Timberland Bancorp 2025 Fiscal Year’s Net Income Increases 20% to $29.16 Million

Insights

Senior Bank Financial Analyst

Timberland reported stronger fiscal 2025 results, higher margins, an increased dividend, and a new branch — net income and EPS rose materially.

Timberland’s profitability improved with fiscal year net income up 20% to $29.16 million and EPS up 22% to $3.67, supported by a higher net interest margin which rose to 3.76% for the year and 3.82% in the quarter. Quarter-over-quarter growth in operating revenue and net interest income came from larger interest-earning assets and modest yield improvements; non-interest income was boosted by a $1.04 million BOLI death benefit claim.

Key dependencies and risks are explicit in the results: continued margin expansion depends on maintaining earning-asset yields while controlling funding costs, and credit metrics require monitoring as NPAs ticked to 0.23% though there were no net charge-offs. Expense growth and a modest provision for credit losses also temper the gains. The Board raised the quarterly dividend by 8% to $0.28 per share, reflecting capital strength.

Concrete items to watch in the near term: deposit and loan growth trends and the stability of NIM and provisioning in the next quarter, the impact of the planned University Place branch opening later this quarter on deposit mix and commercial relationships, and the timing of the November dividend payment on November 28, 2025 to holders of record on November 14, 2025. Expect meaningful updates each quarter on NIM, loan performance, and BOLI-related income.

• Fiscal Year EPS Increases 22% to $3.67
• Quarterly EPS Increases 19% to $1.07 from $0.90 for Preceding Quarter
• Quarterly Net Interest Margin Increases to 3.82%
• Quarterly Return on Average Assets Increases to 1.68%
• Quarterly Return on Average Equity Increases to 12.97%
• Announces an 8% Increase in the Quarterly Cash Dividend
• Announces Plans to Open a Branch in University Place
  

HOQUIAM, Wash., Oct. 30, 2025 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”), the holding company for Timberland Bank (the “Bank”), today reported that net income increased 20% to $29.16 million for the fiscal year ended September 30, 2025, from $24.28 million for the fiscal year ended September 30, 2024. Earnings per diluted common share (“EPS”) increased 22% to $3.67 for the 2025 fiscal year from $3.01 for the 2024 fiscal year.

Timberland also reported net income of $8.45 million, or $1.07 per diluted common share for the quarter ended September 30, 2025. This compares to net income of $7.10 million, or $0.90 per diluted common share for the preceding quarter, and $6.36 million, or $0.79 per diluted common share, for the comparable quarter one year ago.

“We closed our fiscal year with record results, reflecting the hard work and dedication of our employees in serving our customers, communities and shareholders,” stated Dean Brydon, Chief Executive Officer. “For the full year, net income and earnings per share reached new highs with year-over-year gains across every major profitability measure, while tangible book value per share continued its steady climb. In the fourth quarter, net income increased 33% from a year ago and 19% from the prior quarter, with earnings per share up 35% and 19%, respectively. We also recorded a $1.04 million bank owned life insurance benefit claim during the quarter, which contributed to net income; however, even excluding this item, all comparisons to prior periods remain favorable. These strong quarterly results were driven by continued expansion in our net interest margin, balance sheet growth, and higher non-interest income.”

“As a result of Timberland’s strong earnings and capital position, our Board of Directors announced an 8% increase to the quarterly cash dividend to shareholders to $0.28 per share, payable on November 28, 2025, to shareholders of record on November 14, 2025,” stated Jonathan Fischer, President and Chief Operating Officer. “This represents the 52nd consecutive quarter Timberland will have paid a cash dividend and demonstrates the Board’s continued confidence in our long-term outlook.”

“Our net interest margin strengthened again in the fourth fiscal quarter, increasing to 3.82%,” said Marci Basich, Chief Financial Officer. “This marks a two-basis point increase from the prior quarter and a 24-basis point improvement year-over- year, underscoring the benefits of our disciplined asset-liability management and the improvement in earning asset yields. Total deposits increased by $47 million, or 3%, with more than half of that growth driven by higher non-interest-bearing balances. This continued deposit momentum reflects the depth of our customer relationships and the success of our funding strategies. We remain committed to maintaining a balanced funding profile and sustaining stable margin performance in the periods ahead.”

“Timberland delivered solid balance sheet growth during the fourth fiscal quarter, highlighted by total assets increasing 3% and surpassing the $2 billion dollar mark for the first time in our Company’s history,” Brydon continued. “Credit quality remains an area we continue to monitor closely. Overall, performance across the portfolio remains solid, with no net charge-offs for the quarter. While our non-performing assets (“NPA”) ratio increased modestly to 0.23% at September 30, 2025 from 0.21% in the prior quarter, we also saw total delinquencies decline during the period. We remain confident in the overall health of our loan portfolio and our disciplined approach to credit risk management.”

