Timberland Bancorp Reports First Fiscal Quarter Net Income of $6.30 Million
- Increase in quarterly cash dividend to shareholders
- Solid earnings and strong growth in loans and deposits
- Continued tangible book value per share growth
- Credit quality remains relatively strong with low non-performing assets
- Decrease in earnings compared to the preceding quarter and the year ago quarter
- Net interest margin contracted due to increase in cost of funds
- Competition for deposits remains intense, leading to margin compression
Insights
Examining Timberland Bancorp's quarterly financial results reveals several key indicators of the company's financial health and performance. A decrease in EPS from the previous quarter and year-over-year suggests a contraction in profitability, which could be attributed to increased funding costs and a compressed net interest margin (NIM). The reported decrease in net income aligns with this observation. However, it's worth noting the growth in loan and deposit portfolios, which indicates an expanding customer base and potential for future revenue growth.
Furthermore, the increase in the quarterly cash dividend reflects confidence in the company's capital position and a commitment to shareholder returns, despite the one-time equity adjustment due to the adoption of the CECL accounting standard. This decision to increase dividends could be seen as a positive signal to the market, potentially offsetting the impact of the reduced earnings on the company's stock price.
The banking sector is highly sensitive to interest rate fluctuations and Timberland Bancorp's experience with margin compression is indicative of broader industry trends. The 25 basis points contraction in NIM suggests that the rising cost of funds is outpacing the yield growth on earning assets, a trend that may continue if interest rates remain volatile. The company's strategic focus on loan origination and retention, especially in the multi-family and commercial real estate loan segments, suggests an adaptation to the current economic climate, targeting areas with perceived stability and growth potential.
Competitive pressures in attracting deposits are also evident, with a shift from non-interest bearing to interest bearing accounts. This could lead to further margin pressures, but also reflects a proactive approach to managing liquidity and funding needs. The company's strong liquidity position, with significant borrowing capacity, provides a buffer against potential market disruptions and supports ongoing operations.
The reported financial metrics provide insight into the macroeconomic factors affecting Timberland Bancorp. The ROA and ROE figures, while showing a decrease, still reflect a relatively efficient use of assets and equity in generating earnings. These figures, however, will need to be monitored closely for future trends, especially in light of potential economic slowdowns and continued high-interest rate environments.
Moreover, the adoption of the new CECL standard, which requires earlier recognition of expected credit losses, has resulted in a one-time equity reduction. This accounting change aligns with regulatory efforts to improve financial resilience but requires careful examination of its implications on future profitability and capital adequacy.
The increase in non-performing assets to total assets ratio, although still low, warrants attention as it may signal emerging credit risks within the loan portfolio. In a slowing economy, the quality of the loan portfolio is critical and even a slight uptick in this ratio could have significant implications for future provisions for credit losses and overall financial stability.
- Quarterly EPS of
$0.77 - Quarterly Return on Average Assets of
1.36% - Quarterly Return on Average Equity of
10.75% - Quarterly Net Interest Margin of
3.60% - Deposits Increased by
4% During the Quarter - Net Loans Increased by
3% During the Quarter - Announces a
4% Increase in the Quarterly Cash Dividend
HOQUIAM, Wash., Jan. 22, 2024 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”), the holding company for Timberland Bank (the “Bank”), today reported net income of
“We are pleased with the results for the first quarter of fiscal year 2024, which were highlighted by solid earnings, strong growth in loans and deposits, and continued tangible book value per share growth,” stated Dean Brydon, Chief Executive Officer. “Although first quarter earnings were strong, they were lower compared to the year ago quarter, which was the peak of our margin in this cycle before deposit cost increases began compressing margins.”
