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Timberland Bancorp EPS Increases 113% to $0.17 for Second Fiscal Quarter

HOQUIAM, Wash., April 23, 2013 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (Nasdaq:TSBK) ("Timberland" or "the Company") today reported net income of $1.28 million for the quarter ended March 31, 2013. Net income to common shareholders, after adjusting for the preferred stock dividend, the preferred stock discount accretion and the discount on the repurchase of preferred stock was $1.20 million, or $0.17 per diluted common share. This compares to net income to common shareholders of $1.44 million, or $0.21 per diluted common share, for the quarter ended December 31, 2012 and net income to common shareholders of $541,000, or $0.08 per diluted common share, for the quarter ended March 31, 2012.

Net income to common shareholders after adjusting for the preferred stock dividend, the preferred stock discount accretion and the discount on the repurchase of preferred stock increased 69% to $2.64 million, or $0.39 per diluted common share for the first six months of fiscal 2013, from $1.56 million, or $0.23 per diluted common share, for the like period one year ago.

Timberland's Board of Directors also declared a quarterly cash dividend of $0.03 per common share payable on May 24, 2013 to shareholders of record on May 10, 2013.

"We continued to grow the loan portfolio while increasing the proportion of deposit liabilities in transaction and money market demand accounts this quarter," stated Michael R. Sand, Timberland's President and CEO. "These factors contributed to an increase in net interest margin from the prior quarter and also year over year. Loan demand remained strong during the quarter however we believe it is likely that refinance activity will gradually taper off during the remainder of the year. Operating efficiencies improved and the Company recorded a gain on the purchase of a portion of the Company's outstanding preferred shares at a discount this quarter."

Fiscal Second Quarter 2013 Highlights (at or for the period ended March 31, 2013, compared to March 31, 2012, or December 31, 2012):

  • Earnings per diluted common share for the current quarter increased 113% to $0.17 from $0.08 for the comparable quarter one year ago;
  • Net income for the current quarter increased 58% to $1.28 million from $808,000 for the comparable quarter one year ago;
  • Net interest margin for the current quarter increased to 3.83% from 3.78% for the preceding quarter and from 3.72% for the comparable quarter one year ago;
  • Non-interest income for the current quarter increased 11% from the comparable quarter one year ago;
  • Non-interest expense for the current quarter decreased 6% from the comparable quarter one year ago;
  • Total delinquent and non-accrual loans decreased 3% during the quarter and 45% year-over-year;
  • Repurchased 4,576 shares of Series A preferred stock for $4.32 million; a discount from par value of $255,000;
  • Capital levels remain very strong: Total Risk Based Capital Ratio of 16.21%; Tier 1 Leverage Capital Ratio of 11.43%; Tangible Capital to Tangible Assets Ratio of 11.29%; and
  • Book value per common share increased to $10.89, and tangible book value per common share increased to $10.06 at quarter end.

Capital Ratios and Asset Quality

Timberland Bancorp purchased and retired 27% of the Company's outstanding preferred shares during the quarter ended March 31, 2013. The Company purchased 4,576 shares of its Series A preferred stock for $4.32 million recording a $255,000 gain on the transaction. The gain is reflected in the quarter ended March 31, 2013 as an increase in net income available to common shareholders. The gain was partially offset by the acceleration of the discount accretion on the shares purchased. The transaction also reduced future preferred share dividend payments by approximately $57,200 per quarter. The Company remains very well capitalized with a total risk-based capital ratio of 16.21%, a Tier 1 leverage capital ratio of 11.43% and a tangible capital to tangible assets ratio of 11.29% at March 31, 2013. Tangible book value per common share increased to $10.06 at March 31, 2013 from $9.90 at December 31, 2012.

