FORM 11-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-23333
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Timberland Bank Employee Stock Ownership and 401(k) Plan
B. Name of issuer of securities held pursuant to the plan and the
address of its principal executive office:
Timberland Bank
624 Simpson Avenue
Hoquiam, Washington 98550
Financial Statements and Exhibits
Page
(a) Reports of Independent Registered Public Accounting Firms 1
(b) Financial Statements
Statements of Net Assets Available for Benefits
at September 30, 2010 and 2009 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended September 30, 2010 4
Notes to the Financial Statements 6
(c) Supplemental Schedule
Schedule H, Line 4i Schedule of Assets (Held at End of Year) 13
(d) Exhibit 23 Consent of Independent Registered Public Accounting
Firm 15
Signatures
The Plan: Pursuant to the requirements of the Securities and Exchange
Act of 1934, the trustees (or other persons who administer employees benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
--------------------------------------------------
Administrator, Timberland Bank Employee Stock Ownership and 401(k) Plan
By: /s/Dean J. Brydon
------------------------------
Dean J. Brydon (name)
------------------------------
Chief Financial Officer (title)
------------------------------
Timberland Bank (bank)
------------------------------
Date: February 24, 2011
Timberland Bank Employee Stock Ownership and 401(k) Plan
Financial Report
September 30, 2010
Timberland
Bank
Employee
Stock
Ownership
And
401(k)
Plan
Financial
Report
September 30
2010
Contents
Report of Registered Independent Public Accounting Firm ............. 1
Financial Statements
Statements of Net Assets Available for Benefits...................... 2-3
Statement of Changes in Net Assets Available for Benefits............ 4
Notes to Financial Statements........................................5-12
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)......13-14
Report of Independent Registered Public Accounting Firm
To the Plan Administrator, Investment and Benefit Committees
of Timberland Bank Employee Stock Ownership and 401(k) Plan:
We have audited the accompanying statements of net assets available for
benefits of the Timberland Bank Employee Stock Ownership and 401(k) Plan (the
Plan) as of September 30, 2010 and 2009 and the related statement of changes
in net assets available for benefits for the year ended September 30, 2010.
These financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
September 30, 2010 and 2009 and the changes in net assets available for
benefits for the year ended September 30, 2010, in conformity with accounting
principles generally accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule H, line 4i
schedule of assets (held at the end of year) as of September 30, 2010 is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements, but is supplementary information required by
the Department of Labor's Rule and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental
schedule is the responsibility of the Plan's management. The supplemental
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
PMB Helin Donovan, LLP
/s/ PMB Helin Donovan, LLP
Spokane, Washington
February 16, 2011
Financial
Statements
Statements of Net Assets Available for Benefits
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
September 30, 2010
Nonparticipant-
Directed
Participant- ----------------------
Directed Allocated Unallocated Total
Assets
Investments, at fair value:
Stable Value Common
Collective Trust Fund $ 569,438 $ - - $ - - $ 569,438
Other common collective
trust funds 6,205,607 - - - - 6,205,607
Timberland Bancorp, Inc.
("Bancorp") common
stock 1,568,750 2,284,660 1,211,106 5,064,516
---------- ---------- ----------- -----------
Total investments 8,343,795 2,284,660 1,211,106 11,839,561
Cash 296,940 1,212 2,308 300,460
---------- ---------- ----------- -----------
Total assets 8,640,735 2,285,872 1,213,414 12,140,021
Liabilities
Note payable - - - - 3,537,777 3,537,777
---------- ---------- ----------- -----------
Net assets available at
fair value 8,640,735 2,285,872 (2,324,363) 8,602,244
Adjustment from fair value
to contract value for
fully benefit-responsive
investment contracts (7,031) - - - - (7,031)
Net assets available ---------- ---------- ----------- -----------
for benefits $8,633,704 $2,285,872 $(2,324,363) $ 8,595,213
========== ========== =========== ===========
See notes to financial statements.
