Attached files
Exhibit 99.1
Contact: Michael R. Sand,
President & CEO
Dean J. Brydon, CFO
(360) 533-4747
www.timberlandbank.com
----------------------
Timberland Bancorp Earns $1.36 Million in Fiscal First Quarter 2011
EPS Increased to $0.16; Total Risk Based Capital Increased to 16.5%; Net
Interest Margin Increased to 3.82%
HOQUIAM, WA - January 24, 2011 -- Timberland Bancorp, Inc. (NASDAQ: TSBK)
("Timberland" or "the Company") today reported fiscal 2011 first quarter
profit of $1.36 million. Net interest margin rose and strong capital ratios
were further strengthened during the quarter. Net income available to common
shareholders after adjusting for the preferred stock dividend and the
preferred stock discount accretion was $1.10 million, or $0.16 per diluted
common share. For the first fiscal quarter one year ago, the net loss to
common shareholders was $(35,000), or $(0.01) per diluted common share, and
was a net loss of $(403,000), or $(0.06) per diluted common share, for the
immediately prior quarter after recognizing a mortgage servicing rights
("MSR") impairment of $890,000. During the quarter ended December 31, 2010,
the Company recovered $634,000 of the prior quarter's MSR impairment.
"We have begun our new fiscal year with a strong first quarter profit, solid
net interest margin, very strong capital ratios and a well balanced mix of
loans and deposits," said Michael Sand, President and CEO. "For the first
time in several quarters, we are seeing signs of improving loan demand and
stabilizing real estate values. This is reflected by reduced charge offs and
a lower loan loss provision for the quarter."
Fiscal First Quarter 2011 Highlights (at or for the period ended December 31,
2010, compared to December 31, 2009, or September 30, 2010):
* Net income increased to $1.36 million from $224,000 one year ago;
* Earnings per common diluted share increased to $0.16 from a loss of
$(0.01) per diluted common share one year ago;
* Capital levels remain very strong: Total Risk Based Capital of 16.54%;
Tier 1 Leverage Capital Ratio of 11.37%; Tangible Capital to Tangible
Assets Ratio of 11.22%, all solidly above well capitalized levels;
* Net interest margin increased to 3.82% from 3.77% for the quarter
immediately prior;
* Speculative one- to four-family construction loans, multi-family
construction loans and land development loans comprise only 2.1% of the
loan portfolio;
* Total construction and land development loans decreased 43%
year-over-year and now account for only 12% of total loans;
* Net charge-offs for the quarter decreased to $415,000; down 74% from
the linked quarter and down 77% year-over-year;
* FHLB advances decreased by 27% during the quarter;
* Recorded a non-cash $634,000 MSR valuation allowance recovery
representing the majority of the $890,000 MSR valuation allowance
recorded in the quarter immediately prior.
Capital Ratios and Asset Quality
Timberland Bancorp remains very well capitalized with a total risk-based
capital ratio of 16.54%, a Tier 1 leverage capital ratio of 11.37% and a
tangible capital to tangible assets ratio of 11.22% at December 31, 2010.
"We remain focused on improving asset quality," said Sand. "Although
non-performing assets increased marginally during the quarter, credit quality
improved from one year ago. The loan loss provision decreased 65% and net
charge-offs decreased 77% year-over-year. Our most recent FDIC visitation and
exit conference concluded on January 13, 2011."
Timberland recorded a $900,000 provision to its allowance for loan losses
during the current quarter. Net charge-offs for the quarter ended December
31, 2010 declined 74% to $415,000 compared to $1.6 million for the quarter
ended September 30, 2010 and were down 77% from $1.8 million for the
comparable quarter one year ago. The allowance for loan losses of $11.7
million represented 2.19% of loans receivable and loans held for sale at
December 31, 2010 compared to 2.09% at September
Timberland Q1 Earnings
January 24, 2011
Page 2
30, 2010. Total delinquent and non-accrual loans were $42.9 million at
December 31, 2010 compared to $51.7 million one year ago and $35.0 million at
September 30, 2010. The non-performing assets ("NPAs") to total assets ratio
was 5.87% at December 31, 2010 compared to 7.25% at December 31, 2009 and
5.53% at September 30, 2010.
