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Timberland Bancorp EPS Increases 55% to $0.31 for the Third Fiscal Quarter of 2015

HOQUIAM, Wash., July 28, 2015 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) ("Timberland" or "the Company") today reported net income of $2.16 million, or $0.31 per diluted share, for the third fiscal quarter ended June 30, 2015. This compares to net income of $1.45 million, or $0.21 per diluted share, for the quarter ended March 31, 2015 and net income of $1.43 million, or $0.20 per diluted share, for the quarter ended June 30, 2014. For the first nine months of fiscal 2015, Timberland earned $5.34 million, or $0.76 per diluted share, compared to $4.00 million, or $0.57 per diluted share for the first nine months of fiscal 2014.

Timberland's Board of Directors announced an increase in the quarterly cash dividend to shareholders to $0.07 per share, payable on August 28, 2015 to shareholders of record on August 14, 2015. In addition, the Board also authorized the repurchase of up to 5% (352,681) of the Company's outstanding shares.

"The Company's strong operating results and continued growth in loans, deposits and assets reflect the strength of our Western Washington markets and the effectiveness of our teams in originating loans and gathering core deposits," stated Michael R. Sand, President and CEO. "We continue to compete effectively in our markets while maintaining a pricing discipline that has resulted in only a nominal variation in our net interest margin during the past four years. We have positioned the Company to benefit from rising rates even though both the timing and pace of this long anticipated increase regimen remains uncertain. We are, however, absolutely certain that each passing quarter moves us closer to the final maturities of three Federal Home Loan Bank advances that represented 49% of our funding costs in the current quarter. The advances mature in December of 2016 and in August and September of 2017. We are looking forward to the elimination of the interest expense associated with these advances and the resulting positive impact on the Company's already strong net interest margin."

Third Fiscal Quarter 2015 Highlights (at or for the period ended June 30, 2015, compared to June 30, 2014, or March 31, 2015):

  • Earnings per diluted share increased 55% to $0.31 from $0.20 for the comparable quarter one year ago;
  • Earnings per diluted share for the first nine months of fiscal 2015 increased 33% to $0.76 from $0.57 for the first nine months of fiscal 2014;
  • Return on average assets and return on average equity were 1.11% and 10.03%, respectively;
  • Operating revenue increased 11% from the comparable quarter one year ago and 8% from the prior quarter;
  • Non-interest income for the current quarter increased by 19% from the comparable quarter one year ago, and by 14% from the preceding quarter;
  • Announced a 17% increase in the quarterly dividend to $0.07 per share from $0.06 per share to be paid on August 28, 2015 to shareholders of record on August 14, 2015;
  • Net interest margin increased to 3.88% from 3.69% for the preceding quarter and from 3.86% for the comparable quarter one year ago;
  • Total deposits increased by $11.4 million, or 2% during the quarter and 9% year-over-year;
  • Net loans receivable increased by $13.9 million, or 2% during the quarter and 7% year-over-year;
  • Loan originations increased 83% to $101.3 million in the third fiscal quarter compared to $55.5 million in the second fiscal quarter and increased 150% from $40.5 million in the third fiscal quarter one year ago;
  • The dollar amount of mortgage loans sold into the secondary market increased 29% compared to the preceding quarter and 112% from the comparable quarter one year ago;
  • Total delinquent loans decreased 11% during the current quarter and 19% year-over-year; and
  • Book value and tangible book value per share increased to $12.38 and $11.57, respectively, at quarter end.

Capital Ratios and Asset Quality

Timberland Bancorp remains well capitalized with a total risk-based capital ratio of 15.01%, a Tier 1 leverage capital ratio of 10.77% and a tangible capital to tangible assets ratio of 10.41% at June 30, 2015.

