Timberland filing shows positive results

Hoquiam-based Timberland Bank has reported a series of positive financial developments in its latest regulatory filings, including a $3.5 million increase in annual earnings.

Also, by the end of the day today Timberland will no longer be a participant in the U.S. Treasury’s Troubled Asset Relief Program (TARP) because the Treasury has “successfully auctioned the preferred shares it had purchased from Timberland in December 2008,” the filing said. The shares will now be owned by private investors.

Timberland had received $16.6 million in TARP money and was one of 17 banks in Washington to get the assistance.

Overall, holding company Timberland Bancorp Inc. on Thursday reported earnings of $4.59 million for fiscal 2012, compared to earnings of $1.09 million for fiscal 2011, according to a news release.

“Profitability increased significantly year over year as historically low interest rates and the improving economy contributed to an increase in the gain on sale of loans and a reduction in provision expense,” said a statement from Michael R. Sand, president and CEO. “We will continue to focus on reducing non-performing assets and on maintaining the bank’s net interest margin during the new fiscal year.”

The impact also was positive for shareholders, with fiscal earnings per diluted common share increasing to 52 cents for the year compared to nothing for fiscal 2011. For the quarter that ended Sept. 30, net income to common shareholders was $883,000 (13 cents per diluted share), compared to a net loss of $339,000 for the same period in 2011.

Total shareholders’ equity increased $1.04 million to a total of $90.32 million. Book value per common share increased to $10.52.

Here are some other highlights of the report:

• Net income for the current quarter was $1.15 million, compared to a loss of $73,000 for the same quarter a year ago.

• Total delinquent and non-accrual loans decreased 12 percent during the quarter and 30 percent year-over-year.

• Net charge-offs for the current quarter decreased 56 percent from the preceding quarter and decreased 58 percent from the same quarter a year ago.

• The holding company maintains a risk-based capital ratio of 16.77 percent.

• Total assets increased by $7.8 million (1 percent) to $737 million in the last quarter, which was primarily due to a $7.6 million increase in total deposits that increased the amount of assets held in overnight funds.

“Our deposit mix continues to improve through the transition to more transaction-based accounts,” said Dean Brydon, bank CFO.

Timberland continued to reduce its exposure to land development and land loans, the report states. Land development loan balances decreased to $589,000, a 73 percent decrease year-over-year. The bank’s total land loan portfolio decreased to $39 million, a 4 percent drop for the quarter and a 19 percent decrease year-over year. “The well diversified land loan portfolio consists of 314 loans on a variety of land types, including individual building lots, acreage, raw land and commercially zoned properties,” the report said.

Timberland’s total loan originations increased 8 percent during the past quarter to $69 million, a figure that represents an 86 percent increase from the $37.1 million originated during the same quarter last year.

“Timberland continues to sell fixed rate one-to-four family mortgage loans into the secondary market for asset-liability management purposes to generate non-interest income,” the report notes. For the last quarter, the bank sold $28.5 million worth of those fixed-rate mortgages, compared to $21.2 million in the preceding quarter and $16.1 million for the same quarter in 2011.

Timberland has been operating since 1915 and now includes 22 branches in Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties, including the main office branch in Hoquiam.