Non-accrual loans increased to $26.2 million at December 31, 2010 from $24.9
million at September 30, 2010 and were comprised of 78 loans and 55 credit
relationships. Non-accrual loans were comprised of the following at December
31, 2010:
* 29 land loans totaling $8.10 million (of which the largest had a
balance of $2.73 million)
* Nine commercial real estate loans totaling $6.30 million (of which the
largest had a balance of $2.71 million)
* 16 single family home loans totaling $4.12 million (of which the
largest had a balance of $722,000 and was paid off subsequent to
quarter end)
* Eight land development loans totaling $3.52 million (of which the
largest had a balance of $1.42 million)
* Three single family speculative home loans totaling $1.70 million (of
which the largest had a balance of $751,000)
* Two condominium construction loans totaling $1.35 million (of which the
largest had a balance of $1.03 million)
* Five home equity loans totaling $739,000 (of which the largest had a
balance of $344,000)
* One single family owner / builder construction loan with a balance of
$279,000
* Two commercial business loans totaling $44,000
* Three consumer loans totaling $28,000
Net charge-offs totaled $415,000 during the quarter ended December 31, 2010
and were primarily comprised of the following:
* $129,000 on six single family home loans
* $116,000 on five land loans
* $78,000 on three home equity loans
* $28,000 on one single family speculative construction loan
* $27,000 on two consumer loans
* $22,000 on one commercial business loan
* $19,000 on one commercial real estate loan
* $4,000 net recovery on one multi-family loan
Other real estate owned ("OREO") and other repossessed items totaled $12.61
million at December 31, 2010 compared to $11.52 million at September 30, 2010.
At December 31, 2010 the OREO portfolio consisted of 33 individual properties
and four other repossessed assets. The properties consisted of two
condominium projects totaling $3.9 million, three land development projects
totaling $2.9 million, 15 land parcels totaling $2.3 million, nine single
family homes totaling $1.9 million and four commercial real estate properties
totaling $1.5 million. During the quarter ended December 31, 2010 twelve OREO
properties and one other repossessed asset totaling $355,000 were sold.
Included in this total were nine residential building lots in a Clark County,
Washington subdivision and two residential building lots in a Richland,
Washington subdivision. The Bank has a 12.5% participation interest in the
Clark County subdivision and the Bank recorded a gain of $27,000 from lots
sold in the subdivision during the quarter. "We are seeing steady sales in
these two projects and anticipate that lot sales will accelerate during the
spring selling season," said Sand.
Balance Sheet Management
On October 1, 2010, a portion of the Bank's excess liquidity was used to repay
four Federal Home Loan Bank ("FHLB") advances totaling $20.0 million. The
average interest rate on these advances was 4.08%. The four advances of $5.0
million each had the following maturity dates: one on October 29, 2010, two on
December 31, 2010 and one on January 14, 2011. Prepaying the advances
required the prepayment of interest to the stated maturities of the advances.
"Even with the repayment of the FHLB advances, we continue to maintain a high
level of liquidity, both on balance sheet and through off-balance sheet
sources," said Dean Brydon, Chief Financial Officer. Liquidity as measured by
cash and cash equivalents, CDs held for investment and available for sale
investments was 19.5% of total liabilities at December 31, 2010 compared to
21.4% at September 30, 2010 and 15.2% one year ago. Total assets decreased 3%
to $722.5 million at December 31, 2010 from $742.7 million at September 30,
2010 primarily as a result of reducing cash equivalents to repay the $20
million of FHLB advances. During the quarter, Timberland reduced its cash
balances by $14.3 million, decreased its loan portfolio by $3.8 million and
reduced its mortgage-backed securities and other investments by $3.3 million.
