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 24, 2005
Timberland Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Washington 0-23333 91-1863696
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State or other jurisdiction Commission (I.R.S. Employer
Of incorporation File Number Identification No.)
624 Simpson Avenue, Hoquiam, Washington 98550
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(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
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On January 24, 2005, 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 24, 2005
SIGNATURES
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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 24, 2005 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 Brydon, CFO
At (360) 533-4747
===================================================================
Timberland Bancorp, Inc. Announces Increased First Quarter Earnings
* Net Income Increases by 8%; Diluted Earnings Per Share Increases by
18%
* Loan Portfolio Increases by $16.0 Million During Quarter
* Deposits Increase by $83.6 Million During Quarter
* Acquisition of 7 Branches Closes in October
HOQUIAM, Wash. January 24, 2005 Timberland Bancorp, Inc. (Nasdaq: TSBK),
("Company") the holding company for Timberland Bank, ("Bank"), today reported
net income of $1.49 million, or $0.40 per diluted share, for the quarter ended
December 31, 2004. This compares to net income of $1.39 million, or $0.34 per
diluted share that the Company earned for the quarter ended December 31, 2003.
The increased income was primarily a result of increased net interest income and
increased non-interest income.
The quarter was highlighted by the successful acquisition and integration of
seven new offices from Venture Bank into Timberland's branch system. Subsequent
to the acquisition, two of the acquired offices were consolidated into existing
Timberland branch offices. "The acquisition added lower cost core deposits to
our funding base and expanded our geographic reach. It also provided the
opportunity for increased fee income from deposit related service fees as
evidenced by the $249,000 increase over the same quarter in the prior fiscal
year", stated Timberland's President Michael Sand. Acquisition related
expenses of $183,000 during the quarter were offset by a $245,000 pre-tax gain
from the sale of $1.5 million in credit card loans.
During the quarter net loans outstanding increased by $16.0 million and total
deposits increased by $83.6 million. "The Bank's lower funding costs combined
with an increase in net loans outstanding resulted in a $607,000 increase in net
interest income. Non-interest income also increased by $426,000 when compared
to the similar quarter in the prior fiscal year," stated Dean Brydon,
Timberland's Chief Financial Officer.
"We are pleased to have increased our core deposits as interest rates have
risen," added Sand. "The timing of the acquisition was good and we look forward
to bringing Timberland's brand of community banking to an expanded customer
base," Sand also stated.
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, 2004 and 2003
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
December 31,
2004 2003
----------------------
Interest and Dividend Income
Loans receivable $ 6,608 $ 6,283
Investments and mortgage-backed securities 389 244
Dividends from investments 266 269
Interest bearing deposits in banks 140 45
----------------------
Total interest and dividend income 7,403 6,841
Interest Expense
Deposits 1,179 1,129
Federal Home Loan Bank advances 755 850
----------------------
Total interest expense 1,934 1,979
----------------------
Net interest income 5,469 4,862
Provision for Loan Losses -- 50
Net interest income after provision ----------------------
for loan losses 5,469 4,812
Non-Interest Income
Service charges on deposits 698 449
Gain on sale of loans, net 348 170
BOLI net earnings 99 115
Escrow fees 35 45
Servicing income (expense) on loans sold (61) (18)
ATM transaction fees 196 149
Other 123 102
----------------------
Total non-interest income 1,438 1,012
Non-interest Expense
Salaries and employee benefits 2,650 2,172
Premises and equipment 511 462
Advertising 166 151
Loss (gain) from real estate operations (27) 16
ATM expenses 112 101
Amortization of core deposit intangible 85 --
Other 1,263 924
----------------------
Total non-interest expense 4,760 3,826
Income before federal income taxes 2,147 1,998
Federal Income Taxes 653 611
----------------------
Net Income $ 1,494 $ 1,387
Earnings Per Common Share:
Basic $0.42 $0.36
Diluted $0.40 $0.34
Weighted average shares outstanding:
Basic 3,550,007 3,846,580
Diluted 3,717,162 4,070,336
2
TIMBERLAND BANCORP, INC. AND SUBSIDIARIES
SUMMARY BALANCE SHEETS
December 31, 2004 and September 30, 2004
(Dollars in thousands)
(unaudited)
December 31, September 30,