2
Statements of Net Assets Available for Benefits
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
September 30, 2009
Nonparticipant-
Directed
Participant- ----------------------
Directed Allocated Unallocated Total
Assets
Investments, at fair value:
Stable Value Common
Collective Trust Fund $ 570,798 $ - - $ - - $ 570,798
Other common collective
trust funds 5,678,533 - - - - 5,678,533
Bancorp common stock 1,686,671 2,555,502 1,554,644 5,796,817
---------- ---------- ----------- -----------
Total investments 7,936,002 2,555,502 1,554,644 12,046,148
Cash 65,360 16,653 2,304 84,317
---------- ---------- ----------- -----------
Total assets 8,001,362 2,572,155 1,556,948 12,130,465
Liabilities
Note payable - - - - 3,811,270 3,811,270
Net assets available at ---------- ---------- ----------- -----------
fair value 8,001,362 2,572,155 (2,254,322) 8,319,195
Adjustment from fair value
to contract value for
fully benefit-responsive
investment contracts (32,836) - - - - (32,836)
Net assets available ---------- ---------- ----------- -----------
for benefits $7,968,526 $2,572,155 $(2,254,322) $ 8,286,359
========== ========== =========== ===========
See notes to financial statements.
3
Statement of Changes in Net Assets Available for Benefits
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
Year Ended September 30, 2010
Nonparticipant-
Directed
Participant- ----------------------
Directed Allocated Unallocated Total
Additions to net assets
Investment income:
Net appreciation
(depreciation) in fair
value of investments:
Stable Value Common
Collective Trust Fund $ 14,528 $ - - $ - - $ 14,528
Other common collective
trust funds 483,772 - - - - 483,772
Bancorp common stock (276,463) (488,528) (57,122) (822,113)
Interest and dividends 21,471 22,093 13,370 56,934
Contributions:
Employer 294,324 - - 553,412 847,736
Participant 473,052 - - - - 473,052
Allocation of 35,266.74
shares of Bancorp common
stock - - 264,324 - - 264,324
---------- ---------- ----------- ----------
Total additions to net
assets 1,010,684 (202,111) 509,660 1,318,233
---------- ---------- ----------- ----------
Deductions from net assets
Interest expense - - - - 315,377 315,377
Benefit payments 345,506 84,172 - - 429,678
Allocation of 35,266.74
shares of Bancorp common
stock - - - - 264,324 264,324
---------- ---------- ----------- ----------
Total deductions from net
assets 345,506 84,172 579,701 1,009,379
---------- ---------- ----------- ----------
Net increase (decrease) 665,178 (286,283) (70,041) 308,854
Net assets available for
benefits
Beginning of year 7,968,526 2,572,155 (2,254,322) 8,286,359
---------- ---------- ----------- ----------
End of year $8,633,704 $2,285,872 $(2,324,363) $8,595,213
========== ========== =========== ==========
See notes to financial statements.
4
Notes to Financial Statements
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
Note 1 - Plan Description and Basis of Presentation
The following description of the Timberland Bank Employee Stock Ownership and
401(k) Plan ("Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
General
Effective October 1, 2006, Timberland Bank ("Company") established the Plan by
combining the existing Timberland Bank Employee Stock Ownership Plan and the
Timberland Bank 401(k) Profit Sharing Plan. The Plan is comprised of two
components, a defined contribution 401(k) plan and a leveraged employee stock
ownership plan ("ESOP"). It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA) and is designed to comply with
Section 401(a) and 4975(e)(7) and the regulations thereunder of the Internal
Revenue Code of 1986, as amended ("Code"). The Plan is administered by
Pentegra Retirement Services and Pentegra Trust Company is the trustee for
Bancorp stock and Reliance Trust Company is the trustee for all other funds in
the Plan. The Company is the wholly owned subsidiary of the Bancorp. The
Plan has recently been amended and restated to comply with the Pension
Protection Act of 2006 and subsequent legislation, including related guidance.