“We are excited to announce the opening of a new full-service branch in University Place later this quarter, marking an important milestone in our growth strategy,” said Fischer. “This expansion positions us to serve a growing market with strong business potential and deepen our commercial banking relationships in the area. We are enthusiastic about the opportunities ahead to welcome new clients, strengthen existing partnerships, and further advance our commitment to supporting the region’s economic growth,” stated Matt DeBord, Chief Lending Officer.

Earnings and Balance Sheet Highlights (at or for the periods ended September 30, 2025, compared to September 30, 2024, or June 30, 2025):

    Earnings Highlights:

• EPS increased 19% to $1.07 for the current quarter from $0.90 for the preceding quarter and increased 35% from $0.79 for the comparable quarter one year ago; EPS for the 2025 fiscal year increased 22% to $3.67 from $3.01 for the 2024 fiscal year;
• Net income increased 19% to $8.45 million for the current quarter from $7.10 million for the preceding quarter and increased 33% from $6.36 million for the comparable quarter one year ago; Net income increased 20% to $29.16 million for the 2025 fiscal year from $24.28 million for the 2024 fiscal year;
• Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were 12.97% and 1.68%, respectively;
• Net interest margin (“NIM”) for the current quarter increased to 3.82% from 3.80% for the preceding quarter and 3.58% for the comparable quarter one year ago; and
• The efficiency ratio for the current quarter improved to 53.18% from 54.48% for the preceding quarter and 56.79% for the comparable quarter one year ago.
  

   Balance Sheet Highlights:

• Total assets reached $2.0 billion with a 3% increase from the prior quarter and a 5% increase year-over-year;
• Net loans receivable increased 2% from the prior quarter and increased 3% year-over-year;
• Total deposits increased 3% from the prior quarter and increased 4% year-over-year;
• Total shareholders’ equity increased 2% from the prior quarter and increased 7% year-over-year; 56,562 shares of common stock were repurchased during the current quarter for $1.89 million;
• Non-performing assets to total assets ratio was 0.23% at September 30, 2025, compared to 0.21% at June 30, 2025, and 0.20% at September 30, 2024;
• Book and tangible book (non-GAAP) values per common share increased to $33.29 and $31.33 respectively, at September 30, 2025; and
• Liquidity (both on-balance sheet and off-balance sheet) remained strong at September 30, 2025, with only $20 million in borrowings and additional secured borrowing line capacity of $690 million available through the Federal Home Loan Bank (“FHLB”) and the Federal Reserve.
  

Operating Results

Operating revenue (net interest income before the provision for credit losses plus non-interest income) for the current quarter increased 10% to $22.49 million from $20.50 million for the preceding quarter and increased 15% from $19.48 million for the comparable quarter one year ago. The increase in operating revenue compared to the preceding quarter was primarily due to increases in non-interest income and interest income from loans and interest-bearing deposits in banks, which were partially offset by an increase in total funding costs. The increase in non-interest income was primarily due to a $1.04 million bank owned life insurance (“BOLI”) death benefit claim. Operating revenue increased 10% to $82.55 million for the 2025 fiscal year from $75.30 million for the 2024 fiscal year, primarily due to an increase in total interest and dividend income, which was partially offset by an increase in funding costs.

Net interest income increased $773,000, or 4%, to $18.40 million for the current quarter from $17.62 million for the preceding quarter and increased $1.85 million, or 11%, from $16.55 million for the comparable quarter one year ago. The increase in net interest income compared to the preceding quarter was primarily due to a $48.52 million increase in the average balance of total interest-earning assets and, to a lesser extent, a three-basis point increase in the weighted average yield on total interest-earning assets to 5.53% from 5.50%. These increases were partially offset by a $21.64 million increase in the average balance of interest-bearing liabilities and a two-basis point increase in the weighted average cost of interest-bearing liabilities. Timberland’s NIM for the current quarter improved to 3.82% from 3.80% for the preceding quarter and 3.58% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately two basis points due to the collection of $102,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $11,000 of the fair value discount on acquired loans. The NIM for the preceding quarter was increased by approximately four basis points due to the collection of $102,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $68,000 of the fair value discount on acquired loans. The NIM for the comparable quarter one year ago was increased by approximately one basis point due to the collection of $20,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $7,000 of the fair value discount on acquired loans.

Net interest income for the 2025 fiscal year increased $6.03 million, or 9%, to $70.20 million from $64.17 million for the 2024 fiscal year, primarily due to a 24-basis point increase in the weighted average yield of total interest-earning assets to 5.48% from 5.24% and a $55.19 million increase in the average balance of total interest-earning assets. These increases to net interest income were partially offset by a $54.78 million increase in the average balance of total interest-bearing liabilities. Timberland’s NIM improved to 3.76% for the 2025 fiscal year from 3.54% for the 2024 fiscal year. A $213,000 provision for credit losses on loans was recorded for the quarter ended September 30, 2025. The provision was primarily due to loan portfolio growth and changes in the composition of the loan portfolio. This compares to a $351,000 provision for credit losses on loans for the preceding quarter and a $444,000 provision for credit losses on loans for the comparable quarter one year ago. In addition, a $18,000 provision for credit losses on unfunded commitments and a $10,000 recapture of credit losses on investment securities were recorded for the current quarter.

