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

August 10, 2009 | About:

Timberland Bancorp Inc. (TSBK) filed Quarterly Report for the period ended 2009-06-30.

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 $30.2 million; its shares were traded at around $4.28 with a P/E ratio of 30.6 and P/S ratio of 0.6. The dividend yield of Timberland Bancorp Inc. stocks is 10.3%. 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 $11.92 million, or 2.1% to $545.77

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

decrease in the portfolio was primarily a result of a $30.42 million decrease

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

process), a $7.27 million decrease in consumer loans, a $5.82 million decrease

in commercial business loans, a $1.96 million decrease in one- to four-family

loans (including loans held for sale) and a $4.39 million increase in the

allowance for loan losses. These decreases to net loans receivable were

partially offset by a $32.72 million increase in commercial real estate loans

and a $5.04 million increase in land loans. The decrease in construction

loans was primarily the result of a $14.88 million decrease in multi-family

and condominium construction loans, a $12.80 million decrease in custom and

owner / builder construction loans, an $11.56 million decrease in one- to

four-family speculative construction loans, and a $7.54 million decrease in

land development loans; which were partially offset by a $2.44 million

increase in commercial real estate construction loans.



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

largest had a balance of $2.12 million)

* Two condominium construction loans totaling $5.68 million (of which

the largest had a balance of $4.29 million)

* Eight commercial real estate loans totaling $5.50 million (of which

the largest had a balance $1.65 million)

* 13 land loans totaling $3.38 million (of which the largest had a

balance of $986,000)

* Seven single family home loans totaling $2.32 million (of which the

largest had a balance of $995,000)

* Seven single family speculative loans totaling $2.17 million (of which

the largest had a balance of $546,000)

* Two commercial business loans totaling $93,000

* Two home equity loans totaling $92,000.



Net Income: Earnings for the quarter ended June 30, 2009 increased by $1.60

million, or 293.8%, to $1.06 million from a net loss of $(546,000) for the

quarter ended June 30, 2008. Earnings available to common shareholders for

the quarter ended June 30, 2009, adjusted for preferred stock dividends of

$210,000 and preferred stock discount accretion of $79,000 was $769,000.

Earnings per diluted common share increased to $0.12 for the quarter ended

June 30, 2009 from a net loss of $(0.08) for the quarter ended June 30, 2008.

The $0.20 increase in diluted earnings per common share was primarily a result

of a $2.82 million ($2.59 million net of income tax - $0.40 per diluted common

share) decrease in loss on redemption of mutual funds and an $870,000

($574,000 net of income tax - $0.09 per diluted common share) increase in

non-interest income (excluding OTTI charges and loss on redemption of mutual

funds). These increases to earnings per diluted common share were partially

offset by a $1.45 million ($960,000 net of income tax - $0.15 per diluted

common share) increase non-interest expense, a $500,000 ($330,000 net of

income tax - $0.05 per diluted common share)



Earnings for the nine months ended June 30, 2009 decreased by $2.63 million,

or 99.0%, to net income of $27,000 from net income of $2.66 million for the

nine months ended June 30, 2008. Earnings available to common shareholders

for the nine months ended June 30, 2009, adjusted for preferred stock

dividends of $437,000 and preferred stock discount accretion of $79,000 was a

net loss or $(489,000). Earnings per diluted common share decreased to a loss

of $(0.07) for the nine months ended June 30, 2009 from earnings of $0.40 for

the nine months ended June 30, 2008. The $0.47 decrease in diluted earnings

per common share was primarily a result of a $5.09 million ($3.36 million net

of income tax - $0.51 per diluted common share) increase in the provision for

loan losses, a $2.29 million ($1.51 million net of income tax - $0.23 per

diluted common share) increase in OTTI charges, a $2.38 million ($1.57 million

net of income tax - $0.24 per diluted common share) increase in non-interest

expense, a $1.02 million ($671,000 net of income tax - $0.10 per diluted

common share) decrease in net interest income, and a $516,000 ($0.07 per

diluted common share) increase in preferred stock dividends and preferred

stock discount accretion. These decreases to earnings per diluted common

share were partially offset by a $2.82 million ($2.59 million net of income

tax - $0.40 per diluted common share) decrease in loss on redemption of mutual

funds and a $2.80 million ($1.85 million net of income tax - $0.28 per diluted

common share) increase in non-interest income (excluding OTTI charges and loss

on redemption of mutual funds).



Non-interest Income: Total non-interest income increased by $3.57 million, or

399.4%, to $2.67 million for the quarter ended June 30, 2009 from a loss of

$(893,000) for the quarter ended June 30, 2008. Excluding the $125,000 OTTI

charge recorded in the quarter ended June 30, 2009 and the $2.82 million loss

on redemption of mutual funds during the quarter ended June 30, 2008,

non-interest income increased by $870,000, or 45.1% to $2.80 million for the

quarter ended June 30, 2009 from $1.93 million for the quarter ended June 30,

2008. This increase was primarily a result of a $827,000 increase in gain on

sale of loans and a $118,000 increase in service charges on deposit accounts.

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 June 30, 2009. The sale of fixed rate one-to

four-family mortgage loans totaled $69.62 million for the quarter ended June

30, 2009 compared to $16.02 million for the quarter ended June 30, 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. These increases to non-interest income were partially offset

by a $169,000 valuation allowance on MSRs recorded during the quarter ended

June 30, 2009. The valuation allowance adjusted the recorded value of MSRs to

the current market value as determined by a third party valuation company.



Total non-interest income increased by $3.33 million, or 154.3%, to $5.49

million for the nine months ended June 30, 2009 from $2.16 million for the

nine months ended June 30, 2008. Excluding the $2.29 million OTTI charge

recorded in the nine months ended June 30, 2009 and the $2.28 million loss on

redemption of mutual funds during the nine months ended June 30, 2008,

non-interest income increased by $2.80 million, or 56.2% to $7.78 million for

the nine months ended June 30, 2009 from $4.98 million for the nine months

ended June 30, 2008. This increase was primarily a result of a $1.64 million

increase in gain on sale of loans, a $932,000 increase in service charges on

deposit accounts and a $141,000 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

nine months ended June 30, 2009. The sale of fixed rate one-to four-family

mortgage loans totaled $140.88 million for the nine months ended June 30, 2009

compared to $35.31 million for the nine months ended June 30, 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 attributable to a $134,000

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

portfolio to a new insurance company in March 2009. These increases to non-

interest income were partially offset by a $169,000 valuation allowance on

MSRs recorded during the nine months ended June 30, 2009. The valuation

allowance adjusted the recorded value of MSRs to the current market value as

determined by a third party valuation company.



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