The Plan purchased Bancorp common stock using proceeds borrowed from the
Bancorp to fund the ESOP portion of the Plan. The borrowing is to be repaid
over a period of 21.25 years by fully deductible Company contributions to the
Plan. As the Plan makes each payment of principal and interest, an
appropriate percentage of stock is released and allocated annually to eligible
employee accounts, in accordance with applicable Code regulations.
The borrowing is collateralized by unallocated shares of stock and guaranteed
by the Company. The Bancorp has no rights against shares once they are
allocated under the Plan. Accordingly, the accompanying financial statements
present, separately, assets and liabilities, and changes therein pertaining
to:
* The accounts of employees with vested rights in allocated stock
(Allocated)
* Stock not yet allocated to employees (Unallocated)
Voting Rights
Each participant may direct the trustee as to the voting rights attributable
to shares of Bancorp common stock held in the ESOP component of the Plan,
which are allocated to the participant's stock account. Any allocated shares
in which voting instructions are not received, unallocated shares under the
ESOP component of the Plan, and shares held in the 401(k) component of the
Plan are voted by the trustee in the same proportion as shares for which the
trustee receives voting instructions.
Eligibility for Participation and Contributions
The Plan covers substantially all employees of the Company or an affiliated
entity who have one year of service and are 21 years of age or older.
Generally, a year of service is credited upon the completion of at least 1,000
hours of service within a Plan year (October 1 to September 30). The Plan
provides entry dates on the first day of each calendar quarter. However,
employees who are at least age 21, but have not been credited with a year of
service, are eligible to make 401(k) contributions as of the first day of the
month after employment. Participants who do not have at least 1,000 hours of
service during such Plan year, or who are not employed on the last working day
of the Plan year, are not eligible for an allocation of the ESOP contribution
for that Plan year.
5
Notes to Financial Statements
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
Note 1 - Plan Description and Basis of Presentation (continued)
401(k) and Company Contributions and Participant Investment Options
The Plan participants may contribute into the 401(k) component up to the
maximum of pretax annual compensation as set by law ($16,500 for 2010 and
2009). Participants may also contribute amounts representing distributions
from other qualified defined benefit or defined contribution plans (rollover
contributions). The Company makes an annual safe harbor profit sharing
contribution of three percent of eligible compensation, with additional
amounts contributed at the option of its Board of Directors. The Company also
makes contributions necessary to repay the ESOP loan.
Participants age 50 and older during the Plan year are permitted to make
elective 401(k) catch-up deferrals in accordance with Section 414(v) of the
Code. For 2010 and 2009, the maximum catch-up deferral by law was $5,500 per
year.
Participants may direct the investments of their 401(k) salary deferral
contributions, safe harbor contribution and the employer discretionary
contribution, if any, into a variety of investment choices, which are more
fully described in the Plan's literature.
Participant Account Allocations
Each eligible participant's account is credited with allocations of the (a)
Company's safe-harbor contribution, (b) Company's discretionary contribution
(if the participant is eligible), (c) Company stock released as a result of
the ESOP loan repayments (if the participant is eligible), (d) Participants
401(k) and catch-up contributions, (e) the Plan's earnings and (f) the
forfeitures of terminated participants' nonvested accounts (if the participant
is eligible). ESOP allocations and Company discretionary contributions are
based upon the relation of the participant's compensation to total eligible
Plan compensation for the Plan year. Eligible compensation is limited for any
participant to $245,000 for 2010 and 2009. Dividends from Bancorp common
stock in the ESOP component are used, along with Company contributions, to
make payments on the ESOP loan. Dividends earned on allocated shares are
credited to participant accounts in the form of Bancorp stock equal to the
fair market value of the stock at the time of the dividend. Forfeited
balances of terminated participant nonvested accounts are treated as
discretionary contributions for the Plan year in which the forfeitures occur.