Non-interest income increased $1.22 million, or 42%, to $4.09 million for the current quarter from $2.88 million for the preceding quarter and increased $1.16 million, or 40%, from $2.93 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter was primarily due to an increase in BOLI net income (from a $1.04 million death benefit claim) and, to a lesser extent, smaller increases in several other categories. Non-interest income for the 2025 fiscal year increased $1.22 million, or 11%, to $12.35 million for the 2025 fiscal year from $11.14 for the 2024 fiscal year, primarily due to a $1.06 million increase in BOLI net earnings and smaller changes in several other categories.

Total operating (non-interest) expenses for the current quarter increased $792,000, or 7%, to $11.96 million from $11.17 million for the preceding quarter and increased $897,000, or 8%, from $11.06 million for the comparable quarter one year ago. The increase in operating expenses compared to the preceding quarter was primarily due to increases in salaries and employee benefits, premises and equipment, technology and communications, professional fees, and smaller increases in several other expense categories. These increases were partially offset by decreases in state and local taxes and smaller decreases in several other expense categories. The efficiency ratio for the current quarter improved to 53.18% from 54.48% for the preceding quarter and 56.79% for the comparable quarter one year ago. For the 2025 fiscal year, operating expenses increased $1.64 million, or 4% to $45.39 million from $43.75 million for the 2024 fiscal year. The efficiency ratio for the 2025 fiscal year improved to 54.98% from 58.09% for the 2024 fiscal year.

The provision for income taxes for the current quarter increased $71,000, or 4%, to $1.86 million from $1.79 million for the preceding quarter, primarily due to higher taxable income. Timberland’s effective income tax rate was 18.1% for the quarter ended September 30, 2025, compared to 20.1% for the quarter ended June 30, 2025, and 19.8% for the quarter ended September 30, 2024. The lower effective income tax rate for the current quarter was primarily due to a higher percentage of non-taxable income as a result of the increase in BOLI net earnings. Timberland’s effective income tax rate was 19.5% for fiscal year 2025 compared to 20.1% for fiscal year 2024. 

Balance Sheet Management

Total assets increased $55.58 million, or 3%, during the quarter to $2.01 billion at September 30, 2025, from $1.96 billion at June 30, 2025, and increased $89.30 million, or 5%, from $1.92 billion one year ago. The increase during the current quarter was primarily due to a $49.80 million increase in cash and cash equivalents and a $22.09 million increase in net loans receivable, which was partially offset by a $14.18 million decrease in investment securities and CDs held for investment.

Liquidity

Timberland has continued to maintain a strong liquidity position, both on-balance sheet and off-balance sheet. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 18.8% of total liabilities at September 30, 2025, compared to 17.0% at June 30, 2025, and 14.7% one year ago. Timberland also had secured borrowing line capacity of $690 million available through the FHLB and the Federal Reserve at
September 30, 2025. With a strong and diversified deposit base, only 20% of Timberland’s deposits were uninsured or uncollateralized at September 30, 2025. (Note: This calculation excludes public deposits that are fully collateralized.)

Loans

Net loans receivable increased $22.09 million, or 2%, during the quarter to $1.46 billion at September 30, 2025, from $1.44 billion at June 30, 2025. This increase was primarily due to a $21.21 million increase in construction loans, a $7.35 million increase in multi-family loans, a $2.99 million increase in home equity loans, a $2.77 million increase in commercial real estate loans and smaller increases in several other loan categories. These increases were partially offset by a $12.02 million increase in the undisbursed portion of construction loans and smaller decreases in several other loan categories.

Loan Portfolio ($ in thousands)
	September 30, 2025						June 30, 2025							September 30, 2024
	Amount				Percent		Amount				Percent			Amount				Percent
Mortgage loans:
One- to four-family (a)	$	317,691			20%		$	317,574			21%			$	299,123			20%
Multi-family		207,767			13			200,418			13				177,350			11
Commercial		610,692			39			607,924			40				599,219			40
Construction - custom and
owner/builder		130,341			9			128,900			8				132,101			9
Construction - speculative
one-to four-family		10,745			1			9,595			1				11,495			1
Construction - commercial		21,818			1			15,992			1				29,463			2
Construction - multi-family		45,660			3			32,731			2				28,401			2
Construction - land
development		15,324			1			15,461			1				17,741			1
Land		35,952			2			36,193			2				29,366			2
Total mortgage loans		1,395,990			89			1,364,788			89				1,324,259			88
Consumer loans:
Home equity and second
mortgage		50,479			3			47,511			3				47,913			3
Other		2,034			--			2,176			--				3,129			--
Total consumer loans		52,513			3			49,687			3				51,042			3
Commercial loans:
Commercial business
Loans		126,937			8			126,497			8				138,743			9
SBA PPP loans		58			--			101			--				260			--
Total commercial loans		126,995			8			126,598			8				139,003			9
Total loans		1,575,498			100%			1,541,073			100%				1,514,304			100%
Less:
Undisbursed portion of
construction loans in
process		(88,289	)					(76,272	)						(69,878	)
Deferred loan origination
fees		(5,528	)					(5,427	)						(5,425	)
Allowance for credit losses		(18,091	)					(17,878	)						(17,478	)
Total loans receivable, net	$	1,463,590					$	1,441,496						$	1,421,523

