- EPS Increases 6% to $0.90 from $0.85 for the Comparable Quarter One Year Ago
- Quarterly Return on Average Assets of 1.43%
- Quarterly Return on Average Equity of 10.72%
- Quarterly Net Interest Margin of 3.81%
HOQUIAM, Wash., April 28, 2026 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”), the holding company for Timberland Bank (the “Bank”), today reported net income of $7.13 million, or $0.90 per diluted common share for the quarter ended March 31, 2026. This compares to net income of $6.76 million, or $0.85 per diluted common share for the comparable quarter one year ago, and $8.22 million, or $1.04 per diluted common share, for the preceding quarter.
For the first six months of fiscal 2026, Timberland’s net income increased 13% to $15.35 million, or $1.94 per diluted common share, from $13.62 million, or $1.71 per diluted common share, for the first six months of fiscal 2025.
“Timberland delivered another strong quarter, with net income and earnings per share both growing 6% compared to the year ago quarter,” stated Dean Brydon, Chief Executive Officer. “Net income and earnings per share were down 13% from the prior quarter, primarily due to higher provision for credit losses and a modest reduction in net interest income reflecting a decrease in average interest-earning assets. Most of our key income-related metrics reflect year-over year improvement, and our fundamentals remain sound.”
“As a result of Timberland’s strong earnings and capital position, our Board of Directors announced a quarterly cash dividend to shareholders to $0.29 per share, payable on May 22, 2026, to shareholders of record on May 8, 2026,” stated Jonathan Fischer, President and Chief Operating Officer. “This represents the 54th 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 remained relatively stable, declining four basis points from the prior quarter while improving two basis points year-over-year,” said Marci Basich, Chief Financial Officer. “After largely offsetting the impact of Federal Reserve rate cuts in the prior quarter, we are beginning to see those cuts have a more direct effect on our margin. Our balance sheet positioning and proactive deposit pricing strategies continue to help mitigate these headwinds. It is also worth noting that the comparison to the prior quarter is somewhat affected by one-time items — collected non-accrual interest and late fees added approximately one basis point to the margin during the current quarter, compared to a six basis point benefit from similar items in the prior quarter. On the deposit side, total deposits grew 2% from the prior quarter and 6% year-over-year. Discipline around our funding mix and margin stability will continue to be central to how we operate.”
“Net loans were down slightly during the quarter, driven primarily by higher loan payoff activity,” Brydon continued. “Credit quality is an area we continue to monitor closely, and this quarter delinquent and non-accrual loans increased, driven primarily by an isolated participation loan that was moved to non-accrual status during the quarter. We remain confident in the overall strength of our loan portfolio and our disciplined approach to credit risk management.”
“Our new full-service branch in University Place, which opened January 12, 2026, is gaining traction and expanding our ability to serve clients in the area between our Gig Harbor and Tacoma locations. Early momentum is encouraging, and we see strong opportunity to deepen commercial banking relationships with the businesses driving growth in this community,” added Fischer.
Earnings and Balance Sheet Highlights (at or for the periods ended March 31, 2026, compared to March 31, 2025, or December 31, 2025):
Earnings Highlights:
- Earnings per diluted common share (“EPS”) increased 6% to $0.90 for the current quarter from $0.85 for the comparable quarter one year ago and decreased 13% from $1.04 for the preceding quarter; EPS increased 13% to $1.94 for the first six months of fiscal 2026 from $1.71 for the first six months of fiscal 2025;
- Net income increased 6% to $7.13 million for the current quarter from $6.76 million for the comparable quarter one year ago and decreased 13% from $8.22 million for the preceding quarter; Net income increased 13% to $15.35 million for the first six months of fiscal 2026 from $13.62 million for the first six months of fiscal 2026;
- Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were 10.72% and 1.43%, respectively;
- Net interest margin (“NIM”) for the current quarter increased to 3.81% from 3.79% for the comparable quarter one year ago and decreased from 3.85% for the preceding quarter; and
- The efficiency ratio for the current quarter was 55.38% compared to 56.25% for the comparable quarter one year ago and 52.65% for the preceding quarter.
