Quarterly EPS Increases 19% to $1.07 from $0.90 for Preceding Quarter
Quarterly Net Interest Margin Increases to 3.82%
Quarterly Return on Average Assets Increases to 1.68%
Quarterly Return on Average Equity Increases to 12.97%
Announces an 8% Increase in the Quarterly Cash Dividend
Announces Plans to Open a Branch in University Place
HOQUIAM, Wash., Oct. 30, 2025 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) ("Timberland" or "the Company"), the holding company for Timberland Bank (the "Bank"), today reported that net income increased 20% to $29.16 million for the fiscal year ended September 30, 2025, from $24.28 million for the fiscal year ended September 30, 2024. Earnings per diluted common share ("EPS") increased 22% to $3.67 for the 2025 fiscal year from $3.01 for the 2024 fiscal year.
Timberland also reported net income of $8.45 million, or $1.07 per diluted common share for the quarter ended September 30, 2025. This compares to net income of $7.10 million, or $0.90 per diluted common share for the preceding quarter, and $6.36 million, or $0.79 per diluted common share, for the comparable quarter one year ago.
"We closed our fiscal year with record results, reflecting the hard work and dedication of our employees in serving our customers, communities and shareholders," stated Dean Brydon, Chief Executive Officer. "For the full year, net income and earnings per share reached new highs with year-over-year gains across every major profitability measure, while tangible book value per share continued its steady climb. In the fourth quarter, net income increased 33% from a year ago and 19% from the prior quarter, with earnings per share up 35% and 19%, respectively. We also recorded a $1.04 million bank owned life insurance benefit claim during the quarter, which contributed to net income; however, even excluding this item, all comparisons to prior periods remain favorable. These strong quarterly results were driven by continued expansion in our net interest margin, balance sheet growth, and higher non-interest income."
"As a result of Timberland's strong earnings and capital position, our Board of Directors announced an 8% increase to the quarterly cash dividend to shareholders to $0.28 per share, payable on November 28, 2025, to shareholders of record on November 14, 2025," stated Jonathan Fischer, President and Chief Operating Officer. "This represents the 52nd consecutive quarter Timberland will have paid a cash dividend and demonstrates the Board's continued confidence in our long-term outlook."
"Our net interest margin strengthened again in the fourth fiscal quarter, increasing to 3.82%," said Marci Basich, Chief Financial Officer. "This marks a two-basis point increase from the prior quarter and a 24-basis point improvement year-over- year, underscoring the benefits of our disciplined asset-liability management and the improvement in earning asset yields. Total deposits increased by $47 million, or 3%, with more than half of that growth driven by higher non-interest-bearing balances. This continued deposit momentum reflects the depth of our customer relationships and the success of our funding strategies. We remain committed to maintaining a balanced funding profile and sustaining stable margin performance in the periods ahead."
"Timberland delivered solid balance sheet growth during the fourth fiscal quarter, highlighted by total assets increasing 3% and surpassing the $2 billion dollar mark for the first time in our Company's history," Brydon continued. "Credit quality remains an area we continue to monitor closely. Overall, performance across the portfolio remains solid, with no net charge-offs for the quarter. While our non-performing assets ("NPA") ratio increased modestly to 0.23% at September 30, 2025 from 0.21% in the prior quarter, we also saw total delinquencies decline during the period. We remain confident in the overall health of our loan portfolio and our disciplined approach to credit risk management."
"We are excited to announce the opening of a new full-service branch in University Place later this quarter, marking an important milestone in our growth strategy," said Fischer. "This expansion positions us to serve a growing market with strong business potential and deepen our commercial banking relationships in the area. We are enthusiastic about the opportunities ahead to welcome new clients, strengthen existing partnerships, and further advance our commitment to supporting the region's economic growth," stated Matt DeBord, Chief Lending Officer.
Earnings and Balance Sheet Highlights (at or for the periods ended September 30, 2025, compared to September 30, 2024, or June 30, 2025):
Earnings Highlights:
EPS increased 19% to $1.07 for the current quarter from $0.90 for the preceding quarter and increased 35% from $0.79 for the comparable quarter one year ago; EPS for the 2025 fiscal year increased 22% to $3.67 from $3.01 for the 2024 fiscal year;
Net income increased 19% to $8.45 million for the current quarter from $7.10 million for the preceding quarter and increased 33% from $6.36 million for the comparable quarter one year ago; Net income increased 20% to $29.16 million for the 2025 fiscal year from $24.28 million for the 2024 fiscal year;
Return on average equity ("ROE") and return on average assets ("ROA") for the current quarter were 12.97% and 1.68%, respectively;
Net interest margin ("NIM") for the current quarter increased to 3.82% from 3.80% for the preceding quarter and 3.58% for the comparable quarter one year ago; and
The efficiency ratio for the current quarter improved to 53.18% from 54.48% for the preceding quarter and 56.79% for the comparable quarter one year ago.