_______________________
(a) Does not include one- to four-family loans held for sale totaling $1,127, $1,763, and $0 at September 30, 2025, June 30, 2025, and September 30, 2024, respectively.

The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of September 30, 2025:

CRE Loan Portfolio Breakdown by Collateral ($ in thousands)
Collateral Type		Balance			Percent of CRE Portfolio		Percent of Total Loan Portfolio		Average Balance Per Loan			Non- Accrual
Industrial warehouses		$	129,815		21%		8%		$	1,311		$	159
Medical/dental offices			81,831		13		5			1,240			--
Office buildings			67,840		11		4			817			--
Other retail buildings			54,497		9		3			599			--
Mini-storage			38,291		6		2			1,532			--
Hotel/motel			31,345		5		2			2,612			--
Restaurants			28,703		5		2			586			--
Gas stations/conv. stores			25,597		4		2			1,024			--
Churches			14,410		3		1			901			--
Nursing homes			13,456		2		1			2,243			--
Shopping centers			10,436		2		1			1,739			--
Mobile home parks			9,174		2		1			417			--
Additional CRE			105,297		17		7			774			--
Total CRE		$	610,692		100%		39%		$	960		$	159

Timberland originated $100.09 million in loans during the quarter ended September 30, 2025, compared to $81.99 million for the preceding quarter and $48.82 million for the comparable quarter one year ago. Timberland continues to originate fixed-rate one- to four-family mortgage loans, a portion of which are sold into the secondary market for asset-liability management purposes and to generate non-interest income. During the current quarter, fixed-rate one- to four-family mortgage loans totaling $9.01 million were sold compared to $6.11 million for the preceding quarter and $5.62 million for the comparable quarter one year ago.

Investment Securities

Timberland’s investment securities and CDs held for investment decreased $14.18 million, or 6%, to $223.18 million at September 30, 2025, from $237.36 million at June 30, 2025. The decrease was primarily due to the maturities of U.S. Treasury Securities and scheduled amortization, and was partially offset by the purchase of additional U.S. government agency mortgaged-backed investment securities and U.S. Treasury investment securities.

Deposits

Total deposits increased $47.16 million, or 3%, during the quarter to $1.72 billion at September 30, 2025, from $1.67 billion at June 30, 2025. The quarter’s increase consisted of a $25.22 million increase in certificate of deposit account balances, a $24.46 million increase in non-interest deposit account balances and a $10.68 million increase in NOW checking account balances. These increases were partially offset by a $9.06 million decrease in money market account balances and a $4.15 million decrease in savings account balances.

Deposit Breakdown ($ in thousands)
			September 30, 2025							June 30, 2025								September 30, 2024
			Amount			Percent				Amount				Percent				Amount				Percent
Non-interest-bearing demand			$	430,685		25%				$	406,222			24%				$	413,116			25%
NOW checking				345,599		20					334,922			20					333,329			20
Savings				201,678		12					205,829			12					205,993			13
Money market				296,152		17					305,207			18					326,922			20
Certificates of deposit under $250				256,597		15					244,063			15					205,970			12
Certificates of deposit $250 and over				142,813		8					126,254			8					113,579			7
Certificates of deposit – brokered				43,111		3					46,980			3					48,759			3
Total deposits			$	1,716,635		100%				$		1,669,477		100%			$			1,647,668		100%

Borrowings

Total borrowings were $20.00 million at both September 30, 2025 and June 30, 2025. At September 30, 2025, the weighted average rate on the borrowings was 3.97%.

Shareholders’ Equity and Capital Ratios

Total shareholders’ equity increased $5.95 million, or 2%, to $262.61 million at September 30, 2025, from $256.66 million at June 30, 2025, and increased $17.20 million, or 7%, from $245.41 million at September 30, 2024. The increase in shareholders’ equity during the quarter was primarily due to net income of $8.45 million, proceeds from stock option exercises of $847,000, and a $477,000 recovery of accumulated other comprehensive loss. These increases to shareholders’ equity were partially offset by the payment of $2.05 million in dividends to shareholders and the repurchase of 56,562 shares of common stock for $1.89 million (an average price of $33.34 per share). At September 30, 2025, Timberland had 337,280 shares available to be repurchased in accordance with the terms of its existing stock repurchase plan.