Forfeitures allocated for the years ended September 30, 2010 and 2009, totaled
$2,953 and $10,936, respectively for the ESOP part of the Plan. For the years
ended September 30, 2010 and 2009, the 401(k) forfeitures totaled $4,837 and
$6,586, respectively.
Benefit Payments and Plan Amendments
On termination of service, a participant whose vested Plan accounts totaled
$1,000 or less will receive a lump-sum amount equal to the value of the vested
interest in his or her account. A participant whose vested Plan accounts
exceed $1,000 may leave the funds in the Plan or elect to receive his or her
vested interest in either a lump sum distribution or a distribution over a
certain period in monthly, quarterly, semiannual or annual installments. A
participant's vested Plan accounts will be distributed upon attaining age 65,
unless an election has been made to defer or accelerate the distribution of
benefits. All distributions from the 401(k) component are in cash.
Distributions from the ESOP component are in the form of Bancorp common stock
or cash as elected by the participant. During the year ended September 30,
2010, the Plan distributed 22,458 shares of Bancorp common stock from the ESOP
component.
6
Notes to Financial Statements
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
Note 1 - Plan Description and Basis of Presentation (continued)
Vesting
Participants are immediately vested in all deferral, rollover and safe harbor
contributions, plus actual earnings thereon. Vesting in the Company's
discretionary contribution portion of accounts, the ESOP, plus earnings
thereon, is based on years of credited service. Participants gradually vest
in these accounts, and are fully vested after six years of credited service.
A participant's account also becomes 100 percent vested upon attaining the
age of 65 while actively employed, or if the participant's separation from
service is a result of death or disability.
ESOP Component Diversification
Diversification is available to a participant that has three years or more of
service with the Company. They may diversify their entire ESOP balance or any
portion they choose. The divestment may be directed into the same fund
choices available for the 401(k) component of the Plan. Divestment and
reinvestment may occur once a month. During the Plan year ended September 30,
2010, there were 1,383 shares or $6,222 that were diversified out of the ESOP
component of the Plan.
Plan Termination
The Company reserves the right to terminate the Plan at any time, subject to
the Plan's provisions. Upon termination of the Plan, the interest of each
participant will be distributed to the participant or to their beneficiary at
the time prescribed by the Plan terms and the Code. In the event of Plan
termination, participants become 100 percent vested in their accounts.
Note 2 - Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, and changes therein, and the disclosure of contingent assets and
liabilities, at the date of the financial statements. Actual results could
differ from those estimates.
Investment Valuation and Income Recognition
The Plan's investments at September 30, 2010 and 2009 consist of common
collective trust funds and Bancorp common stock; both of which are stated at
fair value. Quoted market prices are used to value shares of Bancorp common
stock. The Plan's interest in the common collective trust funds are based on
the fair values of the common collective trust funds' underlying investments,
based on net asset value information reported by the investment manager (State
Street Global Advisors) to the asset custodian (Reliance Trust Company) and
trustees (Reliance Trust Company and Pentegra Trust Company). Fluctuations in
market value are reflected as net appreciation (depreciation) in fair value of
investments.
7
Notes to Financial Statements
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
Note 2 - Summary of Significant Accounting Policies (continued)
Investment Valuation and Income Recognition (concluded)
Purchases and sales of securities are recorded on the trade-date basis.
Interest income is recognized when earned. Dividends are recorded on the
ex-dividend date.
As of December 31, 2008, the Plan adopted the Financial Accounting Standards
Board ("FASB") issued staff position on interim disclosures about fair value
of financial instruments for financial assets and liabilities. The FASB
guidance defines fair value, and increases disclosures regarding fair value
calculations.
Payment of Benefits
Benefits are recorded when paid.