Timberland Q1 Earnings
January 24, 2011
Page 3
Net loans receivable decreased 1% to $523.8 million at December 31, 2010 from
$527.6 million at September 30, 2010. "The loan mix in our portfolio and the
risk profile of the portfolio continues to improve," said Brydon. "Overall,
we have reduced our total exposure to construction and land development loans
by 43% from one year ago and by 61% from two years ago." Timberland continues
to originate non-speculative owner / builder single family home construction
loans and certain commercial real estate construction loans, but has
dramatically reduced its exposure to speculative residential construction
loans.
LOAN PORTFOLIO
($ in thousands) Dec. 31, 2010 Sept. 30, 2010 Dec. 31, 2009
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Mortgage loans:
One-to-four family $116,631 21% $121,014 22% $112,678 19%
Multi-family 29,419 5 32,267 6 27,833 5
Commercial 217,845 39 208,002 37 197,614 34
Construction and land
development 68,081 12 69,271 12 118,552 20
Land 58,334 11 62,999 11 65,159 11
-------- --- -------- --- -------- ---
Total mortgage loans 490,310 88 493,553 88 521,836 89
Consumer loans:
Home equity and second
mortgage 37,239 7 38,418 7 40,212 7
Other 8,939 2 9,086 2 9,449 2
-------- --- -------- --- -------- ---
Total consumer loans 46,178 9 47,504 9 49,661 9
Commercial business loans 17,452 3 17,979 3 13,023 2
-------- --- -------- --- -------- ---
Total loans 553,940 100% 559,036 100% 584,520 100%
=== === ===
Less:
Undisbursed portion of
construction loans in
process (16,288) (17,952) (20,096)
Deferred loan origination
fees (2,153) (2,229) (2,337)
Allowance for loan losses (11,749) (11,264) (14,931)
-------- -------- --------
Total loans receivable,
net $523,750 $527,591 $547,156
======== ======== ========
CONSTRUCTION AND LAND DEVELOPMENT LOAN COMPOSITION
($ in thousands) Dec. 31, 2010 Sept. 30, 2010 Dec. 31, 2009
Percent Percent Percent
of Loan of Loan of Loan
Amount Portfolio Amount Portfolio Amount Portfolio
------ --------- ------ --------- ------ ---------
Custom and owner /
builder $32,483 5% $30,945 5% $32,014 6%
Speculative one- to
four-family 3,469 1 4,777 1 12,523 2
Commercial real
estate 23,869 4 23,528 4 36,890 6
Multi-family
(including
condominium) 2,938 1 3,587 1 19,084 3
Land development 5,322 1 6,434 1 18,041 3
Total construction ------- -- ------- -- -------- --
and land
development loans $68,081 12% $69,271 12% $118,552 20%
======= == ======= == ======== ==
Timberland's loan originations totaled $49.1 million for the quarter ended
December 31, 2010 compared to $49.3 million for the preceding quarter and
$54.1 million for the comparable quarter one year ago. Timberland continues
to sell fixed rate one-to-four family mortgage loans into the secondary market
for asset liability management purposes and to generate non-interest income.
During the quarter ended December 31, 2010, $26.9 million one-to-four family
fixed-rate mortgage loans were sold on the secondary market compared to $24.0
million for the preceding quarter and $18.9 million for the quarter ended one
year ago. Historically low mortgage interest rates boosted mortgage
refinancing activity in fiscal 2010," said Brydon. "As a result the gain on
sale of loans was strong and the average life of loans in the existing
mortgage loan servicing portfolio declined. This caused us to record an
$890,000 valuation allowance at the end of fiscal 2010. With refinancing
activity diminishing towards the end of the first fiscal quarter, the average
life of loans comprising the MSR asset increased, and we were able to recover
most of the valuation allowance in the current quarter."
