8-K 1 k8042208.txt TIMBERLAND BANCORP, INC. FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 22, 2008 Timberland Bancorp, Inc. (Exact name of registrant as specified in its charter) Washington 0-23333 91-1863696 --------------------------- --------- ---------------- State or other jurisdiction Commission (I.R.S. Employer Of incorporation File Number Identification No.) 624 Simpson Avenue, Hoquiam, Washington 98550 -------------------------------------------- -------- (Address of principal executive offices) (Zip Code) Registrant's telephone number (including area code) (360) 533-4747 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions. [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition -------------------------------------------------------- On April 22, 2008, Timberland Bancorp, Inc. issued its earnings release for the quarter ended March 31, 2008. A copy of the earnings release is attached hereto as Exhibit 99.1, which is incorporated herein by reference. Item 9.01 Financial Statements and Exhibits -------------------------------------------- (c) Exhibits 99.1 Press Release of Timberland Bancorp, Inc. dated April 22, 2008 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. TIMBERLAND BANCORP,INC. DATE: April 22, 2008 By: /s/Dean J. Brydon ------------------------ Dean J. Brydon Chief Financial Officer Exhibit 99.1 Contact: Michael R. Sand President & CEO Dean J. Brydon CFO (360) 533-4747 http://www.timberlandbank.com ----------------------------- Timberland Bancorp Earns $1.6 Million or $0.24 per Share in Fiscal Second Quarter 2008 HOQUIAM, WA--Apr 22, 2008 -- Timberland Bancorp, Inc. (NASDAQ:TSBK) ("Timberland"), the holding company for Timberland Bank ("Bank"), today reported solid fiscal second quarter profits of $1.6 million after a $700,000 addition to its loan loss reserves as a result of continued loan growth and the reclassification of certain loans. In the second quarter of fiscal 2008, Timberland earned $1.6 million, or $0.24 per diluted share, compared to $1.9 million, or $0.27 per diluted share, in the second quarter one year ago. All per share data has been adjusted to reflect the two-for-one stock split in the form of a 100% stock dividend paid on June 5, 2007. Fiscal Second Quarter 2008 Highlights: (quarter ended March 31, 2008 compared to the quarter ended March 31, 2007) * The loan portfolio increased 14% to $548 million from $480 million. * Total deposits increased by $9 million with an increase of $7 million in savings and N.O.W. checking account balances. * Total assets increased 6% to $655 million from $618 million. * Revenue increased 4% due to solid loan growth. * Loan loss reserves increased to 1.21% of loans. * Capital levels remain strong with a 10.4% tangible equity to assets ratio. * Completed 15th share repurchase program and announced another 5% repurchase program. "While the Northwest economy has slowed we are seeing encouraging signs in our core markets," said Michael R. Sand, President and Chief Executive Officer. "The recent announcement by the State of Washington that a site in Grays Harbor County was chosen to facilitate the construction of pontoons for Seattle's Evergreen Point floating bridge is good news for our local economy. The project should bring 250 construction and 75 to 100 manufacturing jobs to the Grays Harbor market." "We are also pleased with the increase in good quality commercial and industrial ("C&I") loans being produced by our lenders in the Pierce County market. Our C&I portfolio has increased by 32% during the past year and we anticipate the continued growth of this loan segment. The quality of these loans validates our ability to compete in a competitive C&I market. We have also recently observed an increase in the sale of spec homes in eastern Pierce County. During the past several weeks one of our spec builders sold five of his inventory of seven homes with closings scheduled for late April and mid to late May. We are encouraged to see the increased sales activity in this market." "We have continued to build our reserve for loan losses during this time of economic uncertainty," Sand also stated. "While our history of recovering principal on defaulted loans is excellent we believe it is prudent to build a strong reserve position consistent with results of our quarterly loan loss reserve analysis in addition to maintaining a strong capital position." The