Balance Sheet Highlights:
- Total assets increased 2% from the prior quarter and increased 6% year-over-year;
- Net loans receivable decreased 1% from the prior quarter and increased 2% year-over-year;
- Total deposits increased 2% from the prior quarter and increased 6% year-over-year;
- Total shareholders’ equity increased 1% from the prior quarter and increased 7% year-over-year; 80,000 shares of common stock were repurchased during the current quarter for $3.09 million;
- Non-performing assets to total assets ratio was 0.47% at March 31, 2026, compared to 0.23% at December 31, 2025, and 0.19% at March 31, 2025;
- Book and tangible book (non-GAAP) values per common share increased to $34.61 and $32.65 respectively, at March 31, 2026; and
- Liquidity (both on-balance sheet and off-balance sheet) remained strong at March 31, 2026, with only $20 million in borrowings and additional secured borrowing line capacity of $778 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 decreased 3% to $21.05 million from $21.71 million for the preceding quarter and increased 6% from $19.90 million for the comparable quarter one year ago. The decrease in operating revenue compared to the preceding quarter was primarily due to a decrease in interest income on loans receivable, and to a lesser extent, a decrease in interest income from investment securities, which was partially offset by a decrease in interest expense on deposits. Operating revenue increased 8%, to $42.77 million for the first six months of fiscal 2026 from $39.57 million for the first six months of fiscal 2025, primarily due to increases in interest income on loans receivable and interest income on interest-bearing deposits in banks, which was partially offset by a decrease in interest income from investments securities.
Net interest income decreased $705,000, or 4%, to $18.24 million for the current quarter from $18.95 million for the preceding quarter and increased $1.03 million, or 6%, from $17.21 million for the comparable quarter one year ago. The decrease in net interest income compared to the preceding quarter was primarily due to an $11.04 million decrease in the average balance of total interest-earning assets and a ten-basis point decrease in the weighted average yield of interest-bearing assets. These decreases were partially offset by an 11-basis point decrease in the weighted average cost of interest-bearing liabilities. Net interest income for the first six months of fiscal 2026 increased $3.01 million, or 9%, to $37.19 million from $34.18 million for the first six months of fiscal 2025, primarily due to a $101.58 million increase in average interest-earning assets and a 15-basis point decrease in the weighted average cost of interest-bearing liabilities.
Timberland’s NIM for the current quarter decreased to 3.81% from 3.85% for the preceding quarter and improved from 3.79% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately one basis point due to the collection of $38,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $10,000 of the fair value discount on acquired loans. The NIM for the preceding quarter was increased by approximately six basis points due to the collection of $282,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $9,000 of the fair value discount on acquired loans. The NIM for the comparable quarter one year ago 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. Timberland’s NIM expanded to 3.83% for the first six months of fiscal 2026 from 3.71% for the first six months of fiscal 2025.
A $523,000 provision for credit losses on loans was recorded for the quarter ended March 31, 2026. The provision was primarily due to changes in the composition of the loan portfolio and an increase in the level of non-accrual loans. This compares to a $16,000 provision for credit losses on loans for the preceding quarter and a $237,000 provision for credit losses on loans for the comparable quarter one year ago.
Non-interest income increased $43,000, or 2%, to $2.81 million for the current quarter from $2.76 million for the preceding quarter and increased $120,000, or 4%, from $2.69 million for the comparable quarter one year ago. The increase in non-interest income was primarily due to a $158,000 increase in net gain on sales of loans and smaller increases in several other categories. These increases were partially offset by a $63,000 decrease in ATM and debit card interchange fees and a $55,000 decrease in service charges on deposits. Fiscal year-to-date non-interest income increased by 4%, to $5.57 million from $5.38 million for the first six months of fiscal 2025.