As a result of our earnings and strong capital position, Timberland’s Board of Directors announced a
“Credit quality continues to be monitored closely and our credit metrics remain relatively strong with only
“Loan origination volumes remained steady and net loans receivable increased by
“Net interest margin was
Earnings and Balance Sheet Highlights (at or for the periods ended December 31, 2023, compared to December 31, 2022, or September 30, 2023):
Earnings Highlights:
- Earnings per diluted common share (“EPS”) decreased
5% to$0.77 for the current quarter from$0.81 for the preceding quarter and decreased14% from$0.90 for the comparable quarter one year ago; - Net income decreased
5% to$6.30 million for the current quarter from$6.64 million for the preceding quarter and decreased16% from$7.51 million for the comparable quarter one year ago; - Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were
10.75% and1.36% , respectively; - Net interest margin (“NIM”) for the current quarter compressed to
3.60% from3.85% for the preceding quarter and from4.03% for the comparable quarter one year ago; and - The efficiency ratio for the current quarter was
56.50% compared to55.52% for the preceding quarter and51.52% for the comparable quarter one year ago.
Balance Sheet Highlights:
- Total assets increased
3% from the prior quarter and increased3% year-over-year; - Net loans receivable increased
3% from the prior quarter and increased14% year-over-year; - Total deposits increased
4% from the prior quarter and increased2% year-over-year; - Total shareholders’ equity increased
2% from the prior quarter and increased6% year-over-year; - Non-performing assets to total assets ratio increased to
0.18% from0.12% one year ago; - Book and tangible book (non-GAAP) values per common share increased to
$29.23 and$27.29 , respectively, at December 31, 2023; and - Liquidity (both on-balance sheet and off-balance sheet) remained strong at December 31, 2023 with only
$20 million in borrowings and additional secured borrowing line capacity of$670 million available through the Federal Home Loan Bank (“FHLB”) and the Federal Reserve.
Operating Results
Operating revenue (net interest income before the provision for credit losses plus non-interest income) for the current quarter decreased
Net interest income decreased
Timberland’s NIM for the current quarter compressed to
A
Non-interest income decreased
Total operating (non-interest) expenses for the current quarter decreased
The provision for income taxes for the current quarter decreased
Balance Sheet Management
Total assets increased
Liquidity
Timberland has continued to maintain a strong liquidity position (both on-balance sheet and off-balance sheet) while deploying overnight funds into loans during the past year. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was
Loans
Net loans receivable increased
Loan Portfolio
($ in thousands)
| December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||
| Mortgage loans: | |||||||||||||||||||||||||||
| One- to four-family (a) | $ | 263,122 | 18 | % | $ | 253,227 | 18 | % | $ | 200,285 | 15 | % | |||||||||||||||
| Multi-family | 147,321 | 10 | 127,176 | 9 | 96,831 | 7 | |||||||||||||||||||||
| Commercial | 579,038 | 40 | 568,265 | 40 | 542,571 | 42 | |||||||||||||||||||||
| Construction - custom and | |||||||||||||||||||||||||||
| owner/builder | 134,878 | 9 | 129,699 | 9 | 117,592 | 9 | |||||||||||||||||||||
| Construction - speculative one-to four-family | 17,609 | 1 | 17,099 | 1 | 11,220 | 1 | |||||||||||||||||||||