Balance Sheet Highlights:
Total assets reached $2.0 billion with a 3% increase from the prior quarter and a 5% increase year-over-year;
Net loans receivable increased 2% from the prior quarter and increased 3% year-over-year;
Total deposits increased 3% from the prior quarter and increased 4% year-over-year;
Total shareholders' equity increased 2% from the prior quarter and increased 7% year-over-year; 56,562 shares of common stock were repurchased during the current quarter for $1.89 million;
Non-performing assets to total assets ratio was 0.23% at September 30, 2025, compared to 0.21% at June 30, 2025, and 0.20% at September 30, 2024;
Book and tangible book (non-GAAP) values per common share increased to $33.29 and $31.33 respectively, at September 30, 2025; and
Liquidity (both on-balance sheet and off-balance sheet) remained strong at September 30, 2025, with only $20 million in borrowings and additional secured borrowing line capacity of $690 million available through the Federal Home Loan Bank ("FHLB") and the Federal Reserve.
Operating Results
Operating revenue (net interest income before the provision for credit losses plus non-interest income) for the current quarter increased 10% to $22.49 million from $20.50 million for the preceding quarter and increased 15% from $19.48 million for the comparable quarter one year ago. The increase in operating revenue compared to the preceding quarter was primarily due to increases in non-interest income and interest income from loans and interest-bearing deposits in banks, which were partially offset by an increase in total funding costs. The increase in non-interest income was primarily due to a $1.04 million bank owned life insurance ("BOLI") death benefit claim. Operating revenue increased 10% to $82.55 million for the 2025 fiscal year from $75.30 million for the 2024 fiscal year, primarily due to an increase in total interest and dividend income, which was partially offset by an increase in funding costs.
Net interest income increased $773,000, or 4%, to $18.40 million for the current quarter from $17.62 million for the preceding quarter and increased $1.85 million, or 11%, from $16.55 million for the comparable quarter one year ago. The increase in net interest income compared to the preceding quarter was primarily due to a $48.52 million increase in the average balance of total interest-earning assets and, to a lesser extent, a three-basis point increase in the weighted average yield on total interest-earning assets to 5.53% from 5.50%. These increases were partially offset by a $21.64 million increase in the average balance of interest-bearing liabilities and a two-basis point increase in the weighted average cost of interest-bearing liabilities. Timberland's NIM for the current quarter improved to 3.82% from 3.80% for the preceding quarter and 3.58% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately two basis points due to the collection of $102,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $11,000 of the fair value discount on acquired loans. The NIM for the preceding quarter was increased by approximately four basis points due to the collection of $102,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $68,000 of the fair value discount on acquired loans. The NIM for the comparable quarter one year ago was increased by approximately one basis point due to the collection of $20,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $7,000 of the fair value discount on acquired loans.
Net interest income for the 2025 fiscal year increased $6.03 million, or 9%, to $70.20 million from $64.17 million for the 2024 fiscal year, primarily due to a 24-basis point increase in the weighted average yield of total interest-earning assets to 5.48% from 5.24% and a $55.19 million increase in the average balance of total interest-earning assets. These increases to net interest income were partially offset by a $54.78 million increase in the average balance of total interest-bearing liabilities. Timberland's NIM improved to 3.76% for the 2025 fiscal year from 3.54% for the 2024 fiscal year. A $213,000 provision for credit losses on loans was recorded for the quarter ended September 30, 2025. The provision was primarily due to loan portfolio growth and changes in the composition of the loan portfolio. This compares to a $351,000 provision for credit losses on loans for the preceding quarter and a $444,000 provision for credit losses on loans for the comparable quarter one year ago. In addition, a $18,000 provision for credit losses on unfunded commitments and a $10,000 recapture of credit losses on investment securities were recorded for the current quarter.
Non-interest income increased $1.22 million, or 42%, to $4.09 million for the current quarter from $2.88 million for the preceding quarter and increased $1.16 million, or 40%, from $2.93 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter was primarily due to an increase in BOLI net income (from a $1.04 million death benefit claim) and, to a lesser extent, smaller increases in several other categories. Non-interest income for the 2025 fiscal year increased $1.22 million, or 11%, to $12.35 million for the 2025 fiscal year from $11.14 for the 2024 fiscal year, primarily due to a $1.06 million increase in BOLI net earnings and smaller changes in several other categories.
