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Timberland Bancorp EPS Increases 38% for Fiscal 2014

HOQUIAM, Wash., Nov. 3, 2014 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (Nasdaq:TSBK) ("Timberland" or "the Company") today reported net income of $1.65 million for the quarter ended September 30, 2014 and net income of $5.85 million for the fiscal year ended September 30, 2014.

Net income to common shareholders for the fiscal year ended September 30, 2014 increased 40% to $5.64 million from $4.02 million for the prior fiscal year. Earnings per diluted common share for the fiscal year just ended increased 38% to $0.80 from $0.58 for the fiscal year ended September 30, 2013.

Net income per diluted common share increased 130% to $0.23 for the quarter ended September 30, 2014 from $0.10 per diluted common share for the comparable quarter one year ago and increased 15% from the $0.20 reported for the quarter immediately prior.

Timberland's Board of Directors also declared a $0.05 per common share quarterly cash dividend payable on November 28th to common shareholders of record on November 14, 2014.

"The recently completed quarter and fiscal year were highlighted by solid loan growth and continued increases in the Company's return on assets and equity," stated Michael R. Sand, President and CEO. "Commercial business loans and non-speculative residential construction loans were the primary areas of growth increasing 75% and 46%, respectively, from the end of the prior fiscal year. We continue to pay particular attention to interest rate risk issues and have maintained our focus on the origination of shorter term and variable rate loans during this unusually long low interest rate cycle."

Fiscal 2014 Highlights (at or for the period ended September 30, 2014, compared to September 30, 2013, or June 30, 2014):

  • Net income to common shareholders for fiscal year 2014 increased 40% to $5.64 million from $4.02 million for fiscal year 2013;
  • Earnings per diluted common share for fiscal year 2014 increased 38% to $0.80 from $0.58 for fiscal year 2013;
  • Earnings per diluted common share increased 130% to $0.23 from $0.10 for the comparable quarter one year ago and increased 15% from the $0.20 per diluted common share reported for the quarter ended June 30, 2014;
  • Non-performing assets decreased 22% year-over-year and 11% from the prior quarter;
  • Total delinquent loans (including non-accrual) decreased 24% year-over-year;
  • OREO and other repossessed assets decreased 22% year-over-year and 19% from the prior quarter;
  • Net charge-offs decreased 80% to $709,000 for fiscal 2014 from $3.61 million for fiscal year 2013;
  • Net interest margin for fiscal year 2014 increased to 3.84% from 3.82% for fiscal year 2013; and
  • Book value and tangible book value per common share increased to $11.75 and $10.94, respectively, at September 30, 2014 from $11.04 and $10.22 at September 30, 2013.

Capital Ratios and Asset Quality

Timberland Bancorp remains well capitalized with a total risk-based capital ratio of 14.94%, a Tier 1 leverage capital ratio of 10.59% and a tangible capital to tangible assets ratio of 10.42% at September 30, 2014.

Reflecting continued improvement in asset quality, no provision for loan losses was required for the quarters ended September 30, 2014 and June 30, 2014, compared to $165,000 for the quarter ended September 30, 2013. The Bank had net charge-offs of $136,000 during the current quarter, compared to $186,000 for the preceding quarter and $155,000 for the comparable quarter one year ago. There was no provision for loan losses made during the fiscal year ended September 30, 2014 compared to a provision of $2.93 million for the fiscal year ended September 30, 2013. Net charge-offs decreased 80% to $709,000 for the 2014 fiscal year from $3.61 million for fiscal year 2013. The non-performing assets to total assets ratio improved to 2.94% at September 30, 2014 from 3.38% three months earlier and 3.75% one year ago.

Non-accrual loans decreased 10% to $10.9 million at September 30, 2014, from $12.1 million at June 30, 2014, and 20% from $13.6 million at September 30, 2013. Non-accrual loans at September 30, 2014, consisted of 37 loans representing 29 credit relationships. By dollar amount per category: 45% are secured by residential properties; 42% are secured by land; and 13% are secured by commercial properties. Total delinquent loans (past due 30 days or more) and non-accrual loans decreased 24% to $13.7 million at September 30, 2014, from $18.1 million one year ago, and increased slightly from $13.3 million at June 30, 2014.