2004 2004
ASSETS ----------------------------
Cash and due from financial institutions $ 14,717 $ 15,268
Interest bearing deposits in banks 6,451 3,385
Federal funds sold 17,835 1,180
Investments and mortgage-backed securities -
held to maturity 160 174
Investments and mortgage-backed securities -
available for sale 89,170 59,889
Federal Home Loan Bank stock 5,682 5,682
Loans receivable 362,657 347,975
Loans held for sale 1,938 610
Less: Allowance for loan losses (3,994) (3,991)
----------------------------
Total loans 360,601 344,594
Accrued interest receivable 1,934 1,828
Premises and equipment 15,941 13,913
Real estate owned and other repossessed items 346 421
Bank owned life insurance ("BOLI") 11,127 11,028
Goodwill 5,562 --
Core deposit intangible 2,116 --
Other assets 2,561 3,057
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TOTAL ASSETS $ 534,203 $ 460,419
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $ 403,186 $ 319,570
Federal Home Loan Bank advances 52,492 65,421
Other borrowings: repurchase agreements 2,008 --
Other liabilities and accrued expenses 2,350 2,611
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TOTAL LIABILITIES 460,036 387,602
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SHAREHOLDERS' EQUITY
Common stock - $.01 par value; 50,000,000 shares
authorized; December 31, 2004 3,896,528 shares
issued and outstanding September 30, 2004
3,882,070 shares issued and outstanding 39 39
Additional paid in capital 25,164 24,908
Unearned shares - Employee Stock Ownership Plan (4,230) (4,362)
Unearned shares Management Recognition &
Development Plan (376) (537)
Retained earnings 53,881 52,926
Accumulated other comprehensive loss (311) (157)
----------------------------
TOTAL SHAREHOLDERS' EQUITY 74,167 72,817
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 534,203 $ 460,419
============================
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,
2004 2004 2003
-----------------------------------------
PERFORMANCE RATIOS:
Return on average assets (1) 1.15% 1.19% 1.22%
Return on average equity (1) 8.17% 7.40% 7.11%
Net interest margin (1) 4.66% 4.92% 4.65%
Efficiency ratio 68.92% 66.79% 65.13%
December 31, September 30, December 31,
2004 2004 2003
-----------------------------------------
ASSET QUALITY RATIOS:
Non-performing loans $ 3,003 $ 1,442 $ 5,754
REO & other repossessed assets 346 421 1,264
Total non-performing assets 3,349 1,863 7,018
Non-performing assets to total assets 0.63% 0.40% 1.53%
Allowance for loan losses to
non-performing loans 133.00% 276.77% 68.23%
Book Value Per Share (2) $ 19.03 $ 18.76 $ 18.51
Book Value Per Share (3) 20.52 20.28 20.05
Tangible Book Value Per Share (2)(4) 16.92 18.76 18.51
Tangible Book Value Per Share (3)(4) 18.24 20.28 20.05
______________________
(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,
2004 2004 2003
---------------------------------------
AVERAGE BALANCE SHEET:
Average Total Loans $ 358,336 $ 342,150 $ 336,601
Average Total Interest Earning Assets 469,317 409,504 418,266
Average Total Assets 521,680 447,160 453,276
Average Total Interest Bearing Deposits 347,782 281,701 283,660
Average FHLB Advances and Other Borrowings 55,414 57,770 60,036
Average Shareholders' Equity 73,135 72,070 77,987
4
Comparison of Financial Condition at December 31, 2004 and September 30, 2004
Total Assets: Total assets increased $73.8 million to $534.2 million at December
31, 2004 from $460.4 million at September 30, 2004 primarily due to a $49.0
million increase in investment securities and overnights funds, a $16.0 million
increase in net loans receivable, a $7.7 million increase in goodwill and
core deposit intangible, and a $2.0 million increase in premises and equipment.
This growth was funded by the net cash received in connection with the
acquisition of seven branch offices and related deposits from Venture Bank.
Investments and Overnight Funds: Investment securities, interest bearing
deposits in banks, and federal funds sold increased by $49.0 million to $113.6
million at December 31, 2004 from $64.6 million at September 30, 2004, as a
portion of the funds received in connection with the acquisition of deposits
from Venture Bank were placed into investment securities and overnight funds.
Loans: Net loans receivable, including loans held-for-sale, increased by $16.0
million to $360.6 million at December 31, 2004 from $344.6 million at September
30, 2004. The increase in the portfolio was primarily a result of an $11.8
million increase in commercial real estate loans, a $3.0 million increase in
one-to-four family mortgage loans, a $1.4 million increase in construction loans
(net of undisbursed portion), a $592,000 increase in consumer loans, and a
$352,000 increase in land loans. These increases were partially offset by a
$517,000 decrease in commercial business loans and a $513,000 decrease in
multi-family loans.
