FORM 11-K
U.S SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 2003 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-23333
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Timberland Bank 401 (k) Profit Sharing Plan
B: Name of issuer of securities held pursuant to the plan and the address of
its principal executive Office:
Timberland Bank
624 Simpson Avenue
Hoquiam, Washington 98550
Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
The Timberland Bank 401(k) Profit Sharing Plan became effective as of
December 4, 1970, and was restated effective October 1, 2000. Filed as
a part of this report on Form 11-K are the audited financial statements
of the Plan as of and for the years ended September 30, 2003 and 2002.
(b) Exhibit 23 Consent of Independent Auditors
Signatures
The Plan: Pursuant to the requirements of the Securities and
Exchange Act of 1934, the trustees (or other persons who administer employees
benefit plan) have duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
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Administrator, Timberland Bank 401 (k) Profit Sharing Plan
/s/ Dean J. Brydon
By: ------------------------------------
Dean J. Brydon (name)
------------------------------------
Chief Financial Officer (title)
------------------------------------
Timberland Bank (bank)
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Date: March 29, 2004
2
Timberland
Bank
401(k)
Profit
Sharing
Plan
Financial
Report
September 30
2003
Contents
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Independent Auditor's Report..............................................1
Financial Statements
Statements of Net Assets Available for Benefits...........................2
Statement of Changes in Net Assets Available for Benefits.................3
Notes to Financial Statements...........................................4-6
Supplemental Schedule
Schedule of Assets Held at End of Year....................................7
Independent Auditor's Report
To the Administrative Committee of the
Timberland Bank 401(k) Profit Sharing Plan
Hoquiam, Washington
We have audited the accompanying statements of net assets available for
benefits of Timberland Bank 401(k) Profit Sharing Plan (Plan) as of September
30, 2003 and 2002, and the related statement of changes in net assets
available for benefits for the year ended September 30, 2003. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
September 30, 2003 and 2002, and the changes in net assets available for
benefits for the year ended September 30, 2003, in conformity with accounting
principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule as of
September 30, 2003 is presented for the purpose of additional analysis and is
not a required part of the basic financial statements, but is supplementary
information required by the United States Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated, in all material respects, in relation
to those basic financial statements taken as a whole.
/s/ McGladrey & Pullen, LLP
Tacoma, Washington
December 18, 2003
Financial
Statements
Statements of Net Assets Available for Benefits
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2003 and 2002
2003 2002
Assets
Investments $6,500,372 $4,510,790
Employer contributions receivable 496,776 384,700
Cash 5,805 - -
Accrued income 400 4,741
Total assets 7,003,353 4,900,231
Liabilities - - - -
Net assets available for benefits $7,003,353 $4,900,231
See notes to financial statements.
2
Statement of Changes in Net Assets Available for Benefits
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Timberland Bank 401(k) Profit Sharing Plan
Year Ended September 30, 2003
Additions to Net Assets
Investment income:
Net appreciation in fair value of investments $1,572,589
Dividends 98,877
Total investment income 1,671,466
Contributions:
Employer 497,386
Participant 164,725
Total contributions 662,111
Total additions 2,333,577
Deductions from Net Assets
Benefits paid to participants 215,102
Administrative expenses 15,353
Total deductions 230,455
Net increase 2,103,122
Net Assets Available for Benefits
Beginning of year 4,900,231
End of year $7,003,353
See notes to financial statements.
3
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2003 and 2002
Note 1 - Description of Plan
The following description of the Timberland Bank 401(k) Profit Sharing Plan
(Plan) provides only general information. Participants should refer to the
Plan agreement for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering substantially all full-time
employees of Timberland Bank (Company) who have one year of service and are
age twenty-one or older. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The Company is the wholly
owned subsidiary of Timberland Bancorp, Inc.
Contributions and Participant Investment Options
Participants of the Plan may contribute up to the maximum of pretax annual
compensation as set by law. Participants may also contribute amounts
representing distributions from other qualified defined benefit or defined
contribution plans. The Company may contribute additional amounts at the
option of the Company's Board of Directors. The Company makes an annual safe
harbor contribution of 3% of eligible compensation. Additional amounts are
contributed at the option of the Company's Board of Directors. For the year
ended September 30, 2003, the Company contributed 10% of total eligible
participant compensation.
Participants must direct their salary deferral contributions and their
allocated share of the safe harbor contribution and of the employer
contributions, if any, into a variety of investment choices as made available
and determined by the Plan Administrator, which are more fully described in
the Plan's literature.
Participant Accounts
Each participant's account is credited with the participant's contribution and
allocations of (a) the Company's contributions, (b) Plan earnings, and (c)
forfeitures of terminated participants' nonvested accounts and charged with an
allocation of administrative expenses. Allocations are based on participant
earnings or account balances, as defined. The benefit to which a participant
is entitled is the benefit that can be provided from the participant's vested
account.