Fully Benefit-Responsive Investment Contracts
As described in the FASB Audit Guidance for Reporting of Fully
Benefit-Responsive Investment Contracts Held by Certain Investment Companies
Subject to the American Institute of Certified Public Accountants Investing
Company Guide and Defined-Contribution Health and Welfare and Pension Plans,
investment contracts held by a defined contribution plan are required to be
reported at fair value. Contract value is the relevant measurement attributed
for that portion of the net assets available for benefits of a defined
contribution plan attributable to fully benefit-responsive investment
contracts because contract value is the amount participants would receive if
they were to initiate permitted transactions under the terms of the Plan. The
Plan invests in investment contracts through a common collective trust fund.
Contract value for this common collective trust fund is based on the net asset
value of the fund, as reported by the investment manager. As required by the
FASB guidance, the statements of net assets available for benefits present the
fair value of the investment in the common collective trust fund as well as
the adjustment of the investment in the common collective trust fund from fair
value to contract value relating to the investment contracts. The statement
of changes in net assets available for benefits is prepared on a contract
value basis. The provisions of the FASB guidance for reporting of fully
benefit-responsive investment contracts have been applied to the statement of
net assets available for benefits as of September 30, 2010 and 2009.
Note 3 - Tax Status
The Plan obtained its latest determination letter dated December 19, 2001, in
which the Internal Revenue Service stated that the Plan, as then designed, was
in compliance with the applicable requirements of the Code. The Plan has been
amended since receiving the determination letter; however, the Plan
Administrator believes the Plan is designed and operating in compliance with
the applicable requirements of the Code.
On December 15, 2010, the Plan applied for a new determination letter and as
of February 16, 2011 the determination letter request was still pending.
8
Notes to Financial Statements
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
Note 4 - Administration of Plan Assets
Certain administrative functions of the Plan are performed by officers and
employees of the Company. No such officers or employees receive compensation
from the Plan. The Company also retained the services of a third party to
perform third-party administrative functions. Administrative expenses are
paid directly by the Company and approximated $22,583 for the year ended
September 30, 2010.
Note 5 - Investments
The following presents, separately, identified investments that represent five
percent or more of the Plan's net assets and Bancorp common stock at September
30, 2010:
Nonparticipant-
Directed
Participant- ----------------------
Directed Allocated Unallocated Total
Bancorp common stock
Number of shares 388,314 565,524 299,786 1,253,624
Market value $1,568,750 $2,284,660 $1,211,106 $ 5,064,516
State Street Global
Advisors Common
Collective Trust Short Term
Investment Fund 1,450,935 - - - - 1,450,935
State Street Global Advisors
Moderate Strategic Balanced
SL Fund 930,321 - - - - 930,321
State Street Global Advisors
Russell 2000 Index SL Series
Fund - Class A 828,553 - - - - 828,553
State Street Global Advisors
Aggressive Strategic Balanced
SL Fund 734,883 - - - - 734,883
State Street Global Advisors
S&P 500 Flagship SL Series
Fund - Class A 658,270 - - - - 658,270
Other (including common
collective trust funds) 2,172,083 - - - - 2,172,083
Total investments at fair ---------- ---------- ---------- -----------
value $8,343,795 $2,284,660 $1,211,106 $11,839,561
========== ========== ========== ===========
9
Notes to Financial Statements
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
Note 5 - Investments (continued)
The following presents, separately, identified investments that represent five
percent or more of the Plan's net assets and Bancorp common stock at September
30, 2009:
Nonparticipant-
Directed
Participant- ----------------------
Directed Allocated Unallocated Total
Bancorp common stock
Number of shares 363,507 550,755 335,052 1,249,314
Market value $1,686,671 $2,555,502 $1,554,644 $5,796,817
State Street Global
Advisors Common
Collective Trust Short
Term Investment Fund 1,543,161 - - - - 1,543,161
State Street Global
Advisors Moderate
Strategic Balanced SL
Fund 849,560 - - - - 849,560
State Street Global
Advisors Russell
2000 Index SL Series
Fund - Class A 723,875 - - - - 723,875
State Street Global
Advisors Aggressive
Strategic Balanced SL
Fund 689,030 - - - - 689,030
Other (including common
collective trust funds) 2,443,705 - - - - 2,443,705
Total investments at ---------- ---------- ---------- -----------
fair value $7,936,002 $2,555,502 $1,554,644 $12,046,148
========== ========== ========== ===========
During the year ended September 30, 2010, the Plan's investments, including
gains and losses on investments bought and sold, as well as held during each
period, appreciated (depreciated) in value as follows:
Stable value common collective trust fund $ 14,528
Other common collective trust funds 483,772
Bancorp common stock (822,113)
----------
Net depreciation in fair value of investments $ (323,813)
==========
The Stable Value Common Collective Trust Fund is administrated by State Street
Global Advisors. The average yield and crediting interest rates were
approximately 2.1% and 2.7%, respectively for the Plan year 2010.
