Timberland Bancorp (TSBK) in Hoquiam, Wash., will buy back its remaining Troubled Asset Relief Program shares for about $12.1 million.

The $745 million-asset company has received approval for the buyback from the Federal Reserve, and expects to redeem the shares at their face value on Friday, it said.

Timberland received $16.6 million through Tarp in December 2008, and the Treasury auctioned the shares last year. Timberland redeemed $4.3 million of shares in March of this year.

"During the last fiscal year, we paid $710,000 in dividends to preferred shareholders. With the dividend rate scheduled to increase to 9% on Dec. 23, 2013, the dividend expense on the preferred shares would have increased to $1.09 million annually," Timberland Chief Executive Michael Sand said in a news release. "The purchase of the preferred shares eliminates this future dividend expense."

Timberland has been gradually recovering after suffering steep losses during the financial crisis. The Federal Deposit Insurance Corp. lifted a memorandum of understanding with Timberland's bank late last year, and the Fed terminated a similar order with the parent company in January.

Timberland will remain well capitalized following the Tarp redemption, it said. Its bank had a Tier 1 leverage ratio of 11.09% and total risk-based capital of 16.05% as of the end of September, according to data from the FDIC.

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