Market Overview

Timberland Bancorp Fiscal Year Net Income Increases 40% to $14.17 Million

Share:
  • Fiscal Year Earnings Per Share Increases 34% to $1.92
  • Fiscal Year Return on Equity Increases to 13.65%
  • Fiscal Year Return on Assets Increases to 1.53%

HOQUIAM, Wash., Nov. 01, 2017 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) ("Timberland" or "the Company") today reported that net income increased 40% to $14.17 million for the fiscal year ended September 30, 2017 from $10.15 million for the fiscal year ended September 30, 2016. Earnings per diluted common share ("EPS") increased 34% to $1.92 for fiscal year 2017 from $1.43 for the prior fiscal year.

Timberland also reported net income of $3.62 million, or $0.48 per diluted common share, for its fourth fiscal quarter ended September 30, 2017.  This compares to net income of $2.70 million, or $0.38 per diluted common share, for the quarter ended September 30, 2016, and net income of $4.28 million, or $0.58 per diluted common share, for the preceding quarter ended June 30, 2017.  

Timberland's Board of Directors declared a quarterly cash dividend of $0.11 per common share, payable on November 30, 2017 to shareholders of record on November 16, 2017. 

"Fiscal year 2017 marked the 7th consecutive year the Company increased earnings per share, return on equity, return on assets and net income," stated Michael R. Sand, President and CEO.  "Each of these metrics increased significantly compared to the prior fiscal year as detailed fully in this earnings release.  The continued improvement in the Company's financial position is a result of exercising pricing discipline while growing revenues and carefully managing expenses.  Our positioning of the Company has been predicated on producing above peer results in conjunction with structuring the balance sheet to benefit from rising interest rates.  We anticipate maintaining this sensitivity to rising rates.  Timberland's shareholders have been rewarded this year by a significant increase in the Company's share price which increased the Company's market cap to a level comfortably sufficient for Timberland to be added to the Russell 2000 and 3000 indexes.  This has increased the visibility of the Company and significantly increased its average daily trading volume."

2017 Fiscal Year Earnings and Balance Sheet Highlights (at or for the period ended September 30, 2017, compared to September 30, 2016, or June 30, 2017):

   Earnings Highlights:

  • Fiscal year 2017 EPS increased 34% to $1.92 from $1.43 for fiscal year 2016;
  • Quarterly EPS increased 26% to $0.48 from $0.38 for comparable quarter one year ago;
  • Net income increased 40% to $14.17 million from $10.15 million for the prior fiscal year;
  • Return on average equity and return on average assets increased to 13.65% and 1.53%, respectively, for the 2017 fiscal year; from 11.00% and 1.19%, respectively, for the prior fiscal year;
  • Operating revenue increased 13% compared to fiscal year 2016;
  • Non-interest income increased 14% compared to fiscal year 2016;
  • Efficiency ratio improved to 57.92% for fiscal year 2017 from 63.89% for fiscal year 2016; and
  • Net interest margin for fiscal 2017 increased to 4.07% from 3.88% for fiscal 2016.

   Balance Sheet Highlights:

  • Increased total assets 7% year-over-year and 2% from the prior quarter;
  • Increased net loans receivable 4% year-over-year;
  • Increased total deposits 10% year-over-year and 2% from the prior quarter;
  • Decreased non-performing assets 27% year-over-year and 5% from the prior quarter; and
  • Increased book and tangible book (non-GAAP) values per common share to $15.08 and $14.31, respectively, at September 30, 2017 from $13.95 and $13.13, respectively, at September 30, 2016.

Operating Results

Operating revenue (net interest income before provision for loan losses, plus non-interest income excluding gains or losses on the sale of investment securities and other than temporary impairment ("OTTI") charges on investment securities) increased 13% for the 2017 fiscal year to $47.48 million from $41.86 million for Timberland's 2016 fiscal year. For the current quarter operating revenue increased 11% to $12.24 million from $11.06 million for the comparable quarter one year ago and decreased 1% from $12.40 for the preceding quarter.  During the preceding quarter operating revenue was increased by $466,000 – the net amount resulting from the collection of $748,000 of non-accrual interest and the payment of $282,000 in prepayment penalties incurred to prepay Timberland's remaining Federal Home Loan Bank ("FHLB") borrowings.

Net interest income for the 2017 fiscal year increased 14% to $35.14 million from $30.80 million for the 2016 fiscal year. Net interest income for the current quarter increased 17% to $9.13 million from $7.81 million for the comparable quarter one year ago and decreased 1% from $9.25 million for the preceding quarter.  The increased net interest income for the preceding quarter was primarily due to an increase in the amount of non-accrual interest collected, which was partially offset by prepayment penalties on FHLB borrowings as noted in the prior paragraph.   

