Exhibit 99.1

 

 

Contact:

Michael R. Sand,   President & CEO    Dean J. Brydon, CFO   (360) 533-4747   www.timberlandbank.com

         

Timberland Bancorp Fiscal Year Net Income Increases 18% to $16.72 Million

·	Fiscal Year Earnings Per Share Increases 16% to $2.22

·	Fiscal Year Return on Average Equity Increases to 14.27%

·	Fiscal Year Return on Average Assets Increases to  1.70%

·	Announces $0.13 Regular Quarterly Dividend and $0.10 Special Dividend

·	Acquisition of South Sound Bank Completed on October 1, 2018

HOQUIAM, WA – November 1, 2018 - Timberland Bancorp, Inc. (NASDAQ: TSBK) ("Timberland" or "the Company") today reported that net income increased 18% to $16.72 million for the fiscal year ended September 30, 2018 from $14.17 million for the fiscal year ended September 30, 2017. Earnings per diluted common share ("EPS") increased 16% to $2.22 for the fiscal year 2018 from $1.92 for the prior fiscal year.  EPS for the fiscal year ended September 30, 2018 was reduced by approximately $0.06 due to paying expenses associated with the acquisition of South Sound Bank.

Timberland also reported quarterly net income of $4.42 million, or $0.59 per diluted common share, for the quarter ended September 30, 2018.  This compares to net income of $4.42 million, or $0.59 per diluted common share, for the preceding quarter and net income of $3.62 million, or $0.48 per diluted common share, for the quarter ended September 30, 2017.  EPS for the quarter ended September 30, 2018 was reduced by approximately $0.03 due to paying expenses associated with the acquisition of South Sound Bank.

Timberland's Board of Directors declared a quarterly cash dividend to shareholders of $0.13 per common share and a special one-time cash dividend of $0.10 per common share payable on November 30, 2018, to shareholders of record on November 16, 2018.

"We are pleased today to announce record net income for the year ended September 30, 2018 and, for the eighth consecutive fiscal year, increases in net income, earnings per share, return on average equity and return on average assets," reported Michael Sand, President and CEO.  "Continued loan and deposit growth combined with net interest margin expansion and the employment of a 24.5% blended federal income tax rate contributed to the strong financial performance achieved this year.  On October 1^st, the first day of our new fiscal year, the Company's federal income tax rate decreased to 21.0% from the 24.5% blended tax rate applicable during the fiscal year just ended.  Also on October 1^st the South Sound Bank acquisition closed and immediately expanded our presence along Washington State's economically important I-5 corridor.  Acquisition related expenses for the quarter and year ended September 30, 2018 were $344,000 and $616,000, respectively, reducing EPS by approximately $0.03 for the September quarter and $0.06 for the fiscal year.  In consideration of our strong earnings and capital position we are pleased to announce the declaration of a special dividend of $0.10 per share in conjunction with our regular $0.13 dividend.  The payment of these two dividends combined with the dividends paid for the three prior quarters represents a return to shareholders of $0.72 per share for the four quarter period."

2018 Fiscal Year Earnings and Balance Sheet Highlights (at or for the period ended September 30, 2018, compared to September 30, 2017, or June 30, 2018):

   Earnings Highlights:

·	Net income increased 18% to $16.72 million for the 2018 fiscal year from $14.17 million for the prior fiscal year;

·	Fiscal year 2018 EPS increased 16% to $2.22 from $1.92 for fiscal year 2017;

·	Quarterly EPS increased 23% to $0.59 from $0.48 for the comparable quarter one year ago;

·	Return on average equity increased to 14.47% for the current quarter and 14.27% for the 2018 fiscal year;

·	Return on average assets increased to 1.76% for the current quarter and 1.70% for the 2018 fiscal year;

·	Net interest margin improved to 4.35% for the current quarter and 4.23% for the 2018 fiscal year;

·	Operating revenue increased 9% for the 2018 fiscal year; and

·	Efficiency ratio improved to 56.55% for the 2018 fiscal year.

