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

May 11, 2009 | About:

Timberland Bancorp Inc. (TSBK) filed Quarterly Report for the period ended 2009-03-31.

Timberland Bancorp Inc. was organized for the purpose of becoming the holding company for Timberland Savings Bank. The Savings Bank is a community oriented savings bank which offeres a variety of savings products to its retail customers while concentrating its lending activities on real estate mortgage loans. Timberland Bancorp Inc. has a market cap of $39 million; its shares were traded at around $5.53 with a P/E ratio of 16.8 and P/S ratio of 0.8. The dividend yield of Timberland Bancorp Inc. stocks is 8%. Timberland Bancorp Inc. had an annual average earning growth of 9% over the past 5 years.

Highlight of Business Operations:

Loans: Net loans receivable decreased by $3.31 million, or 0.6% to $554.37

million at March 31, 2009 from $557.69 million at September 30, 2008. The

decrease in the portfolio was primarily a result of a $19.55 million decrease

in construction loans (net of undisbursed portion of construction loans in

process), a $5.39 million decrease in commercial business loans, a $4.61

million decrease in consumer loans, a $3.46 million decrease in multi-family

loans, and a $4.00 million increase in the allowance for loan losses. These

decreases to net loans receivable were partially offset by an $18.56 million

increase in commercial real estate loans, an $8.22 million increase in one- to

four-family loans (including a $6.01 million increase in one- to four-family

loans held for sale), and a $6.69 million increase in land loans. The

decrease in construction loans was primarily reflected in a $12.11 million

decrease in custom and owner / builder construction loans, a $10.53 million

decrease in multi-family and condominium construction loans, a $6.50 million

decrease in speculative construction loans, and a $4.25 million decrease in

land development loans; which were partially offset by an $8.02 million

increase in commercial real estate construction loans.



Total non-accrual loans of $19.87 million at March 31, 2009 were comprised of

49 loans and 34 credit relationships. Included in these non-accrual loans

were:

* Four land development loans totaling $5.88 million (of which the

largest had a balance of $2.60 million)

* 18 individual lot / land loans totaling $3.90 million (of which the

largest had a balance of $1.00 million)

* 13 Single family speculative loans totaling $3.78 million (of which

the largest had a balance of $451,000)

* Six commercial real estate loans totaling $3.78 million (of which the

largest had a balance of $1.39 million)

* One multi-family loan for $1.39 million

* Three single family home loans totaling $595,000 (of which the largest

had a balance of $334,000)

* Three commercial business loans totaling $592,000

* One single family construction loan for $123,000



Net Income: Earnings for the quarter ended March 31, 2009 decreased by $2.98

million, or 187.9%, to a net loss of $(1.39) million from net income of $1.59

million for the quarter ended March 31, 2008. Earnings available to common

shareholders for the quarter ended March 31, 2009, adjusted for the dividend

of $208,000 payable to the U.S. Treasury on preferred stock was a net loss of

$(1.60) million. Earnings per diluted common share decreased to a loss of

$(0.24) for the quarter ended March 31, 2009 from earnings of $0.24 for the

quarter ended March 31, 2008. The $0.48 decrease in diluted earnings per

common share was primarily a result of a $4.48 million ($2.95 million net of

income tax - $0.45 per diluted common share) increase in the provision for

loan losses, a $993,000 ($655,000 net of income tax - $0.10 per diluted common

share) increase in OTTI charges, a $236,000 ($156,000 net of income tax -

$0.02 per diluted common share) increase in non-interest expense, a $254,000

($168,000 net of income tax - $0.02 per diluted common share) decrease in net

interest income, and a $208,000 ($0.03 per diluted common share) increase in

dividends payable to preferred shareholders. These decreases to earnings per

diluted common share were partially offset by $1.35 million ($937,000 net of

income tax - $0.14 per diluted common share) increase in non-interest income

(excluding OTTI charges).