| Construction - commercial | 36,702 | 3 | 51,064 | 4 | 36,825 | 3 | |||||||||||||||||||||
| Construction - multi-family | 57,019 | 4 | 57,140 | 4 | 89,040 | 7 | |||||||||||||||||||||
| Construction - land | |||||||||||||||||||||||||||
| development | 18,878 | 1 | 18,841 | 1 | 17,015 | 1 | |||||||||||||||||||||
| Land | 28,697 | 2 | 26,726 | 2 | 25,872 | 2 | |||||||||||||||||||||
| Total mortgage loans | 1,283,264 | 88 | 1,249,237 | 88 | 1,137,251 | 87 | |||||||||||||||||||||
| Consumer loans: | |||||||||||||||||||||||||||
| Home equity and second | |||||||||||||||||||||||||||
| Mortgage | 39,403 | 3 | 38,281 | 3 | 35,967 | 3 | |||||||||||||||||||||
| Other | 2,926 | -- | 2,772 | -- | 2,482 | -- | |||||||||||||||||||||
| Total consumer loans | 42,329 | 3 | 41,053 | 3 | 38,449 | 3 | |||||||||||||||||||||
| Commercial loans: | |||||||||||||||||||||||||||
| Commercial business loans | 136,942 | 9 | 135,802 | 9 | 127,085 | 10 | |||||||||||||||||||||
| SBA PPP loans | 423 | -- | 466 | -- | 631 | -- | |||||||||||||||||||||
| Total commercial loans | 137,365 | 9 | 136,268 | 9 | 127,716 | 10 | |||||||||||||||||||||
| Total loans | 1,462,958 | 100 | % | 1,426,558 | 100 | % | 1,303,416 | 100 | % | ||||||||||||||||||
| Less: | |||||||||||||||||||||||||||
| Undisbursed portion of | |||||||||||||||||||||||||||
| construction loans in | |||||||||||||||||||||||||||
| Process | (104,683 | ) | (103,194 | ) | (112,096 | ) | |||||||||||||||||||||
| Deferred loan origination | |||||||||||||||||||||||||||
| Fees | (5,337 | ) | (5,242 | ) | (4,532 | ) | |||||||||||||||||||||
| Allowance for credit losses | (16,655 | ) | (15,817 | ) | (14,229 | ) | |||||||||||||||||||||
| Total loans receivable, net | $ | 1,336,283 | $ | 1,302,305 | $ | 1,172,559 | |||||||||||||||||||||
_______________________
(a) Does not include one- to four-family loans held for sale totaling
The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of December 31, 2023:
CRE Loan Portfolio Breakdown by Collateral
($ in thousands)
| Collateral Type | Balance | Percent of CRE Portfolio | Percent of Total Loan Portfolio | Average Balance Per Loan | Non-Accrual | ||||||||||
| Industrial warehouse | $ | 114,355 | 20 | % | 8 | % | $ | 1,132 | $ | 195 | |||||
| Medical/dental offices | 80,767 | 14 | 6 | 1,324 | -- | ||||||||||
| Office buildings | 65,543 | 11 | 5 | 745 | -- | ||||||||||
| Other retail buildings | 50,003 | 9 | 3 | 538 | -- | ||||||||||
| Mini-storage | 37,131 | 6 | 2 | 1,375 | -- | ||||||||||
| Hotel/motel | 31,973 | 5 | 2 | 2,906 | -- | ||||||||||
| Restaurants | 27,346 | 5 | 2 | 558 | -- | ||||||||||
| Gas stations/Conv. Stores | 21,346 | 4 | 1 | 970 | -- | ||||||||||
| Nursing homes | 18,024 | 3 | 1 | 2,575 | -- | ||||||||||
| Shopping centers | 10,922 | 2 | 1 | 1,820 | -- | ||||||||||
| Mobile home parks | 10,917 | 2 | 1 | 520 | -- | ||||||||||
| Churches | 7,121 | 1 | 1 | 475 | -- | ||||||||||
| Additional CRE | 103,590 | 18 | 7 | 719 | 488 | ||||||||||
| Total CRE | $ | 579,038 | 100 | % | 40 | % | $ | 898 | $ | 683 | |||||
Timberland originated
Investment Securities
Timberland’s investment securities and CDs held for investment decreased
Deposits
Total deposits increased
| Deposit Breakdown ($ in thousands) | |||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||||||
| Non-interest-bearing demand | $ | 433,065 | 27 | % | $ | 455,864 | 29 | % | $ | 494,370 | 31 | % | |||||||||||||||||||||||||||