Total operating (non-interest) expenses for the current quarter increased $228,000, or 2%, to $11.66 million from $11.43 million for the preceding quarter and increased $465,000, or 4%, from $11.19 million for the comparable quarter one year ago. The increase in operating expenses compared to the preceding quarter was primarily due to increases in technology and communications, loan administration and foreclosure, and smaller increases in several other categories. These increases were partially offset by a decrease in ATM and debit card processing expense and smaller decreases in several other categories. The efficiency ratio for the current quarter was 55.38% compared to 52.65% for the preceding quarter and 56.25% for the comparable quarter one year ago. Fiscal year-to-date operating expenses increased 4% to $23.09 million from $22.26 million for the first six months of fiscal 2025.
The provision for income taxes for the current quarter decreased $363,000, or 17%, to $1.74 million from $2.10 million for the preceding quarter, primarily due to lower taxable income. Timberland’s effective income tax rate was 19.6% for the quarter ended March 31, 2026, compared to 20.4% for the quarter ended December 31, 2025, and 20.2% for the quarter ended March 31, 2025. Timberland’s effective income tax rate was 20.0% for the first six months of fiscal 2026 compared to 20.1% for the first six months of fiscal 2025.
Balance Sheet Management
Total assets increased $40.26 million, or 2%, during the quarter to $2.05 billion at March 31, 2026, from $2.01 billion at December 31, 2025, and increased $113.66 million, or 6%, from $1.93 billion one year ago.
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 22.1% of total liabilities at March 31, 2026, compared to 18.9% at December 31, 2025, and 16.9% one year ago. Timberland also had secured borrowing line capacity of $778 million available through the FHLB and the Federal Reserve at March 31, 2026. With a strong and diversified deposit base, only 18% of Timberland’s deposits were uninsured or uncollateralized at March 31, 2026. (Note: This calculation excludes public deposits that are fully collateralized.)
Loans
Net loans receivable decreased $7.96 million, or 1%, during the quarter to $1.45 billion at March 31, 2026, from $1.46 billion at December 31, 2025, and increased $30.80 million, or 2%, from $1.42 billion at March 31, 2025. The decrease during the quarter was primarily due to a $14.22 million decrease in one- to four-family loans, a $3.33 million decrease in commercial business loans and smaller decreases in several other loan categories. These decreases were partially offset by a $10.33 million increase in construction loans and smaller increases in several other loan categories.
Loan Portfolio($ in thousands) March 31, 2026 December 31, 2025 March 31, 2025 Amount Percent Amount Percent Amount PercentMortgage loans: One- to four-family (a)$311,500 20% $325,724 21% $315,421 21%Multi-family 214,107 14 212,331 14 178,590 12Commercial 611,117 39 611,989 39 602,248 40Construction - custom and owner/builder 104,074 7 102,177 7 114,401 7Construction - speculativeone-to four-family 15,840 1 15,110 1 9,791 1Construction - commercial 12,985 1 20,199 1 22,352 1Construction - multi-family 80,246 5 65,856 4 46,602 3Construction - land development 2,915 -- 2,387 -- 15,032 1Land 32,214 2 33,521 2 32,301 2Total mortgage loans 1,384,998 89 1,389,294 89 1,336,738 88 Consumer loans: Home equity and second mortgage 53,252 3 52,569 3 47,458 3Other 2,018 -- 1,898 -- 2,375 --Total consumer loans 55,270 3 54,467 3 49,833 3 Commercial loans: Commercial business loans 125,087 8 128,397 8 131,243 9SBA PPP loans 5 -- 20 -- 156 --Total commercial loans 125,092 8 128,417 8 131,399 9Total loans 1,565,360 100% 1,572,178 100% 1,517,970 100%Less: Undisbursed portion of construction loans in process (90,576) (89,883) (75,042) Deferred loan origination fees (5,259) (5,338) (5,329) Allowance for credit losses (18,648) (18,125) (17,525) Total loans receivable, net$1,450,877 $1,458,832 $1,420,074
_______________________
(a) Does not include one- to four-family loans held for sale totaling $1,642, $3,736, and $1,151 at March 31, 2026, December 31, 2025, and March 31, 2025, respectively.
