Market Overview

Timberland Bancorp Earnings Per Share Increases 36% to $0.57 for Second Fiscal Quarter of 2018

Share:
  • Earnings Per Share Increases 22% to $1.05 for the First Six Months of Fiscal 2018
  • Total Assets Reach $1 Billion
  • Announces $0.13 Regular Dividend and $0.10 Special Dividend

HOQUIAM, Wash., April 24, 2018 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) ("Timberland" or "the Company") today reported net income increased 36% to $4.27 million, or $0.57 per diluted common share, for its second fiscal quarter ended March 31, 2018, from $3.13 million, or $0.42 per diluted common share, for the quarter ended March 31, 2017, and increased 18% from $3.61 million, or $0.48 per diluted common share, for the preceding quarter ended December 31, 2017.

For the first six months of fiscal 2018, Timberland earned $7.88 million, or $1.05 per diluted common share, an increase in net income of 26% and an increase in earnings per diluted common share ("EPS") of 22% from $6.28 million, or $0.86 per diluted common share, reported for the first six months of fiscal 2017.

Timberland's Board of Directors also declared a quarterly cash dividend to shareholders of $0.13 per common share and a special one-time dividend of $0.10 per common share payable on May 25, 2018, to shareholders of record on May 11, 2018. 

"We have continued to emphasize our operations along Western Washington's economically important I-5 corridor and, correspondingly, have continued to significantly and consistently improve the Company's financial metrics year over year," said Michael Sand, President and CEO.  "We have expended considerable efforts developing and profitably growing our franchise within our primary markets and have specifically focused on increasing core deposits.  Particular attention has been devoted to growing transaction account balances, and we have successfully expanded this segment of our funding base.  Strong economic conditions persist in the northwest markets we serve, and we see ample opportunity for the continued profitable growth of our franchise."

"Additionally, based on a number of factors, including the Company's sustained strong financial performance, Timberland's Board of Directors voted to pay a one-time special dividend of $0.10 per share in addition to the regular $0.13 per share quarterly dividend.  This special dividend marks the third special dividend the Company has paid in the past three years."

Second Fiscal Quarter 2018 Earnings and Balance Sheet Highlights (at or for the period ended March 31, 2018, compared to December 31, 2017, or March 31, 2017):

   Earnings Highlights:

  • Net income increased 36% to $4.27 million from $3.13 million for the comparable quarter one year ago and increased 18% from $3.61 million for the preceding quarter;
  • EPS for the first six months of fiscal 2018 increased 22% to $1.05 from $0.86 for the first six months of fiscal 2017;
  • Return on average equity and return on average assets for the current quarter increased to 14.79% and 1.75%, respectively;
  • Operating revenue increased 13% from the comparable quarter one year ago;
  • Net interest margin improved to 4.19% from 3.88% for the comparable quarter one year ago; and
  • Efficiency ratio improved to 56.83% for the current quarter from 60.67% for the comparable quarter one year ago.

   Balance Sheet Highlights:

  • Total assets increased 6% year-over-year reaching $1 billion;
  • Increased net loans receivable 5% year-over-year;
  • Increased total deposits 9% year-over-year;
  • Decreased non-performing assets 18% year-over-year and 16% from the prior quarter; and
  • Increased book and tangible book (non-GAAP) values per common share to $15.95 and $15.18, respectively, at March 31, 2018.

Operating Results

Operating revenue (net interest income before the recapture of loan losses, plus non-interest income excluding gains or losses on the sale of investment securities and other than temporary impairment ("OTTI") charges (recoveries) on investment securities) increased 12% for the current quarter to $12.69 million from $11.30 million for the comparable quarter one year ago and increased 1% from $12.55 million for the preceding quarter.  Operating revenue increased 11% to $25.24 million for the first six months of fiscal 2018 from $22.83 million for the comparable period one year ago.

Net interest income for the current quarter increased 14% to $9.62 million from $8.45 million for the comparable quarter one year ago and increased 2% from $9.43 million for the preceding quarter.  The increase in net interest income compared to the preceding quarter was primarily due to an increase in average total interest-earning assets and an increase in the yield earned on average total interest-earning assets and was partially offset by an increase in the cost of interest-bearing deposits.  The increase in net interest income relative to the comparable quarter one year ago was also partially due to paying off FHLB borrowings and eliminating the associated interest expense.  For the first six months of fiscal 2018 net interest income increased 14% to $19.06 million from $16.76 million for the first six months of fiscal 2017.

