Timberland Bancorp Third Fiscal Quarter Net Income Increases to $7.10 Million

Rhea-AI Summary

Timberland Bancorp (NASDAQ: TSBK) reported strong fiscal Q3 2025 results with net income increasing to $7.10 million, or $0.90 per diluted share, up 20% year-over-year. The company demonstrated improved performance across key metrics, with net interest margin expanding to 3.80%, ROE reaching 11.23%, and ROA increasing to 1.47%.

The bank announced a quarterly cash dividend of $0.26 per share and introduced a new stock repurchase program for up to 5% of outstanding shares (393,842 shares). Total assets grew 3% year-over-year to $1.96 billion, with net loans increasing 2% quarter-over-quarter and deposits growing 1% to maintain a strong liquidity position.

Credit quality metrics showed mixed trends, with the non-performing assets ratio at 0.21%, up from 0.13% in the previous quarter but slightly improved from 0.22% year-over-year.

Positive

• Net income increased 20% year-over-year to $7.10 million
• EPS grew 22% year-over-year to $0.90 per diluted share
• Net interest margin expanded to 3.80%, up 27 basis points year-over-year
• Efficiency ratio improved to 54.48% from 58.97% year-over-year
• Strong liquidity position with $674 million in available secured borrowing capacity
• Total deposits increased 3% year-over-year
• New stock repurchase program authorized for up to 5% of outstanding shares

Negative

• Non-performing assets ratio increased to 0.21% from 0.13% in the previous quarter
• Required $351,000 provision for credit losses on loans due to portfolio growth
• Non-accrual loans increased during the quarter due to a single matured loan

Insights

Banking Industry Analyst

Timberland's Q3 results show strong profitability with expanding margins, improved efficiency, and increased shareholder returns through dividends and buybacks.

Timberland Bancorp delivered impressive third quarter results with net income rising to $7.10 million ($0.90 per share), representing a 22% year-over-year EPS increase and 6% sequential growth. The bank's performance demonstrates robust fundamentals across key metrics.

The bank's net interest margin expanded to 3.80%, a 27 basis point improvement year-over-year, reflecting successful asset-liability management amid the current rate environment. This margin expansion occurred despite competitive deposit pressures, showcasing management's ability to maintain pricing discipline.

Particularly notable is the improved efficiency ratio of 54.48%, significantly better than the 58.97% from a year ago. This efficiency gain indicates strong cost control while growing revenue—operating revenue increased 9% year-over-year to $20.50 million.

The loan portfolio grew at a moderate 2% quarterly pace, with multi-family loans leading growth ($21.83 million increase). This measured growth approach suggests prudent risk management during economic uncertainty. Meanwhile, deposits increased 1%, maintaining a stable funding base.

Credit quality metrics show minor concerns with non-performing assets rising to 0.21% from 0.13% in the previous quarter, though this remains below many peer banks. Management attributed this primarily to a single matured loan, suggesting isolated rather than systemic issues.

The bank's capital return strategy is strengthening with a $0.26 quarterly dividend (their 51st consecutive payout) and authorization of a new repurchase program for up to 5% of outstanding shares. These shareholder-friendly actions reflect management's confidence in sustained profitability.

With a return on equity of 11.23% and return on assets at 1.47%, Timberland is generating returns well above industry averages. The bank's strong liquidity position—with only 17% of deposits being uninsured/uncollateralized and $674 million in available secured borrowing capacity—provides significant flexibility for continued growth while maintaining safety.

• Quarterly EPS Increases 22% to $0.90 from $0.74 One Year Ago
• Quarterly Net Interest Margin Increases to 3.80%
• Quarterly Return on Average Assets Increases to 1.47%
• Quarterly Return on Average Equity Increases to 11.23%
• Announces New Stock Repurchase Program
  

HOQUIAM, Wash., July 22, 2025 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”), the holding company for Timberland Bank (the “Bank”), today reported net income of $7.10 million, or $0.90 per diluted common share for the quarter ended June 30, 2025. This compares to net income of $6.76 million, or $0.85 per diluted common share for the preceding quarter and $5.92 million, or $0.74 per diluted common share, for the comparable quarter one year ago.

For the first nine months of fiscal 2025, Timberland’s net income increased 16% to $20.72 million, or $2.60 per diluted common share, from $17.93 million, or $2.21 per diluted common share for the first nine months of fiscal 2024.

“Timberland delivered solid third fiscal quarter results, driven by continued net interest margin expansion and steady balance sheet growth,” stated Dean Brydon, Chief Executive Officer. “Net income and earnings per share increased 20% and 22%, respectively, compared to the third fiscal quarter a year ago. Compared to the prior quarter, net income and earnings per share increased 5% and 6%, respectively, primarily due to higher net interest income and non-interest income. We also posted year-over-year improvements across all key profitability metrics, and our tangible book value per share (non-GAAP) continued its upward trend. Looking ahead we believe our strong capital position, solid earnings, and continued focus on disciplined growth position us well to navigate the current environment and drive long-term shareholder value.”