10
Notes to Financial Statements
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
Note 6 - Note Payable
On December 19, 2006, the Company approved the extension of the Plan's term
loan agreement with the Bancorp (a related party). The new agreement extended
the maturity date of the note to March 31, 2019. The quarterly payments
decreased to $147,217 from $234,269 with the interest rate remaining at 8.5
percent. The note is guaranteed by the Company and remains collateralized by
unallocated shares of Bancorp common stock. The new annual principal and
interest payments total $588,870 and are due through maturity in 2019.
Note 7 - Employer Contributions
The Company is obligated to make contributions in cash to the Plan for the
ESOP component, which, when aggregated with the Plan's dividends and interest
earnings, equal the amount necessary to enable the Plan to make its regularly
scheduled payments of principal and interest on the term loan. In addition,
the Company is obligated to make an annual safe-harbor contribution of three
percent of eligible compensation into the 401(k) component which totalled
$294,324 for the year ended September 30, 2010. At the discretion of the
Board of Directors, the Company may make an additional profit sharing
contribution to the 401(k) component of the Plan. For the year ended
September 30, 2010, there was no such discretionary contribution.
Note 8 - Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are
exposed to various risks, such as interest rate, market and credit risks. Due
to the level of risk associated with certain investment securities, it is at
least reasonably possible that changes in the value of investment securities
will occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported on the statement of
net assets available for benefits.
11
Notes to Financial Statements
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010 and 2009
Note 9 - Fair Value of Investments
As discussed in Note 2, the Plan adopted the authoritative guidance on fair
value of financial instruments as of December 31, 2008. The authoritative
guidance established a three-tiered fair value hierarchy that prioritizes
inputs to valuation techniques in fair value calculations. The three levels
of inputs are defined as follows:
Level 1 - unadjusted quoted prices for identical assets or liabilities in
active markets accessible by the Company.
Level 2 - inputs that are observable in the marketplace other than those
inputs classified as Level 1
Level 3 - inputs that are unobservable in the marketplace and significant to
the valuation
The guidance on fair value of financial instruments requires the Plan to
maximize the use of observable inputs and minimize the use of unobservable
inputs. If a financial instrument uses inputs that fall in different levels
of the hierarchy, the instrument will be categorized based upon the lowest
level of input that is significant to the fair value calculation.
The following table summarizes the balances of assets and liabilities measured
at fair value on a recurring basis at September 30, 2010 and 2009 (in
thousands):
Fair Value
---------------------------
2010 Level 1 Level 2 Level 3 Total Losses
Available for Sale Securities
Bancorp common stock $5,064 $ - - $ - - $ (822)
Stable Value common collective
trust fund - - 569 - - - -
Other common collective trust
funds - - 6,206 - - - -
------ ------ ------ -------
Total $5,064 $6,775 $ - - $ (822)
Fair Value
---------------------------
2009 Level 1 Level 2 Level 3 Total Losses
Available for Sale Securities
Bancorp common stock $5,797 $ - - $ - - $(3,554)
Stable Value common collective
trust fund - - 571 - - - -
Other common collective trust
funds - - 5,678 - - (68)
------ ------ ------ -------
Total $5,797 $6,249 $ - - $(3,622)
Note 10 - Subsequent Events
Management has evaluated events and transactions that occurred after the
balance sheet date of September 30, 2010 through February 16, 2011, the date
the financial statements were available to be issued.