Reflecting continued improvement in asset quality, no provision for loan losses was necessary for the quarters ended June 30, 2015, March 31, 2015 and June 30, 2014. The Bank had a net recovery of $85,000 for the current quarter compared to a net recovery of $60,000 for the preceding quarter and net charge-offs of $186,000 during the comparable quarter one year ago. The non-performing assets to total assets ratio improved to 2.36% at June 30, 2015 from 2.55% three months earlier and 3.38% one year ago. The allowance for loan losses was 1.72% of loans receivable at June 30, 2015.

Total delinquent loans (past due 30 days or more) and non-accrual loans decreased 11% to $10.8 million at June 30, 2015, from $12.2 million at March 31, 2015 and decreased 19% from $13.3 million one year ago. Non-accrual loans decreased to $9.1 million at June 30, 2015, from $10.9 million at March 31, 2015 and from $12.1 million at June 30, 2014.

NON-ACCRUAL LOANS June 30, 2015 March 31, 2015 June 30, 2014
($ in thousands) Amount Quantity Amount Quantity Amount Quantity
Mortgage Loans:
One- to four-family $ 3,141 17 $ 3,751 18 4,873 23
Multi-family 760 1 760 1 -- --
Commercial 462 2 1,535 2 1,631 3
Construction 157 1 225 2 -- --
Land 4,200 5 4,214 4 5,204 11
Total mortgage loans 8,720 26 10,485 27 11,708 37
Consumer Loans:
Home equity and second mortgage 374 6 401 7 371 5
Other 36 1 38 1 8 2
Total consumer loans 410 7 439 8 379 7
Total loans $ 9,130 33 $ 10,924 35 $ 12,087 44

Other real estate owned ("OREO") and other repossessed assets decreased 28% to $8.1 million at June 30, 2015, from $11.2 million at June 30, 2014 and increased 3% from $7.9 million at March 31, 2015. At June 30, 2015, the OREO portfolio consisted of 33 individual properties and one other repossessed asset. During the quarter ended June 30, 2015, three OREO properties totaling $557,000 were sold for a net loss of $18,000.

OREO and OTHER REPOSSESSED ASSETS June 30, 2015 March 31, 2015 June 30, 2014
($ in thousands) Amount Quantity Amount Quantity Amount Quantity
One- to four-family $ 2,434 8 $ 2,150 9 $ 3,554 18
Multi-family -- -- -- -- 142 1
Commercial 2,041 4 2,073 4 3,221 5
Land 3,521 21 3,576 22 4,249 26
Mobile home 67 1 67 1 6 1
Total $ 8,063 34 $ 7,866 36 $ 11,172 51

Balance Sheet Management

Total assets increased by $13.5 million, or 2%, to $789.8 million at June 30, 2015, from $776.3 million at March 31, 2015. The increase was primarily due to a $13.9 million increase in net loans receivable and a $5.2 million increase in CDs held for investment, which was partially offset by a $5.9 million decrease in cash and cash equivalents. The increase in total assets was funded primarily by an $11.4 million increase in total deposits.

Liquidity as measured by cash and cash equivalents, CDs held for investment and available for sale investments securities was 17.7% of total liabilities at June 30, 2015, compared to 18.2% at March 31, 2015, and 15.4% one year ago.

Net loans receivable increased by $13.9 million to $598.2 million at June 30, 2015, from $584.3 million at March 31, 2015. The increase was primarily due to a $32.2 million increase in construction loans, a $3.4 million increase in one- to four-family loans, a $1.9 million increase in multi-family loans, a $1.4 million increase in commercial business loans and an $822,000 increase in consumer loans. These increases to net loans receivable were partially offset by a $21.7 million increase in the undisbursed portion of construction loans in process and a $2.9 million decrease in commercial real estate loans. The increase in construction loans was primarily due to a $15.5 million increase in commercial real estate construction loans and a $12.6 million increase in multi-family construction loans.