Timberland remains well capitalized with a total risk-based capital ratio of 20.67%, a Tier 1 leverage capital ratio of 12.59%, a tangible common equity to tangible assets ratio (non-GAAP) of 12.38%, and a shareholders’ equity to total assets ratio of 13.05% at September 30, 2025. Timberland’s held to maturity investment securities were $136.86 million at September 30, 2025, with a net unrealized loss of $4.56 million (pre-tax). Although not permitted by U.S. Generally Accepted Accounting Principles (“GAAP”), including these unrealized losses in accumulated other comprehensive income (loss) (“AOCI”) would result in a ratio of shareholders’ equity to total assets of 12.89%, compared to 13.05%, as reported.

Asset Quality
Timberland’s non-performing assets to total assets ratio was 0.23% at September 30, 2025, compared to 0.21% at June 30, 2025, and 0.20% at September 30, 2024. Net charge-offs totaled less than $1,000 for the current quarter compared to net recoveries of $1,000 for the preceding quarter and net charge-offs of $12,000 for the comparable quarter one year ago. During the current quarter, provisions for credit losses of $213,000 on loans and $18,000 unfunded commitments were made, which was partially offset by a $10,000 recapture of credit losses on investment securities. The allowance for credit losses (“ACL”) for loans as a percentage of loans receivable was 1.22% at September 30, 2025, compared to 1.23% at June 30, 2025, and 1.21% one year ago.

Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $515,000 or 8%, to $5.66 million at September 30, 2025, from $6.18 million at June 30, 2025, and increased $1.18 million, or 26%, from $4.49 million at September 30, 2024. Non-accrual loans increased $564,000, or 15%, to $4.41 million at September 30, 2025 from $3.84 million at June 30, 2025, and increased $522,000, or 13%, from $3.89 million at September 30, 2024. The quarterly increase in non-accrual loans was primarily due to one single-family construction loan being placed on non-accrual status. Loans graded “Substandard” totaled $32.80 million (or 2% of total loans receivable) at September 30, 2025. (Note: Subsequent to September 30, 2025, the Bank’s largest “Substandard” loan, an $11.55 million land development loan, paid off in full.)

Non-Accrual Loans ($ in thousands)
	September 30, 2025					June 30, 2025					September 30, 2024
	Amount			Quantity		Amount			Quantity		Amount			Quantity
Mortgage loans:
One- to four-family	$	1,781		1		$	1,781		1		$	49		1
Commercial		159		1			161		2			1,158		6
Construction – custom and
owner/builder		553		1			--		--			--		--
Total mortgage loans		2,493		3			1,942		3			1,207		7
Consumer loans:
Home equity and second
mortgage		602		4			575		3			618		3
Other		22		1			--		--			--		--
Total consumer loans		624		4			575		3			618		3
Commercial business loans		1,290		9			1,326		9			2,060		8
Total loans	$	4,407		17		$	3,843		15		$	3,885		18

Timberland had two properties classified as other real estate owned (“OREO”) at September 30, 2025:

	September 30, 2025					June 30, 2025					September 30, 2024
	Amount			Quantity		Amount			Quantity		Amount			Quantity
Other real estate owned:
Commercial	$	221		1		$	221		1		$	--		--
Land		--		1			--		1			--		1
Total mortgage loans	$	221		2		$	221		2		$	--		1

About Timberland Bancorp, Inc.
Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank. The Bank opened for business in 1915 and primarily serves consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties, Washington with a full range of lending and deposit services through its 23 branches (including its main office in Hoquiam).

Disclaimer
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results anticipated or implied by our forward-looking statements, including, but not limited to: potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth; continuing elevated levels of inflation and the impact of current and future monetary policies of the Board of Governors of the Federal Reserve System ("Federal Reserve") in response thereto; the effects of any federal government shutdown; credit risks of lending activities, including any deterioration in the housing and commercial real estate markets which may lead to increased losses and non-performing loans in our loan portfolio resulting in our ACL not being adequate to cover actual losses and thus requiring us to materially increase our ACL through the provision for credit losses; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long-term interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; secondary market conditions for loans and our ability to sell loans in the secondary market; results of examinations of us by the Federal Reserve and of our bank subsidiary by the Federal Deposit Insurance Corporation (“FDIC”), the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action against us or our bank subsidiary which could require us to increase our ACL, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; legislative or regulatory changes that adversely affect our business including changes in banking, securities and tax law, in regulatory policies and principles, or the interpretation of regulatory capital or other rules; our ability to attract and retain deposits; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risks associated with the loans in our consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our business strategies; our ability to manage loan delinquency rates; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common stock; the quality and composition of our securities portfolio and the impact if any adverse changes in the securities markets, including on market liquidity; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board ("FASB"), including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, civil unrest and other external events on our business; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and other risks described elsewhere in this press release and in the Company's other reports filed with or furnished to the Securities and Exchange Commission.