increase in non-performing loans ("NPLs") of approximately $2.5 million for the quarter was due primarily to placing Timberland's one-eighth participation interest of $1.9 million in a Clark County residential land development loan on non-accrual as noted below. The plat which is east of Vancouver Washington is finished and lots are currently being marketed. Total NPLs of $6.4 million represent 0.98% of total assets. Operating Results Fiscal second quarter revenue (net interest income before provision for loan losses plus non-interest income) increased 4% to $8.2 million from $7.9 million in the like quarter one year ago. Net interest income before the provision for loan losses increased 3% to $6.7 million compared to the like quarter one year ago with interest and dividend income increasing 7% and interest expense increasing 16%. Strong loan growth contributed to the increase in net interest income and offset increased funding costs. Timberland Q1 Earnings April 22, 2008 Page 2 Timberland's net interest margin remained strong at 4.44%, a reduction of 15 basis points from the 4.59% reported for the quarter ended December 31, 2007. "The substantial Fed rate cuts during the quarter affected margins but stimulated residential loan activity," said Dean Brydon, Chief Financial Officer. The other factor influencing margin compression was the reversal of interest on loans placed on non-accrual during the quarter which reduced the margin by approximately eight basis points. The Bank's net interest margin was 4.75% for the same quarter one year ago. In the second fiscal quarter Timberland increased its loan loss provision by $544,000 when compared to the like quarter in the prior fiscal year. "With continuing loan portfolio growth, the reclassification of certain loans and a generally slower Northwest economy we made prudent additions to loan loss reserves this quarter," Brydon noted. While there were no charge offs during the quarter ended March 31, 2008, the reserve for principal impairments on non-accrual loans was increased by $329,000 to $623,000. Impairments may result in actual charge offs against the impairment reserves in the future. The Bank's largest non-accrual loan is a $1.9 million participation interest in a land development loan secured by property located in Clark County, east of Vancouver, Washington. Lot sales have been occurring, however at a rate indicating a longer than anticipated absorption period. Non-interest income increased 9% to $1.55 million for the second quarter from $1.42 million for the second quarter of fiscal 2007, primarily due to increased income from loan sales (gain on sale of loans and servicing income on loans sold). The sale of fixed rate one-to-four family mortgage loans totaled $11.6 million for the second quarter of fiscal 2008 compared to $6.6 million for the same period one year prior. Moderate interest rates for 30-year fixed rate loans has increased the demand for financing one-to-four family properties which increases revenues associated with the sale of such loans. Timberland's total operating (non-interest) expenses increased to $5.21 million for the second quarter from $4.94 million for the second quarter of fiscal 2007 primarily due to a $220,000 increase in salaries and employee benefits expense and a $67,000 increase in advertising expenses. The increased salary and benefit expense was primarily the result of annual salary adjustments (effective October 1, 2007) and the addition of several employees. The increased advertising expenses were primarily attributable to marketing costs designed to gather new deposits. As a result of the increased expenses, the efficiency ratio increased to 63.29% for the current quarter compared to 62.42% for the same quarter one year ago. Asset Quality The non-performing assets ("NPAs") to total assets ratio was 0.98% at March 31, 2008, with no charge-offs during the quarter. The allowance for loan losses totaled $6.7 million at March 31, 2008, or 1.21% of loans receivable and 105% of non-performing loans. The allowance for loan losses was $6.0 million, or 1.11% of loans receivable and $4.3 million, or 0.89% at December 31, 2007 and March 31, 2007, respectively. NPLs totaled $6.4 million at March 31, 2008, and were comprised of 17 loans including 11 single family speculative home loans located in Pierce County totaling $4.0 million (which included one $1.0 