The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of March 31, 2026:
CRE Loan Portfolio Breakdown by Collateral($ in thousands) Collateral TypeBalance Percent of
CRE
Portfolio Percent of
Total Loan
Portfolio Average
Balance Per
Loan Non-
AccrualIndustrial warehouses $131,278 22% 8% $1,353 $--Medical/dental offices 80,060 13 5 1,213 237Office buildings 69,655 11 4 819 294Other retail buildings 55,702 9 3 619 --Mini-storage 37,840 6 2 1,514 --Hotel/motel 32,405 5 2 2,315 4,328Restaurants 28,018 5 2 584 --Gas stations/conv. stores 26,182 4 2 1,007 --Churches 13,842 2 1 923 --Nursing homes 13,304 2 1 2,217 --Shopping centers 10,290 2 1 1,715 --Mobile home parks 9,280 2 1 422 --Additional CRE 103,261 17 7 776 --Total CRE $611,117 100% 39% $965 $4,859
Timberland originated $71.12 million in loans during the quarter ended March 31, 2026, compared to $73.06 million for the preceding quarter and $56.76 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 $11.36 million were sold compared to $3.66 million for the preceding quarter and $5.17 million for the comparable quarter one year ago.
Investment Securities
Timberland’s investment securities and CDs held for investment increased $191,000, or less than 1%, to $216.03 million at March 31, 2026, from $215.84 million at December 31, 2025. The increase was primarily due to the purchase of additional U.S. government agency mortgage-backed investment securities and was partially offset by maturities of U.S. Treasury Securities and scheduled amortization.
Deposits
Total deposits increased $38.73 million, or 2%, during the quarter to $1.74 billion at March 31, 2026, from $1.70 billion at December 31, 2025, and increased $92.38 million, or 6%, from $1.65 billion at March 31, 2025. The quarter’s increase consisted of a $21.50 million increase in money market account balances, a $10.13 million increase in certificate of deposits account balances, a $3.68 million increase in non-interest-bearing deposit account balances, a $3.11 million increase in NOW account balances, and a $315,000 increase in savings account balances.
Deposit Breakdown($ in thousands)
March 31, 2026
December 31, 2025
March 31, 2025
Amount Percent
Amount
Percent
Amount
Percent
Non-interest-bearing demand$407,980 23% $404,300
24%
$407,811 25%NOW checking370,385 21 367,278 21
333,325 20Savings197,805 11 197,490 12
207,857 13Money market325,811 19 304,316 18
300,552 18Certificates of deposit under $250257,449 15 256,809 15
227,137 14Certificates of deposit $250 and over141,843 8 136,764 8
124,009 7Certificates of deposit – brokered41,937 3 37,525 2
50,139 3Total deposits$1,743,210 100% $1,704,482 100% $1,650,830 100%
Borrowings
Total borrowings were $20.00 million at both March 31, 2026, and December 31, 2025. At March 31, 2026, the weighted average rate on the borrowings was 4.03%.
Shareholders’ Equity and Capital Ratios
Total shareholders’ equity increased $2.68 million, or 1%, to $271.09 million at March 31, 2026, from $268.41 million at December 31, 2025, and increased $18.57 million, or 7%, from $252.52 million at March 31, 2025. The increase in shareholders’ equity during the quarter was primarily due to net income of $7.13 million and proceeds from stock option exercises of $877,000. These increases to shareholders’ equity were partially offset by the payment of $2.27 million in dividends to shareholders and the repurchase of 80,000 shares of common stock for $3.09 million (an average price of $38.63 per share), and a $117,000 increase of accumulated other comprehensive loss. At March 31, 2026, Timberland had 227,977 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 21.55%, a Tier 1 leverage capital ratio of 12.82%, a tangible common equity to tangible assets ratio (non-GAAP) of 12.59%, and a shareholders’ equity to total assets ratio of 13.25% at March 31, 2026. Timberland’s held to maturity investment securities were $117.33 million at March 31, 2026, with a net unrealized loss of $4.07 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 13.09%, compared to 13.25%, as reported.