Timberland's net interest margin for the fiscal year ended September 30, 2017, increased to 4.07% from 3.88% for the fiscal year ended September 30, 2016. The net interest margin for the current quarter increased to 4.18% from 3.77% for the comparable quarter one year ago and decreased from 4.29% for the preceding quarter.  The net interest margin for the prior quarter was increased by approximately 22 basis points due to the net effect ($466,000) of collecting $748,000 of non-accrual interest and paying $282,000 in FHLB borrowing prepayment penalties.  The net interest margin for the current quarter was increased by less than one basis point due to the collection of $8,000 of non-accrual interest.

Non-interest income for fiscal year 2017 increased 14% to $12.37 million from $10.89 million for the prior fiscal year. The increase was primarily due to increases in services charges on deposits, gain on sales of loans, servicing income on loans sold and smaller increases in several other categories.  Non-interest income for the current quarter increased 1% to $3.15 million from $3.11 million for the comparable quarter one year ago and decreased slightly from $3.16 million for the preceding quarter.

For fiscal year 2017, total (non-interest) operating expense increased 3% to $27.52 million from $26.64 million for the prior fiscal year. Total operating expenses for the current quarter decreased slightly to $6.91 million from $6.94 million for the preceding quarter and from $6.96 million for the comparable quarter one year ago.  The efficiency ratio for fiscal 2017 improved to 57.92% from 63.89% for fiscal year 2016.  The efficiency ratio for the current quarter improved to 56.31% from 63.77% for the comparable quarter one year ago.

The provision for income taxes for fiscal year 2017 increased $2.18 million to $7.08 million from $4.90 million for fiscal year 2016, primarily due to higher pre-tax income. The effective tax rate was 33.3% for fiscal year 2017 compared to 32.6% for fiscal year 2016. The provision for income taxes for the current quarter decreased to $1.75 million from $2.19 million for the preceding quarter, primarily due to lower pre-tax income.  The effective tax rate was 32.6% for the current quarter compared to 33.8% for the quarter ended June 30, 2017.  The lower effective tax rate for the current quarter was in part due to the adoption of Accounting Standards Update ("ASU") No. 2016-09, Improvements to Employee Share-Based Payment Accounting.

Balance Sheet Management

Total assets increased $60.64 million, or 7%, during the fiscal year to $952.02 million at September 30, 2017 from $891.39 million at September 30, 2016.  This increase was primarily due to a $39.25 million increase in cash and cash equivalents and a $27.22 million increase in net loans receivable.  These increases, and the repayment of $30.00 million in FHLB borrowings, were primarily funded by a $76.36 million increase in deposits and retained net income during the fiscal year.  Total assets increased $21.02 million, or 2%, during the current quarter to $952.02 million at September 30, 2017 from $931.01 million at June 30, 2017.  The increase was primarily due to a $15.75 million increase in cash and cash equivalents and a $3.21 million increase in net loans receivable and was funded by increased deposits.

Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment and available for sale investment securities, was 22.9% of total liabilities at September 30, 2017, compared to 21.3% at June 30, 2017, and 20.6% one year ago. 

Net loans receivable increased $27.22 million, or 4%, during the fiscal year to $690.36 million at September 30, 2017, from $663.15 million at September 30, 2016.  The increase was primarily due to a $24.59 million increase in custom and owner/builder one- to four-family construction loans, a $16.40 million increase in commercial real estate loans, a $10.27 million increase in commercial construction loans, an $8.74 million increase in multi-family construction loans and smaller increases in several other categories.  These increases were partially offset by a $33.78 million increase in the amount of undisbursed construction loans in process, a $3.70 million decrease in multi-family mortgage loans and smaller decreases in several other categories. 

Net loans receivable increased $3.21 million during the current quarter to $690.36 million at September 30, 2017, from $687.16 million at June 30, 2017.  The increase was primarily due to a $10.27 million increase in multi-family construction loans, an $8.06 million increase in custom and owner/builder one- to four-family construction loans and smaller increases in several other categories.  These increases were partially offset by a $10.28 million increase in the amount of undisbursed construction loans in process, a $3.80 million decrease in one- to four- family mortgage loans and smaller decreases in several other categories. 

LOAN PORTFOLIO

($ in thousands) September 30, 2017   June 30, 2017   September 30, 2016
  Amount   Percent   Amount   Percent   Amount   Percent
                       
Mortgage loans:                      
  One- to four-family (a) $   118,147     15 %   $   121,705     16 %   $  118,560     16 %
  Multi-family     58,607       7          61,051       8          62,303       9  
  Commercial     328,927       42         331,901       43         312,525       43  
  Construction - custom and                      
owner/builder     117,641       15         109,578         14          93,049       13  
  Construction - speculative
  one-to four-family
    9,918       1         8,002       1         8,106       1  
  Construction - commercial     19,630       3         20,067       3         9,365       1  
  Construction - multi-family     21,327       3         11,057       1         12,590       2  
  Land     23,910       3         24,333       3         21,627       3  
Total mortgage loans     698,107       89         687,694       89         638,125       88
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