Timberland Fiscal Q4 2018 Earnings

November 1, 2018

Page 2

 

 

   Balance Sheet Highlights:

·	Total assets increased 7% year-over-year to $1.02 billion;

·	Total deposits increased 6% year-over-year;

·	Net loans receivable increased 5% year-over-year; and

·	Book and tangible book (non-GAAP) values per common share increased to $16.84 and $16.08, respectively, at September 30, 2018.

Operating Results

Operating revenue (net interest income before the recapture of loan losses, plus non-interest income excluding other than temporary impairment ("OTTI") charges (recoveries) on investment securities) increased 9% for the 2018 fiscal year to $51.53 million from $47.48 million for the 2017 fiscal year.  For the current quarter operating revenue increased by 10% to $13.44 million from $12.24 million for the comparable quarter one year ago and increased 5% from $12.85 million for the preceding quarter.

Net interest income for the 2018 fiscal year increased 11% to $39.06 million from $35.14 million for the 2017 fiscal year.  The increase in net interest income was primarily due to an increase in average total interest-earning assets, an increase in the yield earned on average total interest-earning assets, and the elimination of FHLB borrowing expense.  These increases to net interest income were partially offset by an increase in the cost of interest-bearing deposits.  Net interest income for the current quarter increased 12% to $10.27 million from $9.13 million for the comparable quarter one year ago and increased 6% from $9.73 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, which was partially offset by an increase in the cost of interest-bearing deposits.

Timberland's net interest margin ("NIM") for the fiscal year ended September 30, 2018, increased to 4.23% from 4.07% for the fiscal year ended September 30, 2017.  The net interest margin for the current quarter increased to 4.35% from 4.18% for the preceding quarter and 4.18% for the comparable quarter one year ago.  The NIM for the current quarter was increased by approximately five basis points due to the collection of $107,000 of non-accrual interest and late fees.  The NIM for the preceding quarter was not impacted by the collection of any non-accrual interest and the NIM for the comparable quarter one year ago was increased by less than one basis point due to the collection of $8,000 of non-accrual interest.

Non-interest income for fiscal year 2018 increased 1% to $12.54 million from $12.37 million for the prior fiscal year.  The increase was primarily due to increases in ATM and debit card interchange transaction fees, services charges on deposits, servicing income on loans sold and smaller increases in several other categories.  These increases were partially offset by a decrease in gain on sale of loans.  Non-interest income increased 1% to $3.18 million for the current quarter from $3.15 million for the preceding quarter and increased 1% from $3.15 million for the comparable quarter one year ago.

For fiscal year 2018, total (non-interest) operating expense increased 6% to $29.18 million from $27.52 million for the prior fiscal year.  The increased expenses were primarily due to an $832,000 increase in salaries and employee benefits, a $503,000 increase in professional fees and smaller increases in several other categories.  The increase in salaries and benefits expense was primarily due to annual salary adjustments and the hiring of additional lending personnel.  The increase in professional fees was primarily due to $616,000 in acquisition related expenses incurred during the fiscal year.  The efficiency ratio for fiscal year 2018 improved to 56.55% from 57.92% for fiscal year 2017.  Total operating expenses for the current quarter increased 8% to $7.66 million from $7.12 million for the preceding quarter and increased 11% from $6.91 million for the comparable quarter one year ago.  The increased expenses for the current quarter compared to the preceding quarter were primarily due to an increase of $193,000 in professional fees, a $121,000 increase in OREO and other repossessed asset expense and smaller increases in several other categories.  The increase in professional fees was primarily due to acquisition related expenses of $344,000 incurred during the current quarter.  The increase in OREO related expenses was primarily due to a $124,000 gain on sale of an OREO property during the preceding quarter, which reduced expenses for the quarter ended June 30, 2018.

The provision for income taxes for fiscal year 2018 decreased by $1.38 million to $5.70 million from $7.08 million for fiscal year 2017, primarily due to the Tax Cuts and Job Acts legislation which was signed into law on December 22, 2017.  As a result of the new legislation (which decreased 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 and began using a lower blended federal income tax rate for the current fiscal year.  Since Timberland is a September 30^th fiscal year-end corporation, it used a blended federal income tax rate of 24.5% for the fiscal year ending September 30, 2018, and began using a 21.0% federal income tax rate on October 1, 2018.  As a result of these changes, Timberland's effective tax rate for fiscal year 2018 was 25.4% compared to 33.3% for fiscal year 2017.