Asset Quality
Timberland’s non-performing assets to total assets ratio was 0.47% at March 31, 2026, compared to 0.23% at December 31, 2025, and 0.13% at March 31, 2025. Net charge-offs were less than $1,000 for the current quarter compared to net recoveries of $18,000 for the preceding quarter and net charge-offs of less than $1,000 for the comparable quarter one year ago. During the current quarter, a $523,000 provision for credit losses on loans and a $3,000 provision for credit losses on unfunded commitments was made, which was offset by a $3,000 recapture of credit losses on investment securities. The allowance for credit losses (“ACL”) for loans as a percentage of loans receivable was 1.27% at March 31, 2026, compared to 1.23% at December 31, 2025, and 1.22% one year ago.
Total delinquent loans (past due 30 days or more) and non-accrual loans increased $4.34 million, or 72%, to $10.40 million at March 31, 2026, from $6.05 million at December 31, 2025, and increased $7.07 million, or 213%, from $3.32 million at March 31, 2025. Non-accrual loans increased $5.12 million or 120%, to $9.41 million at December 31, 2025 from $4.28 million at December 31, 2025, and increased $7.08 million, or 304%, from $2.33 million at March 31, 2025. The increase in delinquent and non-accrual loans during the quarter was primarily due to a $4.33 million participation loan secured by a hotel in Oregon that was put on non-accrual status. Timberland has a total of $7.11 million in participation loans purchased from other community banks and all other participation loans were performing according to their terms at March 31, 2026. Loans graded “Substandard” increased $926,000, or 11%, to $9.54 million at March 31, 2026 from $8.61 million at December 31, 2025 and decreased $13.97 million, or 59%, from $23.51 million at March 31, 2025.
Non-Accrual Loans($ in thousands) March 31, 2026 December 31, 2025 March 31, 2025 Amount Quantity Amount Quantity Amount QuantityMortgage loans: One- to four-family$1,934 2 $1,988 2 $47 1Commercial 4,859 4 304 1 324 3Construction – custom and owner/builder 553 1 553 1 -- --Total mortgage loans 7,346 7 2,845 4 371 4 Consumer loans: Home equity and second mortgage 352 4 356 4 575 3Other 20 1 20 1 -- --Total consumer loans 372 5 376 5 575 3 Commercial business loans 1,687 7 1,063 8 1,381 11Total loans$9,405 19 $4,284 17 $2,327 18
Timberland had two properties classified as other real estate owned (“OREO”) at March 31, 2026:
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 24 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 SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOMEThree Months Ended($ in thousands, except per share amounts) (unaudited)March 31, Dec. 31 March 31, 2026
2025
2025
Interest and dividend income Loans receivable and loans held for sale $21,793 $22,673 $20,896 Investment securities 1,751 1,862 2,003 Dividends from mutual funds, FHLB stock and other investments 77 82 82 Interest bearing deposits in banks 2,334 2,578 1,884 Total interest and dividend income 25,955 27,195 24,865 Interest expense Deposits 7,513 8,043 7,454 Borrowings 198 203 198 Total interest expense 7,711 8,246 7,652 Net interest income 18,244 18,949 17,213 Provision for credit losses – loans 523 16 237 Recapture of credit losses – investment securities (3) (2) (5) Prov. for (recapture of) credit losses – unfunded commitments 3 (49) 14 Net int. income after provision for (recapture of) credit losses 17,721 18,984 16,967 Non-interest income Service charges on deposits 934 989 959 