“As a result of Timberland’s strong earnings and sound capital position, our Board of Directors announced a quarterly cash dividend to shareholders of $0.26 per share, payable on August 22, 2025, to shareholders of record on August 8, 2025,” stated Jonathan Fischer, President and Chief Operating Officer. “This represents the 51st consecutive quarter Timberland will have paid a cash dividend. In addition, the Company also announced the adoption of a new stock repurchase program. We believe Timberland stock presents a strong investment opportunity, and buying back shares is a strategy to enhance long-term value for shareholders. Under the new repurchase program, the Company may repurchase up to 5% of the outstanding shares, or 393,842 shares. The new stock repurchase program replaces our existing stock repurchase program, which had 31,762 shares available to be repurchased.”

“Our net interest margin continued to show positive momentum in the third fiscal quarter, expanding to 3.80%,” said Marci Basich, Chief Financial Officer. “This represents a one basis point increase from the prior quarter and a 27 basis point improvement compared to the same period last year, reflecting our disciplined asset-liability management and favorable shift in earning asset yields. Total deposits grew by $19 million, or 1%, during the quarter, driven primarily by higher balances in certificates of deposit. This growth highlights the continued strength of our customer relationships and the effectiveness of our deposit-gathering strategies. We remain focused on maintaining a well-balanced funding mix while sustaining stable margin performance going forward.”

“The loan portfolio continues to expand at a steady pace, with growth of 2% over the prior quarter and 3% year-over year,” Brydon continued. “Credit quality remains an area we are monitoring closely, as we are seeing a mix of stable-to-positive trends alongside a few metrics that have shown modest deterioration. Net charge-offs continue to be minimal, with net recoveries of $1,000 during the third quarter. Our non-performing assets (“NPA”) ratio increased to 0.21% at June 30, 2025, compared to 0.13% at the end of the prior quarter. However, it remains a slight improvement from the 0.22% reported a year ago. Although non-accrual loans increased this quarter primarily due to a single matured loan, total non-accrual balances remain modestly below year-ago levels.”

Earnings and Balance Sheet Highlights (at or for the periods ended June 30, 2025, compared to June 30, 2024, or March 31, 2025):
  
    Earnings Highlights:

• Earnings per diluted common share (“EPS”) increased 6% to $0.90 for the current quarter from $0.85 for the preceding quarter and increased 22% from $0.74 for the comparable quarter one year ago; EPS increased 18% to $2.60 for the first nine months of fiscal 2025 from $2.21 for the first nine months of fiscal 2024;
• Net income increased 5% to $7.10 million for the current quarter from $6.76 million for the preceding quarter and increased 20% from $5.92 million for the comparable quarter one year ago; Net income increased 16% to $20.72 million for the first nine months of fiscal 2025 from $17.93 million for the first nine months of fiscal 2024;
• Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were 11.23% and 1.47%, respectively;
• Net interest margin (“NIM”) for the current quarter expanded to 3.80% from 3.79% for the preceding quarter and 3.53% for the comparable quarter one year ago; and
• The efficiency ratio for the current quarter improved to 54.48% from 56.25% for the preceding quarter and 58.97% for the comparable quarter one year ago.
  

   Balance Sheet Highlights:

• Total assets increased 1% from the prior quarter and increased 3% year-over-year;
• Net loans receivable increased 2% from the prior quarter and increased 3% year-over-year;
• Total deposits increased 1% from the prior quarter and increased 3% year-over-year;
• Total shareholders’ equity increased 2% from the prior quarter and increased 6% year-over-year; 34,236 shares of common stock were repurchased during the current quarter for $1.02 million;
• Non-performing assets to total assets ratio was 0.21% at June 30, 2025 compared to 0.13% at March 31, 2025 and 0.22% at June 30, 2024;
• Book and tangible book (non-GAAP) values per common share increased to $32.58 and $30.62 respectively, at June 30, 2025; and
• Liquidity (both on-balance sheet and off-balance sheet) remained strong at June 30, 2025 with only $20 million in borrowings and additional secured borrowing line capacity of $674 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 3% to $20.50 million from $19.90 million for the preceding quarter and increased 9% from $18.77 million for the comparable quarter one year ago. The increase in operating revenue compared to the preceding quarter was primarily due to increases in total interest and dividend income and non-interest income, which were partially offset by an increase in total funding costs. Operating revenue increased 8% to $60.06 million for the first nine months of fiscal 2025 from $55.82 million for the first nine months of fiscal 2024, 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 $409,000, or 2%, to $17.62 million for the current quarter from $17.21 million for the preceding quarter and increased $1.64 million, or 10%, from $15.98 million for the comparable quarter one year ago. The increase in net interest income compared to the preceding quarter was primarily due to a $20.80 million increase in the average balance of total interest-earning assets and, to a lesser extent, a two-basis point increase in the weighted average yield on total interest-earning assets to 5.50% from 5.48%. These increases were partially offset by a $20.21 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 expanded to 3.80% from 3.79% for the preceding quarter and 3.53% for the comparable quarter one year ago.   The NIM for the current 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 preceding quarter was increased by approximately five basis points due to the collection of $201,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $17,000 of the fair value discount on acquired loans.   The NIM for the comparable quarter one year ago was increased by approximately three basis points due to the collection of $124,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $9,000 of the fair value discount on acquired loans. Net interest income for the first nine months of fiscal 2025 increased $4.19 million, or 9%, to $51.81 million from $47.62 million for the first nine months of fiscal 2024, primarily due to a 32 basis point increase in the weighted average yield of total interest-earning assets to 5.49% from 5.17% and a $49.96 million increase in the average balance of total interest-earning assets. These increases to net interest income were partially offset by a seven basis point increase in the weighted average cost of interest-bearing liabilities to 2.53% from 2.46% and a $58.86 million increase in the average balance of total interest-bearing liabilities. Timberland’s NIM expanded to 3.74% for the first nine months of fiscal 2025 from 3.53% for the first nine months of fiscal 2024.

A $351,000 provision for credit losses on loans was recorded for the quarter ended June 30, 2025. The provision was primarily due to loan portfolio growth and changes in the composition of the loan portfolio. This compares to a $237,000 provision for credit losses on loans for the preceding quarter and a $264,000 provision for credit losses on loans for the comparable quarter one year ago. In addition, a $93,000 provision for credit losses on unfunded commitments and a $4,000 recapture of credit losses on investment securities were recorded for the current quarter.  

Non-interest income increased $188,000, or 7%, to $2.88 million for the current quarter from $2.69 million for the preceding quarter and increased $84,000, or 3%, from $2.79 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 ATM and debit card interchange transaction fees and smaller changes in several other categories. Fiscal year-to-date non-interest income increased by 1%, to $8.26 million from $8.20 million for the first nine months of fiscal 2024.

Total operating (non-interest) expenses for the current quarter decreased $27,000 (less than 1%), to $11.17 million from $11.19 million for the preceding quarter and increased $98,000, or 1%, from $11.07 million for the comparable quarter one year ago.   The decrease in operating expenses compared to the preceding quarter was primarily due to decreases in salaries and employee benefits, premises and equipment, technology and communications, professional fees, and smaller decreases in several other expense categories. These decreases were partially offset by increases in state and local taxes and smaller increases in several other expense categories. The efficiency ratio for the current quarter improved to 54.48% from 56.25% for the preceding quarter and 58.97% for the comparable quarter one year ago. Fiscal year-to-date operating expenses increased 2% to $33.43 million from $32.68 million for the first nine months of fiscal 2024. The efficiency ratio for the first nine months of fiscal 2025 improved to 55.65% from 58.55% for the first nine months of fiscal 2024.

The provision for income taxes for the current quarter increased $85,000, or 5%, to $1.79 million from $1.71 million for the preceding quarter, primarily due to higher taxable income. Timberland’s effective income tax rate was 20.1% for the quarter ended June 30, 2025, compared to 20.2% for the quarter ended March 31, 2025 and 20.6% for the quarter ended June 30, 2024. Timberland’s effective income tax rate was 20.1% for the first nine months of fiscal 2025 compared to 20.2% for the first nine months of fiscal 2024.  

Balance Sheet Management

Total assets increased $24.46 million, or 1%, during the quarter to $1.96 billion at June 30, 2025 from $1.93 billion at March 31, 2025 and increased $56.56 million, or 3%, from $1.90 billion one year ago. The increase during the current quarter was primarily due to a $21.42 million increase in net loans receivable and smaller increases in several other categories.

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 17.0% of total liabilities at June 30, 2025, compared to 16.9% at March 31, 2025, and 14.7% one year ago. Timberland also had secured borrowing line capacity of $674 million available through the FHLB and the Federal Reserve at June 30, 2025. With a strong and diversified deposit base, only 17% of Timberland’s deposits were uninsured or uncollateralized at June 30, 2025. (Note: This calculation excludes public deposits that are fully collateralized.)