Other real estate owned ("OREO") and other repossessed assets decreased 19% to $9.1 million at September 30, 2014, from $11.2 million at June 30, 2014 and decreased 22% from $11.7 million at September 30, 2013. At September 30, 2014, the OREO portfolio included 40 individual properties. The properties consisted of 21 land parcels totaling $3.8 million, 14 one-to four-family homes totaling $2.9 million, four commercial real estate properties totaling $2.2 million, and one multi-family property valued at $142,000. During the quarter ended September 30, 2014, 13 OREO properties totaling $2.4 million were sold. There was no aggregate net gain or loss during the quarter on the sale of the OREO properties.

Balance Sheet Management

Total assets increased by $18.0 million, or 2%, to $745.6 million at September 30, 2014, from $727.6 million at June 30, 2014. The increase in total assets was primarily due to an $8.4 million increase in total cash and cash equivalents and an $8.1 million increase in net loans receivable. The increase in total assets was primarily funded by a $16.5 million increase in total deposits.

Liquidity measured by cash and cash equivalents, CDs held for investment and available for sale investments as a percentage of total liabilities was 16.8% at September 30, 2014, compared to 15.4% at June 30, 2014, and 19.6% one year ago.

Net loans receivable increased $8.1 million to $565.8 million at September 30, 2014, from $557.7 million at June 30, 2014. The increase was primarily due to a $14.8 million increase in construction loans, a $5.2 million increase in commercial business loans, a $2.6 million increase in consumer loans and a $1.1 million increase in land loans. These increases were partially offset by a $5.3 million decrease in commercial real estate loans, a $1.6 million decrease in one-to four-family loans, an $871,000 decrease in multi-family loans and an $8.0 million increase in the undisbursed portion of construction loans in process. The increase in construction loans was primarily the result of increased demand for custom construction and owner/builder construction loans.

LOAN PORTFOLIO
September 30, 2014 June 30, 2014 September 30, 2013
($ in thousands) Amount Percent Amount Percent Amount Percent
Mortgage Loans:
One-to four-family $98,534 16% $100,085 17% $104,298 18%
Multi-family 46,206 8 47,077 8 51,108 9
Commercial 294,354 48 299,707 51 291,297 50
Construction and land development 68,479 11 53,695 9 45,136 8
Land 29,589 5 28,442 5 31,144 5
Total mortgage loans 537,162 88 529,006 90 522,983 90
Consumer Loans:
Home equity and second mortgage 34,921 6 31,832 5 33,014 6
Other 4,699 1 5,229 1 5,981 1
Total consumer loans 39,620 7 37,061 6 38,995 7
Commercial business loans 30,559 5 25,341 4 17,499 3
Total loans 607,341 100% 591,408 100% 579,477 100%
Less:
Undisbursed portion of construction loans in process (29,416) (21,463) (18,527)
Deferred loan origination fees (1,746) (1,687) (1,710)
Allowance for loan losses (10,427) (10,563) (11,136)
Total loans receivable, net $565,752 $557,695 $548,104
CONSTRUCTION LOAN COMPOSITION
September 30, 2014 June 30, 2014 September 30, 2013
($ in thousands) Percent Percent Percent
of Loan of Loan of Loan
Amount Portfolio Amount Portfolio Amount Portfolio
Custom and owner / builder $59,752 10% $48,212 8% $40,811 7%
Speculative one- to four- family 2,577 -- 2,307 -- 1,428 --
Commercial real estate 3,310 1 2,736 1 2,239 1
Multi-family (including condominium) 2,840 -- 440 -- 143 --
Land development -- -- -- -- 515 --
Total construction loans $68,479 11% $53,695 9% $45,136 8%

Timberland originated $60.4 million in loans during the quarter ended September 30, 2014, compared to $40.5 million for the preceding quarter and $53.2 million for the comparable quarter one year ago. Timberland continues to sell fixed rate one-to-four family mortgage loans into the secondary market for asset-liability management purposes and to generate non-interest income. During the quarter ended September 30, 2014, fixed-rate one-to four-family mortgage loans totaling $10.0 million were sold compared to $7.8 million for the preceding quarter and $14.7 million for the comparable quarter one year ago.