ATM and debit card interchange transaction fees 1,131 1,194 1,176 Gain on sales of loans, net 236 78 122 Bank owned life insurance (“BOLI”) net earnings 155 158 165 Other 351 345 265 Total non-interest income, net 2,807 2,764 2,687 Non-interest expense Salaries and employee benefits 6,469 6,453 5,977 Premises and equipment 1,116 1,074 1,075 Advertising 182 192 189 OREO and other repossessed assets, net 3 5 9 ATM and debit card processing 471 582 521 Postage and courier 155 143 142 State and local taxes 428 457 335 Professional fees 325 316 431 FDIC insurance 228 221 219 Loan administration and foreclosure 141 80 155 Technology and communications 1,177 1,055 1,121 Deposit operations 363 347 319 Amortization of core deposit intangible (“CDI”) 34 34 45 Other, net 567 472 656 Total non-interest expense, net 11,659 11,431 11,194 Income before income taxes 8,869 10,317 8,460 Provision for income taxes 1,738 2,101 1,705 Net income $7,131 $8,216 $6,755 Net income per common share: Basic $0.91 $1.04 $0.85 Diluted 0.90 1.04 0.85 Weighted average common shares outstanding: Basic 7,875,436 7,885,656 7,937,063 Diluted 7,922,232 7,923,037 7,968,632 TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOMESix Months Ended($ in thousands, except per share amounts) (unaudited)March 31, March 31, 2026
2025
Interest and dividend income Loans receivable and loans held for sale $44,467 $41,928 Investment securities 3,613 4,141 Dividends from mutual funds, FHLB stock and other investments 158 168 Interest bearing deposits in banks 4,912 3,885 Total interest and dividend income 53,150 50,122 Interest expense Deposits 15,555 15,538 Borrowings 401 402 Total interest expense 15,956 15,940 Net interest income 37,194 34,182 Provision for credit losses – loans 539 289 Recapture of credit losses – investment securities (5) (10) Recapture of credit losses - unfunded commitments (46) (7) Net int. income after provision for (recapture of) credit losses 36,706 33,910 Non-interest income Service charges on deposits 1,923 1,958 ATM and debit card interchange transaction fees 2,325 2,443 Gain on sales of loans, net 314 165 Bank owned life insurance (“BOLI”) net earnings 312 331 Other 697 487 Total non-interest income, net 5,571 5,384 Non-interest expense Salaries and employee benefits 12,922 12,068 Premises and equipment 2,190 2,025 Advertising 374 370 OREO and other repossessed assets, net 9 9 ATM and debit card processing 1,052 1,043 Postage and courier 298 264 State and local taxes 885 680 Professional fees 641 777 FDIC insurance 449 429 Loan administration and foreclosure 221 283 Technology and communications 2,232 2,261 Deposit operations 710 652 Amortization of core deposit intangible (“CDI”) 68 90 Other, net 1,039 1,309 Total non-interest expense, net 23,090 22,260 Income before income taxes 19,187 17,034 Provision for income taxes 3,840 3,419 Net income $15,347 $13,615 Net income per common share: Basic $1.95 $1.71 Diluted 1.94 1.71 Weighted average common shares outstanding: Basic 7,880,602 7,947,786 Diluted 7,922,639 7,984,238 TIMBERLAND BANCORP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS ($ in thousands, except per share amounts) (unaudited)March 31,
Dec. 31,
March 31,
2026
2025
2025
Assets Cash and due from financial institutions$24,157 $23,176
$26,010 Interest-bearing deposits in banks 270,514 223,688
165,201 Total cash and cash equivalents 294,671 246,864
191,211 Certificates of deposit (“CDs”) held for investment, at cost 5,972 6,470