| NOW checking | 389,463 | 24 | 386,730 | 25 | 444,742 | 28 | |||||||||||||||||||||||||||||||||
| Savings | 215,948 | 13 | 228,366 | 15 | 279,514 | 17 | |||||||||||||||||||||||||||||||||
| Money market | 269,686 | 17 | 189,875 | 12 | 229,643 | 14 | |||||||||||||||||||||||||||||||||
| Certificates of deposit under | 181,762 | 11 | 170,221 | 11 | 110,897 | 7 | |||||||||||||||||||||||||||||||||
| Certificates of deposit | 96,145 | 6 | 91,714 | 6 | 41,924 | 3 | |||||||||||||||||||||||||||||||||
| Certificates of deposit – brokered | 41,000 | 2 | 38,165 | 2 | -- | -- | |||||||||||||||||||||||||||||||||
| Total deposits | $ | 1,627,069 | 100 | % | $ | 1,560,935 | 100 | % | $ | 1,601,090 | 100 | % | |||||||||||||||||||||||||||
Borrowings
Total borrowings decreased to
Shareholders’ Equity and Capital Ratios
Total shareholders’ equity increased
Timberland remains well capitalized with a total risk-based capital ratio of
Asset Quality
In accordance with changes in GAAP, on October 1, 2023, Timberland adopted the new credit loss accounting standard known as the Current Expected Credit Loss (“CECL”) model, which replaced the incurred loss model. With the adoption of CECL, the allowance for credit losses (“ACL”) for loans increased by
Timberland’s non-performing assets to total assets ratio was
Total delinquent loans (past due 30 days or more) and non-accrual loans increased
Non-Accrual Loans
($ in thousands)
| December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||
| Amount | Quantity | Amount | Quantity | Amount | Quantity | |||||||||
| Mortgage loans: | ||||||||||||||
| One- to four-family | $ | 602 | 4 | $ | 368 | 2 | $ | 383 | 2 | |||||
| Commercial | 683 | 2 | 683 | 2 | 658 | 2 | ||||||||
| Construction – custom and | ||||||||||||||
| owner/builder | 150 | 1 | -- | -- | -- | -- | ||||||||
| Land | -- | -- | -- | -- | 425 | 2 | ||||||||
| Total mortgage loans | 1,435 | 7 | 1,051 | 4 | 1,466 | 6 | ||||||||
| Consumer loans: | ||||||||||||||
| Home equity and second | ||||||||||||||
| Mortgage | 171 | 1 | 177 | 1 | 263 | 3 | ||||||||
| Other | -- | -- | -- | 1 | 2 | 1 | ||||||||
| Total consumer loans | 171 | 1 | 177 | 2 | 265 | 4 | ||||||||
| Commercial business loans | 1,760 | 6 | 286 | 5 | 304 | 6 | ||||||||
| Total loans | $ | 3,366 | 14 | $ | 1,514 | 11 | $ | 2,035 | 16 | |||||
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 geopolitical instability (including wars, conflicts, terrorist attacks, natural disasters, and other unexpected events outside of our control), 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 2024 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) | Dec. 31, | Sept. 30, | Dec. 31, | ||||||||
| 2023 | 2023 | 2022 | |||||||||
| Interest and dividend income | |||||||||||
| Loans receivable | $ | 18,395 | $ | 17,532 | $ | 14,457 | |||||
| Investment securities | 2,311 | 2,326 | 2,214 | ||||||||
| Dividends from mutual funds, FHLB stock and other investments | 91 | 85 | 51 | ||||||||
| Interest bearing deposits in banks | 1,699 | 1,619 | 2,390 | ||||||||
| Total interest and dividend income | 22,496 | 21,562 | 19,112 | ||||||||
| Interest expense | |||||||||||
| Deposits | 6,143 | 4,574 | 1,369 | ||||||||
| Borrowings | 349 | 157 | -- | ||||||||
| Total interest expense | 6,492 | 4,731 | 1,369 | ||||||||
| Net interest income | 16,004 | 16,831 | 17,743 | ||||||||
| Provision for credit losses - loans | 379 | 522 | 525 | ||||||||
| Recapture of credit losses – investment securities | (10 | ) | -- | -- | |||||||
| Recapture of credit losses - unfunded commitments | (33 | ) | -- | -- | |||||||