Timberland's mortgage-backed securities ("MBS") and other investments decreased by $190,000 during the quarter to $8.2 million at September 30, 2014, from $8.4 million at June 30, 2014, primarily due to prepayments and scheduled amortization.

DEPOSIT BREAKDOWN
($ in thousands)
September 30, 2014 June 30, 2014 September 30, 2013
Amount Percent Amount Percent Amount Percent
Non-interest bearing $106,417 17% $92,995 15% $87,657 14%
N.O.W. checking 160,748 26 157,303 26 156,100 26
Savings 95,665 16 93,728 16 91,349 15
Money market 88,999 14 94,363 16 99,006 16
Certificates of deposit under $100 95,333 16 97,917 16 109,001 18
Certificates of deposit $100 and over 64,762 10 59,134 10 63,958 11
Certificates of deposit – brokered 3,192 1 3,192 1 1,191 --
Total deposits $615,116 100% $598,632 100% $608,262 100%

Total deposits increased $16.5 million to $615.1 million at September 30, 2014, from $598.6 million at June 30, 2014, primarily as a result of a $13.4 million increase in non-interest bearing account balances, a $3.4 million increase in N.O.W. checking account balances, a $3.0 million increase in certificates of deposit account balances and a $1.9 million increase in savings account balances. These increases were partially offset by a $5.4 million decrease in money market account balances.

Shareholders Equity

Total shareholders' equity increased $1.45 million to $82.78 million at September 30, 2014, from $81.33 million at June 30, 2014. The increase in shareholders' equity was primarily due to net income of $1.65 million for the quarter, which was partially offset by dividend payments of $352,000 to common shareholders. Book value per common share increased to $11.75 and tangible book value per common share increased to $10.94 at September 30, 2014.

Operating Results

Fiscal fourth quarter operating revenue [net interest income before provision for loan losses, plus non-interest income excluding OTTI charges / recoveries, gains or losses on sale of investments, valuation allowances or recoveries on mortgage servicing rights ("MSRs")], increased 3% to $8.81 million from $8.56 million for the preceding quarter and decreased 1% from $8.87 million for the comparable quarter one year ago. The increase in revenue compared to the preceding quarter was primarily a result of an increase in net interest income and non-interest income. For fiscal year 2014, operating revenue decreased 3% to $34.42 million from $35.63 million for fiscal year 2013, primarily due to a decrease in gain on sale of loans.

Net interest income increased 2% to $6.59 million for the quarter ended September 30, 2014, from $6.43 million for the preceding quarter and increased 2% from $6.47 million for the comparable quarter one year ago. The net interest margin for the current quarter remained level at 3.86% compared to the preceding quarter and increased from 3.82% for the comparable quarter one year ago. For fiscal 2014, net interest income increased slightly to $25.92 million from $25.80 million for fiscal year 2013. Timberland's net interest margin for the year ended September 30, 2014 increased to 3.84% from 3.82% for the year ended September 30, 2013.

Non-interest income increased 4% to $2.21 million for the quarter ended September 30, 2014, from $2.12 million in the preceding quarter and decreased 8% from $2.40 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter was primarily due to a $57,000 increase in gain on sale of loans and a $38,000 increase in ATM and debit card interchange transaction fees. For fiscal year 2014, non-interest income decreased $1.73 million, or 17%, to $8.53 million from $10.26 million for fiscal year 2013, primarily due to a $1.49 million decrease in gain on sale of loans and a $475,000 decrease in the valuation recovery on MSRs.

Total operating (non-interest) expenses decreased 1% to $6.37 million for the quarter ended September 30, 2014 from $6.43 million for the preceding quarter and decreased 10% from $7.07 million for the comparable quarter one year ago. For fiscal year 2014, operating expenses decreased slightly to $25.80 million from $25.86 million for fiscal year 2013, primarily as a result of a $1.58 million decrease in OREO expenses which was offset by increases in salaries and employee benefits, ATM and debit card processing expenses, data processing and telecommunications, and a decrease in the gain on the disposition of premises and equipment.