The net interest margin ("NIM") for the current quarter improved to 4.19% from 3.88% for the comparable quarter one year ago and matched the 4.19% recorded for the preceding quarter.  The NIM for the current quarter was increased by approximately six basis points due to the collection of a $134,000 loan prepayment penalty and the collection of $2,000 of non-accrual interest.  The NIM for the comparable quarter one year ago was increased by approximately nine basis points due to the collection of $204,000 of non-accrual interest and the NIM for the preceding quarter was increased by approximately two basis points due to the collection of $45,000 of non-accrual interest. Timberland's net interest margin for the first six months of fiscal 2018 improved to 4.19% from 3.90% for the first six months of fiscal 2017. 

Non-interest income increased 8% to $3.08 million for the current quarter from $2.85 million for the comparable quarter one year ago and decreased 2% from $3.14 million for the preceding quarter.  The decreased non-interest income for the current quarter compared to the preceding quarter was primarily due to a decrease in service charges on deposits and a decrease in gain on sales of loans, which was partially offset by an increase in ATM and debit card interchange transaction fees.  Fiscal year-to-date non-interest income increased 2% to $6.22 million from $6.07 million for the first six months of fiscal 2017.

Total operating expenses for the current quarter increased 5% to $7.22 million from $6.86 million for the comparable quarter one year ago and increased 1% from $7.18 million for the preceding quarter.  The increased expenses for the current quarter compared to the preceding quarter were primarily due to an increase in salaries and employee benefits and smaller increases in several other categories.  These increases were partially offset by a $113,000 gain on the sale of excess land.  The efficiency ratio for the current quarter improved to 56.83% compared to 57.08% for the preceding quarter and 60.67% for the comparable quarter one year ago.  Fiscal year-to-date operating expenses increased 5% to $14.40 million from $13.67 million for the first six months of fiscal 2017.  The efficiency ratio improved for the first six months of fiscal 2018 to 56.96% from 59.86% for the first six months of fiscal 2017.

The provision for income taxes decreased $565,000 to $1.22 million from $1.78 million for the preceding quarter and was impacted by the Tax Cuts and Jobs Act Legislation which was signed into law on December 22, 2017.  As a result of the new legislation (which decreases the federal corporate income tax rate to 21.0% from 35.0%), Timberland recorded a one-time income tax expense of $548,000 in conjunction with writing down its net deferred tax asset ("DTA") during the quarter ended December 31, 2017.  Since Timberland is a September 30th fiscal year-end corporation, it will use a blended tax rate of 24.5% for the fiscal year ending September 30, 2018, and a 21.0% rate thereafter.  Timberland's effective tax rate for the quarter ended March 31, 2018, was 22.2%.

Balance Sheet Management

Total assets increased $7.31 million, or 1%, to $1.00 billion at March 31, 2018, from $993.90 million at December 31, 2017. The increase was primarily due to a $3.87 million increase in net loans receivable and loans held for sale, and a $3.20 million increase in total cash and cash equivalents. These increases were primarily 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 25.3% of total liabilities at March 31, 2018, compared to 25.1% at December 31, 2017, and 24.0% one year ago. 

Net loans receivable increased $3.30 million, or 1%, to $708.57 million at March 31, 2018, from $705.27 million at December 31, 2017.  The increase was primarily due to an $8.76 million increase in commercial real estate loans, a $3.62 million increase in speculative one- to four-family loans, a $3.17 million increase in commercial construction loans, a $2.95 million increase in land development loans, a $1.34 million decrease in the undisbursed portion of construction loans in process and smaller increases in several other categories.  These increases were partially offset by a $6.21 million decrease in multi-family loans, a $4.14 million decrease in one- to four-family construction loans, a $4.11 million decrease in one- to four-family mortgage loans and smaller decreases in several other categories. 

LOAN PORTFOLIO

($ in thousands) March 31, 2018   December 31, 2017   March 31, 2017
  Amount   Percent   Amount   Percent   Amount   Percent
                       
Mortgage loans:                      
  One- to four-family (a) $   112,862     14 %   $   116,976     15 %   $  122,889     16 %
  Multi-family     55,157       7         61,366       8         63,181       8  
  Commercial     341,845       43         333,085       42         325,120       44  
  Construction - custom and                      
owner/builder     119,230       15         123,365     15          99,304       13  
  Construction - speculative
  one-to four-family
    10,876       1         7,253       1         5,311       1  
  Construction - commercial     25,166       3         22,000       3         10,762       2  
  Construction - multi-family     24,812       3         24,601       3         11,057       2  
  Construction – land                       
  development     2,950       --         --       --         --       --  
  Land     20,602       3         21,122       2         25,866       3  
Total mortgage loans  
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