Timberland provisioned $1.18 million to its loan loss allowance during the quarter ended March 31, 2013 compared to $200,000 in the preceding quarter and $1.05 million in the comparable quarter one year ago. Net charge-offs for the second fiscal quarter increased to $1.63 million compared to $256,000 for the preceding quarter and $758,000 for the comparable quarter one year ago. Timberland's allowance for loan losses to total loans was 2.03% at March 31, 2013 compared to 2.11% at December 31, 2012 and 2.24% at March 31, 2012.

Total delinquent loans (past due 30 days or more) and non-accrual loans decreased 3% to $24.2 million at March 31, 2013 from $25.0 million at December 31, 2012 and decreased 45% from $44.0 million one year ago. The non-performing assets to total assets ratio was 5.14% at March 31, 2013 compared 5.13% three months earlier and 5.40% one year ago.

Non-accrual loans decreased to $20.5 million at March 31, 2013 from $21.7 million at December 31, 2012 and from $26.6 million at March 31, 2012. The non-accrual loans at March 31, 2013 were comprised of 59 loans and 45 credit relationships. By dollar amount per category: 35% are secured by commercial properties; 32% are secured by land and land development properties; 31% are secured by residential properties; and 2% are secured by residential construction projects.

Other real estate owned ("OREO") and other repossessed assets increased $1.8 million to $15.0 million at March 31, 2013 from $13.2 million at December 31, 2012 and increased $7.0 million from $8.0 million at March 31, 2012. At March 31, 2013 the OREO portfolio consisted of 56 individual properties. The properties consisted of commercial real estate properties totaling $6.1 million, land parcels totaling $5.0 million, multi-family properties totaling $2.4 million and single family homes totaling $1.5 million. During the quarter ended March 31, 2013, OREO properties totaling $904,000 were sold for a net gain of $8,000. "We continue to move non-performing assets through the collection cycle which resulted in an increase in other real estate owned this quarter," stated Sand.

Balance Sheet Management

Total assets increased by $3.5 million to $738.1 million at March 31, 2013 from $734.6 million at December 31, 2012. The increase in total assets was primarily due to a $1.9 million increase in net loans receivable and a $1.8 million increase in OREO.

Liquidity as measured by cash and cash equivalents, CDs held for investment and available for sale investments was 17.9% of total liabilities at March 31, 2013 compared to 18.2% at December 31, 2012 and 20.9% one year ago.

Net loans receivable increased $1.9 million to $546.8 million at March 31, 2013 from $544.9 million at December 31, 2012. The increase was primarily due to a $12.8 million increase in commercial real estate loan balances and a $1.9 million decrease in the undisbursed portion of construction loans in process. These increases to net loans receivable were partially offset by decreases of $7.3 million in construction and land development loan balances, $2.6 million in land loan balances, $2.2 million in commercial business loan balances and $531,000 in one-to four-family loan balances. The increase in commercial real estate loan balances and the decrease in construction loan balances were primarily due to several commercial construction loans converting to permanent financing during the quarter.

Timberland continued to reduce its exposure to land development and land loans. Land development loan balances decreased to $559,000 at March 31, 2013, a 43% decrease year-over-year. The Bank's land loan portfolio decreased 21% to $35.3 million at March 31, 2013 compared to one year ago and decreased 7% from December 31, 2012. The well diversified land loan portfolio consists of 293 loans on a variety of land types including individual building lots, acreage, raw land and commercially zoned properties. The average loan balance for the entire land portfolio was approximately $121,000 at March 31, 2013.

LOAN PORTFOLIO
March 31, 2013 December 31, 2012 March 31, 2012
($ in thousands) Amount Percent Amount Percent Amount Percent
Mortgage Loans:
One-to four-family $108,304 19% $108,835 19% $105,570 19%
Multi-family 47,330 8 48,464 8 30,745 5
Commercial 283,307 50 270,537 47 255,327 46
Construction and land development 39,658 7 46,985 8 57,069 10
Land 35,323 6 37,920 7 44,553 8
Total mortgage loans 513,922 90 512,741 89 493,264 88
Consumer Loans:
Home equity and second mortgage 32,080 6 31,196 6 33,979 6
Other 5,570 1 6,029 1 6,234 1
Total consumer loans 37,650 7 37,225 7 40,213 7
Commercial business loans 20,388 3 22,596 4 26,881 5
Total loans 571,960 100% 572,562 100% 560,358 100%
Less:
Undisbursed portion of construction loans in process (12,161) (14,100) (11,245)
Deferred loan origination fees (1,699) (1,767) (1,856)
Allowance for loan losses (11,313) (11,769) (12,264)
Total loans receivable, net $546,787 $544,926 $534,993