LOAN PORTFOLIO

June 30, 2015 March 31, 2015 June 30, 2014
($ in thousands) Amount Percent Amount Percent Amount Percent
Mortgage Loans:
One- to four-family $111,184 17% $107,821 17% $100,085 17%
Multi-family 50,587 8 48,641 8 47,077 8
Commercial 293,438 44 296,338 47 299,707 51
Construction and land Development 109,678 16 77,433 12 53,695 9
Land 27,495 4 28,464 4 28,442 5
Total mortgage loans 592,382 89 558,697 88 529,006 90
Consumer Loans:
Home equity and second Mortgage 35,040 5 34,362 5 31,832 5
Other 4,711 1 4,567 1 5,229 1
Total consumer loans 39,751 6 38,929 6 37,061 6
Commercial business loans 36,288 5 34,911 6 25,341 4
Total loans 668,421 100% 632,537 100% 591,408 100%
Less:
Undisbursed portion of construction loans in Process (57,674) (35,990) (21,463)
Deferred loan origination
Fees (2,069) (1,893) (1,687)
Allowance for loan losses (10,467) (10,382) (10,563)
Total loans receivable, net $598,211 $584,272 $557,695

CONSTRUCTION LOAN COMPOSITION

June 30, 2015 March 31, 2015 June 30, 2014
($ in thousands)

Amount
Percent
of Loan
Portfolio


Amount
Percent
of Loan
Portfolio


Amount
Percent
of Loan
Portfolio
Custom and owner / builder $62,579 9% $60,889 10% $48,212 8%
Speculative one- to four-Family 5,205 1 2,769 -- 2,307 --
Commercial real estate 18,924 3 3,395 -- 2,736 1
Multi-family (including condominium) 22,970 3 10,380 2 440 --
Land development -- -- -- -- -- --
Total construction loans $109,678 16% $77,433 12% $53,695 9%

Timberland originated $101.3 million in loans during the quarter ended June 30, 2015, compared to $55.5 million for the preceding quarter and $40.5 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 June 30, 2015, fixed-rate one- to four-family mortgage loans totaling $16.5 million were sold compared to $12.8 million for the preceding quarter and $7.8 million for the comparable quarter one year ago.

Timberland's investment securities increased by $2.8 million during the quarter to $9.4 million at June 30, 2015, from $6.6 million at March 31, 2015, primarily due to the purchase of a $3.0 million U.S. Treasury security. This increase was partially offset by scheduled amortization.

DEPOSIT BREAKDOWN ($ in thousands)
June 30, 2015 March 31, 2015 June 30, 2014
Amount Percent Amount Percent Amount Percent
Non-interest bearing $122,133 19% $117,481 18% $ 92,995 15%
N.O.W. checking 168,773 26 168,451 26 157,303 26
Savings 104,774 16 104,246 16 93,728 16
Money market 94,529 14 85,927 13 94,363 16
Money market – brokered 8,521 1 5,867 1 -- --
Certificates of deposit under $100 87,590 13 91,498 14 97,917 16
Certificates of deposit $100 and over 65,202 10 66,610 11 59,134 10
Certificates of deposit – brokered 3,196 1 3,193 1 3,192 1
Total deposits $654,718 100% $643,273 100% $598,632 100%

Total deposits increased $11.4 million, or 2%, to $654.7 million at June 30, 2015, from $643.3 million at March 31, 2015. The increase was primarily due to an $8.6 million increase in money market account balances, a $4.6 million increase in non-interest bearing account balances, a $2.7 million increase in brokered money market account balances, a $528,000 increase in savings account balances and a $322,000 increase in N.O.W. checking account balances. These increases were partially offset by a $5.3 million decrease in certificates of deposit account balances.

Shareholders' Equity

Total shareholders' equity increased $1.87 million to $87.29 million at June 30, 2015, from $85.42 million at March 31, 2015. The increase in shareholders' equity was primarily due to net income of $2.16 million for the quarter, which was partially offset by dividend payments of $423,000 to shareholders. Book value per share increased to $12.38 and tangible book value per share increased to $11.57 at June 30, 2015.

Share Repurchase

Timberland's Board of Directors authorized the repurchase of up to 5% of the Company's outstanding shares, or 352,681 shares. The repurchase program permits shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission ("SEC").