Timberland Q1 Earnings
January 24, 2011
Page 4
The Bank's land loan portfolio decreased to $58.3 million at December 31, 2010
from $63.0 million at September 30, 2010. The portfolio consists of 448 loans
on a variety of land types including individual building lots, acreage, raw
land and commercially zoned properties. The average loan size for the entire
land portfolio was approximately $130,000 at December 31, 2010.
Timberland's mortgage-backed securities and other investments decreased by
$3.3 million during the quarter to $12.9 million at December 31, 2010 from
$16.2 million at September 30, 2010, primarily as a result of the sale of $2.3
million in agency mortgage-backed securities for a gain of $79,000,
prepayments, regular amortization and impairment related write-downs. During
the quarter ended December 31, 2010, other-than-temporary-impairment ("OTTI")
credit related write-downs of $136,000 were recorded on the private label
mortgage-backed securities that were acquired in the in-kind redemption from
the AMF family of mutual funds in June 2008. At December 31, 2010 the Bank's
remaining private label mortgage-backed securities portfolio had been reduced
to $4.6 million from an original acquired balance of $15.3 million.
DEPOSIT BREAKDOWN
($ in thousands) Dec. 31, 2010 Sept. 30, 2010 Dec. 31, 2009
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Non-interest bearing $ 51,519 9% $ 58,755 10% $ 50,525 9%
N.O.W. checking 157,411 27 153,304 26 133,510 25
Savings 69,168 12 67,448 12 61,697 11
Money market 58,756 10 55,723 10 63,965 12
Certificates of deposit
under $100 148,296 26 150,633 26 136,838 25
Certificates of deposit
$100 and over 92,244 16 93,006 16 90,478 17
Certificates of deposit
- brokered - - -- - - - - 4,000 1
-------- --- -------- --- -------- ---
Total deposits $577,394 100% $578,869 100% $541,013 100%
======== === ======== === ======== ===
Total deposits decreased by less than 1% to $577.4 million at December 31,
2010, from $578.9 million at September 30, 2010 primarily as a result of a
$7.2 million decrease in non-interest bearing account balances and a $3.1
million decrease in CD account balances. These decreases were partially
offset by a $4.1 million increase in N.O.W. checking account balances, a $3.0
million increase in money market account balances and $1.7 million increase in
savings account balances.
Total shareholders' equity increased $1.15 million to $86.56 million at
December 31, 2010, from $85.41 million at September 30, 2010. The increase in
equity was primarily a result of net income for the quarter, net of accrued
dividends on preferred stock. Timberland continues to remain very well
capitalized with a total risk based capital ratio of 16.54% and a Tier 1
leverage capital of 11.37%. Book value per common share was $10.04 and
tangible book value per common share was $9.17 at December 31, 2010.
Operating Results
Fiscal first quarter operating revenue (net interest income before provision
for loan losses, plus non-interest income excluding OTTI charges and valuation
allowances or recoveries on MSRs), was $8.78 million compared to $8.80 million
for the immediately prior quarter and $8.69 million for the comparable quarter
one year ago. Operating revenue for the current quarter was improved by
increased gains on sale of loans (from an increase in the dollar amount of
fixed rate single family loans sold into the secondary market) and $79,000 in
gains from the sale of agency mortgage-backed securities. These gains were
partially offset by a reduction in service charges on deposits, which is in
part attributable to new regulations regarding overdraft charges that became
effective in August 2010.
Net interest income decreased to $6.33 million for the quarter ended December
31, 2010, from $6.41 million for the immediately prior quarter and from $6.39
million for the comparable quarter one year ago. The decrease in net interest
income was primarily due to a decrease in the level of average total
interest-earning assets during the current quarter as a portion of the
Company's excess liquidity was used to repay $20 million in FHLB advances. In
spite of the continued challenging interest rate environment, Timberland's net
interest margin increased to 3.82% for the current quarter compared to 3.77%
for the
Timberland Q1 Earnings
January 24, 2011
Page 5
quarter ended September 30, 2010. The net interest margin was reduced by
approximately four basis points for the quarter ended December 31, 2010 by the
reversal of interest income on loans placed on non-accrual during the quarter.