CONSTRUCTION LOAN COMPOSITION
March 31, 2013 December 31, 2012 March 31, 2012
($ in thousands) Amount Percent
of Loan
Portfolio
Amount Percent
of Loan
Portfolio
Amount Percent
of Loan
Portfolio
Custom and owner / builder $32,515 6% $33,530 6% $28,109 5%
Speculative one- to four-family 1,718 -- 1,912 -- 2,271 1
Commercial real estate 4,521 1 10,617 2 17,079 3
Multi-family (including condominium) 345 -- 345 -- 8,632 1
Land development 559 -- 581 -- 978 --
Total construction loans $39,658 7% $46,985 8% $57,069 10%

Timberland's loan originations increased 12% to $58.1 million during the quarter ended March 31, 2013 compared to $51.9 million for the preceding quarter and increased 15% from $50.4 million for the 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 March 31, 2013, $29.0 million fixed-rate one-to four-family mortgage loans were sold compared to $24.1 million for the preceding quarter and $23.9 million for the comparable quarter ended one year ago.

Timberland's mortgage-backed securities ("MBS") and other investments decreased $356,000 during the quarter to $7.5 million at March 31, 2013 from $7.9 million at December 31, 2012, primarily due to prepayments and scheduled amortization. During the quarter ended March 31, 2013, other-than-temporary-impairment ("OTTI") credit related write-downs and realized losses of $25,000 were recorded on private label MBS. At March 31, 2013 the Bank's remaining private label MBS portfolio had been reduced to $2.6 million from an original acquired balance of $15.3 million.

DEPOSIT BREAKDOWN
($ in thousands)
March 31, 2013 December 31, 2012 March 31, 2012
Amount Percent Amount Percent Amount Percent
Non-interest bearing $ 80,938 14% $ 78,425 13% $ 69,633 12%
N.O.W. checking 152,068 25 152,431 26 158,635 26
Savings 91,790 15 87,628 15 89,676 15
Money market 89,489 15 79,142 13 69,345 11
Certificates of deposit under $100 118,752 20 123,510 21 135,538 22
Certificates of deposit $100 and over 68,548 11 73,263 12 81,769 14
Certificates of deposit – brokered -- -- -- -- -- --
Total deposits $601,585 100% $594,399 100% $604,596 100%

Total deposits increased $7.2 million, or 1%, to $601.6 million at March 31, 2013, from $594.4 million at December 31, 2012 primarily as a result of a $10.3 million increase in money market account balances, a $4.2 million increase in savings account balances and a $2.5 million increase in non-interest bearing account balances. These increases were partially offset by a decrease of $9.5 million in certificates of deposit account balances.

Total shareholders' equity decreased $3.37 million to $88.53 million at March 31, 2013, from $91.90 million at December 31, 2012. The decrease in shareholders' equity was primarily due to the Company's purchase of 4,576 shares of Series A preferred stock for $4.32 million, the payment of $211,000 in dividends on common stock and the payment of $207,000 in dividends on preferred stock. These decreases to shareholders' equity were partially offset by net income of $1.28 million.

Operating Results

Fiscal second quarter operating revenue (net interest income before provision for loan losses, plus non-interest income excluding OTTI charges and valuation allowances or recoveries on mortgage servicing rights ("MSRs")), increased 2% to $9.02 million from $8.86 million for the preceding quarter and 3% from $8.72 million for the comparable quarter one year ago. Operating revenue increased 3% to $17.88 million for the first six months of fiscal 2013 from $17.44 million for the comparable period one year ago.