Loans

Net loans receivable increased $21.42 million, or 2%, during the quarter to $1.44 billion at June 30, 2025 from $1.42 billion at March 31, 2025. This increase was primarily due to a $21.83 million increase in multi-family loans, a $5.67 million increase in commercial real estate loans, a $3.89 million increase in land loans and smaller increases in several other loan categories. These increases were partially offset by a $5.50 million decrease in construction loans, a $4.80 million decrease in commercial business loans, and smaller decreases in several other loan categories. The increase in multi-family loans was, in large part, due to several multi-family construction projects being completed and converting to permanent financing during the quarter.

Loan Portfolio ($ in thousands)
	June 30, 2025							March 31, 2025								June 30, 2024
	Amount				Percent			Amount				Percent				Amount				Percent
Mortgage loans:
One- to four-family (a)	$317,574				21%			$315,421				21%				$288,611				19%
Multi-family		200,418			13				178,590			12					177,950			12
Commercial		607,924			40				602,248			40					597,865			40
Construction - custom and
owner/builder		128,900			8				114,401				7				128,222			9
Construction - speculative one-to four-family		9,595			1				9,791			1					11,441			1
Construction - commercial		15,992			1				22,352			1					32,130			2
Construction - multi-family		32,731			2				46,602			3					35,631			2
Construction - land
development		15,461			1				15,032			1					19,104			1
Land		36,193			2				32,301			2					32,384			2
Total mortgage loans		1,364,788			89				1,336,738			88					1,323,338			88
Consumer loans:
Home equity and second
mortgage		47,511			3				47,458			3					43,679			3
Other		2,176			--				2,375			--					3,121			--
Total consumer loans		49,687			3				49,833			3					46,800			3
Commercial loans:
Commercial business loans		126,497			8				131,243			9					136,213			9
SBA PPP loans		101			--				156			--					314			--
Total commercial loans		126,598			8				131,399			9					136,527			9
Total loans		1,541,073			100%				1,517,970			100%					1,506,665			100%
Less:
Undisbursed portion of
construction loans in
process		(76,272)							(75,042)								(87,196)
Deferred loan origination
fees		(5,427)							(5,329)								(5,404)
Allowance for credit losses		(17,878)							(17,525)								(17,046)
Total loans receivable, net	$1,441,496							$1,420,074								$1,397,019

_______________________
(a)   Does not include one- to four-family loans held for sale totaling $1,763, $1,151, and $1,795 at June 30, 2025, March 31, 2025, and June 30, 2024, respectively.  

The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of June 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		$128 822			21%			8%			$1 301			$161
Medical/dental offices			81 238		13			5				1 269			--
Office buildings			68 916		11			5				801			--
Other retail buildings			54 472		9			3				567			--
Mini-storage			38 483		6			2				1 539			--
Hotel/motel			31 656		5			2				2 638			--
Restaurants			27 485		5			2				585			--
Gas stations/conv. stores			24 359		4			2				1 015			--
Churches			14 690		3			1				918			--
Nursing homes			13 532		2			1				2 255			--
Shopping centers			10 507		2			1				1 751			--
Mobile home parks			8 882		2			1				444			--
Additional CRE			104 882		17			7				760			--
Total CRE		$607 924			100%			40%			$951			$161

Timberland originated $81.99 million in loans during the quarter ended June 30, 2025, compared to $56.76 million for the preceding quarter and $74.32 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 $5.11 million were sold compared to $5.17 million for the preceding quarter and $3.05 million for the comparable quarter one year ago.

Investment Securities
        
Timberland’s investment securities and CDs held for investment increased $2.04 million, or 1%, to $237.36 million at June 30, 2025, from $235.33 million at March 31, 2025. The increase was primarily due to the purchase of additional U.S. government agency mortgage-backed investment securities and U.S. Treasury investment securities. Partially offsetting these increases was the sale of $13.49 million available for sale investment securities, which resulted in a net gain of $24,000.

Deposits

Total deposits increased $18.65 million, or 1%, during the quarter to $1.67 billion at June 30, 2025, from $1.65 billion at March 31, 2025. The quarter’s increase consisted of a $16.01 million increase in certificates of deposit account balances, a $4.66 million increase in money market account balances, and a $1.60 million increase in NOW checking account balances. These decreases were partially offset by a $2.03 million decrease in savings account balances and a $1.59 million decrease in non-interest-bearing checking account balances.