Earnings for the six months ended March 31, 2009 decreased by $4.23 million,

or 132.2%, to a net loss of $(1.03) million from net income of $3.20 million

for the six months ended March 31, 2008. Earnings available to common

shareholders for the six months ended March 31, 2009, adjusted for the

dividend of $227,000 payable to the U.S. Treasury on preferred stock was a net

loss of $(1.26) million. Earnings per diluted common share decreased to a

loss of $(0.19) for the six months ended March 31, 2009 from earnings of $0.48

for the six months ended March 31, 2008. The $0.67 decrease in diluted

earnings per common share was primarily a result of a $4.59 million ($3.03

million net of income tax - $0.46 per diluted common share) increase in the

provision for loan losses, a $2.16 million ($1.43 million net of income tax -

$0.21 per diluted common share) increase in OTTI charges, a $920,000 ($607,000

net of income tax - $0.09 per diluted common share) increase in non-interest

expense, a $710,000 ($469,000 net of income tax - $0.07 per diluted common

share) decrease in net interest income, and a $227,000 ($0.03 per diluted

common share) increase in dividends payable to preferred shareholders. These

decreases to earnings per diluted common share were partially offset by $1.93

million ($1.27 million net of income tax - $0.19 per diluted common share)

increase in non-interest income (excluding OTTI charges).



Non-interest Income: Total non-interest income increased by $358,000, or

23.0%, to $1.91 million for the quarter ended March 31, 2009 from $1.55

million for the quarter ended March 31, 2008. Excluding the $993,000 OTTI

charge recorded in the quarter ended March 31, 2009, non-interest income

increased by $1.35 million, or 86.9% to $2.91 million for the quarter ended

March 31, 2009 from $1.55 million for the quarter ended March 31, 2008. This

increase was primarily a result of a $720,000 increase in loan sale income

(gain on sale of loans and servicing income on loans sold), a $361,000

increase in service charges on deposit accounts and a $137,000 increase in

BOLI net earnings. The increased income from loan sales was primarily a

result of an increase in the dollar value of residential mortgage loans sold

in the secondary market during the quarter ended March 31, 2009. The sale of

fixed rate one-to four-family mortgage loans totaled $60.7 million for the

quarter ended March 31, 2009 compared to $11.9 million for the quarter ended

March 31, 2008. The increase in loan sales was primarily attributable to

lower interest rates for 30-year fixed rates loans which increased refinancing

activity. The increase in service charge income was primarily a result of

implementing an automated overdraft decision-making program in May 2008 and

increasing the fees charged for overdrafts. The increase in BOLI income was

due to a $134,000 non-recurring gain associated with transferring a portion of

the BOLI portfolio to a new insurance company.



Total non-interest income decreased by $234,000, or 7.7%, to $2.82 million for

the six months ended March 31, 2009 from $3.05 million for the six months

ended March 31, 2008. Excluding the $2.16 million OTTI charge recorded in the

six months ended March 31, 2009, non-interest income increased by $1.93

million, or 63.2% to $4.98 million for the six months ended March 31, 2009

from $3.05 million for the six months ended March 31, 2008. This increase was

primarily a result of an $823,000 increase in loan sale income (gain on sale

of loans and servicing income on loans sold), an $815,000 increase in service

charges on deposit accounts and a $139,000 increase in BOLI net earnings. The

increased income from loan sales was primarily a result of an increase in the

dollar value of residential mortgage loans sold in the secondary market during

the quarter ended March 31, 2009. The sale of fixed rate one-to four-family

mortgage loans totaled $71.3 million for the six months ended March 31, 2009

compared to $19.3 million for the six months ended March 31, 2008. The

increase in loan sales was primarily attributable to lower interest rates for

30-year fixed rates loans which increased refinancing activity. The increase

in service charge income was primarily a result of implementing an automated

overdraft decision-making program in May 2008 and increasing the fees charged

for overdrafts. The increase in BOLI income was due to a $134,000

non-recurring gain associated with transferring a portion of the BOLI

portfolio to a new insurance company.



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