| Net int. income after provision for (recapture of) credit losses | 15,668 | 16,309 | 17,218 | ||||||||
| Non-interest income | |||||||||||
| Service charges on deposits | 1,023 | 1,015 | 947 | ||||||||
| ATM and debit card interchange transaction fees | 1,264 | 1,333 | 1,251 | ||||||||
| Gain on sales of loans, net | 78 | 97 | 21 | ||||||||
| Bank owned life insurance (“BOLI”) net earnings | 156 | 237 | 156 | ||||||||
| Recoveries on investment securities, net | 5 | 2 | 3 | ||||||||
| Other | 272 | 240 | 327 | ||||||||
| Total non-interest income, net | 2,798 | 2,924 | 2,705 | ||||||||
| Non-interest expense | |||||||||||
| Salaries and employee benefits | 5,911 | 5,756 | 5,900 | ||||||||
| Premises and equipment | 973 | 982 | 924 | ||||||||
| Loss on sale of premises and equipment, net | -- | 12 | -- | ||||||||
| Advertising | 186 | 235 | 195 | ||||||||
| ATM and debit card processing | 615 | 524 | 483 | ||||||||
| Postage and courier | 126 | 135 | 121 | ||||||||
| State and local taxes | 319 | 325 | 299 | ||||||||
| Professional fees | 253 | 599 | 429 | ||||||||
| FDIC insurance expense | 210 | 194 | 124 | ||||||||
| Loan administration and foreclosure | 105 | 118 | 120 | ||||||||
| Data processing and telecommunications | 974 | 933 | 789 | ||||||||
| Deposit operations | 320 | 346 | 346 | ||||||||
| Amortization of core deposit intangible (“CDI”) | 56 | 68 | 68 | ||||||||
| Other, net | 576 | 740 | 737 | ||||||||
| Total non-interest expense, net | 10,624 | 10,967 | 10,535 | ||||||||
| Income before income taxes | 7,842 | 8,266 | 9,388 | ||||||||
| Provision for income taxes | 1,546 | 1,624 | 1,881 | ||||||||
| Net income | $ | 6,296 | $ | 6,642 | $ | 7,507 | |||||
| Net income per common share: | |||||||||||
| Basic | $ | 0.78 | $ | 0.82 | $ | 0.91 | |||||
| Diluted | 0.77 | 0.81 | 0.90 | ||||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | 8,114,209 | 8,094,719 | 8,232,273 | ||||||||
| Diluted | 8,166,048 | 8,156,497 | 8,318,733 | ||||||||
| TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS | |||||||||||||
| ($ in thousands, except per share amounts) (unaudited) | Dec. 31, | Sept. 30, | Dec. 31, | ||||||||||
| 2023 | 2023 | 2022 | |||||||||||
| Assets | |||||||||||||
| Cash and due from financial institutions | $ | 28,656 | $ | 25,390 | $ | 31,237 | |||||||
| Interest-bearing deposits in banks | 129,365 | 103,331 | 193,659 | ||||||||||
| Total cash and cash equivalents | 158,021 | 128,721 | 224,896 | ||||||||||
| Certificates of deposit (“CDs”) held for investment, at cost | 12,449 | 15,188 | 23,392 | ||||||||||
| Investment securities: | |||||||||||||
| Held to maturity, at amortized cost (net of ACL – investment securities) | 266,085 | 270,218 | 278,585 | ||||||||||
| Available for sale, at fair value | 40,446 | 41,771 | 55,841 | ||||||||||
| Investments in equity securities, at fair value | 848 | 811 | 837 | ||||||||||
| FHLB stock | 2,001 | 3,602 | 2,194 | ||||||||||
| Other investments, at cost | 3,000 | 3,000 | 3,000 | ||||||||||
| Loans held for sale | 1,425 | 400 | -- | ||||||||||
| Loans receivable | 1,352,938 | 1,318,122 | 1,186,788 | ||||||||||
| Less: ACL – loans | (16,655 | ) | (15,817 | ) | (14,229 | ) | |||||||
| Net loans receivable | 1,336,283 | 1,302,305 | 1,172,559 | ||||||||||
| Premises and equipment, net | 21,584 | 21,642 | 21,703 | ||||||||||
| BOLI | 23,122 | 22,966 | 22,962 | ||||||||||
| Accrued interest receivable | 6,731 | 6,004 | 5,508 | ||||||||||