Any of the forward-looking statements that we make in this press release and in the other public statements we make are based upon management's beliefs and assumptions at the time they are made. We do not undertake and specifically disclaim any obligation to publicly update or revise any forward-looking statements included in this press release to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this document might not occur and we caution readers not to place undue reliance on any forward-looking statements. These risks could cause our actual results for fiscal 2026 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us, and could negatively affect the Company's consolidated financial condition and results of operations as well as its stock price performance.

TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME							Three Months Ended
($ in thousands, except per share amounts) (unaudited)							Sept. 30,								June 30,								Sept. 30,
								2025								2025								2024
	Interest and dividend income
	Loans receivable						$	22,186							$	21,411							$	20,589
	Investment securities							1,992								2,064								2,237
	Dividends from mutual funds, FHLB stock and other investments							83								83								95
	Interest bearing deposits in banks							2,350								1,986								2,114
	Total interest and dividend income							26,611								25,544								25,035
	Interest expense
	Deposits							8,013								7,721								8,277
	Borrowings							203								201								211
	Total interest expense							8,216								7,922								8,488
	Net interest income							18,395								17,622								16,547
	Provision for credit losses – loans							213								351								444
	Recapture of credit losses – investment securities							(10			)					(4			)					(13	)
	Provision for credit losses – unfunded commitments							18								93								59
	Net int. income after provision for (recapture of) credit losses							18,174								17,182								16,057
	Non-interest income
	Service charges on deposits							991								966								1,037
	ATM and debit card interchange transaction fees							1,269								1,262								1,293
	Gain on sales of investment securities, net							--								24								--
	Gain on sales of loans, net							208								138								135
	Bank owned life insurance (“BOLI”) net earnings							1,200								171								175
	Other							425								314								292
	Total non-interest income, net							4,093								2,875								2,932
	Non-interest expense
	Salaries and employee benefits							6,029								5,825								5,867
	Premises and equipment							1,114								973								933
	Gain on sale of premises and equipment, net							--								--								1
	Advertising							208								182								205
	OREO and other repossessed assets, net							3								8								4
	ATM and debit card processing							578								658								588
	Postage and courier							143								137								137
	State and local taxes							432								570								343
	Professional fees							558								341								410
	FDIC insurance							211								211								209
	Loan administration and foreclosure							151								99								125
	Technology and communications							1,116								993								1,163
	Deposit operations							350								345								446
	Amortization of core deposit intangible (“CDI”)							45								45								57
	Other, net							1,021								780								574
	Total non-interest expense, net							11,959								11,167								11,062
	Income before income taxes							10,308								8,890								7,927
	Provision for income taxes							1,861								1,790								1,572
	Net income						$	8,447							$	7,100							$	6,355
	Net income per common share:
	Basic						$	1.07							$	0.90							$	0.80
	Diluted							1.07								0.90								0.79
	Weighted average common shares outstanding:
	Basic							7,880,299								7,893,308								7,954,112
	Diluted							7,920,617								7,921,762								7,995,024
TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME							Year Ended
($ in thousands, except per share amounts) (unaudited)							Sept. 30,																Sept. 30,
								2025																2024
	Interest and dividend income
	Loans receivable						$	85,525															$	77,430
	Investment securities							8,197																9,129
	Dividends from mutual funds, FHLB stock and other investments							335																361
	Interest bearing deposits in banks							8,220																7,905
	Total interest and dividend income							102,277																94,825
	Interest expense
	Deposits							31,272																29,659
	Borrowings							805																999
	Total interest expense							32,077																30,658
	Net interest income							70,200																64,167
	Provision for credit losses – loans							853																1,254
	Recapture of credit losses – investment securities							(24			)													(32	)
	Prov. for (recapture of) credit losses - unfunded commitments							105																(71	)
	Net int. income after provision for (recapture of) credit losses							69,266																63,016
	Non-interest income
	Service charges on deposits							3,915																4,062
	ATM and debit card interchange transaction fees							4,975																5,066
	Gain on sales of investment securities, net							24																--
	Gain on sales of loans, net							511																322
	Bank owned life insurance (“BOLI”) net earnings							1,702																645
	Other							1,225																1,041
	Total non-interest income, net							12,352																11,136
	Non-interest expense
	Salaries and employee benefits							23,922																23,730
	Premises and equipment							4,112																3,998
	Gain on sale of premises and equipment, net							--																(2	)
	Advertising							761																761
	OREO and other repossessed assets, net							20																5
	ATM and debit card processing							2,279																2,384
	Postage and courier							544																538
	State and local taxes							1,682																1,322
	Professional fees							1,676																1,317
	FDIC insurance							851																833
	Loan administration and foreclosure							534																521
	Technology and communications							4,369																4,264
	Deposit operations							1,347																1,540
	Amortization of core deposit intangible (“CDI”)							180																226
	Other, net							3,110																2,309
	Total non-interest expense, net							45,387																43,746
	Income before income taxes							36,231																30,406
	Provision for income taxes							7,070																6,123
	Net income						$	29,161															$	24,283
	Net income per common share:
	Basic						$	3.68															$	3.02
	Diluted							3.67																3.01
	Weighted average common shares outstanding:
	Basic							7,917,193																8,038,674
	Diluted							7,952,626																8,080,382
TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts) (unaudited)					Sept. 30,								June 30,								Sept. 30,
						2025								2025								2024
Assets
Cash and due from financial institutions					$	23,649							$	32,532							$	29,071
Interest-bearing deposits in banks						219,779								161,095								135,657
		Total cash and cash equivalents				243,428								193,627								164,728
Certificates of deposit (“CDs”) held for investment, at cost						7,217								8,462								10,209
Investment securities:
		Held to maturity, at amortized cost (net of ACL – investment securities)				136,861								141,570								172,097
		Available for sale, at fair value				78,240								86,475								72,257
Investments in equity securities, at fair value						864								855								866
FHLB stock						2,045								2,045								2,037
Other investments, at cost						3,000								3,000								3,000
Loans held for sale						1,127								1,763								--
Loans receivable						1,481,681								1,459,374								1,439,001
Less: ACL – loans						(18,091			)					(17,878			)					(17,478			)
		Net loans receivable				1,463,590								1,441,496								1,421,523
Premises and equipment, net						21,684								21,490								21,486
OREO and other repossessed assets, net						221								221								--
BOLI						21,830								24,113								23,611
Accrued interest receivable						7,393								7,174								6,990
Goodwill						15,131								15,131								15,131
CDI						271								316								451
Loan servicing rights, net						815								911								1,372
Operating lease right-of-use assets						2,949								1,248								1,475
Other assets						6,113								7,295								6,242
		Total assets			$	2,012,779							$	1,957,192							$	1,923,475
Liabilities and shareholders’ equity
Deposits: Non-interest-bearing demand					$	430,685							$	406,222							$	413,116
Deposits: Interest-bearing						1,285,950								1,263,255								1,234,552
		Total deposits				1,716,635								1,669,477								1,647,668
Operating lease liabilities						3,077								1,350								1,575
FHLB borrowings						20,000								20,000								20,000
Other liabilities and accrued expenses						10,453								9,701								8,819
		Total liabilities				1,750,165								1,700,528								1,678,062
Shareholders’ equity
Common stock, $.01 par value; 50,000,000 shares authorized;
7,889,571 shares issued and outstanding – September 30, 2025 7,876,853 shares issued and outstanding – June 30, 2025 7,960,127 shares issued and outstanding – September 30, 2024						236,607								27,226								29,862
Retained earnings														230,213								215,531
Accumulated other comprehensive income (loss)						(298			)					(775			)					20
		Total shareholders’ equity				262,614								256,664								245,413
		Total liabilities and shareholders’ equity			$	2,012,779							$	1,957,192							$	1,923,475