Vesting
Participants are immediately vested in all deferral, rollover and safe harbor
contributions plus actual earnings. Vesting in the Company's discretionary
contribution portion of accounts plus earnings is based on years of continuous
service. Participants are fully vested after six years of credited service.
A participant's accrued benefit derived from employer contributions is also
100% non-forfeitable upon attaining age 65, or if the participant's separation
from service is a result of death or disability.
Payment of Benefits
On termination of service, a participant with an accrued benefit of $5,000 or
less will receive a lump-sum amount equal to the value of the vested interest
in his or her account. The distribution date will be the earliest
administratively feasible date determined by the Trustee. Participants with
an accrued benefit in excess of $5,000 may leave the funds in the Plan or
elect to receive a lump-sum distribution.
(continued)
4
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2003 and 2002
Note 1 - Description of Plan (concluded)
Forfeitures
Forfeitures of participant non-vested account balances are reallocated to
remaining participants, in the year the balances are forfeited, in the same
manner as employer contributions. For the year ended September 30, 2003,
$14,495 was reallocated to participants.
Note 2 - Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
Payment of Benefits
Benefits are recorded when paid.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and changes
therein, and the disclosure of contingent assets and liabilities. Actual
results could differ from these estimates.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Quoted market prices are
used to value investments. Shares of mutual funds are valued at the net asset
value of shares held by the Plan at year-end. Purchases and sales of
securities are recorded on the trade-date basis. Dividends are recorded on
the ex-dividend date.
Note 3 - Investments
The following presents separately investments that represent 5% or more of the
Plan's net assets at September 30:
2003 2002
Timberland Bancorp common stock $4,799,885 $3,115,180
First American Prime Obligations Fund - Mutual Fund 708,239 766,615
First American Strategy Growth Allocation Fund -
Mutual Fund - - 306,193
Other - Mutual Funds 992,248 322,802
$6,500,372 $4,510,790
(continued)
5
Notes to Financial Statements
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2003 and 2002
Note 3 - Investments (concluded)
During 2003, the Plan's investments, including gains and losses on investments
bought and sold, as well as held during the year, appreciated in value as
follows:
Mutual funds $ 157,587
Common stock 1,415,002
Net appreciation in fair value of investments $1,572,589
During 2003, the Plan's investments generated $98,877 in dividend earnings.
Note 4 - Plan Termination
Although they have not expressed any intent to do so, the Company has the
right under the Plan to discontinue contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100% vested in their accounts.
Note 5 - Tax Status/Non-Standardized Prototype Plan
Effective October 1, 1997, the Plan adopted a non-standardized form of a
prototype plan sponsored by Actuarial Planning Group, Inc. The prototype plan
has received an opinion letter from the Internal Revenue Service concerning
its qualified status; however, adopters of a non-standardized version of the
prototype plan cannot rely on this opinion letter. The Plan administrator
believes the Plan is designed and being operated in compliance with the
applicable provisions of the Internal Revenue Code.
Note 6 - Administration of Plan Assets
Certain Plan investments are shares of mutual funds managed by US Bank. US
Bank is the trustee as defined by the Plan and, therefore, these transactions
qualify as party-in-interest transactions. Fees paid by the Plan for the
investment management services amounted to $15,353 for the year ended
September 30, 2003.
Certain administrative functions of the Plan are performed by officers or
employees of the Company. No such officer or employee receives compensation
from the Plan. Other administrative and management fees of the Plan are paid
directly by the Company.
6
Supplemental
Schedule
Schedule of Assets Held at End of Year
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Timberland Bank 401(k) Profit Sharing Plan
September 30, 2003
EIN: 91-0260220
Plan Number: 001
(a) and (b) (c) (d) (e)
Identity of Issue, Description of Investment Including Cost Current
Borrower, Lessor, Maturity Date, Rate of Interest, Value
or Similar Party Collateral, Par or Maturity Value
(pv or mv)
** US Bank First American Strategy Aggressive
Allocation Fund * $ 215,748
** US Bank First American Small Cap Growth Fund * 238,382
** US Bank First American Equity Index Fund * 226,270
** US Bank First American Strategy Growth
Allocation Fund * 311,848
** US Bank First American Prime Obligations
Fund * 708,239
** Timberland
Bancorp, Inc. Common Stock, $0.01 par value * 4,799,885
$6,500,372
* Historical cost not required for participant directed accounts.
** Represents a party-in-interest.
7
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-32386 of Timberland Bancorp, Inc. on Form S-8 of our report, dated
December 18, 2003, appearing in this Annual Report on Form 11-K of Timberland
Bank 401(k) Profit Sharing Plan for the year ended September 30, 2003.
/s/ McGladrey & Pullen, LLP
McGladrey & Pullen, LLP
Tacoma, Washington
March 29, 2004