Timberland recorded a $900,000 provision to its allowance for loan losses for
the quarter ended December 31, 2010, compared to $2.0 million in the preceding
quarter and $2.6 million in the comparable quarter one year prior. Net
charge-offs for the quarter ended December 31, 2010 totaled $415,000 compared
to $1.6 million for the quarter ended September 30, 2010 and $1.8 million for
the quarter ended December 31, 2009.
Primarily as a result of recording a non-cash $634,000 valuation allowance
recovery for the Bank's MSR asset, non-interest income increased 118% to $2.95
million for the first fiscal quarter from $1.36 million for the immediately
prior quarter and by 50% from $1.97 million for the comparable quarter one
year ago. The increase in the fair value of the MSR asset was primarily a
result of increased mortgage interest rates during the quarter ended December
31, 2010. An increase in gain on sale of loans and gain on sale of securities
also contributed to the increase in non-interest income for the current
quarter.
Total operating (non-interest) expenses increased 6% to $6.38 million for the
first fiscal quarter from $6.03 million for the immediately prior quarter and
increased 16% from $5.50 million for the comparable quarter one year ago. The
increase in expenses compared to the immediately prior quarter was primarily
due to increased OREO related expenses. The increased OREO related expenses
for the current quarter were primarily due to lower valuations on updated
appraisals received for several properties. The increase in expenses compared
to the comparable quarter one year ago was primarily due to increased OREO
related expenses and increased insurance expenses (FDIC and D&O). Also
affecting the comparison was a change in the Bank's vacation accrual policy
during the prior year which reduced the salaries and employee benefits expense
by $164,000 for the quarter ended December 31, 2009.
About Timberland Bancorp, Inc.
Timberland Bancorp, Inc., a Washington corporation, is the holding company for
Timberland Bank ("Bank"). The Bank opened for business in 1915 and serves
consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap
and Lewis counties, Washington with a full range of lending and deposit
services through its 22 branches (including its main office in Hoquiam).
Disclaimer
Certain matters discussed in this press release may contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are not statements of historical fact and
often include the words "believes," "expects," "anticipates," "estimates,"
"forecasts," "intends," "plans," "targets," "potentially," "probably,"
"projects," "outlook" or similar expressions or future or conditional verbs
such as "may," "will," "should," "would" and "could." Forward-looking
statements include statements with respect to our beliefs, plans, objectives,
goals, expectations, assumptions and statements about future performance.
These forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that could cause our actual results to differ
materially from the results anticipated, including, but not limited to: the
credit risks of lending activities, including changes in the level and trend
of loan delinquencies and write-offs and changes in our allowance for loan
losses and provision for loan losses that may be impacted by deterioration in
the housing and commercial real estate markets and may lead to increased
losses and non-performing assets in our loan portfolio, and may result in our
allowance for loan losses not being adequate to cover actual losses, and
require us to materially increase our reserves; changes in general economic
conditions, either nationally or in our market areas; changes in the levels of
general interest rates, and the relative differences between short and long
term interest rates, deposit interest rates, our net interest margin and
funding sources; fluctuations in the demand for loans, the number of unsold
homes, land and other properties and fluctuations in real estate values in our
market areas; secondary market conditions for loans and our ability to sell
loans in the secondary market; results of examinations of us by the Federal