Deposit Breakdown ($ in thousands)
				June 30, 2025				March 31, 2025				June 30, 2024
				Amount		Percent		Amount		Percent		Amount		Percent
Non-interest-bearing demand				$406,222		24%		$407,811		25%		$407,125		25%
NOW checking				334,922		20		333,325		20		324,795		20
Savings				205,829		12		207,857		13		207,921		13
Money market				305,207		18		300,552		18		327,162		20
Certificates of deposit under $250				244,063		15		227,137		14		195,022		12
Certificates of deposit $250 and over				126,254		8		124,009		7		117,788		7
Certificates of deposit – brokered				46,980		3		50,139		3		48,731		3
Total deposits				$1,669,477		100%		$1,650,830		100%		$1,628,544		100%

Borrowings

Total borrowings were $20.00 million at both June 30, 2025 and March 31, 2025. At June 30, 2025, the weighted average rate on the borrowings was 3.97%.

Shareholders’ Equity and Capital Ratios

Total shareholders’ equity increased $4.14 million, or 2%, to $256.66 million at June 30, 2025, from $252.52 million at March 31, 2025, and increased $15.44 million, or 6%, from $241.22 million at June 30, 2024.   The increase in shareholders’ equity during the quarter was primarily due to net income of $7.10 million, which was partially offset by the payment of $2.05 million in dividends to shareholders and the repurchase of 34,236 shares of common stock for $1.02 million (an average price of $29.74 per share).

Timberland remains well capitalized with a total risk-based capital ratio of 20.54%, a Tier 1 leverage capital ratio of 12.63%, a tangible common equity to tangible assets ratio (non-GAAP) of 12.42%, and a shareholders’ equity to total assets ratio of 13.11% at June 30, 2025.   Timberland’s held to maturity investment securities were $141.57 million at June 30, 2025, with a net unrealized loss of $5.99 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 12.90%, compared to 13.11%, as reported.

New Stock Repurchase Program

The Company announced a new stock repurchase program today. Under the repurchase program, the Company may repurchase up to 5% of the Company’s outstanding shares, or 393,842 shares. The new stock repurchase program replaces the existing stock repurchase program which had 31,762 shares available to be repurchased.

The repurchase program permits shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission (“SEC”). Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interest of both the Company and its shareholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. Open market purchases will be conducted in accordance with the limitations set forth in Rule 10b-18 of the SEC and other applicable legal requirements. The repurchase program may be suspended, terminated, or modified at any time for any reason, including market conditions, the cost of repurchasing the shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase any particular number of shares.

Asset Quality
Timberland’s non-performing assets to total assets ratio was 0.21% at June 30, 2025, compared to 0.13% at March 31, 2025 and 0.22% at June 30, 2024.   Net recoveries totaled $1,000 for the current quarter compared to net charge-offs of less than $1,000 for the preceding quarter and net charge-offs of $36,000 for the comparable quarter one year ago. During the current quarter, provisions for credit losses of $351,000 on loans and $93,000 unfunded commitments were made, which was partially offset by a $4,000 recapture of credit losses on investment securities. The allowance for credit losses (“ACL”) for loans as a percentage of loans receivable was 1.23% at June 30, 2025, compared to 1.22% at March 31, 2025 and 1.21% one year ago.

Total delinquent loans (past due 30 days or more) and non-accrual loans increased $2.86 million or 86%, to $6.18 million at June 30, 2025, from $3.32 million at March 31, 2025 and increased $1.95 million, or 46%, from $4.23 million at June 30, 2024. Non-accrual loans increased $1.52 million, or 65%, to $3.84 million at June 30, 2025 from $2.33 million at March 31, 2025 and decreased $277,000, or 7%, from $4.12 million at March 31, 2024.   The quarterly increase in non-accrual loans was primarily due to one loan (secured by several single family homes) being past maturity. The loan is well collateralized (based on recent appraisals) and the Bank is working with the borrower to renew the loan. Loans graded “Substandard” totaled $32.37 million (or 2% of total loans receivable) at June 30, 2025.

Non-Accrual Loans ($ in thousands)
	June 30, 2025					March 31, 2025					June 30, 2024
	Amount			Quantity		Amount			Quantity		Amount			Quantity
Mortgage loans:
One- to four-family	$1,781			1		$47			1		$135			2
Commercial		161		2			324		3			1,310		4
Construction – custom and
owner/builder		--		--			--		--			152		1
Total mortgage loans		1,942		3			371		4			1,597		7
Consumer loans:
Home equity and second
mortgage		575		3			575		3			615		3
Other		--		--			--		--			--		--
Total consumer loans		575		3			575		3			615		3
Commercial business loans		1,326		9			1,381		11			1,908		8
Total loans	$3,843			15		$2,327			18		$4,120			18