Repurchases will be made at management's discretion at prices management considers to be attractive and in the best interests of both the Company and its shareholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company's financial performance. Open market purchases will be conducted in accordance with the limitations set forth in the SEC's Rule 10b-18 and other applicable legal requirements.

The repurchase program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase any particular number of shares.

Operating Results

Operating revenue (net interest income before provision for loan losses, plus non-interest income excluding other than temporary impairment ("OTTI") charges and gains or losses on sale of investments) increased 8% to $9.51 million for the current quarter from $8.78 million for the preceding quarter and 11% from $8.56 million for the comparable quarter one year ago. Operating revenue increased 6% to $27.07 million for the first nine months of fiscal 2015 from $25.61 million for the comparable period one year ago.

Net interest income increased 6% to $6.98 million for the quarter ended June 30, 2015, from $6.57 million for the preceding quarter and increased 9% from $6.43 million for the comparable quarter one year ago. Net interest income was higher during the quarter ended June 30, 2015, primarily due to an increased level of average loans and average interest-earning assets and the collection of $159,000 of non-accrual interest on three loans.

The net interest margin for the current quarter increased to 3.88% from 3.69% for the preceding quarter and from 3.86% for the comparable quarter one year ago. The non-accrual interest recognized during the current quarter increased the net interest margin by approximately nine basis points. For the first nine months of fiscal 2015, net interest income increased 5% to $20.25 million from $19.33 million for the first nine months of fiscal 2014. Timberland's net interest margin for the first nine months of fiscal 2015 decreased to 3.81% from 3.83% for the first nine months of fiscal 2014.

Non-interest income increased 14% to $2.52 million for the quarter ended June 30, 2015, from $2.21 million in the preceding quarter, and increased 19% from $2.12 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter was primarily due to a $166,000 increase in gain on sale of loans and smaller increases in ATM and debit card interchange transaction fees and service charges on deposits. The increase in gain on sale of loans was primarily due to an increase in the dollar volume of fixed-rate one- to four-family loans sold during the current quarter. Fiscal year-to-date non-interest income increased 8% to $6.86 million from $6.32 million for the first nine months of fiscal 2014.

Total operating (non-interest) expenses decreased 7% to $6.22 million for the third fiscal quarter from $6.65 million for the preceding quarter and decreased 3% from $6.43 million for the comparable quarter one year ago. The decreased expenses for the current quarter compared to the preceding quarter were primarily due to a non-recurring $299,000 gain on disposition of premises and equipment, a $156,000 decrease in OREO and other repossessed assets expense, and an $88,000 decrease in salary and employee benefits. These decreases were partially offset by increases in ATM and debit card processing expenses and expenses for state and local taxes. The gain on the disposition of premises and equipment was a result of the sale of excess land adjacent to the Bank's Lacey branch office. Fiscal year-to-date operating expenses decreased 1% to $19.15 million from $19.43 million for the first nine months of fiscal 2014.

The provision for income taxes increased $452,000 to $1.13 million for the quarter ended June 30, 2015, from $676,000 for the preceding quarter, primarily due to increased income before income taxes. The effective tax rate was 34.32% for the current quarter and 31.78% for the quarter ended March 31, 2015.