million loan, one $522,000 loan, eight loans with loan balances ranging from $245,000 to $344,000, and one loan with an outstanding balance of $63,000), a $1.9 million participation interest in a land development loan located in Clark County, two home equity consumer loans totaling $183,000 on which losses, if any, incurred on the disposition of the underlying collateral are recoverable from title insurance proceeds, one commercial real estate loan for $152,000 that is well secured, one commercial business loan for $119,000 that is well secured, and one land loan for $22,000 the security for which has a tax assessed value of $134,000. These non-performing loans represent eight credit relationships. Balance Sheet Management Total assets increased 6% year over year, to $654.5 million at March 31, 2008, from $646.6 million at December 31, 2007 and $617.8 million one year ago primarily due to strong loan portfolio growth. LOAN PORTFOLIO ($ in thousands) March 31, 2008 Dec. 31, 2007 March 31, 2007 Amount Percent Amount Percent Amount Percent --------- ----- --------- ----- --------- ----- Mortgage Loans: One-to-four family (1) $ 108,117 18% $ 101,971 17% $ 104,697 19% Multi family 37,932 6 38,828 6 17,156 3 Commercial 136,112 22 126,003 21 137,474 25 Timberland Q1 Earnings April 22, 2008 Page 3 Construction and land development 197,384 32 206,105 34 179,350 32 Land 55,158 9 57,033 9 48,331 9 --------- ----- --------- ----- --------- ----- Total mortgage loans 534,703 87 529,940 87 487,008 88 Consumer Loans: Home equity and second mortgage 47,003 8 47,071 8 41,357 7 Other 10,888 2 10,627 2 11,543 2 --------- ----- --------- ----- --------- ----- 57,891 10 57,698 10 52,900 9 Commercial business loans 20,177 3 18,642 3 15,289 3 --------- ----- --------- ----- --------- ----- Total loans $ 612,771 100% $ 606,280 100% $ 555,197 100% Less: Undisbursed portion of construction loans in process (55,447) (60,708) (68,034) Unearned income (2,782) (2,928) (3,003) Allowance for loan losses (6,697) (5,997) (4,272) --------- --------- --------- Total loans receivable, net $ 547,845 $ 536,647 $ 479,888 ========= ========= ========= _____________________ (1) Includes loans held for sale CONSTRUCTION LOAN COMPOSITION ($ in thousands) March 31, 2008 Dec. 31, 2007 March 31, 2007 Amount Percent Amount Percent Amount Percent --------- ----- --------- ----- --------- ----- Custom and owner / builder $ 46,311 23% $ 50,748 25% $ 46,723 26% Speculative 42,582 22 41,251 20 36,753 20 Commercial real estate 56,964 29 66,949 32 57,191 32 Multi-family 21,941 11 22,060 11 17,756 10 Land development 29,586 15 25,097 12 20,927 12 --------- ----- --------- ----- --------- ----- Total construction loans $ 197,384 100% $ 206,105 100% $ 179,350 100% Net loans receivable increased 8% on an annualized basis during the quarter to $547.8 million at March 31, 2008, and increased 14% from $479.9 million one year ago. During the quarter the portfolio increased by $11.2 million as commercial real estate loans increased by $10.1 million, one-to-four family mortgage loans increased by $6.2 million (including $4.9 million that are held for sale), and commercial business loans increased by $1.5 million. These increases were partially offset by a $3.5 million decrease in construction and land development loans (net of the undisbursed portion) and a $1.9 million decrease in land loans. Loan originations decreased to $59.0 million for the quarter ended March 31, 2008 from $65.5 million for the quarter ended December 31, 2007 and from $86.2 million for the quarter ended March 31, 2007. The Bank continues to sell fixed rate one-to-four family mortgage loans into the secondary market for asset-liability management purposes. Timberland's investment securities decreased by $2.2 million during the quarter to $42.9 million at March 31, 2008 from $45.1 million at December 31, 2007 primarily due to the maturity or call of U.S. agency securities, regular amortization and prepayments on mortgaged backed securities, and a decrease in market value on mutual funds. At March 31, 2008, the mutual funds had gross unrealized losses of $1.5 million as the market value ($31.4 million) was below the amortized cost ($32.9 million). These mutual funds invest primarily in highly rated mortgage-backed securities and U.S. agency securities and their net asset values have been negatively impacted by the unusually large