The provision for income taxes for the current quarter increased by $36,000 to $1.37 million from $1.33 million for the preceding quarter, primarily due to higher pre-tax income.  Timberland's effective tax rate for the quarter ended September 30, 2018, was 23.7%.

Balance Sheet Management

Total assets increased $66.27 million, or 7%, during the fiscal year to $1.02 billion at September 30, 2018, from $952.02 million at September 30, 2017.  This increase was primarily due to a $35.03 million increase in net loans receivable, a $20.26 million increase in CDs held for investment, and a $5.58 million increase in investment securities.  Total assets increased $11.91 million, or 1%, to $1.02 billion at September 30, 2018, from $1.01 billion at June 30, 2018.  The increase was primarily due to an $8.07 million increase in net loans receivable and a $4.84 million increase in investment securities, which was partially offset by a $7.96 million net decrease in total cash and cash equivalents.  Total assets at September 30, 2018 also included a $6.90 million escrow deposit related to the South Sound Bank acquisition transaction, which was completed on October 1, 2018.  The $6.90 million escrow deposit represented the cash portion of the payment to South Sound Bank shareholders.  In addition to the cash portion, South Sound Bank shareholders also received 904,826 shares of Timberland Bancorp, Inc. common stock.

Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment and available for sale investment securities, was 23.9% of total liabilities at September 30, 2018, compared to 25.0% at June 30, 2018, and 22.9% one year ago.

Net loans receivable increased $35.03 million, or 5%, during the fiscal year to $725.39 million at September 30, 2018, from $690.36 million at September 30, 2017.  The increase was primarily due to a $19.84 million increase in construction loans, a $16.19 million increase in commercial real estate loans, a $3.32 million increase in multi-family loans and smaller increases in several other categories.  These increases were partially offset by a $2.21 million decrease in one- to four-family mortgage loans and smaller decreases in several other categories.

Net loans receivable increased $8.07 million, or 1%, during the current quarter to $725.39 million at September 30, 2018, from $717.32 million at June 30, 2018.  The increase was primarily due to a $20.13 million increase in construction loans, a $3.76 million increase in multi-family loans and smaller increases in several other categories.  These increases to net loans receivable were partially offset by a $17.56 million increase in the undisbursed portion of construction loans in process and smaller decreases in several other loan categories.

 

LOAN PORTFOLIO

_______________________

(a)	Does not include one- to four-family loans held for sale totaling $1,785, $2,321 and $3,515 at September 30, 2018, June 30, 2018 and September 30, 2017, respectively.

(b)	Does not include commercial business loans held for sale totaling $84 at September 30, 2017.

Timberland originated $99.27 million in loans during the quarter ended September 30, 2018, compared to $85.10 million for the comparable quarter one year ago and $70.46 million for the preceding quarter.  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.  Timberland also periodically sells the guaranteed portion of U.S. Small Business Administration ("SBA") loans.  During the fourth quarter of fiscal 2018 fixed-rate one- to four-family mortgage loans and SBA loans totaling $17.42 million were sold compared to $15.88 million for the comparable quarter one year ago and $17.74 million for the preceding quarter.

Timberland's investment securities and other investments increased $4.84 million, or 40%, to $16.96 million at September 30, 2018, from $12.13 million at June 30, 2018, primarily due to the purchase of a $4.96 million U.S. Treasury security. Timberland's CDs held for investment increased slightly to $63.29 million at September 30, 2018, from $63.13 million at June 30, 2018.

Total deposits increased $51.61 million, or 6%, during the fiscal year to $889.51 million at September 30, 2018, from $837.90 million at September 30, 2017. This increase was primarily due to $27.31 million increase in non-interest-bearing demand account balances, a $10.42 million increase in savings account balances, a $6.74 million increase in money market account balances and smaller increases in other account types.