Loan originations totaled $61.4 million for the three months ended December 31,
2004 compared to $54.3 million for the same period a year earlier. The Bank
sold loans totaling $4.8 million ($3.3 million in fixed rate one-to-four family
mortgage loans and $1.5 million in credit card loans) during the three months
ended December 31, 2004, compared to $10.2 million in fixed rate one-to-four
family mortgage loans sold during the three months ended December 31, 2003.
Deposits: Deposits increased by $83.6 million to $403.2 million at December 31,
2004 from $319.6 million at September 30, 2004, primarily due to the acquisition
of $86.3 million in deposits from Venture Bank in October 2004. The $83.6
million deposit increase is comprised of a $34.7 million increase in certificate
of deposit accounts, a $21.5 million increase in N.O.W. checking accounts, a
$14.0 million increase in savings accounts, a $9.9 million increase in money
market accounts, and a $3.6 million increase in non-interest bearing accounts.
Shareholders' Equity: Total shareholders' equity increased by $1.4 million to
$74.2 million at December 31, 2004 from $72.8 million at September 30, 2004,
primarily due to net income of $1.5 million and a $256,000 increase to
additional paid in capital from the exercise of stock options and the vesting of
shares associated with the Bank's benefit plans. Also increasing shareholders'
equity were decreases of $161,000 and $132,000 in the equity components related
to unearned shares issued to the Management Recognition and Development Plan and
the Employee Stock Ownership Plan, respectively. Partially offsetting these
increases to shareholders' equity was the payment of $582,000 in dividends to
shareholders and a $154,000 increase in accumulated other comprehensive loss.
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 December 31, 2004, the Company has repurchased 214,086 of these shares at
an average price of $22.83 per share. Cumulatively the Company has repurchased
3,192,687 (48.3%) of the 6,612,500 shares that were issued when the Company went
public in January 1998 at an average price of $14.96 per share.
5
Comparison of Operating Results for the Three Months Ended December 31, 2004 and
2003
Net Income: Net income for the quarter ended December 31, 2004 was $1.49
million, or $0.40 per diluted share ($0.42 per basic share) compared to $1.39
million, or $0.34 per diluted share ($0.36 per basic share) for the quarter
ended December 31, 2003. The $.06 increase in earnings per share for the
quarter ended December 31, 2004 was primarily a result of a $657,000 ($434,000
net of income tax - $0.12 per diluted share) increase in net interest income
after provision for loan losses, a $426,000 ($281,000 net of income tax - $0.08
per diluted share) increase in non-interest income, and a lower number of
weighted average shares outstanding which increased diluted earnings per share
by approximately $0.03. These items were partially offset by a $934,000
($616,000 net of income tax - $0.17 per diluted share) increase in non-interest
expense.
Net Interest Income: Net interest income increased $607,000 to $5.47 million for
the quarter ended December 31, 2004 from $4.86 million for the quarter ended
December 31, 2003, primarily due to increased interest income from a larger
interest earning asset base. Total interest income increased $562,000 to $7.40
million for the quarter ended December 31, 2004 from $6.84 million for the
quarter ended December 31, 2003 as average total interest earning assets
increased by $51.0 million. The increased interest earning asset balances were
a result of investing the funds received in connection with the acquisition of
deposits from Venture Bank. Partially offsetting the increased interest earning
balances, was a reduction in the yield on assets. The yield on earning assets
was 6.31% for the quarter ended December 31, 2004 compared to 6.54% for the
quarter ended December 31, 2003.
Also contributing to the increased net interest income was a decrease in
interest expense. Total interest expense decreased by $45,000 to $1.93 million
for the quarter ended December 31, 2004 from $1.98 million for the quarter ended
December 31, 2003 as the Company's total cost of funds decreased to 1.92% from
2.30%. The lower funding costs were due in part to a change in the composition
of interest-bearing liabilities, as average certificate of deposit accounts and
FHLB advances decreased while N.O.W. checking accounts, a lower cost source of
funds, increased.
As a result of these changes, the net interest margin increased to 4.66% for the
quarter ended December 31, 2004 from 4.65% for the quarter ended December 31,
2003.