spreads in the market for mortgage-related products. The credit ratings and quality of underlying securities in the funds remain solid and Timberland believes that the risk of principal loss is low. The two largest mutual funds (ASARX and AULTX) in the portfolio comprise over 83% of the total mutual fund balance and currently have three star ratings from Morningstar. We continue to believe that the market value of the underlying securities will recover as spreads narrow on mortgage-related securities. However, if the wide pricing spreads on mortgage-related products continues to persist or we find that the narrowing spreads do not positively affect the market value of these funds in the manner we anticipate, we may deem the funds to be other than temporarily impaired and a non-cash charge to income may occur. In accordance with accounting rules, the reduction in market value of these mutual funds continues to be reflected as a reduction in Timberland's capital which, as noted previously, remains strong with a tangible equity to assets ratio of 10.40%. Timberland Q1 Earnings April 22, 2008 Page 4 DEPOSIT BREAKDOWN ($ in thousands) March 31, 2008 Dec. 31, 2007 March 31, 2007 Amount Percent Amount Percent Amount Percent --------- ----- --------- ----- --------- ----- Non-interest bearing $ 50,068 11% $ 50,590 11% $ 53,321 12% N.O.W. checking 88,350 19 83,594 18 83,945 19 Savings 57,212 12 54,738 12 62,169 14 Money market 47,244 10 47,102 10 45,950 10 Certificates of deposit under $100 137,529 29 133,676 29 129,986 29 Certificates of deposit $100 and over 74,376 16 68,527 15 68,751 16 Certificates of deposit - brokered 15,058 3 23,020 5 -- -- --------- ----- --------- ----- --------- ----- Total deposits $ 469,837 100% $ 461,247 100% $ 444,122 100% ========= ===== ========= ===== ========= ===== Total deposits increased $8.6 million to $469.8 million at March 31, 2008 from $461.2 million at December 31, 2007 primarily due to a $9.7 million increase in certificate of deposit accounts, a $4.8 million increase in N.O.W. checking accounts, and a $2.5 million increase in savings accounts. These increases were partially offset by an $8.0 million decrease in brokered deposits. Total shareholders' equity decreased $147,000 to $74.8 million at March 31, 2008 from $75.0 million at December 31, 2007. Timberland continued to manage its capital ratio through asset growth, stock repurchases and dividends. During the quarter Timberland repurchased 94,950 shares for $1.22 million (an average price of $12.83 per share) and completed it 15th share repurchase program. Shortly after completing this repurchase program, Timberland announced that it had authorized an additional 5% (or 343,468 shares) repurchase program. No shares have been repurchased under the current share repurchase program. Cumulatively, Timberland has repurchased 7.8 million shares at an average price of $8.98 per share. The share repurchases equal approximately 59% of the 13.2 million shares that were issued in Timberland's January 1998 initial public offering. A cash dividend of $0.11 per share was paid during the quarter, which represented the 40th consecutive quarter a cash dividend was paid to shareholders. About Timberland Bancorp, Inc. Timberland Bancorp operates 21 branches in the state of Washington in Hoquiam, Aberdeen, Ocean Shores, Montesano, Elma, Olympia, Lacey, Tumwater, Yelm, Puyallup, Edgewood, Tacoma, Spanaway (Bethel Station), Gig Harbor, Poulsbo, Silverdale, Auburn, Winlock, and Toledo. Timberland Q1 Earnings April 22, 2008 Page 5 TIMBERLAND BANCORP INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT Three Months Ended ($ in thousands, except per share) March 31, Dec. 31, March 31, (unaudited) 2008 2007 2007 ---------- ---------- ---------- Interest and dividend income Loans receivable $ 10,358 $ 10,764 $ 9,283 Investments and mortgage-backed securities 142 249 381 Dividends from mutual funds and Federal Home Loan Bank ("FHLB") stock 395 423 413 Federal funds sold 27 31 77 Interest bearing deposits in banks 4 10 14 ---------- ---------- ---------- Total interest and dividend income 10,926 11,477 10,168 Interest expense Deposits 3,117 3,334 2,657 FHLB advances 1,132 1,216 1,013 Other borrowings 6 8 10 ---------- ---------- ---------- Total interest expense 4,255 4,558 3,680 ---------- ---------- ---------- Net interest income 6,671 6,919 6,488 Provision for loan losses 