Total deposits increased $8.78 million, or 1%, during the current quarter to $889.51 million at September 30, 2018, from $880.73 million at June 30, 2018. This increase was primarily due to $4.06 million increase in non-interest-bearing demand account balances, a $3.09 million increase in NOW checking account balances, and a $2.71 million increase in savings account balances.  These increases were partially offset by a $1.90 million decrease in money market account balances.

Shareholders' Equity

Total shareholders' equity increased $3.76 million to $124.66 million at September 30, 2018, from $120.89 million at June 30, 2018.  The increase in shareholders' equity was primarily due to net income of $4.42 million for the quarter, which was partially offset by dividend payments to shareholders of $962,000.

Capital Ratios and Asset Quality

Timberland remains well capitalized with a total risk-based capital ratio of 18.39% and a Tier 1 leverage capital ratio of 11.98% at September 30, 2018.

Asset quality remains strong with the non-performing assets to total assets ratio improving to 0.36% at September 30, 2018, compared to 0.60% one year ago and 0.56% at June 30, 2018.

No provision for loan losses was made for the quarters ended September 30, 2018, June 30, 2018, and September 30, 2017.  Net charge-offs totaled $2,000 for the current quarter compared to $12,000 for the preceding quarter and $57,000 for the comparable quarter one year ago.  The allowance for loan losses was 1.30% of loans receivable at September 30, 2018, compared to 1.31% at June 30, 2018, and 1.36% at September 30, 2017.

Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $870,000, or 25%, to $2.56 million at September 30, 2018, from $3.43 million at June 30, 2018, and increased $143,000, or 6%, from $2.41 million one year ago.  Non-accrual loans decreased $1.39 million, or 51%, to $1.32 million at September 30, 2018, from $2.71 million at June 30, 2018, and decreased $594,000, or 31%, from $1.91 million one year ago.

NON-ACCRUAL LOANS

 

($ in thousands)		September 30, 2018								June 30, 2018								September 30, 2017
		Amount				Quantity				Amount				Quantity				Amount				Quantity
Mortgage loans:
One- to four-family		$	545				5			$	1,361				7			$	874				7
Commercial			--				--				598				3				213				2
Land			243				2				295				3				566				4
Total mortgage loans			788				7				2,254				13				1,653				13
Consumer loans:
Home equity and second
mortgage			359				5				278				6				258				5
Total consumer loans			359				5				278				6				258				5
Commercial business loans			170				2				174				2				--				6
Total loans		$	1,317				14			$	2,706				21			$	1,911				16

 

OREO and other repossessed assets decreased 9% to $1.91 million at September 30, 2018, from $2.11 million at June 30, 2018, and decreased 42% from $3.30 million at September 30, 2017.  At September 30, 2018, the OREO and other repossessed asset portfolio consisted of 10 individual land parcels and two commercial real estate properties.  During the quarter ended September 30, 2018, one OREO property was sold for a net gain of $12,000.

OREO and OTHER REPOSSESSED ASSETS

 

($ in thousands)		September 30, 2018								June 30, 2018								September 30, 2017
		Amount				Quantity				Amount				Quantity				Amount				Quantity
One- to four-family		$	--				--			$	--				--			$	875				2
Commercial			448				2				448				2				533				2
Land			1,465				10				1,664				11				1,865				11
Consumer			--				--				--				--				28				1
Total		$	1,913				12			$	2,112				13			$	3,301				16

         

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures.  Timberland believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company's financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.

Financial measures that exclude intangible assets are non-GAAP measures.  To provide investors with a broader understanding of capital adequacy, Timberland provides non-GAAP financial measures for tangible common equity, along with the GAAP measure.  Tangible common equity is calculated as shareholders' equity less goodwill.  In addition, tangible assets equal total assets less goodwill.

The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible shareholders' equity (non-GAAP), and ending total assets (GAAP) to ending tangible assets (non-GAAP).