Reserve and our bank subsidiary by the Federal Deposit Insurance Corporation,
the Washington State Department of Financial Institutions, Division of Banks
or other regulatory authorities, including the possibility that any such
regulatory authority may, among other things, require us to increase our
allowance for loan losses, write-down assets, change our regulatory capital
position or affect our ability to borrow funds or maintain or increase
deposits, which could adversely affect our liquidity and earnings; our
compliance with regulatory enforcement actions, including regulatory memoranda
of understandings ("MOUs") to which we are subject; legislative or regulatory
changes that adversely affect our business including changes in regulatory
policies and principles, or the interpretation of regulatory capital or other
rules; our ability to attract and retain deposits; further increases in
premiums for deposit insurance; our ability to control operating costs and
expenses; the use of estimates in determining fair value of certain of
Timberland Q1 Earnings
January 24, 2011
Page 6
our assets, which estimates may prove to be incorrect and result in
significant declines in valuation; difficulties in reducing risk associated
with the loans on our balance sheet; staffing fluctuations in response to
product demand or the implementation of corporate strategies that affect our
workforce and potential associated charges; computer systems on which we
depend could fail or experience a security breach; our ability to retain key
members of our senior management team; costs and effects of litigation,
including settlements and judgments; our ability to successfully integrate any
assets, liabilities, customers, systems, and management personnel we may in
the future acquire into our operations and our ability to realize related
revenue synergies and cost savings within expected time frames and any
goodwill charges related thereto; our ability to manage loan delinquency
rates; increased competitive pressures among financial services companies;
changes in consumer spending, borrowing and savings habits; legislative or
regulatory changes that adversely affect our business including changes in
regulatory policies and principles, the interpretation of regulatory capital
or other rules and any changes in the rules applicable to institutions
participating in the TARP Capital Purchase Program; the availability of
resources to address changes in laws, rules, or regulations or to respond to
regulatory actions; adverse changes in the securities markets; inability of
key third-party providers to perform their obligations to us; changes in
accounting policies and practices, as may be adopted by the financial
institution regulatory agencies or the Financial Accounting Standards Board,
including additional guidance and interpretation on accounting issues and
details of the implementation of new accounting methods; the economic impact
of war or any terrorist activities; other economic, competitive, governmental,
regulatory, and technological factors affecting our operations; pricing,
products and services; and other risks detailed in our reports filed with the
Securities and Exchange Commission.
Any of the forward-looking statements that we make in this press release and
in the other public statements we make are based upon management's beliefs and
assumptions at the time they are made. We undertake no obligation to publicly
update or revise any forward-looking statements included in this report or to
update the reasons why actual results could differ from those contained in
such statements, whether as a result of new information, future events or
otherwise. We caution readers not to place undue reliance on any
forward-looking statements. We do not undertake and specifically disclaim any
obligation to revise any forward-looking statements to reflect the occurrence
of anticipated or unanticipated events or circumstances after the date of such
statements. These risks could cause our actual results for fiscal 2011 and
beyond to differ materially from those expressed in any forward-looking
statements by, or on behalf of us, and could negatively affect the Company's
operations and stock price performance.