700 1,200 156 ---------- ---------- ---------- Net interest income after provision for loan losses 5,971 5,719 6,332 Non-interest income Service charges on deposits 648 696 663 Gain on sale of loans, net 144 92 64 Bank owned life insurance ("BOLI") net earnings 119 120 114 Servicing income on loans sold 179 118 115 ATM transaction fees 302 299 272 Other 162 172 196 ---------- ---------- ---------- Total non-interest income 1,554 1,497 1,424 Non-interest expense Salaries and employee benefits 2,986 2,920 2,766 Premises and equipment 650 464 660 Advertising 268 182 201 Loss (gain) from other real estate operations -- -- (11) ATM expenses 142 148 107 Postage and courier 130 118 130 Amortization of core deposit intangible 62 62 71 State and local taxes 147 151 133 Professional fees 145 147 172 Other 676 659 710 ---------- ---------- ---------- Total non-interest expense 5,206 4,851 4,939 Income before federal income taxes 2,319 2,365 2,817 Federal income taxes 734 750 901 ---------- ---------- ---------- Net income $ 1,585 $ 1,615 $ 1,916 ========== ========== ========== Earnings per common share: Basic $ 0.25 $ 0.25 $ 0.28 Diluted $ 0.24 $ 0.24 $ 0.27 Weighted average shares outstanding: Basic 6,441,367 6,515,428 6,866,664 Diluted 6,560,806 6,674,773 7,083,420 Timberland Q1 Earnings April 22, 2008 Page 6 TIMBERLAND BANCORP INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT Six Months Ended ($ in thousands, except per share) March 31, March 31, (unaudited) 2008 2007 ------------ ------------ Interest and dividend income Loans receivable $ 21,121 $ 18,070 Investments and mortgage-backed securities 391 835 Dividends from mutual funds and FHLB stock 818 833 Federal funds sold 58 142 Interest bearing deposits in banks 14 53 ------------ ------------ Total interest and dividend income 22,402 19,933 Interest expense Deposits 6,450 5,247 FHLB advances 2,348 1,895 Other borrowings 14 27 ------------ ------------ Total interest expense 8,812 7,169 ------------ ------------ Net interest income 13,590 12,764 Provision for loan losses 1,900 156 ------------ ------------ Net interest income after provision for loan losses 11,690 12,608 Non-interest income Service charges on deposits 1,344 1,369 Gain on sale of loans, net 237 171 BOLI net earnings 239 227 Servicing income on loans sold 297 246 ATM transaction fees 601 535 Other 334 356 ------------ ------------ Total non-interest income 3,052 2,904 Non-interest expense Salaries and employee benefits 5,906 5,551 Premises and equipment 1,114 1,283 Advertising 450 379 Loss (gain) from real estate operations -- (29) ATM expenses 291 226 Postage and courier 247 235 Amortization of core deposit intangible 124 143 State and local taxes 298 272 Professional fees 292 349 Other 1,335 1,426 ------------ ------------ Total non-interest expense 10,057 9,835 Income before federal income taxes 4,685 5,677 Federal income taxes 1,484 1,807 ------------ ------------ Net income $ 3,201 $ 3,870 ============ ============ Earnings per common share: Basic $ 0.49 $ 0.56 Diluted $ 0.48 $ 0.54 Weighted average shares outstanding: Basic 6,478,600 6,937,990 Diluted 6,618,101 7,165,698 Timberland Q1 Earnings April 22, 2008 Page 7 TIMBERLAND BANCORP, INC. CONSOLIDATED BALANCE SHEET ($ in thousands) (unaudited) March 31, Dec. 31, March 31, 2008 2007 2007 Assets --------- --------- --------- Cash and due from financial institutions: Non-interest bearing $ 12,165 $ 15,301 $ 14,604 Interest-bearing deposits in banks 883 502 659 Federal funds sold 1,220 1,015 6,655 --------- --------- --------- 14,268 16,818 21,918 Investments and mortgage-backed securities: Held to maturity 60 67 72 Available for sale 42,868 45,037 67,221 FHLB stock 5,705 5,705 5,705 --------- --------- --------- 48,633 50,809 72,998 Loans receivable 549,593 542,644 482,226 Loans held for sale 4,949 -- 1,934 Less: Allowance for loan losses (6,697) (5,997) (4,272) --------- --------- --------- Net loans receivable 547,845 536,647 479,888 Accrued interest receivable 3,055 3,407 3,177 Premises and equipment 16,470 16,512 16,736 Other real estate owned ("OREO") and other repossessed items -- -- 71 BOLI 12,654 12,535 12,178 Goodwill 5,650 5,650 5,650 Core deposit intangible 1,096 1,158 1,363 Mortgage servicing rights 1,145 1,071 986 Other assets 3,697 1,987 2,836 --------- --------- --------- Total Assets $ 654,513 $ 646,594 $ 617,801 ========= ========= ========= Liabilities