| Goodwill | 15,131 | 15,131 | 15,131 | ||||||||||
| CDI | 621 | 677 | 880 | ||||||||||
| Loan servicing rights, net | 1,925 | 2,124 | 2,770 | ||||||||||
| Operating lease right-of-use assets | 1,698 | 1,772 | 1,912 | ||||||||||
| Other assets | 3,745 | 3,573 | 3,374 | ||||||||||
| Total assets | $ | 1,895,115 | $ | 1,839,905 | $ | 1,835,544 | |||||||
| Liabilities and shareholders’ equity | |||||||||||||
| Deposits: Non-interest-bearing demand | $ | 433,065 | $ | 455,864 | $ | 494,370 | |||||||
| Deposits: Interest-bearing | 1,194,004 | 1,105,071 | 1,106,720 | ||||||||||
| Total deposits | 1,627,069 | 1,560,935 | 1,601,090 | ||||||||||
| Operating lease liabilities | 1,796 | 1,867 | 2,001 | ||||||||||
| FHLB borrowings | 20,000 | 35,000 | -- | ||||||||||
| Other liabilities and accrued expenses | 8,881 | 9,030 | 8,904 | ||||||||||
| Total liabilities | 1,657,746 | 1,606,832 | 1,611,995 | ||||||||||
| Shareholders’ equity | |||||||||||||
| Common stock, $.01 par value; 50,000,000 shares authorized; 8,120,708 shares issued and outstanding – December 31, 2023 8,105,338 shares issued and outstanding – September 30, 2023 8,231,197 shares issued and outstanding – December 31, 2022 | 34,869 | 34,771 | 38,878 | ||||||||||
| Retained earnings | 203,327 | 199,386 | 185,406 | ||||||||||
| Accumulated other comprehensive loss | (827 | ) | (1,084 | ) | (735 | ) | |||||||
| Total shareholders’ equity | 237,369 | 233,073 | 223,549 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 1,895,115 | $ | 1,839,905 | $ | 1,835,544 | |||||||
KEY FINANCIAL RATIOS AND DATA ($ in thousands, except per share amounts) (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| PERFORMANCE RATIOS: | Dec. 31, 2023 | Sept. 30, 2023 | Dec. 31, 2022 | |||||||||
| Return on average assets (a) | 1.36 | % | 1.45 | % | 1.63 | % | ||||||
| Return on average equity (a) | 10.75 | % | 11.52 | % | 13.63 | % | ||||||
| Net interest margin (a) | 3.60 | % | 3.85 | % | 4.03 | % | ||||||
| Efficiency ratio | 56.50 | % | 55.52 | % | 51.52 | % | ||||||
| ASSET QUALITY RATIOS AND DATA: | ||||||||||||
| Non-accrual loans | $ | 3,366 | $ | 1,514 | $ | 2,035 | ||||||
| Loans past due 90 days and still accruing | -- | -- | -- | |||||||||
| Non-performing investment securities | 85 | 82 | 98 | |||||||||
| OREO and other repossessed assets | -- | -- | -- | |||||||||
| Total non-performing assets (b) | $ | 3,451 | $ | 1,596 | $ | 2,133 | ||||||
| Non-performing assets to total assets (b) | 0.18 | % | 0.09 | % | 0.12 | % | ||||||
| Net charge-offs (recoveries) during quarter | $ | 2 | $ | 12 | $ | (1 | ) | |||||
| Allowance for credit losses - loans to non-accrual loans, | 495 | % | 1,045 | % | 699 | % | ||||||
| Allowance for credit losses - loans to loans receivable (c) | 1.23 | % | 1.20 | % | 1.20 | % | ||||||
| CAPITAL RATIOS: | ||||||||||||
| Tier 1 leverage capital | 12.14 | % | 12.10 | % | 11.46 | % | ||||||
| Tier 1 risk-based capital | 18.25 | % | 18.13 | % | 18.07 | % | ||||||
| Common equity Tier 1 risk-based capital | 18.25 | % | 18.13 | % | 18.07 | % | ||||||
| Total risk-based capital | 19.50 | % | 19.38 | % | 19.32 | % | ||||||
| Tangible common equity to tangible assets (non-GAAP) | 11.79 | % | 11.91 | % | 11.41 | % | ||||||
| BOOK VALUES: | ||||||||||||
| Book value per common share | $ | 29.23 | $ | 28.76 | $ | 27.16 | ||||||
| Tangible book value per common share (d) | 27.29 | 26.81 | 25.21 | |||||||||
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(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.
