inc. (Nasdaq:TSBK), ("Company") the holding company for Timberland Bank, ("Bank"), today reported net income of $1.42 million, or $0.36 per diluted share, for the quarter ended March 31, 2004. This represents a 6% increase in earnings per share from the prior quarter ended December 31, 2003. Earnings for the quarter ended March 31, 2003 were $0.45 per diluted share. Higher earnings during the quarter ended March 31, 2003 were primarily due to stronger mortgage banking activities and lower non-interest expense. Non-performing assets decreased by 37% to 1.0% of assets during the current quarter and the Company was successful in repurchasing 11% of its outstanding shares. "We were particularly pleased with the increased profitability over the prior calendar quarter, the success of our share repurchase activities, and the reduction in non-performing assets," stated Company President Michael Sand. "During the quarter we completed our 11th stock buyback program. We also announced our 12th stock repurchase program and were successful in purchasing 40% of the shares authorized for repurchase," stated Sand. Non-performing assets were reduced to 1.00% of assets due to the profitable disposition of three REO properties. Mortgage loan originations have declined nationally which has resulted in a decrease in the fee income generated from mortgage banking activities. A decrease in fee income from mortgage banking activities accounted for $207,000 of the $382,000 decrease in non-interest income for the quarter ended March 31, 2004 as compared to the quarter ended March 31, 2003. This $382,000 decrease in non-interest income reduced diluted earnings per share by $0.06. "While we have seen a reduction in the volume of refinanced mortgages we are pleased with the level of residential construction loans we have originated and we continue to see strong demand for commercial real estate loans through our Business Banking Division," reported Sand. Non-interest expense increased $309,000 for the quarter as compared to the like quarter in the prior fiscal year. This increase in non-interest expenses reduced diluted earnings per share by $0.05. The increased expense was primarily due to increased employee expenses from a larger employee base, and increased premises and equipment expenses from a larger branch network. "We have continued our branching initiatives by branching into markets we consider beneficial for our franchise. Branching has placed us near larger population groups and has enabled us to operate in many diverse economies," Sand also stated. 1 Branch Expansion Update Timberland's Gig Harbor office is scheduled to open in June. Richard Pifer, a 12-year resident of Gig Harbor with over 23 years of banking experience will manage the office. He has been actively originating loans for Timberland for the past year in anticipation of the opening of the Gig Harbor office. We look forward to his continued success in building the Bank's clientele in this dynamic market. 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. 2 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT For the three and six months ended March 31, 2004 and 2003 (Dollars in thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended March 31, March 31, 2004 2003 2004 2003 Interest and Dividend Income Loans receivable $ 6,193 $ 6,379 $ 12,476 $ 12,962 Investments and mortgage-backed securities 239 244 483 487 Dividends from investments 250 287 519 546 Interest bearing deposits in banks 36 83 81 205 Total interest and ------------------ ------------------ dividend income 6,718 6,993 13,559 14,200 Interest Expense Deposits 1,082 1,412 2,210 3,023 Federal Home Loan Bank advances 810 831 1,661 1,681 ------------------ ------------------ Total interest expense 1,892 2,243 3,871 4,704 ------------------ ------------------ Net interest income 4,826 4,750 9,688 9,496 Provision for Loan Losses 30 107 80 280 ------------------ ------------------ Net interest income after provision 4,796 4,643 9,608 9,216 for loan losses Non-Interest Income Service charges on deposits 450 461 899 992 Gain on sale of loans, net 256 394 426 823 Loss on sale of securities (6) - - (6) - - BOLI net earnings 112 134 227 269 Escrow fees 28 61 72 135 Servicing income (expense) on loans sold 14 83 (4) 195 ATM transaction fees 147 189 296 375 Other 116 177 218 356 ------------------ ------------------ Total non-interest income 1,117 1,499 2,128 3,145 ------------------ ------------------ Non-interest Expense Salaries and employee benefits 2,234 2,031 4,406 4,041 Premises and equipment 465 370 927 733 Advertising 201 176 352 380 Loss (gain) from real estate operations and write-downs (90) 42 (74) 73 ATM expenses 91 152 192 301 Other 942 763 1,866 1,496 ------------------ ------------------ Total non-interest expense 3,843 