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; our ability to pay dividends on our common and stock; 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 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) June 30, March 31, June 30,
(unaudited) 2015 2015 2014
Interest and dividend income
Loans receivable $7,756 $7,352 $7,238
Investment securities 59 55 66
Dividends from mutual funds and Federal Home Loan Bank ("FHLB") stock 7 6 6
Interest bearing deposits in banks 125 114 87
Total interest and dividend income 7,947 7,527 7,397
Interest expense
Deposits 492 495 498
FHLB advances 471 465 466
Total interest expense 963 960 964
Net interest income 6,984 6,567 6,433
Provision for loan losses -- -- --
Net interest income after provision for loan losses 6,984 6,567 6,433
Non-interest income
OTTI on investment securities, net (4) (1) (9)
Service charges on deposits 899 852 921
Gain on sale of loans, net 514 348 241
Bank owned life insurance ("BOLI") net earnings 133 131 134
ATM and debit card interchange transaction fees 691 643 611
Other 290 241 218
Total non-interest income, net 2,523 2,214 2,116
Non-interest expense
Salaries and employee benefits 3,196 3,284 3,325
Premises and equipment 763 751 759
Gain on disposition of premises and equipment, net (299) -- (5)
Advertising 169 173 187
OREO and other repossessed assets expense, net 193 349 240
ATM and debit card processing 336 255 207
Postage and courier 104 114 122
Amortization of core deposit intangible ("CDI") -- -- 29
State and local taxes 189 119 123
Professional fees 207 223 196
FDIC insurance 142 148 158
Other insurance 28 38 34
Loan administration and foreclosure 88 76 129
Data processing and telecommunications 449 471 399
Deposit operations 220 219 146
Other 435 434 381
Total non-interest expense 6,220 6,654 6,430
Three Months Ended
June 30, March 31, June 30,
2015 2015 2014
Income before income taxes $3,287 $2,127 $2,119
Provision for income taxes 1,128 676 685
Net income 2,159 1,451 1,434
Preferred stock dividends -- -- --
Preferred stock discount accretion -- -- --
Net income to common shareholders $ 2,159 $ 1,451 $ 1,434
Net income per common share:
Basic $0.31 $0.21 $0.21
Diluted 0.31 0.21 0.20
Weighted average common shares outstanding:
Basic 6,902,067 6,898,192 6,857,149
Diluted 7,071,221 7,071,792 7,033,713
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME

Nine Months Ended
($ in thousands, except per share amounts) June 30, June 30,
(unaudited) 2015 2014
Interest and dividend income
Loans receivable $22,617 $21,811
Investment securities 179 190
Dividends from mutual funds and FHLB stock 21 21
Interest bearing deposits in banks 343 268
Total interest and dividend income 23,160 22,290
Interest expense
Deposits 1,496 1,562
FHLB advances 1,411 1,399
Total interest expense 2,907 2,961
Net interest income 20,253 19,329
Provision for loan losses -- --
Net interest income after provision for loan losses 20,253 19,329
Non-interest income
Recoveries (OTTI) on investment securities, net (5) 78
Gain (loss) on sale of investment securities, net 45 (32)
Service charges on deposits 2,635 2,795
Gain on sale of loans, net 1,098 714
BOLI net earnings 401 392
ATM and debit card interchange transaction fees 1,964 1,769
Other 722 608
Total non-interest income, net 6,860 6,324
Non-interest expense
Salaries and employee benefits 9,877 10,138
Premises and equipment 2,239 2,099
Gain on disposition of premises and equipment, net (299) (5)
Advertising 529 537
OREO and other repossessed assets expense, net 617 795
ATM and debit card processing 929 791
Postage and courier 322 329
Amortization of CDI 3 87
State and local taxes 426 361
Professional fees 606 590
FDIC insurance 449 479
Other insurance 103 113
Loan administration and foreclosure 207 377
Data processing and telecommunications 1,299 1,058
Deposit operations 615 569
Other 1,225 1,107
Total non-interest expense 19,147 19,425
Nine Months Ended
June 30, June 30,
2015 2014
Income before income taxes $7,966 $6,228
Provision for income taxes 2,629 2,024
Net income 5,337 4,204
Preferred stock dividends -- (136)
Preferred stock discount accretion -- (70)
Net income to common shareholders $5,337 $3,998
Net income per common share:
Basic $0.77 $0.58
Diluted 0.76 $0.57
Weighted average common shares outstanding:
Basic 6,897,381 6,855,811
Diluted 7,068,821 7,015,155
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts) (unaudited) June 30, March 31, June 30,
2015 2015 2014
Assets
Cash and due from financial institutions $ 13,800 $ 12,474 $ 13,500
Interest-bearing deposits in banks 62,373 69,619 50,467
Total cash and cash equivalents 76,173 82,093 63,967
Certificates of deposit ("CDs") held for investment, at cost 47,053 41,868 32,336
Investment securities:
Held to maturity, at amortized cost 8,018 5,106 5,417
Available for sale, at fair value 1,401 1,486 2,928
FHLB stock 2,699 5,135 5,299
Loans receivable 604,843 592,402 566,757
Loans held for sale 3,835 2,252 1,501
Less: Allowance for loan losses (10,467) (10,382) (10,563)
Net loans receivable 598,211 584,272 557,695
Premises and equipment, net 17,083 17,422 17,867
OREO and other repossessed assets, net 8,063 7,866 11,172
BOLI 18,034 17,900 17,494
Accrued interest receivable 2,132 2,060 1,922
Goodwill 5,650 5,650 5,650
Core deposit intangible -- -- 32
Mortgage servicing rights, net 1,469 1,484 1,812
Other assets 3,801 3,928 4,040
Total assets $789,787 $776,270 $727,631
Liabilities and shareholders' equity
Deposits: Non-interest-bearing demand $ 122,133 $ 117,481 $ 92,995
Deposits: Interest-bearing 532,585 525,792 505,637
Total deposits 654,718 643,273 598,632
FHLB advances 45,000 45,000 45,000
Other liabilities and accrued expenses 2,779 2,573 2,669
Total liabilities 702,497 690,846 646,301
Shareholders' equity
Common stock, $.01 par value; 50,000,000 shares authorized; 7,045,936 shares issued and outstanding – June 30, 2014 7,052,636 shares issued and outstanding – March 31, 2015 7,053,636 shares issued and outstanding – June 30, 2015 10,948 10,892 10,710
Unearned shares- Employee Stock Ownership Plan (992) (1,058) (1,256)
Retained earnings 77,673 75,937 72,240
Accumulated other comprehensive loss (339) (347) (364)
Total shareholders' equity 87,290 85,424 81,330
Total liabilities and shareholders' equity $789,787 $776,270 $727,631
KEY FINANCIAL RATIOS AND DATA Three Months Ended
($ in thousands, except per share amounts) (unaudited) June 30, March 31, June 30,
2015 2015 2014
PERFORMANCE RATIOS:
Return on average assets (a) 1.11% 0.75% 0.79%
Return on average equity (a) 10.03% 6.86% 7.12%
Net interest margin (a) 3.88% 3.69% 3.86%
Efficiency ratio 65.43% 75.78% 75.21%
Nine Months Ended
June 30, June 30,
2015 2014
PERFORMANCE RATIOS:
Return on average assets (a) 0.93% 0.76%
Return on average equity (a) 8.40% 6.76%
Net interest margin (a) 3.81% 3.83%
Efficiency ratio 70.62% 75.72%
June 30, March 31, June 30,
2015 2015 2014
ASSET QUALITY RATIOS AND DATA:
Non-accrual loans $9,130 $10,924 $12,087
Loans past due 90 days and still accruing 488 -- 150
Non-performing investment securities 979 1,009 1,162
OREO and other repossessed assets 8,063 7,866 11,172
Total non-performing assets (b) $18,660 $19,799 $24,571
Non-performing assets to total assets (b) 2.36% 2.55% 3.38%
Net charge-offs (recoveries) during quarter $ (85) $ (60) $ 186
Allowance for loan losses to non-accrual loans 115% 95% 87%
Allowance for loan losses to loans receivable (c) 1.72% 1.75% 1.86%
Troubled debt restructured loans on accrual status (d) $12,392 $12,673 $16,524
CAPITAL RATIOS:
Tier 1 leverage capital 10.77% 10.63% 10.62%
Tier 1 risk-based capital 13.76% 13.97% 13.61%
Total risk-based capital 15.01% 15.23% 14.87%
Tangible capital to tangible assets (e) 10.41% 10.35% 10.48%
BOOK VALUES:
Book value per common share $ 12.38 $ 12.11 $ 11.54
Tangible book value per common share (e) 11.57 11.31 10.74

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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. 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 $1,356, $2,121 and $2,915 reported as non-accrual loans at June 30, 2015, March 31, 2015 and June 30, 2014, respectively.
(e) Calculation subtracts goodwill and core deposit intangible from the equity component and from assets.