8,711 Investment securities: Held to maturity, at amortized cost (net of ACL – investment securities) 117,327 133,259
140,954 Available for sale, at fair value 91,869 75,243
84,807 Investments in equity securities, at fair value 862 867
853 FHLB stock 2,103 2,045
2,045 Other investments, at cost 3,000 3,000
3,000 Loans held for sale 1,642 3,736 1,151 Loans receivable 1,469,525 1,476,957 1,437,599 Less: ACL – loans (18,648) (18,125) (17,525) Net loans receivable 1,450,877 1,458,832 1,420,074 Premises and equipment, net 21,925 21,826 21,436 OREO and other repossessed assets, net 221 221 221 BOLI 22,143 21,988 23,942 Accrued interest receivable 7,397 7,435 7,127 Goodwill 15,131 15,131 15,131 CDI 203 237 361 Loan servicing rights, net 641 678 1,051 Operating lease right-of-use assets 2,767 2,856 1,324 Other assets 7,635 5,439 9,331 Total assets$2,046,386 $2,006,127 $1,932,730 Liabilities and shareholders’ equity Deposits: Non-interest-bearing demand$407,980 $404,300 $407,811 Deposits: Interest-bearing 1,335,230 1,300,182 1,243,019 Total deposits 1,743,210 1,704,482 1,650,830 Operating lease liabilities 2,937 3,015 1,426 FHLB borrowings 20,000 20,000 20,000 Other liabilities and accrued expenses 9,150 10,221 7,950 Total liabilities 1,775,297 1,737,718 1,680,206 Shareholders’ equity Common stock, $.01 par value; 50,000,000 shares authorized; 7,833,643 shares issued and outstanding – March 31, 2026
7,879,828 shares issued and outstanding – December 31, 2025
7,903,489 shares issued and outstanding – March 31, 2025 23,982 26,025 28,028 Retained earnings 247,457 242,617 225,166 Accumulated other comprehensive loss (350) (233) (670) Total shareholders’ equity 271,089 268,409 252,524 Total liabilities and shareholders’ equity$2,046,386 $2,006,127 $1,932,730
2026 Dec. 31,
2025 March 31,
2025Return on average assets (a) 1.43% 1.60% 1.43%Return on average equity (a) 10.72% 12.33% 10.95%Net interest margin (a) 3.81% 3.85% 3.79%Efficiency ratio 55.38% 52.65% 56.25% Six Months Ended March 31,
2026 March 31,
2025Return on average assets (a) 1.52% 1.42%Return on average equity (a) 11.53% 10.99%Net interest margin (a) 3.83% 3.71%Efficiency ratio 53.99% 56.26% At or for the Period Indicated March 31,
2026 Dec. 31,
2025 March 31,
2025ASSET QUALITY RATIOS AND DATA: ($ in thousands) Non-accrual loans$9,405 $4,284 $2,327 Loans past due 90 days and still accruing -- -- -- Non-performing investment securities 30 32 41 OREO and other repossessed assets 221 221 221 Total non-performing assets (b)$9,656 $4,537 $2,589 Non-performing assets to total assets (b) 0.47% 0.23% 0.13%Net charge-offs (recoveries) during quarter$-- $(18) $-- Allowance for credit losses - loans to non-accrual loans 198% 423% 753%Allowance for credit losses - loans to loans receivable (c) 1.27% 1.23% 1.22% CAPITAL RATIOS: Tier 1 leverage capital 12.82% 12.61% 12.55%Tier 1 risk-based capital 20.29% 20.01% 19.04%Common equity Tier 1 risk-based capital 20.29% 20.01% 19.04%Total risk-based capital 21.55% 21.26% 20.29%Tangible common equity to tangible assets (non-GAAP) 12.59% 12.71% 12.36% BOOK VALUES: Book value per common share$34.61 $34.06 $31.95 Tangible book value per common share (d) 32.65 32.11 29.99
________________________________________________
(a) Annualized
(b) Non-performing assets include non-accrual loans, loans past due 90 days and still accruing, non-performing investment securities and OREO and other repossessed assets.
(c) Does not include loans held for sale and is before the allowance for credit losses.
(d) Tangible common equity divided by common shares outstanding (non-GAAP).
AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
($ in thousands)
(unaudited)
March 31, 2026
Dec. 31, 2025
March 31, 2025
Amount Rate Amount Rate Amount Rate Assets Loans receivable and loans held for sale$1,474,095 5.99% $1,478,563 6.08% $1,435,999 5.90%Investment securities and FHLB stock (1) 213,089 3.48 218,584 3.53 232,532 3.64 Interest-earning deposits in banks and CDs 255,300 3.71 256,379 3.99 172,175 4.44 Total interest-earning assets 1,942,484 5.42 1,953,526 5.52 1,840,706 5.48 Other assets 78,917 79,280 77,563 Total assets$2,021,401 $2,032,806 $1,918,269 Liabilities and Shareholders’ Equity NOW checking accounts$364,926 1.53% $368,557 1.61% $328,115 1.32%Money market accounts 312,593 2.70 304,183 2.86 306,137 3.18 Savings accounts 197,031 0.28 198,384 0.30 206,054 0.28 Certificates of deposit accounts 399,665 3.56 401,821 3.73 343,945 3.82 Brokered CDs 38,176 4.29 39,282 4.31 50,104 4.85 Total interest-bearing deposits 1,312,391 2.32 1,312,227 2.43 1,234,355 2.45 Borrowings 20,000 4.03 20,000 4.03 20,000 4.04 Total interest-bearing liabilities 1,332,391 2.35 1,332,227 2.46 1,254,355 2.47 Non-interest-bearing demand deposits 407,936 420,521 403,738 Other liabilities 11,373 15,640 10,064 Shareholders’ equity 269,701 264,418 250,112 Total liabilities and shareholders’ equity$2,021,401 $2,032,806 $1,918,269 Interest rate spread 3.07% 3.06% 3.01%Net interest margin (2) 3.81% 3.85% 3.79%Average interest-earning assets to average interest-bearing liabilities 145.79% 146.64% 146.75%
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income / average interest-earning assets
March 31, 2026
March 31, 2025
Amount
Rate Amount Rate Assets Loans receivable and loans held for sale$1,476,356 6.04% $1,437,081 5.85%Investment securities and FHLB stock (1) 215,866 3.50 239,966 3.60 Interest-earning deposits in banks and CDs 255,847 3.85 169,444 4.60 Total interest-earning assets 1,948,069 5.47 1,846,491 5.44 Other assets 79,097 76,535 Total assets$2,027,166 $1,923,026 Liabilities and Shareholders’ Equity NOW checking accounts$366,761 1.57% $328,287 1.35%Money market accounts 308,342 2.78 315,381 3.31 Savings accounts 197,715 0.29 205,849 0.28 Certificates of deposit accounts 400,643 3.65 337,798 3.95 Brokered CDs 38,847 4.29 48,239 4.91 Total interest-bearing deposits 1,312,308 2.38 1,235,554 2.52 Borrowings 20,000 4.03 20,000 4.02 Total interest-bearing liabilities 1,332,308 2.40 1,255,554 2.55 Non-interest-bearing demand deposits 415,309 409,000 Other liabilities 12,519 10,107 Shareholders’ equity 267,030 248,365 Total liabilities and shareholders’ equity$2,027,166 $1,923,026 Interest rate spread 3.07% 2.89%Net interest margin (2) 3.83% 3.71%Average interest-earning assets to average interest-bearing liabilities 146.22% 147.07%
_____________________________________
(1) Includes other investments
(2) Net interest margin = annualized net interest income /
average interest-earning assets
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. Timberland believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.
Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Timberland provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders’ equity less goodwill and CDI. In addition, tangible assets equal total assets less goodwill and CDI.
The following table provides a reconciliation of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP) and ending total assets (GAAP) to ending tangible assets (non-GAAP).
($ in thousands)March 31, 2026 Dec. 31, 2025 March 31, 2025 Shareholders’ equity$271,089 $268,409 $252,524 Less goodwill and CDI (15,334) (15,368) (15,492)Tangible common equity$255,755 $253,041 $237,032 Total assets$2,046,386 $2,006,127 $1,932,730 Less goodwill and CDI (15,334) (15,368) (15,492)Tangible assets$2,031,052 $1,990,759 $1,917,238