3,534 7,669 7,024 Income before federal income taxes 2,070 2,608 4,067 5,337 Federal Income Taxes 647 818 1,258 1,678 ------------------ ------------------ Net Income $ 1,423 $ 1,790 $ 2,809 $ 3,659 ================== ================== Earnings Per Common Share: Basic $ 0.38 $ 0.47 $ 0.74 $ 0.95 Diluted $ 0.36 $ 0.45 $ 0.71 $ 0.91 Weighted average shares outstanding: Basic 3,702,491 3,820,273 3,774,929 3,838,604 Diluted 3,901,469 4,009,862 3,976,132 4,010,795 3 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES SUMMARY BALANCE SHEETS March 31, 2004 and September 30, 2003 (Dollars in thousands) (unaudited) March September 31, 2004 30, 2003 ASSETS Cash and due from financial institutions $ 11,715 $ 8,587 Interest bearing deposits in banks 9,311 29,511 Investments and mortgage-backed securities held to maturity 218 279 Investments and mortgage-backed securities available for sale 55,800 54,031 Federal Home Loan Bank stock 5,577 5,454 Loans receivable 337,778 325,126 Loans held for sale 703 1,001 Less: Allowance for loan losses (3,927) (3,891) -------- -------- Total loans 334,554 322,236 Accrued interest receivable 1,717 1,687 Premises and equipment 13,763 13,429 Real estate owned and other repossessed items 484 1,258 Bank owned life insurance ("BOLI") 10,793 10,566 Other assets 2,392 2,595 -------- -------- TOTAL ASSETS $446,324 $449,633 -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Deposits $317,020 $307,672 Federal Home Loan Bank advances 55,022 61,605 Other liabilities and accrued expenses 2,774 2,745 -------- -------- TOTAL LIABILITIES 374,816 372,022 -------- -------- SHAREHOLDERS' EQUITY Common stock - $.01 par value; 50,000,000 shares authorized; March 31, 2004 - 3,903,338 shares issued, 3,495,151 shares outstanding September 30, 2003 - 4,251,680 shares issued, 3,843,493 shares outstanding (Unallocated ESOP shares and unvested MRDP shares are not considered outstanding) 39 43 Additional paid in capital 25,459 33,775 Unearned shares - Employee Stock Ownership Plan (4,626) (4,891) Unearned shares - Management Recognition & Development Plan (860) (1,182) Retained earnings 51,313 49,699 Accumulated other comprehensive income 183 167 -------- -------- TOTAL SHAREHOLDERS' EQUITY 71,508 77,611 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $446,324 $449,633 -------- -------- 4 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES KEY FINANCIAL RATIOS AND DATA (Dollars in thousands, except per share data) Three Months Ended Six Months Ended March 31, March 31, 2004 2003 2004 2003 PERFORMANCE RATIOS: Return on average assets (1) 1.25% 1.67% 1.24% 1.69% Return on average equity (1) 7.51% 9.41% 7.31% 9.69% Net interest margin (1) 4.62% 4.75% 4.63% 4.71% Efficiency ratio 64.66% 56.56% 64.90% 55.57% March September 31, 2004 30, 2003 ASSET QUALITY RATIOS: Non-performing loans $3,959 $3,895 REO & other repossessed assets 484 1,258 Total non-performing assets 4,443 5,153 Non-performing assets to total assets 1.00% 1.15% Allowance for loan losses to non-performing loans 99.19% 99.90% Book Value Per Share (2) $18.32 $18.25 Book Value Per Share (3) $19.89 $19.77 - ------------------------ (1) Annualized (2) Calculation includes ESOP shares not committed to be released (3) Calculation excludes ESOP shares not committed to be released Three Months Ended Six Months Ended March 31, March 31, 2004 2003 2004 2003 AVERAGE BALANCE SHEET: Average Total Loans $338,694 $315,469 $337,642 $320,335 Average Total Interest Earning Assets 418,012 400,137 418,232 402,827 Average Total Assets 455,272 429,792 454,268 432,336 Average Total Interest Bearing Deposits 286,792 266,514 285,218 269,276 Average FHLB Advances 57,786 61,698 58,917 61,716 Average Shareholders' Equity 75,755 76,062 76,877 75,531 5 Comparison of Financial Condition at March 31, 2004 and September 30, 2003 Total Assets: Total assets decreased $3.3 million to $446.3 million at March 31, 2004 from $449.6 million at September 30, 2003 primarily due to a decrease in the Company's interest bearing deposits in banks. The balance in the Company's interest bearing deposits decreased by $20.2 million primarily due to the repurchase of 411,316 shares of TSBK stock for $9.5 million and repayment of $6.6 million of Federal Home Home Loan Bank advances. Partially offsetting the decrease in interest bearing balances, was a $12.3 million increase in net loans receivable, a $3.1 million increase in cash and due from financial institutions, and a $1.7 million increase in investment securities. A portion of the increased loan portfolio was funded by a $9.3 million increase in deposits. Investments and Interest Bearing Deposits in Banks: Investments and interest bearing deposits in banks decreased by $18.5 million to $65.3 million at March 31, 2004 from $83.8 million at September 30, 2003, as a