AVERAGE BALANCES, YIELDS AND RATES - QUARTERLY
($ in thousands)
(unaudited)
For the three months ended
June 30, 2015 March 31, 2015 June 30, 2014
Average Balance Average Yield/Rate Average Balance Average Yield/Rate Average Balance Average Yield/Rate
Assets
Loans $ 600,740 5.16% $ 592,000 4.97% $ 566,887 5.11%
Investment securities 12,276 2.15% 11,823 2.06% 13,905 2.07%
Other interest-bearing assets 107,295 0.47% 108,298 0.43% 85,854 0.41%
Total interest-bearing assets 720,311 4.41% 712,121 4.23% 666,646 4.44%
Other assets 57,130 58,224 63,000
Total assets $ 777,441 $ 770,345 $ 729,646
Liabilities and Shareholders' Equity
N.O.W. checking accounts $ 167,003 0.27% $ 165,314 0.27% $ 156,932 0.27%
Money market accounts 95,341 0.30% 92,683 0.27% 94,181 0.26%
Savings accounts 104,306 0.05% 100,997 0.05% 92,744 0.05%
Certificates of deposit accounts 158,990 0.74% 162,446 0.78% 159,977 0.80%
Total interest-bearing deposits 525,640 0.38% 521,440 0.38% 503,834 0.40%
FHLB Advances 45,000 4.20% 45,000 4.19% 45,000 4.15%
Total interest-bearing liabilities 570,640 0.68% 566,440 0.69% 548,834 0.70%
Non-interest-bearing demand deposits 117,488 116,177 96,776
Other liabilities 3,220 3,092 3,376
Shareholders' equity 86,093 84,636 80,660
Total liabilities and shareholders' equity $ 777,441 $ 770,345 $ 729,646
Net interest income and spread 3.74% 3.54% 3.74%
Net interest margin (1) 3.88% 3.69% 3.86%
Average interest-bearing assets to average interest-bearing liablilities 126.23% 125.72% 121.47%

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(1)Net interest margin = annualized net interest income /
Average interest-bearing assets

AVERAGE BALANCES, YIELDS AND RATES – YEAR TO DATE
($ in thousands)
(unaudited)
For the nine months ended
June 30, 2015 June 30, 2014
Average Balance Average Yield/Rate Average Balance Average Yield/Rate
Assets
Loans $ 591,483 5.10% $ 565,990 5.14%
Investment securities 12,460 2.15% 12,968 2.17%
Other interest-bearing assets 103,937 0.44% 94,205 0.38%
Total interest-bearing assets 707,880 4.36% 673,163 4.41%
Other assets 58,424 62,112
Total assets $ 766,304 $ 735,275
Liabilities and Shareholders' Equity
N.O.W. checking accounts $ 163,917 0.27% $ 156,397 0.29%
Money market accounts 92,750 0.28% 95,501 0.26%
Savings accounts 100,636 0.05% 91,794 0.05%
Certificates of deposit accounts 161,486 0.77% 164,200 0.82%
Total interest-bearing deposits 518,789 0.39% 507,892 0.41%
FHLB Advances 45,000 4.19% 45,000 4.16%
Total interest-bearing liabilities 563,789 0.69% 552,892 0.72%
Non-interest-bearing demand deposits 114,861 96,238
Other liabilities 2,983 3,195
Shareholders' equity 84,671 82,950
Total liabilities and shareholders' equity $ 766,304 $ 735,275
Net interest income and spread 3.67% 3.69%
Net interest margin (1) 3.81% 3.83%
Average interest-bearing assets to average interest-bearing liablilities 125.56% 121.75%

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(1)Net interest margin = annualized net interest income /
Average interest-bearing assets

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