Timberland Q1 Earnings
January 24, 2011
Page 7
TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended
($ in thousands, except per share amounts) Dec. 31, Sept. 30, Dec. 31,
(unaudited) 2010 2010 2009
------ ------ ------
Interest and dividend income
Loans receivable $8,534 $8,683 $9,065
Mortgage-backed securities and other
investments 182 215 216
Dividends from mutual funds 8 8 9
Interest bearing deposits in banks 87 90 51
------ ------ ------
Total interest and dividend income 8,811 8,996 9,341
------ ------ ------
Interest expense
Deposits 1,751 1,821 2,077
FHLB advances and other borrowings 729 768 873
------ ------ ------
Total interest expense 2,480 2,589 2,950
------ ------ ------
Net interest income 6,331 6,407 6,391
Provision for loan losses 900 2,005 2,600
------ ------ ------
Net interest income after provision
for loan losses 5,431 4,402 3,791
Non-interest income
OTTI on mortgage-backed securities, net (136) (148) (288)
Realized loss on mortgage-backed securities - - (3) (48)
Gain on sale of securities 79 - - - -
Service charges on deposits 984 1,022 1,130
Gain on sale of loans, net 701 560 449
Bank owned life insurance ("BOLI") net
earnings 122 122 134
Servicing income (expense) on loans sold (36) 48 29
Valuation recovery (allowance) on mortgage
servicing rights ("MSRs") 634 (890) - -
ATM transaction fees 411 432 362
Other 192 213 201
------ ------ ------
Total non-interest income, net 2,951 1,356 1,969
------ ------ ------
Non-interest expense
Salaries and employee benefits 3,127 3,047 2,981
Premises and equipment 694 648 701
Advertising 167 203 172
OREO and other repossessed items expense,
net 428 114 50
ATM expenses 175 208 155
FDIC insurance 340 336 200
Insurance 154 151 20
Postage and courier 115 139 128
Amortization of core deposit intangible 42 48 48
State and local taxes 166 173 141
Professional fees 182 102 172
Other 786 860 730
------ ------ ------
Total non-interest expense 6,376 6,029 5,498
------ ------ ------
Income (loss) before income taxes 2,006 (271) 262
Provision (benefit) for income taxes 647 (130) 38
------ ------ ------
Net income (loss) $1,359 $ (141) $ 224
====== ====== ======
Preferred stock dividends accrued $ (208) $ (208) $ (208)
Timberland Q1 Earnings
January 24, 2011
Page 8
Preferred stock discount accretion (54) (54) (51)
------ ------ ------
Net income (loss) to common shareholders $1,097 $ (403) $ (35)
====== ====== ======
Net income (loss) per common share:
Basic $ 0.16 $(0.06) $(0.01)
Diluted $ 0.16 $(0.06) $(0.01)
Weighted average common shares outstanding:
Basic 6,745,250 6,715,734 6,709,985
Diluted 6,745,250 6,715,734 6,709,985
Timberland Q1 Earnings
January 24, 2011
Page 9
TIMBERLAND BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts)
(unaudited) Dec. 31, Sept. 30, Dec. 31,
Assets 2010 2010 2009
-------- -------- --------
Cash and cash equivalents:
Cash and due from financial institutions $ 8,955 $ 9,466 $ 11,676
Interest-bearing deposits in other banks 88,516 102,320 57,250
-------- -------- --------
97,471 111,786 68,926
-------- -------- --------
Certificate of deposits ("CDs") held for
investment, at cost 18,501 18,047 14,442
Mortgage-backed securities and other
investments:
Held to maturity, at amortized cost 4,715 5,066 6,413
Available for sale, at fair value 8,191 11,119 12,594
FHLB stock 5,705 5,705 5,705
Loans receivable 533,646 535,885 559,153
Loans held for sale 1,853 2,970 2,934
Less: Allowance for loan losses (11,749) (11,264) (14,931)
-------- -------- --------
Net loans receivable 523,750 527,591 547,156
Premises and equipment, net 17,237 17,383 17,951
OREO and other repossessed items, net 12,612 11,519 8,119
BOLI 13,522 13,400 13,042
Accrued interest receivable 2,706 2,630 2,997
Goodwill 5,650 5,650 5,650
Core deposit intangible 522 564 707
Mortgage servicing rights, net 2,587 1,929 2,691
Prepaid FDIC insurance assessment 2,959 3,268 4,364
Other assets 6,357 7,030 5,709
-------- -------- --------
Total assets $722,485 $742,687 $716,466
======== ======== ========
Liabilities and shareholders' equity
Deposits: Demand, non-interest-bearing $ 51,519 $ 58,755 $ 50,525
Deposits: Interest-bearing 525,875 520,114 490,488
-------- -------- --------