	Three Months Ended
PERFORMANCE RATIOS:		Sept. 30, 2025				June 30, 2025				Sept. 30, 2024
Return on average assets (a)			1.68	%			1.47	%			1.32	%
Return on average equity (a)			12.97	%			11.23	%			10.43	%
Net interest margin (a)			3.82	%			3.80	%			3.58	%
Efficiency ratio			53.18	%			54.48	%			56.79	%
	Year Ended
		Sept. 30, 2025								Sept. 30, 2024
Return on average assets (a)			1.50	%							1.28	%
Return on average equity (a)			11.56	%							10.19	%
Net interest margin (a)			3.76	%							3.54	%
Efficiency ratio			54.98	%							58.09	%
	Three Months Ended
ASSET QUALITY RATIOS AND DATA: ($ in thousands)		Sept. 30, 2025				June 30, 2025				Sept. 30, 2024
Non-accrual loans		$	4,407			$	3,843			$	3,885
Loans past due 90 days and still accruing			--				--				--
Non-performing investment securities			35				38				51
OREO and other repossessed assets			221				221				--
Total non-performing assets (b)		$	4,663			$	4,102			$	3,936
Non-performing assets to total assets (b)			0.23	%			0.21	%			0.20	%
Net charge-offs (recoveries) during quarter		$	--			$	(1	)		$	12
Allowance for credit losses - loans to non-accrual loans			411	%			465	%			450	%
Allowance for credit losses - loans to loans receivable (c)			1.22	%			1.23	%			1.21	%
CAPITAL RATIOS:
Tier 1 leverage capital			12.59	%			12.63	%			12.12	%
Tier 1 risk-based capital			19.42	%			19.29	%			18.14	%
Common equity Tier 1 risk-based capital			19.42	%			19.29	%			18.14	%
Total risk-based capital			20.67	%			20.54	%			19.39	%
Tangible common equity to tangible assets (non-GAAP)			12.38	%			12.42	%			12.05	%
BOOK VALUES:
Book value per common share		$	33.29			$	32.58			$	30.83
Tangible book value per common share (d)			31.33				30.62				28.87

________________________________________________
(a) Annualized
(b) Non-performing assets include non-accrual loans, loans past due 90 days and still accruing, non-performing investment securities and OREO and other repossessed assets.
(c) Does not include loans held for sale and is before the allowance for credit losses.
(d) Tangible common equity divided by common shares outstanding (non-GAAP).

AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY ($ in thousands) (unaudited)
	For the Three Months Ended
	Sept. 30, 2025								June 30, 2025								Sept. 30, 2024
	Amount				Rate				Amount				Rate				Amount				Rate
Assets
Loans receivable and loans held for sale	$	1,470,460			5.99		%		$	1,450,350			5.92		%		$	1,428,125			5.74		%
Investment securities and FHLB stock (1)		228,710			3.60					232,272			3.71					254,567			3.64
Interest-earning deposits in banks and CDs		210,864			4.42					178,887			4.45					156,732			5.37
Total interest-earning assets		1,910,034			5.53					1,861,509			5.50					1,839,424			5.41
Other assets		79,211								79,715								80,940
Total assets	$	1,989,245							$	1,941,224							$	1,920,364
Liabilities and Shareholders’ Equity
NOW checking accounts	$	339,838			1.46		%		$	333,074			1.39		%		$	337,955			1.40		%
Money market accounts		298,102			3.04					304,526			3.16					321,151			3.62
Savings accounts		204,671			0.35					205,592			0.35					207,457			0.27
Certificates of deposit accounts		390,478			3.77					363,342			3.77					316,897			4.20
Brokered CDs		43,118			5.47					48,028			4.83					48,719			5.54
Total interest-bearing deposits		1,276,207			2.49					1,254,562			2.47					1,232,179			2.67
Borrowings		20,000			4.03					20,002			4.03					20,000			4.20
Total interest-bearing liabilities		1,296,207			2.51					1,274,564			2.49					1,252,179			2.70
Non-interest-bearing demand deposits		423,177								402,717								414,603
Other liabilities		11,542								10,266								11,151
Shareholders’ equity		258,319								253,677								242,431
Total liabilities and shareholders’ equity	$	1,989,245							$	1,941,224							$	1,920,364
Interest rate spread					3.02		%						3.01		%						2.71		%
Net interest margin (2)					3.82		%						3.80		%						3.58		%
Average interest-earning assets to
average interest-bearing liabilities		147.36	%							146.05	%							146.90	%

_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income / average interest-earning assets

AVERAGE BALANCES, YIELDS, AND RATES ($ in thousands) (unaudited)
	For the Year Ended
	Sept. 30, 2025										Sept. 30, 2024
	Amount				Rate						Amount				Rate
Assets
Loans receivable and loans held for sale	$	1,448,803			5.90		%				$	1,379,529			5.61		%
Investment securities and FHLB stock (1)		235,210			3.57							284,678			3.33
Interest-earning deposits in banks and CDs		182,239			4.51							146,855			5.38
Total interest-earning assets		1,866,252			5.48							1,811,062			5.24
Other assets		78,000										81,470
Total assets	$	1,944,252									$	1,892,532
Liabilities and Shareholders’ Equity
NOW checking accounts	$	332,392			1.39		%				$	353,000			1.46		%
Money market accounts		308,319			3.21							285,615			3.24
Savings accounts		205,488			0.31							212,562			0.25
Certificates of deposit accounts		357,444			3.86							298,039			4.14
Brokered CDs		46,896			5.02							44,330			5.41
Total interest-bearing deposits		1,250,539			2.50							1,193,546			2.48
Borrowings		20,002			4.02							22,214			4.50
Total interest-bearing liabilities		1,270,541			2.53							1,215,760			2.52
Non-interest-bearing demand deposits		411,007										427,514
Other liabilities		10,506										10,865
Shareholders’ equity		252,198										238,393
Total liabilities and shareholders’ equity	$	1,944,252									$	1,892,532
Interest rate spread					2.95		%								2.72		%
Net interest margin (2)					3.76		%								3.54		%
Average interest-earning assets to
average interest-bearing liabilities		146.89	%									148.97	%

_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets

Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. Timberland believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.

Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Timberland provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders’ equity less goodwill and CDI. In addition, tangible assets equal total assets less goodwill and CDI.

The following table provides a reconciliation of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP) and ending total assets (GAAP) to ending tangible assets (non-GAAP).

($ in thousands)		Sept. 30, 2025				June 30, 2025				Sept. 30, 2024
Shareholders’ equity		$	262,614			$	256,664			$	245,413
Less goodwill and CDI			(15,402	)			(15,447	)			(15,582	)
Tangible common equity		$	247,212			$	241,217			$	229,831
Total assets		$	2,012,779			$	1,957,192			$	1,923,475
Less goodwill and CDI			(15,402	)			(15,447	)			(15,582	)
Tangible assets		$	1,997,377			$	1,941,745			$	1,907,893

Contact: Dean J. Brydon, CEO
Jonathan A. Fischer, President & COO
Marci A. Basich, CFO
(360) 533-4747
www.timberlandbank.com