The provision for income taxes increased $91,000 to $776,000 for the quarter ended September 30, 2014, from $685,000 for the preceding quarter, primarily due to higher income before income taxes. For fiscal year 2014, the provision for income taxes increased to $2.80 million from $2.51 million for fiscal 2013, primarily due to higher income before income taxes. The comparison between fiscal years was also impacted by the expiration of a capital loss carry-forward in fiscal year 2013 which increased the provision for income taxes by $236,000 in that year.

About Timberland Bancorp, Inc.

Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank ("Bank"). The Bank opened for business in 1915 and 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 22 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. Forward-looking statements are not statements of historical fact 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 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, including, but not limited to: the 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 and may lead to increased losses and non-performing assets in our loan portfolio, and 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; 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 Board of Governors of the Federal Reserve System and 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 or 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, which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules including as a result of Basel III; the impact of the Dodd Frank Wall Street Reform and Consumer Protection Act and the implementation of related rules and regulations; our ability to attract and retain deposits; increases in premiums for deposit insurance; 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 risk associated with the loans on our consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; computer systems on which we depend could fail or experience a security breach; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; 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; adverse changes in the securities markets; 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, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of war or any terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations; pricing, products and services; and other risks detailed in our reports filed with 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 undertake no obligation to publicly update or revise any forward-looking statements included in this report 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. We caution readers not to place undue reliance on any forward-looking statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for fiscal year 2015 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 operations and stock price performance.

TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
($ in thousands, except per share amounts) Sept. 30, June 30, Sept. 30,
(unaudited) 2014 2014 2013
Interest and dividend income
Loans receivable $7,393 $7,238 $7,360
MBS and other investments 69 66 66
Dividends from mutual funds and Federal Home Loan Bank ("FHLB") stock 6 6 7
Interest bearing deposits in banks 98 87 89
Total interest and dividend income 7,566 7,397 7,522
Interest expense
Deposits 504 498 582
FHLB advances 474 466 471
Total interest expense 978 964 1,053
Net interest income 6,588 6,433 6,469
Provision for loan losses -- -- 165
Net interest income after provision for loan losses 6,588 6,433 6,304
Non-interest income
Other than temporary impairment ("OTTI") on MBS and other investments, net (19) (9) (8)
Service charges on deposits 943 921 1,006
Gain on sale of loans, net 298 241 453
Bank owned life insurance ("BOLI") net earnings 138 134 146
ATM and debit card interchange transaction fees 658 611 580
Other 189 218 219
Total non-interest income, net 2,207 2,116 2,396
Non-interest expense
Salaries and employee benefits 3,156 3,325 3,229
Premises and equipment 777 754 674
Gain on disposition of premises and equipment, net -- -- (425)
Advertising 206 187 209
OREO and other repossessed assets, net 215 240 1,480
ATM and debit card processing 304 207 221
Postage and courier 117 122 102
Amortization of core deposit intangible ("CDI") 29 29 33
State and local taxes 118 123 110
Professional fees 202 196 220
FDIC insurance 157 158 158
Other insurance 37 34 41
Loan administration and foreclosure 79 129 152
Data processing and telecommunications 392 399 321
Deposit operations 190 146 157
Other 394 381 385
Total non-interest expense 6,373 6,430 7,067
Income before income taxes $2,422 $2,119 $1,633
Provision for income taxes 776 685 739
Net income 1,646 1,434 894
Preferred stock dividends -- -- (151)
Preferred stock discount accretion -- -- (47)
Net income to common shareholders $1,646 $1,434 $696
Net income per common share:
Basic $0.24 $0.21 $0.10
Diluted 0.23 0.20 0.10
Weighted average common shares outstanding:
Basic 6,859,457 6,857,149 6,821,320
Diluted 7,033,090 7,033,713 6,935,197
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME Year Ended
($ in thousands, except per share amounts) Sept. 30, Sept. 30,
(unaudited) 2014 2013
Interest and dividend income
Loans receivable $29,205 $29,591
MBS and other investments 259 281
Dividends from mutual funds and FHLB stock 27 29
Interest bearing deposits in banks 366 336
Total interest and dividend income 29,857 30,237
Interest expense
Deposits 2,066 2,568
FHLB advances 1,873 1,871
Total interest expense 3,939 4,439
Net interest income 25,918 25,798
Provision for loan losses -- 2,925
Net interest income after provision for loan losses 25,918 22,873
Non-interest income
Recovery (OTTI) on MBS and other investments, net 59 (47)
Loss on sale of MBS and other investments, net (32) --
Service charges on deposits 3,738 3,663
Gain on sale of loans, net 1,013 2,507
BOLI net earnings 530 577
Valuation recovery on MSRs -- 475
ATM and debit card interchange transaction fees 2,426 2,142
Other 796 945
Total non-interest income, net 8,530 10,262
Non-interest expense
Salaries and employee benefits 13,294 12,605
Premises and equipment 2,871 2,835
Gain on disposition of premises and equipment, net -- (431)
Advertising 742 742
OREO and other repossessed assets, net 1,010 2,587
ATM and debit card processing 1,096 857
Postage and courier 446 443
Amortization of CDI 116 130
State and local taxes 479 576
Professional fees 792 856
FDIC insurance 636 685
Other insurance 150 174
Loan administration and foreclosure 456 430
Data processing and telecommunications 1,450 1,232
Deposit operations 759 607
Other 1,501 1,536
Total non-interest expense 25,798 25,864
Income before income taxes $8,650 $7,271
Provision for income taxes 2,800 2,514
Net income 5,850 4,757
Preferred stock dividends (136) (710)
Preferred stock discount accretion (70) (283)
Discount on redemption of preferred stock -- 255
Net income to common shareholders $5,644 $4,019
Net income per common share:
Basic $0.82 $0.59
Diluted 0.80 0.58
Weighted average common shares outstanding:
Basic 6,856,730 6,817,918
Diluted 7,019,676 6,886,995
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts) (unaudited) Sept. 30, June 30, Sept. 30,
2014 2014 2013
Assets
Cash and due from financial institutions $11,818 $13,500 $12,879
Interest-bearing deposits in banks 60,536 50,467 81,617
Total cash and cash equivalents 72,354 63,967 94,496
Certificates of deposit ("CDs") held for investment, at cost 35,845 32,336 30,042
MBS and other investments:
Held to maturity, at amortized cost 5,298 5,417 2,737