Provision for Loan Losses: The provision for loan losses for the quarter ended
December 31, 2004 decreased $50,000 from the quarter ended December 31, 2003 as
there was no provision made during the current quarter. Even though the loan
portfolio grew during the current quarter, the sale of the Bank's credit card
portfolio, which carried the highest risk factors of any loan type, offset the
need to increase the overall allowance for loan losses according to the Bank's
comprehensive analysis. Management deemed the allowance for loan losses of
$3.99 million at December 31, 2004 (1.10% of loans receivable and 133.00% 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 $3.93 million (1.17% of loans receivable and 68.2%
of non-performing loans) at December 31, 2003. The Company had a net recovery
of $3,000 for the current quarter compared to a net charge-off of $15,000 in
the same quarter of 2003.
The Company's non-performing assets to total assets ratio decreased to 0.63% at
December 31, 2004 from 1.53% at December 31, 2003. The non-performing loan
total of $3.0 million at December 31, 2004 consisted of $2.2 million in
commercial real estate loans, $349,000 in commercial business loans, $333,000 in
one-to-four family loans, $115,000 in land loans, and $6,000 in consumer loans.
Non-interest Income: Total non-interest income increased $426,000 to $1.44
million for the quarter ended December 31, 2004 from $1.01 million for the
quarter ended December 31, 2003, primarily due to $249,000 increase in service
charges on deposits, a $135,000 increase in income from loan sales (gain on
sale of loans and servicing income on loans sold), and a $47,000 increase in ATM
transaction fees. The increased service charges on deposits and the increased
ATM transaction fees are primarily a result of the increased transaction account
base acquired through the Venture Bank branch acquisition. The
increased income from loan sales is primarily due to the sale of the Bank's $1.5
million credit card portfolio, which resulted in a gain of $245,000. Income
from the sale of fixed rate one-to-four family loans decreased to $42,000 for
the quarter ended December 31, 2004 from $152,000 for the quarter ended December
31, 2003 as fewer loans were sold. The Bank sold $3.3 million in fixed rate
one-to-four family mortgages during the quarter ended December 31, 2004 compared
to $10.2 million for the same period a year ago.
6
Non-interest Expense: Total non-interest expense increased by $934,000 to $4.76
million for the quarter ended December 31, 2004 from $3.83 million for the
quarter ended December 31, 2003, as the Bank acquired seven branch offices and
the associated employees from Venture Bank in October 2004. The increase is
primarily a result of a $478,000 increase in salaries and employee benefits,
$183,000 in expenses associated with the branch acquisition, a $85,000 core
deposit intangible amortization expense, a $66,000 increase in postage and
courier expense, a $59,000 increase in legal and professional fees, and
a $49,000 increase in premises and equipment expenses. The increased employee
expenses are primarily due to the larger employee base resulting from the branch
acquisition, annual salary adjustments, and increased medical insurance costs.
The Company's efficiency ratio increased to 68.92% for the quarter ended
December 31, 2004 from 65.13% for the quarter ended December 31, 2003 and from
66.79% for the quarter ended September 30, 2004. Directly impacting the current
quarter's higher ratio was the acquisition of seven branches as discussed above.
7
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 December 31, At September 30,
2004 2004
Amount Percent Amount Percent
------------------- -------------------
Mortgage Loans:
One-to-four family (1) $102,862 24.71% $99,835 25.25%
Multi family 16,647 4.00 17,160 4.34
Commercial 120,046 28.84 108,276 27.39
Construction and
land development 112,448 27.02 106,241 26.88
Land 20,247 4.86 19,895 5.03
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Total mortgage loans 372,250 89.43 351,407 88.89
Consumer Loans:
Home equity and second mortgage 25,024 6.01 23,549 5.96
Other 8,387 2.02 9,270 2.34
------- ------ ------- ------
33,411 8.03 32,819 8.30
Commercial business loans 10,581 2.54 11,098 2.81
------- ------ ------- ------
Total loans 416,242 100.00% 395,324 100.00%
Less:
Undisbursed portion of
construction loans in process (48,385) (43,563)
Unearned income (3,262) (3,176)
Allowance for loan losses (3,994) (3,991)
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Total loans receivable, net $360,601 $344,594
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________________
(1) Includes loans held-for-sale.
8
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.
December 31, 2004 September 30, 2004
----------------- ------------------
Non-interest bearing $ 40,721 $ 37,150
N.O.W checking 98,749 77,242
Savings 62,190 48,200
Money market accounts 51,547 41,652
Certificates of deposit under $100,000 113,819 93,750
Certificates of deposit $100,000 and over 36,160 21,576
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Total deposits $403,186 $319,570
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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, Panorama
City, 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
9