Timberland Fiscal Q4 2018 Earnings

November 1, 2018

Page 7

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. These statements relate to our financial condition, results of operations, plan, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions 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 or implied by our forward-looking statements, including, but not limited to: the expected cost savings, synergies and other financial benefits from our acquisition of South Sound Bank might not be realized within the expected time frames or at all; the integration of the combined company, including personnel changes/retention, might not proceed as planned; and the combined company might not perform as well as expected; 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 which 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 loan loss 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 Board of Governors of the Federal Reserve System 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, institute a formal or informal enforcement action or 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 or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings; 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 including as a result of Basel III; the impact of the Dodd Frank Wall Street Reform and Consumer Protection Act and the implementation of related rules and regulations; our ability to attract and retain deposits;  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 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 consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; 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; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common and stock; 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 do not undertake and specifically disclaim any obligation to publicly update or revise any forward-looking statements included in this report to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements 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.  In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this document might not occur and we caution readers not to place undue reliance on any forward-looking statements.  These risks could cause our actual results for fiscal 2019 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 consolidated financial condition and results of operations as well as its stock price performance.

Timberland Fiscal Q4 2018 Earnings

TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME		Three Months Ended
($ in thousands, except per share amounts)		Sept. 30,				June 30,				Sept. 30,
(unaudited)		2018				2018				2017
Interest and dividend income
Loans receivable		$	9,956			$	9,530			$	9,104
Investment securities			70				51				73
Dividends from mutual funds, FHLB stock and other investments			37				31				28
Interest bearing deposits in banks			989				845				505
Total interest and dividend income			11,052				10,457				9,710
Interest expense
Deposits			782				730				581
Total interest expense			782				730				581
Net interest income			10,270				9,727				9,129
Provision for loan losses			--				--				--
Net interest income after provision for loan losses			10,270				9,727				9,129
Non-interest income
Service charges on deposits			1,134				1,137				1,170
ATM and debit card interchange transaction fees			922				921				895
Gain on sale of loans, net			467				435				502
Bank owned life insurance ("BOLI") net earnings			140				134				139
Servicing income on loans sold			127				121				114
Recoveries on investment securities, net			13				19				33
Other			378				378				292
Total non-interest income			3,181				3,145				3,145
Non-interest expense
Salaries and employee benefits			3,877				3,912				3,732
Premises and equipment			871				795				787
Loss on disposition of premises and equipment, net			11				--				2
Advertising			191				205				199
OREO and other repossessed assets, net			29				(92	)			--
ATM and debit card processing			314				334				369
Postage and courier			115				104				111
State and local taxes			190				169				125
Professional fees			561				368				258
FDIC insurance			52				101				42
Loan administration and foreclosure			89				76				93
Data processing and telecommunications			511				465				476
Deposit operations			376				285				225
Other, net			472				400				492
Total non-interest expense, net			7,659				7,122				6,911
Income before income taxes			5,792				5,750				5,363
Provision for income taxes			1,370				1,334				1,748
Net income		$	4,422			$	4,416			$	3,615
Net income per common share:
Basic		$	0.60			$	0.60			$	0.50
Diluted			0.59				0.59				0.48
Weighted average common shares outstanding:
Basic			7,352,013				7,345,618				7,280,773
Diluted			7,549,778				7,535,157				7,473,724

 

 

TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME		Year Ended
($ in thousands, except per share amounts)		Sept. 30,				Sept. 30,
(unaudited)		2018				2017
Interest and dividend income
Loans receivable		$	38,298			$	36,385
Investment securities			217				279
Dividends from mutual funds, FHLB stock and other investments			120				88
Interest bearing deposits in banks			3,198				1,586
Total interest and dividend income			41,833				38,338
Interest expense
Deposits			2,778				2,218
FHLB borrowings			--				979
Total interest expense			2,778				3,197
Net interest income			39,055				35,141
Recapture of loan losses			--				(1,250	)
Net interest income after recapture of loan losses			39,055				36,391
Non-interest income
Service charges on deposits			4,581				4,518
ATM and debit card interchange transaction fees			3,570				3,343
Gain on sale of loans, net			1,893				2,157
BOLI net earnings			547				546
Servicing income on loans sold			480				417
Recoveries on investment securities, net			68				33
Other			1,405				1,354
Total non-interest income			12,544				12,368
Non-interest expense
Salaries and employee benefits			15,740				14,908
Premises and equipment			3,231				3,082
Loss (gain) on disposition of premises and equipment, net			(102	)			5
Advertising			782				698
OREO and other repossessed assets, net			140				22
ATM and debit card processing			1,296				1,405
Postage and courier			456				435
State and local taxes			687				609
Professional fees			1,390				887
FDIC insurance			294				362
Loan administration and foreclosure			336				205
Data processing and telecommunications			1,938				1,870
Deposit operations			1,192				1,074
Other, net			1,797				1,954
Total non-interest expense, net			29,177				27,516
Income before income taxes		$	22,422			$	21,243
Provision for income taxes			5,701				7,076
Net income		$	16,721			$	14,167
Net income per common share:
Basic		$	2.28			$	1.99
Diluted			2.22				1.92
Weighted average common shares outstanding:
Basic			7,334,577				7,136,690
Diluted			7,526,344				7,380,053