Net interest income increased 1% to $6.44 million for the quarter ended March 31, 2013 from $6.39 million for the preceding quarter and 3% from $6.27 million for the comparable quarter one year ago. The net interest margin for the current quarter increased to 3.83% from 3.78% for the preceding quarter and from 3.72% for the comparable quarter one year ago. For the first six months of fiscal 2013, net interest income increased 2% to $12.83 million from $12.57 million for the first six months of fiscal 2012. Timberland's net interest margin for the first six months of fiscal 2013 increased to 3.80% compared to 3.73% for the first six months of 2012.

Non-interest income increased 2% to $2.78 million for the quarter ended March 31, 2013, from $2.72 million in the preceding quarter and 11% from $2.49 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter was primarily due to a $191,000 increase in gain on sale of loans, which was partially offset by a decrease in service charges on deposits and a decrease in the valuation recovery on MSRs. The increase in gains 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. Year to date, non-interest income increased 11%, to $5.49 million from $4.94 million for the first six months of fiscal 2012, primarily due to increased gains on sale of loans and an increased valuation recovery of MSRs.

Total operating (non-interest) expenses decreased 3% to $6.18 million for the second fiscal quarter from $6.38 million for the preceding quarter and 6% from $6.57 million for the comparable quarter one year ago. The decreased expenses for the current quarter compared to the preceding quarter were primarily the result of decreases in FDIC insurance expense, loan administration and foreclosure expense, professional fees expense, deposit operations expense and salaries and employee benefits expense. These decreases were partially offset by an increase in OREO and other repossessed assets expense. Fiscal year-to-date operating expenses decreased 2% to $12.56 million from $12.79 million for the first six months of fiscal 2012.

