Upward estimate revisions on the back of strong fiscal fourth
quarter results - including an earnings surprise of 18.2% - have
Timberland Bancorp Inc.
) achieve a Zacks #1 Rank (Strong Buy) on January 1. With a solid
return of 68.4% in the last year, this banking service provider
hit a new 52-week high on December 26.
The Rank Drivers
Better-than-expected fiscal fourth quarter results, improving
credit quality and strong capital ratios are the primary rank
drivers for this stock.
Timberland Bancorp reported its fiscal fourth quarter (ended
September 30) results on November 8 with earnings per share of 13
cents, beating the Zacks Consensus Estimate of 11 cents by 18.2%.
It also compared favorably with the year-ago loss of 5 cents.
Robust results for the reported quarter were primarily aided by
higher non-interest income, elevated net interest income and
reduced provision for loan losses.
Non-interest expenses, which increased 1.5% on a year-over year
basis to $6.7 million, were a dampener for the quarter.
Net interest income increased 3.2% to $6.5 million from $6.3
million in the year-ago quarter. Net interest margin expanded 8
basis points on a year-over year basis to 3.83%. The rise was
primarily due to lower cost of funds. Non-interest income jumped
31.6% year over year to $2.5 million. Provision for loan losses
skidded 50.0% from the year-ago quarter to $0.9 million.
Credit quality continued to exhibit improvement. Non-accrual
loans stood at $21.3 million, down 1.4% year over year. Net
charge-offs during the quarter dipped 56.3% on a year-over-year
basis to $0.7 million.
As of September 30, 2012, Timberland Bancorp's total risk-based
capital ratio was 16.77%, Tier 1 risk-based capital ratio was
15.51% and Tier 1 leverage capital ratio was 11.66%, improving
from 16.46%, 15.19% and 11.09%, respectively, in the prior-year
Earnings Estimate Revisions
The Zacks Consensus Estimate for fiscal 2013 moved up by 5.5% to
58 cents over the last 60 days. This reflects a year-over-year
improvement of about 11.5%.
Shares of Timberland Bancorp currently trade at 11.5x 12-month
forward earnings, a 28% discount to the peer group average of
15.9x. Its price to book ratio of 0.6 is at a 25% discount to the
industry median of 0.8.
Moreover, the company has a trailing 12-month ROE of 6.0%,
compared with the industry average of 3.9%. This implies that the
company reinvests its earnings more efficiently than its industry
About the Company
Headquartered in Hoquiam, Washington, Timberland Bancorp operates
as the bank holding company for Timberland Bank. It operates
through 22 branches located in Grays Harbor, Pierce, Thurston,
Kitsap, King and Lewis counties of Washington and offers an array
of banking services. The company, which was founded in 1915, has
a market capitalization of roughly $48.9 million.
Other Zacks #1 Rank bank stocks include
Sun Bancorp Inc.
Pacific Continental Corp.
PACIFIC CONTL (PCBK): Free Stock Analysis
SUN BANCORP/NJ (SNBC): Free Stock Analysis
TIMBERLAND BANC (TSBK): Free Stock Analysis
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