portion of the Company's short-term deposits were used to fund the Company's stock repurchase program, pay down Federal Home Loan Bank advances and fund loan growth. Loans: Net loans receivable, including loans held-for-sale, increased by $12.3 million to $334.6 million at March 31, 2004 from $322.2 million at September 30, 2003. The increase in the portfolio was primarily a result of a $6.5 million increase in commercial real estate loans, a $4.6 million increase in construction loans (net of undisbursed portion), a $1.6 million increase in land loans and a $1.9 million increase in consumer loans. These increases were partially offset by a $2.1 million decrease in the Bank's one-to-four family mortgage loan portfolio. Loan originations totaled $32.4 million and $86.7 million for the three and six months ended March 31, 2004, compared to $58.5 million and $109.3 million for the same periods a year earlier. The Bank sold $12.6 million and $22.9 million in fixed rate one-to-four family mortgage loans for the three and six months ended March 31, 2004, compared to $27.5 million and $62.3 million for the same periods a year earlier. Deposits: Deposits increased by $9.3 million to $317.0 million at March 31, 2004 from $307.7 million at September 30, 2003, primarily due to a $14.7 million increase in the Bank's N.O.W. checking accounts and a $992,000 increase in non-interest-bearing accounts. These increases were partially offset by a $3.5 million decrease in money market accounts, a $1.6 million decrease in certificate of deposit accounts, and a $1.2 million decrease in savings accounts. The Bank continues to focus on attracting transaction accounts rather than higher-rate time deposits. Transaction accounts represent a stronger core deposit relationship than other types of deposit accounts. Shareholders' Equity: Total shareholders' equity decreased by $6.1 million to $71.5 million at March 31, 2004 from $77.6 million at September 30, 2003, primarily due to the repurchase of 411,316 shares of the Company's stock for $9.5 million and the payment of $1.2 million in dividends to shareholders. Partially offsetting these decreases to equity, were net income of $2.8 million and a $1.0 million increase to additional paid in capital from the exercise of stock options. Also affecting shareholders' equity were decreases of $322,000 and $265,000 in the equity components related to unearned shares issued to the Management Recognition and Development Plan and the Employee Stock Ownership Plans. On February 23, 2004, the Company announced the completion of its 11th stock repurchase plan. The Company repurchased 380,038 shares at an average price of $22.64 per share. The Company repurchased 267,930 of these shares during the quarter ended March 31, 2004. On February 27, 2004, the Company announced a plan to repurchase 360,670 shares of the Company's stock. This marked the Company's 12th stock repurchase plan. As of March 31, 2004, the Company has repurchased 143,386 of these shares at an average price of $23.01 per share. Cumulatively the Company has repurchased 3,121,987 (47.2%) of the 6,612,500 shares that were issued when the Company went public in January 1998 at an average price of $14.79 per share. 6 Comparison of Operating Results for the Three and Six Months Ended March 31, 2004 and 2003 Net Income: Net income for the quarter ended March 31, 2004 was $1.42 million, or $0.36 per diluted share ($0.38 per basic share) compared to $1.79 million, or $0.45 per diluted share ($0.47 per basic share) for the quarter ended March 31, 2003. The lower earnings for the current quarter were primarily a result of decreased income from loan sales and increased employee costs (resulting from a larger employee base) and increased premises and equipment expenses. The $0.09 per share decrease in earnings for the quarter was primarily a result of the $382,000 ($252,000 net of income tax -- $0.065 per diluted share) decrease in non-interest income and the $309,000 ($204,000 net of income tax -- $0.052 per diluted share) increase in non-interest expense. These items were partially offset by a $153,000 ($101,000 net of income tax - $0.026 per diluted share) increase in net interest income after provision for loan losses. Net income for the six months ended March 31, 2004 was $2.81 million, or $0.71 per diluted share ($0.74 per basic share) compared to $3.66 million, or $0.91 per diluted share ($0.95 per basic share) for the six months ended March 31, 2003. The $0.20 per share decrease in earnings for the six months ended March 31, 2004 was primarily a result of the $1.02 million ($671,000 net of income tax - $0.169 per diluted share) decrease in non-interest income and the $645,000 ($426,000 net of income tax -- $0.107 per diluted share) increase in non-interest expense. These