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 preferred 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 2013 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) March 31, Dec. 31 March 31,
(unaudited) 2013 2012 2012
Interest and dividend income
Loans receivable $7,395 $7,414 $7,607
MBS and other investments 70 77 109
Dividends from mutual funds 5 12 7
Interest bearing deposits in banks 82 86 81
Total interest and dividend income 7,552 7,589 7,804
Interest expense
Deposits 650 728 1,035
FHLBadvances 461 472 496
Total interest expense 1,111 1,200 1,531
Net interest income 6,441 6,389 6,273
Provision for loan losses 1,175 200 1,050
Net interest income after provision for loan losses 5,266 6,189 5,223
Non-interest income
OTTI and realized losses on MBS and other investments, net (25) (10) (94)
Gain on sale of MBS and other investments -- -- 20
Service charges on deposits 827 947 890
Gain on sale of loans, net 833 642 596
Bank owned life insurance ("BOLI") net earnings 144 143 154
Valuation recovery on MSRs 221 254 142
ATM and debit card interchange transaction fees 521 515 540
Other 257 224 245
Total non-interest income, net 2,778 2,715 2,493
Non-interest expense
Salaries and employee benefits 3,086 3,114 3,055
Premises and equipment 725 690 682
Advertising 172 177 172
OREO and other repossessed assets expense, net 506 288 434
ATM 196 221 197
Postage and courier 122 113 139
Amortization of core deposit intangible ("CDI") 32 33 37
State and local taxes 157 139 152
Professional fees 192 242 232
FDIC insurance 128 241 241
Other insurance 43 52 53
Loan administration and foreclosure 49 138 372
Data processing and telecommunications 305 287 315
Deposit operations 129 164 193
Other 342 478 298
Total non-interest expense 6,184 6,377 6,572
Income before income taxes $1,860 $2,527 $1,144
Provision for income taxes 582 819 336
Net income 1,278 1,708 808
Preferred stock dividends (207) (201) (208)
Preferred stock discount accretion (126) (63) (59)
Preferred stock discount 255 -- --
Net income to common shareholders $1,200 $1,444 $ 541
Net income per common share:
Basic $0.18 $0.21 $0.08
Diluted 0.17 0.21 0.08
Weighted average common shares outstanding:
Basic 6,815,782 6,815,782 6,780,516
Diluted 6,889,504 6,821,006 6,780,516
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended
($ in thousands, except per share amounts) March 31, March 31,
(unaudited) 2013 2012
Interest and dividend income
Loans receivable $14,809 $15,412
MBS and other investments 147 234
Dividends from mutual funds 17 20
Interest bearing deposits in banks 168 170
Total interest and dividend income 15,141 15,836
Interest expense
Deposits 1,378 2,204
FHLB advances and other borrowings 933 1,058
Total interest expense 2,311 3,262
Net interest income 12,830 12,574
Provision for loan losses 1,375 1,700
Net interest income after provision for loan losses 11,455 10,874
Non-interest income
OTTI and realized losses on MBS and other investments, net (35) (153)
Gain on sale of MBS and other investments -- 20
Service charges on deposits 1,774 1,860
Gain on sale of loans, net 1,475 1,155
BOLI net earnings 287 311
Valuation recovery on MSRs 475 226
ATM and debit card interchange transaction fees 1,036 1,057
Other 481 461
Total non-interest income, net 5,493 4,937
Non-interest expense
Salaries and employee benefits 6,200 5,983
Premises and equipment 1,415 1,332
Advertising 349 380
OREO and other repossessed assets expense, net 794 936
ATM 417 392
Postage and courier 235 257
Amortization of CDI 65 74
State and local taxes 296 301
Professional fees 434 411
FDIC insurance 369 466
Other insurance 95 109
Loan administration and foreclosure 187 533
Data processing and telecommunications 592 615
Deposit operations 293 416
Other 820 589
Total non-interest expense 12,561 12,794
Income before income taxes $4,387 $3,017
Provision for income taxes 1,401 927
Net income 2,986 2,090
Preferred stock dividends (408) (416)
Preferred stock discount accretion (189) (118)
Preferred stock discount 255 --
Net income to common shareholders $2,644 $ 1,556
Net income per common share:
Basic $0.39 $0.23
Diluted 0.39 0.23
Weighted average common shares outstanding:
Basic 6,815,782 6,780,516
Diluted 6,854,879 6,780,516
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts) (unaudited) March 31, Dec. 31, March 31,
2013 2012 2012
Assets
Cash and due from financial institutions $ 11,250 $ 12,082 $ 11,154
Interest-bearing deposits in banks 74,550 73,766 100,467
Total cash and cash equivalents 85,800 85,848 111,621