and Shareholders' Equity Non-interest-bearing deposits $ 50,068 $ 50,590 $ 53,321 Interest-bearing deposits 419,769 410,657 390,801 --------- --------- --------- Total deposits 469,837 461,247 444,122 FHLB advances 105,663 106,380 92,230 Other borrowings: repurchase agreements 815 611 588 Other liabilities and accrued expenses 3,356 3,367 3,048 --------- --------- --------- Total Liabilities 579,671 571,605 539,988 --------- --------- --------- Shareholders' Equity Common stock- $.01 par value; 50,000,000 shares authorized; March 31, 2008 6,876,653 shares issued and outstanding December 31, 2007 6,917,675 shares issued and outstanding March 31, 2007 3,649,190 shares issued and outstanding on a pre-split basis 69 69 36 Additional paid-in capital 8,527 9,314 16,439 Unearned shares- Employee Stock Ownership Plan (2,908) (2,974) (3,392) Retained earnings 70,125 69,300 65,465 Accumulated other comprehensive loss (971) (720) (735) --------- --------- --------- Total Shareholders' Equity 74,842 74,989 77,813 --------- --------- --------- Total Liabilities and Shareholders' Equity $ 654,513 $ 646,594 $ 617,801 ========= ========= ========= Timberland Q1 Earnings April 22, 2008 Page 8 KEY FINANCIAL RATIOS AND DATA Three Months Ended ($ in thousands, except per share) March 31, Dec. 31, March 31, (unaudited) 2008 2007 2007 --------- --------- --------- PERFORMANCE RATIOS: Return on average assets (a) 0.98% 0.99% 1.28% Return on average equity (a) 8.48% 8.61% 9.91% Net interest margin (a) 4.44% 4.59% 4.75% Efficiency ratio 63.29% 57.64% 62.42% Six Months Ended March 31, March 31, 2008 2007 --------- --------- Return on average assets 0.99% 1.32% Return on average equity 8.55% 9.92% Net interest margin 4.52% 4.74% Efficiency ratio 60.43% 62.78% March 31, Dec. 31, March 31, 2008 2007 2007 --------- --------- --------- ASSET QUALITY RATIOS: Non-performing loans $ 6,388 $ 3,908 $ 322 OREO and other repossessed assets -- -- 71 --------- --------- --------- Total non-performing assets $ 6,388 $ 3,908 $ 393 Non-performing assets to total assets 0.98% 0.60% 0.06% Allowance for loan losses to non-performing loans 105% 153% 1,327% Restructured loans $ 2,491 $ 2,462 $ -- Book value per share (b) $ 10.88 $ 10.84 $ 10.66 Book value per share (c) $ 11.53 $ 11.50 $ 11.32 Tangible book value per share (b) (d) $ 9.90 $ 9.86 $ 9.70 Tangible book value per share (c) (d) $ 10.49 $ 10.46 $ 10.30 (a) Annualized (b) Calculation includes ESOP shares not committed to be released (c) Calculation excludes ESOP shares not committed to be released (d) Calculation subtracts goodwill and core deposit intangible from the equity component AVERAGE BALANCE SHEET: Three Months Ended March 31, Dec. 31, March 31, 2008 2007 2007 --------- --------- --------- Average total loans $ 546,349 $ 538,284 $ 465,460 Average total interest earning assets 600,872 602,628 546,870 Average total assets 647,851 650,893 597,015 Average total interest bearing deposits 411,465 411,766 380,916 Average FHLB advances and other borrowings 107,572 106,937 81,578 Average shareholders' equity 74,741 75,002 77,340 Six Months Ended March 31, March 31, 2008 2007 --------- --------- Average total loans $ 542,295 $ 452,232 Average total interest earning assets 601,754 538,115 Average total assets 649,225 588,470 Average total interest bearing deposits 410,542 378,614 Average FHLB advances and other borrowings 107,253 73,688 Average shareholders' equity 74,873 78,002 Timberland Q1 Earnings April 22, 2008 Page 8 Disclaimer This report contains certain "forward-looking statements." The Company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protection of such safe harbor with forward looking statements. These forward-looking statements may describe future plans or strategies and include the Company's expectations of future financial results. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated objectives. These risk factors include but are not limited to the effect of interest rate changes, competition in the financial services market for both deposits and loans as well as regional and general economic conditions. The words "believe," "expect," "anticipate," "estimate," "project," and similar expressions identify forward-looking statements. The Company's ability to predict results or the effect of future plans or strategies is inherently uncertain and undue reliance should not be placed on such statements.