Available for sale, at fair value 2,857 2,928 4,101
FHLB stock 5,246 5,299 5,452
Loans receivable 575,280 566,757 557,329
Loans held for sale 899 1,501 1,911
Less: Allowance for loan losses (10,427) (10,563) (11,136)
Net loans receivable 565,752 557,695 548,104
Premises and equipment, net 17,679 17,867 17,764
OREO and other repossessed assets, net 9,092 11,172 11,720
BOLI 17,632 17,494 17,102
Accrued interest receivable 1,910 1,922 1,972
Goodwill 5,650 5,650 5,650
Core deposit intangible 3 32 119
Mortgage servicing rights, net 1,684 1,812 2,266
Other assets 4,563 4,040 4,123
Total assets $745,565 $727,631 $745,648
Liabilities and shareholders' equity
Deposits: Non-interest-bearing demand $106,417 $92,995 $87,657
Deposits: Interest-bearing 508,699 505,637 520,605
Total deposits 615,116 598,632 608,262
FHLB advances 45,000 45,000 45,000
Other liabilities and accrued expenses 2,671 2,669 2,698
Total liabilities 662,787 646,301 655,960
Shareholders' equity
Fixed Rate Cumulative Preferred stock, Series A, $.01 par value; 1,000,000 shares authorized; redeemable at $1,000 per share;
12,065 shares issued and outstanding – September 30, 2013 -- -- 11,936
Common stock, $.01 par value; 50,000,000 shares authorized;
7,045,036 shares issued and outstanding - September 30, 2013
7,045,936 shares issued and outstanding - June 30, 2014
7,047,336 shares issued and outstanding -- September 30, 2014 10,773 10,710 10,570
Unearned shares- Employee Stock Ownership Plan (1,190) (1,256) (1,454)
Retained earnings 73,534 72,240 68,998
Accumulated other comprehensive loss (339) (364) (362)
Total shareholders' equity 82,778 81,330 89,688
Total liabilities and shareholders' equity $745,565 $727,631 $745,648
KEY FINANCIAL RATIOS AND DATA Three Months Ended
($ in thousands, except per share amounts) (unaudited) Sept. 30, June 30, Sept. 30,
2014 2014 2013
PERFORMANCE RATIOS:
Return on average assets (a) 0.88% 0.79% 0.48%
Return on average equity (a) 8.04% 7.12% 4.00%
Net interest margin (a) 3.86% 3.86% 3.82%
Efficiency ratio 72.46% 75.12% 79.72%
Year Ended
Sept. 30, Sept. 30,
2014 2013
PERFORMANCE RATIOS:
Return on average assets (a) 0.79% 0.64%
Return on average equity (a) 7.08% 5.27%
Net interest margin (a) 3.84% 3.82%
Efficiency ratio 74.89% 71.72%
As of or for the Three Months Ended
Sept. 30, June 30, Sept. 30,
2014 2014 2013
ASSET QUALITY RATIOS AND DATA:
Non-accrual loans $10,909 $12,087 $13,610
Loans past due 90 days and still accruing 812 150 436
Non-performing investment securities 1,101 1,162 2,187
OREO and other repossessed assets 9,092 11,172 11,720
Total non-performing assets (b) $21,914 $24,571 $27,953
Non-performing assets to total assets (b) 2.94% 3.38% 3.75%
Net charge-offs during quarter $136 $186 $155
Allowance for loan losses to non-accrual loans 96% 87% 82%
Allowance for loan losses to loans receivable (c) 1.81% 1.86% 1.99%
Troubled debt restructured loans on accrual status (d) $16,804 $16,524 $18,573
CAPITAL RATIOS:
Tier 1 leverage capital 10.59% 10.62% 11.47%
Tier 1 risk based capital 13.68% 13.61% 15.30%
Total risk based capital 14.94% 14.87% 16.56%
Tangible capital to tangible assets (e) 10.42% 10.48% 11.34%
BOOK VALUES:
Book value per common share $11.75 $11.54 $11.04
Tangible book value per common share (e) 10.94 10.74 10.22
(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. Troubled debt restructured loans on accrual status are not included.
(c) Includes loans held for sale and is before the allowance for loan losses.
(d) Does not include troubled debt restructured loans totaling $2,284, $2,915 and $4,031 reported as non-accrual loans at September 30, 2014, June 30, 2014 and September 30, 2013, respectively.
(e) Calculation subtracts goodwill and core deposit intangible from the equity component and from assets.
AVERAGE CONSOLIDATED BALANCE SHEETS: Three Months Ended
($ in thousands) (unaudited) Sept. 30, June 30, Sept. 30,
2014 2014 2013
Average total loans $570,995 $566,887 $559,187
Average total interest-bearing assets (a) 682,327 666,646 680,566
Average total assets 745,717 729,646 746,797
Average total interest-bearing deposits 510,176 503,834 515,229
Average FHLB advances 45,000 45,000 45,000
Average shareholders' equity 81,883 80,600 89,487
Year Ended
Sept. 30, Sept. 30,
2014 2013
Average total loans $567,251 $556,815
Average total interest-bearing assets (a) 675,475 675,026
Average total assets 737,907 740,829
Average total interest-bearing deposits 508,468 517,478
Average FHLB advances 45,000 45,352
Average shareholders' equity 82,618 90,301
(a) Includes loans and MBS on non-accrual status

CONTACT: Michael R. Sand, President & CEO Dean J. Brydon, CFO (360) 533-4747 www.timberlandbank.comSource:Timberland Bancorp, Inc