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Timberland Bancorp Inc. Reports Operating Results (10-K)

December 10, 2010 | About:
10qk

10qk

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Timberland Bancorp Inc. (TSBK) filed Annual Report for the period ended 2010-09-30.

Timberland Bancorp Inc. has a market cap of $24.2 million; its shares were traded at around $3.44 with and P/S ratio of 0.6. TSBK is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Grays Harbor County has a population of 72,000 according to the U.S.

Census Bureau 2009 estimates and a median family income of $55,400 according

to 2010 estimates from the Department of Housing and Urban Development (

HUD"). The economic base in Grays Harbor has been historically dependent on

the timber and fishing industries. Other industries that support the economic

base are tourism, agriculture, shipping, transportation and technology.

According to the Washington State Employment Security Department, the

unemployment rate in Grays Harbor County decreased to 11.4% at September 30,

2010 from 11.9% at September 30, 2009. The median price of a resale home in

Grays Harbor County for the quarter ended September 30, 2010 decreased 3.3% to

$130,000 from $134,500 for the comparable prior year period. The number of

home sales increased 23.1% for the quarter ended September 30, 2010 compared

to the same quarter one year earlier. The Bank has six branches (including

its home office) located throughout the county. The downturn in Grays Harbor

County's economy and the decline in real estate values since 2008 have had a

negative effect on the Bank's profitability in this market area.



At September 30,

-

2010 2009 2008 2007 2006

- - - - -

Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent

- - - - - - - - - -

(Dollars in thousands)



Mortgage Loans:

One- to four-

family(1)....$121,014 21.65% $110,556 18.58% $112,299 18.35% $102,434 17.40% $ 98,709 20.11%

Multi-family.. 32,267 5.77 25,638 4.31 25,927 4.24 35,157 5.97 17,689 3.60

Commercial.... 208,002 37.21 188,205 31.62 146,223 23.90 127,866 21.72 137,609 28.04

Construction

and land

development.. 69,271 12.39 139,728 23.48 186,344 30.46 186,261 31.64 146,855 29.92

Land.......... 62,999 11.27 65,642 11.03 60,701 9.92 60,706 10.30 29,598 6.03

- - - - - - - - - -

Total

mortgage

loans....... 493,553 88.29 529,769 89.02 531,494 86.87 512,424 87.03 430,460 87.70



Consumer Loans:

Home equity

and second

mortgage..... 38,418 6.87 41,746 7.01 48,690 7.96 47,269 8.02 37,435 7.63

Other......... 9,086 1.62 9,827 1.66 10,635 1.73 10,922 1.86 11,127 2.27

- - - - - - - - - -

Total consumer

loans....... 47,504 8.49 51,573 8.67 59,325 9.69 58,191 9.88 48,562 9.90

Commercial

business

loans......... 17,979 3.22 13,775 2.31 21,018 3.44 18,164 3.09 11,803 2.40

- - - - - - - - - -

Total loans.. 559,036 100.00% 595,117 100.00% 611,837 100.00% 588,779 100.00% 490,825 100.00%

= = = = = = = = = =



The Bank also offers adjustable-rate mortgage ("ARM") loans. All of the

Bank's ARM loans are retained in its loan portfolio and not sold. The Bank

offers several ARM products which adjust annually after an initial period

ranging from one to five years subject to a limitation on the annual increase

of 2% and an overall limitation of 6%. These ARM products generally are

priced utilizing the weekly average yield on one year U.S. Treasury securities

adjusted to a constant maturity of one year plus a margin of 2.88% to 4.00%.

Loans tied to the prime rate or to London Inter-Bank Offered Rate ("LIBOR")

indices typically do not have periodic, or lifetime adjustment limits. Loans

tied to these indices normally have margins ranging up to 3.5%. ARM loans

held in the Bank's portfolio do not permit negative amortization of principal.

Borrower demand for ARM loans versus fixed-rate mortgage loans is a function

of the level of interest



At September 30,

-

2010 2009

- -

Outstanding Percent of Outstanding Percent of

Balance Total Balance Total

- - - -

(In thousands)

Custom and owner/builder

onstruction............... $30,945 44.67% $ 35,414 25.34%

Speculative construction... 4,777 6.90 16,959 12.14

Multi-family (including

condominium).............. 3,587 5.18 18,800 13.46

Land development........... 6,434 9.29 19,158 13.71

Commercial real estate..... 23,528 33.96 49,397 35.35

- - - -

Total.................... $69,271 100.00% $139,728 100.00%

= = = =



Owner/builder construction loans are originated to home owners rather

than home builders and are typically refinanced into permanent loans at the

completion of construction. The construction phase of an owner/builder

construction loan generally lasts up to 12 months with fixed interest rates

currently ranging from 7.00% to 7.88%, and with loan-to-value ratios of 80%

(or up to 95% with PMI) of the appraised estimated value of the completed

property. At the completion of construction, the loan is refinanced into

either a fixed-rate mortgage loan, which conforms to secondary market

standards, or an ARM loan for retention in the Bank's portfolio. At September

30, 2010, custom and owner/builder construction loans totaled $30.9 million,

or 44.7%, of the total construction and land development loan portfolio. At

September 30, 2010, the largest outstanding custom and owner/builder

construction loan had an outstanding balance of $600,000 (including $172,000

of undisbursed loans in process) and was performing according to its repayment

terms.



Read the The complete Report

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