items were partially offset by a $392,000 ($259,000 net of income tax - $0.065 per diluted share) increase in net interest income after provision for loan losses. Net Interest Income: Net interest income increased $76,000 to $4.83 million for the quarter ended March 31, 2004 from $4.75 million for the quarter ended March 31, 2003, primarily due to a larger interest earning asset base and a decrease in the Company's funding costs. Average total interest earning assets increased by $17.9 million to $418.0 million for the current quarter from $400.1 million for the quarter ended March 31, 2003. Total interest expense decreased by $351,000 to $1.89 million for the quarter ended March 31, 2004 from $2.24 million for the quarter ended March 31, 2003 as the Company's total cost of funds decreased to 2.20% from 2.73%. Total interest income decreased $275,000 to $6.72 million for the quarter ended March 31, 2004 from $6.99 million for the quarter ended March 31, 2003, primarily due to a reduction in average yields on earning assets. The yield on earning assets was 6.43% for the quarter ended March 31, 2004 compared to 6.99% for the quarter ended March 31, 2003. As a result of these changes, the net interest margin decreased to 4.62% for the quarter ended March 31, 2004 from 4.75% for the quarter ended March 31, 2003. Net interest income increased $192,000 to $9.69 million for the six months ended March 31, 2004 from $9.50 million for the six months ended March 31, 2003, primarily due to a larger interest earning asset base and a decrease in the Company's funding costs. Average total interest earning assets increased by $15.4 million to $418.2 million for the six months ended March 31, 2004 from $402.8 million for the six months ended March 31, 2003. Total interest expense decreased by $833,000 to $3.87 million for the six months ended March 31, 2004 from $4.70 million for the six months ended March 31, 2003 as the Company's total cost of funds decreased to 2.25% from 2.84%. Total interest income decreased $641,000 to $13.56 million for the six months ended March 31, 2004 from $14.20 million for the six months ended March 31, 2003, primarily due to a reduction in average yields on earning assets. The yield on earning assets was 6.48% for the six months ended March 31, 2004 compared to 7.05% for the six months ended March 31, 2003. As a result of these changes, the net interest margin decreased to 4.63% for the six months ended March 31, 2004 from 4.71% for the six months ended March 31, 2003. Provision for Loan Losses: The provision for loan losses for the quarter ended March 31, 2004 decreased $77,000 to $30,000 from $107,000 for the quarter ended March 31, 2003. Management deemed the allowance for loan losses of $3.93 million at March 31, 2004 (1.16% of loans receivable and 99.2% 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 $3.87 million (1.25% of loans receivable and 113.8% of non-performing loans) at March 31, 2003. The Company had a net charge-off of $29,000 for the current quarter compared to a net charge-off of $16,000 in the same quarter of 2003. For the six months ended March 31, 2004 and 2003, net charge-offs were $43,000 for each period. 7 The Company's non-performing asset ratio decreased to 1.00% at March 31, 2004 from 1.53% at December 31, 2003 and 1.15% at September 30, 2003. The non-performing loan total of $3.96 million at March 31, 2004 consisted of $1.1 million in one-to-four family loans, $872,000 in land development loans, $850,000 in one-to-four family construction loans, $707,000 in commercial real estate loans, $392,000 in land loans, and $30,000 in commercial business loans. Despite historically maintaining a higher percentage of non-performing loans than relevant peer group averages, the Company's actual charge-offs have remained low. The Company's net charge-offs to outstanding loans ratio was a minimal .01% for the quarter ended March 31, 2004 and during the last five fiscal years has averaged less than .10% per year. Non-interest Income: Total non-interest income decreased $382,000 to $1.11 million for the quarter ended March 31, 2004 from $1.50 million for the quarter ended March 31, 2003, primarily due to a $207,000 decrease in income from loan sales (gain on sale of loans and servicing income on loans sold), a $42,000 decrease in ATM transaction fees, a $33,000 decrease in escrow fees, and a $33,000 decrease in loan application fees. Income from loans sales decreased as mortgage banking activity slowed. The Bank sold $12.6 million in fixed rate one-to-four mortgages during the quarter ended March 31, 2004 compared to $27.5 million for the same period a year ago. Total non-interest income decreased $1.02 million to $2.13 million for the six months ended March 31, 2004 from $3.15 million for the six months ended