Total deposits 577,394 578,869 541,013
-------- -------- --------
FHLB advances 55,000 75,000 75,000
Federal Reserve Bank of San Francisco
borrowings -- -- 10,000
Repurchase agreements 642 622 622
Other liabilities and accrued expenses 2,887 2,788 2,625
-------- -------- --------
Total liabilities 635,923 657,279 629,260
-------- -------- --------
Shareholders' equity
Preferred stock - $.01 par value;
1,000,000 shares authorized;
16,641 shares, Series A, issued and
outstanding
Series A shares: $1,000 per share
liquidation value 15,818 15,764 15,605
Common stock - $.01 par value; 50,000,000
shares authorized;
7,045,036 shares issued and outstanding 10,389 10,377 10,343
Unearned shares- Employee Stock Ownership
Plan (2,181) (2,247) (2,446)
Retained earnings 63,335 62,238 65,607
Accumulated other comprehensive loss (799) (724) (1,903)
-------- -------- --------
Total shareholders' equity 86,562 85,408 87,206
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Total liabilities and shareholders' equity $722,485 $742,687 $716,466
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Timberland Q1 Earnings
January 24, 2011
Page 10
KEY FINANCIAL RATIOS AND DATA
($ in thousands, except per share amounts) (unaudited)
Three Months Ended
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Dec. 31, Sept. 30, Dec. 31,
2010 2010 2009
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PERFORMANCE RATIOS:
Return (loss) on average assets (a) 0.75% (0.08)% 0.13%
Return (loss) on average equity (a) 6.35% (0.66)% 1.02%
Net interest margin (a) 3.82% 3.77% 3.94%
Efficiency ratio 68.69% 77.66% 65.77%
Core efficiency ratio (b) 67.24% 66.66% 62.10%
Dec. 31, Sept. 30, Dec. 31,
2010 2010 2009
------- ------- -------
ASSET QUALITY RATIOS:
Non-accrual loans $26,166 $24,864 $34,563
Past due 90 days and still accruing 305 1,325 6,299
Non-performing investment securities 3,325 3,390 2,976
OREO and other repossessed assets 12,612 11,519 8,119
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Total non-performing assets (c) $42,408 $41,098 $51,957
======= ======= =======
Non-performing assets to total assets
(c) 5.87% 5.53% 7.25%
Net charge-offs $ 415 $1,641 $1,841
Allowance for loan losses to non-accrual
loans 45% 45% 43%
Allowance for loan losses to loans
receivable, net (d) 2.19% 2.09% 2.66%
Troubled debt restructured loans on
accrual status (e) $ 8,841 $ 8,995 $ - -
CAPITAL RATIOS:
Tier 1 leverage capital 11.37% 10.96% 11.95%
Tier 1 risk based capital 15.28% 15.00% 14.63%
Total risk based capital 16.54% 16.26% 15.90%
Tangible capital to tangible assets (f) 11.22% 10.75% 11.39%
BOOK VALUES:
Book value per common share $ 10.04 $ 9.89 $ 10.16
Tangible book value per common share (f) $ 9.17 $ 9.00 $ 9.26
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(a) Annualized
(b) Calculation excludes OTTI losses, OREO expenses, realized losses on
investment securities, valuation allowance / recovery on MSRs and
amortization of CDI.
(c) Non-performing assets include non-accrual loans, loans past due 90 days
and still accruing, non-performing investment securities and OREO and
other repossessed assets. Troubled debt restructured loans on accrual
status are not included.
(d) Includes loans held for sale and is before the allowance for loan losses.
(e) Does not include troubled debt restructured loans totaling $6,756, $7,405
and $9,799 reported as non-accrual loans at December 31, 2010, September
30, 2010 and December 31, 2009, respectively.
(f) Calculation subtracts goodwill and core deposit intangible from the equity
component and from assets.
Timberland Q1 Earnings
January 24, 2011
Page 11
AVERAGE BALANCE SHEETS: Three Months Ended
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Dec. 31, Sept. 30, Dec. 31,
2010 2010 2009
------- ------- -------
Average total loans $539,007 $544,561 $561,378
Average total interest-earning assets
(a) 663,761 678,925 648,716
Average total assets 722,007 737,854 701,614
Average total interest-bearing deposits 523,221 518,683 474,898
Average FHLB advances and other
borrowings 55,546 75,584 85,537
Average shareholders' equity 85,596 86,086 87,756
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(a) Includes loans on non-accrual status