Certificates of deposit ("CDs") held for investment, at cost 26,057 26,752 20,180
MBS and other investments:
Held to maturity, at amortized cost 3,060 3,197 3,706
Available for sale, at fair value 4,463 4,682 5,261
FHLB stock 5,553 5,604 5,705
Loans receivable 554,313 554,659 545,961
Loans held for sale 3,787 2,036 1,296
Less: Allowance for loan losses (11,313) (11,769) (12,264)
Net loans receivable 546,787 544,926 534,993
Premises and equipment, net 18,126 18,027 17,640
OREO and other repossessed assets, net 15,031 13,230 8,024
BOLI 16,812 16,668 16,228
Accrued interest receivable 2,081 2,080 2,369
Goodwill 5,650 5,650 5,650
Core deposit intangible 184 217 323
Mortgage servicing rights, net 2,412 2,213 2,284
Prepaid FDIC insurance assessment 758 957 1,643
Other assets 5,347 4,570 7,082
Total assets $738,121 $734,621 $742,709
Liabilities and shareholders' equity
Deposits: Non-interest-bearing demand $ 80,938 $ 78,425 $ 69,633
Deposits: Interest-bearing 520,647 515,974 534,963
Total deposits 601,585 594,399 604,596
FHLB advances 45,000 45,000 45,000
Repurchase agreements 549 625 948
Other liabilities and accrued expenses 2,456 2,694 4,181
Total liabilities 649,590 642,718 654,725
Shareholders' equity
Preferred stock, $.01 par value; 1,000,000 shares authorized;
12,065 shares, Series A, issued and outstanding – March 31, 2013
16,641 shares, Series A, issued and outstanding – Dec. 31, 2012
and March 31, 2012
$1,000 per share liquidation value 11,842 16,292 16,107
Common stock, $.01 par value; 50,000,000 shares authorized; 7,045,036 shares issued and outstanding 10,524 10,500 10,480
Unearned shares- Employee Stock Ownership Plan (1,587) (1,653) (1,851)
Retained earnings 68,198 67,232 63,826
Accumulated other comprehensive loss (446) (468) (578)
Total shareholders' equity 88,531 91,903 87,984
Total liabilities and shareholders' equity $738,121 $734,621 $742,709
KEY FINANCIAL RATIOS AND DATA Three Months Ended
($ in thousands, except per share amounts) (unaudited) March 31, Dec. 31, March 31,
2013 2012 2012
PERFORMANCE RATIOS:
Return on average assets (a) 0.69% 0.92% 0.44%
Return on average equity (a) 5.56% 7.53% 3.69%
Net interest margin (a) 3.83% 3.78% 3.72%
Efficiency ratio 67.08% 70.05% 74.97%
Six Months Ended
March 31, March 31,
2013 2012
PERFORMANCE RATIOS:
Return on average assets (a) 0.81% 0.57%
Return on average equity (a) 6.54% 4.80%
Net interest margin (a) 3.80% 3.73%
Efficiency ratio 68.55% 73.06%
March 31, Dec. 31, March 31,
2013 2012 2012
ASSET QUALITY RATIOS AND DATA:
Non-accrual loans $20,450 $21,737 $26,623
Loans past due 90 days and still accruing 158 357 2,967
Non-performing investment securities 2,264 2,334 2,516
OREO and other repossessed assets 15,031 13,230 8,024
Total non-performing assets (b) $37,903 $37,658 $40,130
Non-performing assets to total assets (b) 5.14% 5.13% 5.40%
Net charge-offs during quarter $ 1,631 $ 256 $ 758
Allowance for loan losses to non-accrual loans 55% 54% 46%
Allowance for loan losses to loans receivable, net (c) 2.03% 2.11% 2.24%
Troubled debt restructured loans on accrual status (d) $13,012 $13,008 $ 15,891
CAPITAL RATIOS:
Tier 1 leverage capital 11.43% 11.86% 11.42%
Tier 1 risk based capital 14.95% 15.67% 15.28%
Total risk based capital 16.21% 16.93% 16.54%
Tangible capital to tangible assets (e) 11.29% 11.81% 11.13%
BOOK VALUES:
Book value per common share $ 10.89 $ 10.73 $ 10.20
Tangible book value per common share (e) 10.06 9.90 9.35
(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 $10,832, $10,733 and $7,097 reported as non-accrual loans at March 31, 2013, December 31, 2012 and March 31, 2012, respectively.
(e) Calculation subtracts goodwill and core deposit intangible from the equity component and from assets.
AVERAGE CONSOLIDATED BALANCE SHEETS: Three Months Ended
($ in thousands) (unaudited) March 31, Dec. 31, March 31,
2013 2012 2012
Average total loans $557,426 $553,404 $540,858
Average total interest-bearing assets (a) 673,109 676,061 673,970
Average total assets 738,818 739,858 732,882
Average total interest-bearing deposits 518,834 519,308 529,706
Average FHLB advances and other borrowings 45,599 45,649 45,967
Average shareholders' equity 92,055 90,721 87,587
Six Months Ended
March 31, March 31,
2013 2012
Average total loans $555,405 $539,359
Average total interest-bearing assets (a) 674,612 674,707
Average total assets 739,332 734,584
Average total interest-bearing deposits 519,074 527,894
Average FHLB advances and other borrowings 45,624 50,789
Average shareholders' equity 91,381 87,058
(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