(c) Does not include loans held for sale and is before the allowance for loan losses.
(d) Tangible common equity divided by common shares outstanding (non-GAAP).
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($ in thousands)
(unaudited)
| For the Three Months Ended | |||||||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||||
| Loans receivable and loans held for sale | $ | 1,332,971 | 5.52 | % | $ | 1,300,743 | 5.39 | % | $ | 1,164,369 | 4.97 | % | |||||||||||||
| Investment securities and FHLB stock (1) | 317,164 | 3.03 | 322,122 | 2.99 | 329,396 | 2.75 | |||||||||||||||||||
| Interest-earning deposits in banks and CDs | 126,253 | 5.38 | 123,894 | 5.23 | 266,439 | 3.59 | |||||||||||||||||||
| Total interest-earning assets | 1,776,388 | 5.07 | 1,746,759 | 4.94 | 1,760,204 | 4.34 | |||||||||||||||||||
| Other assets | 81,612 | 84,191 | 84,806 | ||||||||||||||||||||||
| Total assets | $ | 1,858,000 | $ | 1,830,950 | $ | 1,845,010 | |||||||||||||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||||||||||||
| NOW checking accounts | $ | 376,682 | 1.51 | % | $ | 390,787 | 1.27 | % | $ | 439,750 | 0.45 | % | |||||||||||||
| Money market accounts | 224,939 | 2.34 | 198,650 | 0.98 | 239,424 | 0.53 | |||||||||||||||||||
| Savings accounts | 220,042 | 0.22 | 234,094 | 0.21 | 279,832 | 0.12 | |||||||||||||||||||
| Certificates of deposit accounts | 311,353 | 4.15 | 284,403 | 3.85 | 135,467 | 1.37 | |||||||||||||||||||
| Total interest-bearing deposits | 1,133,016 | 2.18 | 1,107,934 | 1.66 | 1,094,473 | 0.50 | |||||||||||||||||||
| Borrowings | 28,804 | 4.81 | 15,435 | 4.04 | -- | -- | |||||||||||||||||||
| Total interest-bearing liabilities | 1,161,820 | 2.22 | 1,123,369 | 1.69 | 1,094,473 | 0.50 | |||||||||||||||||||
| Non-interest-bearing demand deposits | 450,027 | 465,183 | 519,307 | ||||||||||||||||||||||
| Other liabilities | 11,878 | 11,873 | 11,002 | ||||||||||||||||||||||
| Shareholders’ equity | 234,275 | 230,525 | 220,228 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,858,000 | $ | 1,830,950 | $ | 1,845,010 | |||||||||||||||||||
| Interest rate spread | 2.85 | % | 3.25 | % | 3.84 | % | |||||||||||||||||||
| Net interest margin (2) | 3.60 | % | 3.85 | % | 4.03 | % | |||||||||||||||||||
| Average interest-earning assets to | |||||||||||||||||||||||||
| average interest-bearing liabilities | 152.90 | % | 155.49 | % | 160.83 | % | |||||||||||||||||||
_____________________________________
(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 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) | December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||
| Shareholders’ equity | $ | 237,369 | $ | 233,073 | $ | 223,549 | ||||||
| Less goodwill and CDI | (15,752 | ) | (15,808 | ) | (16,011 | ) | ||||||
| Tangible common equity | $ | 221,617 | $ | 217,265 | $ | 207,538 | ||||||
| Total assets | $ | 1,895,115 | $ | 1,839,905 | $ | 1,835,544 | ||||||
| Less goodwill and CDI | (15,752 | ) | (15,808 | ) | (16,011 | ) | ||||||
| Tangible assets | $ | 1,879,363 | $ | 1,824,097 | $ | 1,819,533 | ||||||
Contact: Dean J. Brydon, CEO
Jonathan A. Fischer, President & COO
Marci A. Basich, CFO
(360) 533-4747
www.timberlandbank.com
FAQ
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