Total operating (non-interest) expenses for the current quarter increased $792,000, or 7%, to $11.96 million from $11.17 million for the preceding quarter and increased $897,000, or 8%, from $11.06 million for the comparable quarter one year ago. The increase in operating expenses compared to the preceding quarter was primarily due to increases in salaries and employee benefits, premises and equipment, technology and communications, professional fees, and smaller increases in several other expense categories. These increases were partially offset by decreases in state and local taxes and smaller decreases in several other expense categories. The efficiency ratio for the current quarter improved to 53.18% from 54.48% for the preceding quarter and 56.79% for the comparable quarter one year ago. For the 2025 fiscal year, operating expenses increased $1.64 million, or 4% to $45.39 million from $43.75 million for the 2024 fiscal year. The efficiency ratio for the 2025 fiscal year improved to 54.98% from 58.09% for the 2024 fiscal year.
The provision for income taxes for the current quarter increased $71,000, or 4%, to $1.86 million from $1.79 million for the preceding quarter, primarily due to higher taxable income. Timberland's effective income tax rate was 18.1% for the quarter ended September 30, 2025, compared to 20.1% for the quarter ended June 30, 2025, and 19.8% for the quarter ended September 30, 2024. The lower effective income tax rate for the current quarter was primarily due to a higher percentage of non-taxable income as a result of the increase in BOLI net earnings. Timberland's effective income tax rate was 19.5% for fiscal year 2025 compared to 20.1% for fiscal year 2024.
Balance Sheet Management
Total assets increased $55.58 million, or 3%, during the quarter to $2.01 billion at September 30, 2025, from $1.96 billion at June 30, 2025, and increased $89.30 million, or 5%, from $1.92 billion one year ago. The increase during the current quarter was primarily due to a $49.80 million increase in cash and cash equivalents and a $22.09 million increase in net loans receivable, which was partially offset by a $14.18 million decrease in investment securities and CDs held for investment.
Liquidity
Timberland has continued to maintain a strong liquidity position, both on-balance sheet and off-balance sheet. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 18.8% of total liabilities at September 30, 2025, compared to 17.0% at June 30, 2025, and 14.7% one year ago. Timberland also had secured borrowing line capacity of $690 million available through the FHLB and the Federal Reserve at September 30, 2025. With a strong and diversified deposit base, only 20% of Timberland's deposits were uninsured or uncollateralized at September 30, 2025. (Note: This calculation excludes public deposits that are fully collateralized.)
Loans
Net loans receivable increased $22.09 million, or 2%, during the quarter to $1.46 billion at September 30, 2025, from $1.44 billion at June 30, 2025. This increase was primarily due to a $21.21 million increase in construction loans, a $7.35 million increase in multi-family loans, a $2.99 million increase in home equity loans, a $2.77 million increase in commercial real estate loans and smaller increases in several other loan categories. These increases were partially offset by a $12.02 million increase in the undisbursed portion of construction loans and smaller decreases in several other loan categories.