12
Supplemental
Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010
EIN: 20-5645878
Plan #: 002
(a) and (b) (c) (d) (e)
Identity of Issue, Description of Investment, Including Cost Current
Borrower, Lessor Maturity Date, Rate of Interest, Value
or Similar Party Collateral, Par or Maturity Value
Stable Value Common Collective Trust Fund
-----------------------------------------
State Street
Global Advisors Pentegra Stable Value Fund, at Fair
Value $ * $ 569,438
Employer Stock
--------------
**Timberland
Bancorp, Inc. Common Stock - 865,310 Shares 6,485,498 3,495,766
**Timberland
Bancorp, Inc. Common Stock 388,314 Shares * 1,568,750
----------
5,064,516
Other Common Collective Trust Funds
-----------------------------------
State Street
Global Advisors Common Collective Trust Short
Term Invesment Fund * 1,450,935
State Street
Global Advisors Moderate Strategic Balanced SL Fund * 930,321
State Street
Global Advisors Russell 2000 Index SL Series Fund -
Class A * 828,553
State Street
Global Advisors Aggressive Strategic Balanced SL Fund * 734,883
State Street
Global Advisors S&P 500 Flagship SL Series Fund -
Class A * 658,270
State Street
Global Advisors Daily EAFE Index SL Series Fund -
Class T * 258,461
State Street
Global Advisors S&P Midcap Index SL Series Fund -
Class A * 202,714
State Street
Global Advisors S&P Value Index SL Fund Series A * 188,110
State Street
Global Advisors Long US Treasury Index SL Series
Fund Class A * 185,234
State Street
Global Advisors NASDAQ 100 Index Non-Lending Fund
Series A * 143,986
State Street
Global Advisors REIT Index Non-Lending Series Fund -
Class A * 135,465
State Street
Global Advisors S&P Growth Index SL Fund Series A * 134,210
State Street
Global Advisors Target Retirement Fund 2015 * 118,544
13
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) (continued)
------------------------------------------------------------------------------
Timberland Bank Employee Stock Ownership and 401(k) Plan
September 30, 2010
EIN: 20-5645878
Plan #: 002
(a) and (b) (c) (d) (e)
Identity of Issue, Description of Investment, Including Cost Current
Borrower, Lessor Maturity Date, Rate of Interest, Value
or Similar Party Collateral, Par or Maturity Value
Other Common Collective Trust Funds (continued)
-----------------------------------------------
State Street
Global Advisors Passive Bond Market Index SL Series
Fund A * 112,494
State Street
Global Advisors Conservative Strategic Balanced SL
Fund * 70,817
State Street
Global Advisors Target Retirement Fund 2025 * 26,385
State Street
Global Advisors Target Retirement Fund 2045 * 14,106
State Street
Global Advisors Target Retirement Fund 2035 * 12,119
-----------
6,205,607
-----------
$11,839,561
===========
* Historical cost not required for participant-directed accounts.
**Represents a party-in-interest
14
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration
Statement (No. 333-116163, filed June 4, 2004) on Form S-8 of Timberland
Bancorp, Inc. of our report dated February 16, 2011 appearing in this Annual
Report on Form 11-K of Timberland Bank Employee Stock Ownership and 401(k)
Plan for the year ended September 30, 2010.
PMB Helin Donovan, LLP
/s/ PMB Helin Donovan, LLOP
Spokane, Washington
February 16, 2011
15