 

KEY FINANCIAL RATIOS AND DATA		Three Months Ended
($ in thousands, except per share amounts) (unaudited)		Sept. 30,		June 30,		Sept. 30,
		2018		2018		2017
PERFORMANCE RATIOS:
Return on average assets (a)		1.76%		1.78%		1.55%
Return on average equity (a)		14.47%		14.87%		13.23%
Net interest margin (a)		4.35%		4.18%		4.18%
Efficiency ratio		56.94%		55.33%		56.31%
		Year Ended
		Sept. 30,				Sept. 30,
		2018				2017
PERFORMANCE RATIOS:
Return on average assets		1.70%				1.53%
Return on average equity		14.27%				13.65%
Net interest margin		4.23%				4.07%
Efficiency ratio		56.55%				57.92%

 

		Sept. 30,				June 30,				Sept. 30,
		2018				2018				2017
ASSET QUALITY RATIOS AND DATA:
Non-accrual loans		$	1,317			$	2,706			$	1,911
Loans past due 90 days and still accruing			--				428				--
Non-performing investment securities			406				433				533
OREO and other repossessed assets			1,913				2,112				3,301
Total non-performing assets (b)		$	3,636			$	5,679			$	5,745
Non-performing assets to total assets (b)			0.36	%			0.56	%			0.60	%
Net charge-offs (recoveries) during quarter		$	2			$	12			$	57
Allowance for loan losses to non-accrual loans			724	%			352	%			500	%
Allowance for loan losses to loans receivable (c)			1.30	%			1.31	%			1.36	%
Troubled debt restructured loans on accrual status (d)		$	2,955			$	2,960			$	3,342
CAPITAL RATIOS:
Tier 1 leverage capital			11.98	%			11.80	%			11.52	%
Tier 1 risk-based capital			17.13	%			16.98	%			16.31	%
Common equity Tier 1 risk-based capital			17.13	%			16.98	%			16.31	%
Total risk-based capital			18.39	%			18.24	%			17.56	%
Tangible common equity to tangible assets (non-GAAP)			11.75	%			11.52	%			11.13	%
BOOK VALUES:
Book value per common share		$	16.84			$	16.35			$	15.08
Tangible book value per common share (e)			16.08				15.58				14.31

________________________________________________

(a)  Annualized

(b)  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.

(c)  Does not include loans held for sale and is before the allowance for loan losses.

(d)  Does not include troubled debt restructured loans totaling $323, $155 and $252 reported as non-accrual loans at September 30, 2018, June 30, 2018 and September 30, 2017, respectively.

(e)  Tangible common equity divided by common shares outstanding (non-GAAP).

AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY

($ in thousands)

(unaudited)

          _____________________________________

(1) Includes other investments

(2) Net interest margin = annualized net interest income /

     average interest-earning assets

 

AVERAGE BALANCES, YIELDS, AND RATES – YEAR-TO-DATE

($ in thousands)

(unaudited)

          _____________________________________

(1)	Includes other investments

(2)	Rate calculation includes prepayment penalties incurred

(3)	Net interest margin = net interest income /

       average interest-earning assets