Timberland provisioned $200,000 to its loan loss allowance during the quarter ended December 31, 2012 compared to $900,000 in the preceding quarter and $650,000 in the comparable quarter one year ago. Net charge-offs for the first fiscal quarter decreased to $256,000 compared to $679,000 for the preceding quarter and $624,000 for the comparable quarter one year ago. Net charge-offs during the current quarter were reduced by recoveries of $240,000 on loans previously charged off.

Total delinquent loans (past due 30 days or more) and non-accrual loans decreased 18% to $25.0 million at December 31, 2012 from $30.4 million at September 30, 2012 and decreased 49% from $49.1 million one year ago. The non-performing assets to total assets ratio decreased to 5.13% at December 31, 2012 compared to 5.19% three months earlier and 5.55% one year ago.

Non-accrual loans increased slightly to $21.7 million at December 31, 2012 from $21.3 million at September 30, 2012 and decreased from $27.8 million at December 31, 2011. The non-accrual loans at December 31, 2012 were comprised of 58 loans and 46 credit relationships. By dollar amount per category: 39% of non-accrual loans are secured by land and land development properties; 31% are secured by residential properties; 27% are secured by commercial properties; and 3% are secured by residential construction projects.

Other real estate owned ("OREO") and other repossessed assets decreased to $13.2 million at December 31, 2012 from $13.3 million at September 30, 2012 and increased from $7.7 million at December 31, 2011. At December 31, 2012 the OREO portfolio consisted of 55 individual properties. The properties consisted of eight commercial real estate properties totaling $6.4 million, 34 land parcels totaling $4.3 million, 12 single family homes totaling $1.6 million and a condominium project of $842,000. During the quarter ended December 31, 2012, 12 OREO properties totaling $1.2 million were sold for a net gain of $211,000.

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