March 31, 2003, primarily due to a $596,000 decrease in income from loan sales (gain on sale of loans and servicing income on loans sold), a $93,000 decrease in service charges on deposits, a $79,000 decrease in ATM transaction fees, a $63,000 decrease in escrow fees, and a $61,000 decrease in loan application fees. Income from loans sales decreased as mortgage banking activity slowed. The Bank sold $22.9 million in fixed rate one-to-four mortgages during the six months ended March 31, 2004 compared to $62.3 million for the same period a year ago. Non-interest Expense: Total non-interest expense increased by $309,000 to $3.84 million for the quarter ended March 31, 2004 from $3.53 million for the quarter ended March 31, 2003. The increase is primarily a result of increased employee expenses and increased premises and equipment expenses. Salaries and employee benefit expenses increased by $203,000 due to a larger employee base, annual salary adjustments, and increased medical insurance costs. The number of full-time equivalent employees increased to 188 at March 31, 2004 from 175 at March 31, 2003. The Bank's employee base grew during this period as the Olympia branch was opened (September 2003), several employees that will be staffing the Gig Harbor branch were hired, and staffing levels in several other departments were increased. Premises and equipment expenses increased by $95,000 to $465,000 for the current quarter from $370,000 for the quarter ended March 31, 2003, primarily due to the additional branch opened (Olympia), costs associated with the upcoming Gig Harbor branch, and increased utility expenses. Total non-interest expense increased by $645,000 to $7.67 million for the six months ended March 31, 2004 from $7.02 million for the six ended March 31, 2003. The increase is primarily a result of increased employee expenses, increased premises and equipment expenses, and expenses related to the Bank's technology conversion. The technology-related conversion expenses totaled $145,000 for the six months ended and are reflected in the income statement under salaries and employee benefits ($67,000) and other non-interest expenses ($78,000). In addition to the conversion related expenses for employee overtime, salaries and employee benefit expenses also increased by $298,000 due to a larger employee base, annual salary adjustments, and increased medical insurance costs. Premises and equipment expenses increased by $194,000 to $927,000 for the six months ended March 31, 2004 from $733,000 for the six months ended March 31, 2003, primarily due to the two additional branches opened (Silverdale -- January 2003; Olympia -- September 2003), costs associated with the upcoming Gig Harbor branch, the remodeling and expansion of the Bank's main office, and increased utility expenses. 8 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES LOANS RECEIVABLE BREAKDOWN (Dollars in thousands) The following table sets forth the composition of the Company's loan portfolio by type of loan. At March 31, At September 30, 2004 2003 Amount Percent Amount Percent Mortgage Loans: One-to-four family (1) $ 93,314 25.26% $ 95,371 26.21% Multi family 17,427 4.72 18,241 5.01 Commercial 109,517 29.64 102,972 28.30 Construction and land development 92,012 24.91 94,117 25.87 Land 17,273 4.67 15,628 4.30 -------- ------- -------- ------- Total mortgage loans 329,543 89.20 326,329 89.69 Consumer Loans: Home equity and second mortgage 20,759 5.62 19,233 5.29 Other 9,126 2.47 8,799 2.42 -------- ------- -------- ------- 29,885 8.09 28,032 7.71 Commercial business loans 10,017 2.71 9,475 2.60 -------- ------- -------- ------- Total loans 369,445 100.00% 363,836 100.00% Less: Undisbursed portion of loans in process (28,113) (34,785) Unearned income (2,851) (2,924) Allowance for loan losses (3,927) (3,891) -------- -------- Total loans receivable, net $334,554 $322,236 ======== ======== - ---------------- (1) Includes loans held-for-sale. 9 TIMBERLAND BANCORP, INC. AND SUBSIDIARIES DEPOSIT BREAKDOWN (Dollars in thousands) The following table sets forth the balances of deposits in the various types of accounts offered by the Bank at the dates indicated. March 31, September 30, 2004 2003 Non-interest bearing $ 30,125 $ 29,133 N.O.W checking 72,294 57,614 Savings 48,356 49,572 Money market accounts 35,945 39,444 Certificates of deposit under $100,000 104,461 109,720 Certificates of deposit $100,000 and over 25,839 22,189 -------- -------- Total deposits $317,020 $307,672 ======== ======== 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, Lacey, Puyallup, Edgewood, Auburn, Yelm, Poulsbo, Spanaway (Bethel Station), Tumwater, Tacoma, Silverdale, and Olympia. CONTACT: Timberland Bancorp, Inc. Michael Sand or Dean Brydon, 360-533-4747 10 -----END PRIVACY-ENHANCED MESSAGE-----