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

	June 30, 2025					March 31, 2025					June 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 2025 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)			June 30,				March 31,				June 30,
				2025				2025				2024
	Interest and dividend income
	Loans receivable		$21,411				$20,896				$19,537
	Investment securities			2,064				2,003				2,335
	Dividends from mutual funds, FHLB stock and other investments			83				82				94
	Interest bearing deposits in banks			1,986				1,884				2,173
	Total interest and dividend income			25,544				24,865				24,139
	Interest expense
	Deposits			7,721				7,454				7,938
	Borrowings			201				198				220
	Total interest expense			7,922				7,652				8,158
	Net interest income			17,622				17,213				15,981
	Provision for credit losses – loans			351				237				264
	Recapture of credit losses – investment securities			(4)				(5)				(12)
	Prov. for (recapture of ) credit losses - unfunded commitments			93				14				(8)
	Net int. income after provision for (recapture of) credit losses			17,182				16,967				15,737
	Non-interest income
	Service charges on deposits			966				959				1,014
	ATM and debit card interchange transaction fees			1,262				1,176				1,297
	Gain on sales of investment securities, net			24				--				--
	Gain on sales of loans, net			138				122				68
	Bank owned life insurance (“BOLI”) net earnings			171				165				158
	Other			314				265				254
	Total non-interest income, net			2,875				2,687				2,791
	Non-interest expense
	Salaries and employee benefits			5,825				5,977				5,928
	Premises and equipment			973				1,075				1,011
	Gain on sale of premises and equipment, net			--				--				(3)
	Advertising			182				189				211
	OREO and other repossessed assets, net			8				9				--
	ATM and debit card processing			658				521				580
	Postage and courier			137				142				130
	State and local taxes			570				335				335
	Professional fees			341				431				335
	FDIC insurance			211				219				208
	Loan administration and foreclosure			99				155				156
	Technology and communications			993				1,121				1,086
	Deposit operations			345				319				450
	Amortization of core deposit intangible (“CDI”)			45				45				56
	Other, net			780				656				586
	Total non-interest expense, net			11,167				11,194				11,069
	Income before income taxes			8,890				8,460				7,459
	Provision for income taxes			1,790				1,705				1,535
	Net income		$7,100				$6,755				$5,924
	Net income per common share:
	Basic		$0.90				$0.85				$0.74
	Diluted			0.90				0.85				0.74
	Weighted average common shares outstanding:
	Basic			7,893,308				7,937,063				8,004,552
	Diluted			7,921,762				7,968,632				8,039,345

TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME			Nine Months Ended
($ in thousands, except per share amounts) (unaudited)			June 30,				June 30,
				2025				2024
	Interest and dividend income
	Loans receivable		$63,339				$56,841
	Investment securities			6,205				6,892
	Dividends from mutual funds, FHLB stock and other investments			252				266
	Interest bearing deposits in banks			5,870				5,791
	Total interest and dividend income			75,666				69,790
	Interest expense
	Deposits			23,259				21,383
	Borrowings			602				787
	Total interest expense			23,861				22,170
	Net interest income			51,805				47,620
	Provision for credit losses – loans			640				810
	Recapture of credit losses – investment securities			(14)				(20)
	Prov. for (recapture of) credit losses - unfunded commitments			87				(130)
	Net int. income after provision for (recapture of) credit losses			51,092				46,960
	Non-interest income
	Service charges on deposits			2,924				3,024
	ATM and debit card interchange transaction fees			3,706				3,773
	Gain on sales of investment securities, net			24				--
	Gain on sales of loans, net			303				188
	Bank owned life insurance (“BOLI”) net earnings			503				470
	Other			799				749
	Total non-interest income, net			8,259				8,204
	Non-interest expense
	Salaries and employee benefits			17,893				17,863
	Premises and equipment			2,998				3,065
	Gain on sale of premises and equipment, net			--				(3)
	Advertising			552				556
	OREO and other repossessed assets, net			17				1
	ATM and debit card processing			1,700				1,796
	Postage and courier			401				401
	State and local taxes			1,251				979
	Professional fees			1,118				908
	FDIC insurance			640				624
	Loan administration and foreclosure			383				395
	Technology and communications			3,253				3,101
	Deposit operations			997				1,094
	Amortization of core deposit intangible (“CDI”)			135				169
	Other, net			2,090				1,735
	Total non-interest expense, net			33,428				32,684
	Income before income taxes			25,923				22,480
	Provision for income taxes			5,208				4,552
	Net income		$20,715				$17,928
	Net income per common share:
	Basic		$2.61				$2.22
	Diluted			2.60				2.21
	Weighted average common shares outstanding:
	Basic			7,929,626				8,067,068
	Diluted			7,963,412				8,109,043

TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts) (unaudited)			June 30,				March 31,				June 30,
				2025				2025				2024
Assets
Cash and due from financial institutions			$32,532				$26,010				$25,566
Interest-bearing deposits in banks				161,095				165,201				133,347
	Total cash and cash equivalents			193,627				191,211				158,913
Certificates of deposit (“CDs”) held for investment, at cost				8,462				8,711				10,458
Investment securities:
	Held to maturity, at amortized cost (net of ACL – investment securities)			141,570				140,954				176,787
	Available for sale, at fair value			86,475				84,807				74,515
Investments in equity securities, at fair value				855				853				836
FHLB stock				2,045				2,045				2,037
Other investments, at cost				3,000				3,000				3,000
Loans held for sale				1,763				1,151				1,795
Loans receivable				1,459,374				1,437,599				1,414,065
Less: ACL – loans				(17,878)				(17,525)				(17,046)
	Net loans receivable			1,441,496				1,420,074				1,397,019
Premises and equipment, net				21,490				21,436				21,558
OREO and other repossessed assets, net				221				221				--
BOLI				24,113				23,942				23,436
Accrued interest receivable				7,174				7,127				7,045
Goodwill				15,131				15,131				15,131
CDI				316				361				508
Loan servicing rights, net				911				1,051				1,526
Operating lease right-of-use assets				1,248				1,324				1,550
Other assets				7,295				9,331				4,515
	Total assets		$1,957,192				$1,932,730				$1,900,629
Liabilities and shareholders’ equity
Deposits: Non-interest-bearing demand			$406,222				$407,811				$407,125
Deposits: Interest-bearing				1,263,255				1,243,019				1,221,419
	Total deposits			1,669,477				1,650,830				1,628,544
Operating lease liabilities				1,350				1,426				1,649
FHLB borrowings				20,000				20,000				20,000
Other liabilities and accrued expenses				9,701				7,950				9,213
	Total liabilities			1,700,528				1,680,206				1,659,406
Shareholders’ equity
Common stock, $.01 par value; 50,000,000 shares authorized;         7,876,853 shares issued and outstanding – June 30, 2025         7,903,489 shares issued and outstanding – March 31, 2025         7,953,431 shares issued and outstanding – June 30, 2024				27,226				28,028				30,681
Retained earnings				230,213				225,166				211,087
Accumulated other comprehensive loss				(775)				(670)				(545)
	Total shareholders’ equity			256,664				252,524				241,223
	Total liabilities and shareholders’ equity		$1,957,192				$1,932,730				$1,900,629

	Three Months Ended
PERFORMANCE RATIOS:		June 30, 2025				March 31, 2025				June 30, 2024
Return on average assets (a)			1.47%				1.43%				1.25%
Return on average equity (a)			11.23%				10.95%				9.95%
Net interest margin (a)			3.80%				3.79%				3.53%
Efficiency ratio			54.48%				56.25%				58.97%
	Nine Months Ended
		June 30, 2025								June 30, 2024
Return on average assets (a)			1.44%								1.27%
Return on average equity (a)			11.07%								10.10%
Net interest margin (a)			3.74%								3.53%
Efficiency ratio			55.65%								58.55%
	Three Months Ended
ASSET QUALITY RATIOS AND DATA: ($ in thousands)		June 30, 2025				March 31, 2025				June 30, 2024
Non-accrual loans		$3,843				$2,327				$4,120
Loans past due 90 days and still accruing			--				--				--
Non-performing investment securities			38				41				72
OREO and other repossessed assets			221				221				--
Total non-performing assets (b)		$4,102				$2,589				$4,192
Non-performing assets to total assets (b)			0.21%				0.13%				0.22%
Net charge-offs (recoveries) during quarter		$(1)				$	--			$36
Allowance for credit losses - loans to non-accrual loans			465%				753%				414%
Allowance for credit losses - loans to loans receivable (c)			1.23%				1.22%				1.21%
CAPITAL RATIOS:
Tier 1 leverage capital			12.63%				12.55%				12.04%
Tier 1 risk-based capital			19.29%				19.04%				17.97%
Common equity Tier 1 risk-based capital			19.29%				19.04%				17.97%
Total risk-based capital			20.54%				20.29%				19.22%
Tangible common equity to tangible assets (non-GAAP)			12.42%				12.36%				11.97%
BOOK VALUES:
Book value per common share		$32.58				$31.95				$30.33
Tangible book value per common share (d)			30.62				29.99				28.36

________________________________________________

(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
	June 30, 2025								March 31, 2025								June 30, 2024
	Amount				Rate				Amount				Rate				Amount				Rate
Assets
Loans receivable and loans held for sale	$	1,450,350			5.92		%		$	1,435,999			5.90		%		$	1,391,582			5.65		%
Investment securities and FHLB stock (1)		232,272			3.71					232,532			3.64					268,954			3.63
Interest-earning deposits in banks and CDs		178,887			4.45					172,175			4.44					161,421			5.41
Total interest-earning assets		1,861,509			5.50					1,840,706			5.48					1,821,957			5.33
Other assets		79,715								77,563								82,008
Total assets	$	1,941,224							$	1,918,269							$	1,903,965
Liabilities and Shareholders’ Equity
NOW checking accounts	$	333,074			1.39		%		$	328,115			1.32		%		$	329,344			1.29		%
Money market accounts		304,526			3.16					306,137			3.18					326,023			3.56
Savings accounts		205,592			0.35					206,054			0.28					208,488			0.27
Certificates of deposit accounts		363,342			3.77					343,945			3.82					311,545			4.21
Brokered CDs		48,028			4.83					50,104			4.85					45,442			5.32
Total interest-bearing deposits		1,254,562			2.47					1,234,355			2.45					1,220,842			2.62
Borrowings		20,002			4.03					20,000			4.04					20,001			4.42
Total interest-bearing liabilities		1,274,564			2.49					1,254,355			2.47					1,240,843			2.64
Non-interest-bearing demand deposits		402,717								403,738								413,494
Other liabilities		10,266								10,064								10,245
Shareholders’ equity		253,677								250,112								239,383
Total liabilities and shareholders’ equity	$	1,941,224							$	1,918,269							$	1,903,965
Interest rate spread					3.01		%						3.01		%						2.69		%
Net interest margin (2)					3.80		%						3.79		%						3.53		%
Average interest-earning assets to
average interest-bearing liabilities		146.05	%							146.75	%							146.83	%

           _____________________________________
(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 Nine Months Ended
	June 30, 2025								June 30, 2024
	Amount				Rate				Amount				Rate
Assets
Loans receivable and loans held for sale	$	1,441,506			5.87		%		$	1,363,213			5.57		%
Investment securities and FHLB stock (1)		237,400			3.81					294,789			3.24
Interest-earning deposits in banks and CDs		172,591			4.55					143,537			5.39
Total interest-earning assets		1,851,497			5.49					1,801,539			5.17
Other assets		77,595								81,650
Total assets	$	1,929,092							$	1,883,189
Liabilities and Shareholders’ Equity
NOW checking accounts	$	329,883			1.36		%		$	358,052			1.48		%
Money market accounts		311,762			3.26					273,683			3.09
Savings accounts		205,764			0.30					214,275			0.24
Certificates of deposit accounts		346,313			3.89					291,707			4.12
Brokered CDs		48,169			4.71					42,856			5.37
Total interest-bearing deposits		1,241,891			2.50					1,180,573			2.42
Borrowings		20,001			4.02					22,457			4.68
Total interest-bearing liabilities		1,261,892			2.53					1,203,030			2.46
Non-interest-bearing demand deposits		406,906								431,849
Other liabilities		10,159								11,273
Shareholders’ equity		250,135								237,037
Total liabilities and shareholders’ equity	$	1,929,092							$	1,883,189
Interest rate spread					2.96		%						2.71		%
Net interest margin (2)					3.74		%						3.53		%
Average interest-earning assets to
average interest-bearing liabilities		146.72	%							149.75	%

_____________________________________
(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)		June 30, 2025				March 31, 2025				June 30, 2024
Shareholders’ equity		$	256,664			$	252,524			$	241,223
Less goodwill and CDI			(15,447)				(15,492)				(15,639)
Tangible common equity		$	241,217			$	237,032			$	225,584
Total assets		$	1,957,192			$	1,932,730			$	1,900,629
Less goodwill and CDI			(15,447)				(15,492)				(15,639)
Tangible assets		$	1,941,745			$	1,917,238			$	1,884,990

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

FAQ

What was Timberland Bancorp's (TSBK) earnings per share for Q3 2025?

Timberland reported earnings of $0.90 per diluted share for Q3 2025, representing a 22% increase from $0.74 in Q3 2024.

How much is Timberland's (TSBK) quarterly dividend payment for Q3 2025?

Timberland announced a quarterly cash dividend of $0.26 per share, payable on August 22, 2025, to shareholders of record on August 8, 2025.

What is the size of Timberland Bancorp's (TSBK) new stock repurchase program?

The new stock repurchase program authorizes the repurchase of up to 5% of outstanding shares, equivalent to 393,842 shares.

What was Timberland's (TSBK) net interest margin in Q3 2025?

Timberland's net interest margin was 3.80%, representing a one basis point increase from the prior quarter and a 27 basis point improvement year-over-year.

How much did Timberland's (TSBK) total deposits grow in Q3 2025?

Total deposits increased 1% quarter-over-quarter and 3% year-over-year, driven primarily by higher balances in certificates of deposit.

What was Timberland Bancorp's (TSBK) total asset size as of June 30, 2025?

Timberland's total assets reached $1.96 billion, representing a 1% increase from the prior quarter and a 3% increase year-over-year.