Loan Portfolio($ in thousands)
September 30, 2025
June 30, 2025
September 30, 2024
Amount
Percent
Amount
Percent
Amount
Percent
Mortgage loans:
One- to four-family (a)
$
317,691
20%
$
317,574
21%
$
299,123
20%
Multi-family
207,767
13
200,418
13
177,350
11
Commercial
610,692
39
607,924
40
599,219
40
Construction - custom and
owner/builder
130,341
9
128,900
8
132,101
9
Construction - speculative
one-to four-family
10,745
1
9,595
1
11,495
1
Construction - commercial
21,818
1
15,992
1
29,463
2
Construction - multi-family
45,660
3
32,731
2
28,401
2
Construction - land
development
15,324
1
15,461
1
17,741
1
Land
35,952
2
36,193
2
29,366
2
Total mortgage loans
1,395,990
89
1,364,788
89
1,324,259
88
Consumer loans:
Home equity and second
mortgage
50,479
3
47,511
3
47,913
3
Other
2,034
--
2,176
--
3,129
--
Total consumer loans
52,513
3
49,687
3
51,042
3
Commercial loans:
Commercial business
Loans
126,937
8
126,497
8
138,743
9
SBA PPP loans
58
--
101
--
260
--
Total commercial loans
126,995
8
126,598
8
139,003
9
Total loans
1,575,498
100%
1,541,073
100%
1,514,304
100%
Less:
Undisbursed portion of
construction loans in
process
(88,289
)
(76,272
)
(69,878
)
Deferred loan origination
fees
(5,528
)
(5,427
)
(5,425
)
Allowance for credit losses
(18,091
)
(17,878
)
(17,478
)
Total loans receivable, net
$
1,463,590
$
1,441,496
$
1,421,523
_______________________(a) Does not include one- to four-family loans held for sale totaling $1,127, $1,763, and $0 at September 30, 2025, June 30, 2025, and September 30, 2024, respectively.The following table provides a breakdown of commercial real estate ("CRE") mortgage loans by collateral type as of September 30, 2025:
CRE Loan Portfolio Breakdown by Collateral($ in thousands)
Collateral Type
Balance
Percent of CRE Portfolio
Percent of Total Loan Portfolio
Average Balance Per Loan
Non-Accrual
Industrial warehouses
$
129,815
21%
8%
$
1,311
$
159
Medical/dental offices
81,831
13
5
1,240
--
Office buildings
67,840
11
4
817
--
Other retail buildings
54,497
9
3
599
--
Mini-storage
38,291
6
2
1,532
--
Hotel/motel
31,345
5
2
2,612
--
Restaurants
28,703
5
2
586
--
Gas stations/conv. stores
25,597
4
2
1,024
--
Churches
14,410
3
1
901
--
Nursing homes
13,456
2
1
2,243
--
Shopping centers
10,436
2
1
1,739
--
Mobile home parks
9,174
2
1
417
--
Additional CRE
105,297
17
7
774
--
Total CRE
$
610,692
100%
39%
$
960
$
159
Timberland originated $100.09 million in loans during the quarter ended September 30, 2025, compared to $81.99 million for the preceding quarter and $48.82 million for the comparable quarter one year ago. Timberland continues to originate fixed-rate one- to four-family mortgage loans, a portion of which are sold into the secondary market for asset-liability management purposes and to generate non-interest income. During the current quarter, fixed-rate one- to four-family mortgage loans totaling $9.01 million were sold compared to $6.11 million for the preceding quarter and $5.62 million for the comparable quarter one year ago.
Investment Securities
Timberland's investment securities and CDs held for investment decreased $14.18 million, or 6%, to $223.18 million at September 30, 2025, from $237.36 million at June 30, 2025. The decrease was primarily due to the maturities of U.S. Treasury Securities and scheduled amortization, and was partially offset by the purchase of additional U.S. government agency mortgaged-backed investment securities and U.S. Treasury investment securities.
Deposits
Total deposits increased $47.16 million, or 3%, during the quarter to $1.72 billion at September 30, 2025, from $1.67 billion at June 30, 2025. The quarter's increase consisted of a $25.22 million increase in certificate of deposit account balances, a $24.46 million increase in non-interest deposit account balances and a $10.68 million increase in NOW checking account balances. These increases were partially offset by a $9.06 million decrease in money market account balances and a $4.15 million decrease in savings account balances.
Deposit Breakdown($ in thousands)
September 30, 2025
June 30, 2025
September 30, 2024
Amount
Percent
Amount
Percent
Amount
Percent
Non-interest-bearing demand
$
430,685
25%
$
406,222
24%
$
413,116
25%
NOW checking
345,599
20
334,922
20
333,329
20
Savings
201,678
12
205,829
12
205,993
13
Money market
296,152
17
305,207
18
326,922
20
Certificates of deposit under $250
256,597
15
244,063
15
205,970
12
Certificates of deposit $250 and over
142,813
8
126,254
8
113,579
7
Certificates of deposit, brokered
43,111
3
46,980
3
48,759
3
Total deposits
$
1,716,635
100%
$
1,669,477
100%
$
1,647,668
100%
Borrowings
Total borrowings were $20.00 million at both September 30, 2025 and June 30, 2025. At September 30, 2025, the weighted average rate on the borrowings was 3.97%.
Shareholders' Equity and Capital Ratios
Total shareholders' equity increased $5.95 million, or 2%, to $262.61 million at September 30, 2025, from $256.66 million at June 30, 2025, and increased $17.20 million, or 7%, from $245.41 million at September 30, 2024. The increase in shareholders' equity during the quarter was primarily due to net income of $8.45 million, proceeds from stock option exercises of $847,000, and a $477,000 recovery of accumulated other comprehensive loss. These increases to shareholders' equity were partially offset by the payment of $2.05 million in dividends to shareholders and the repurchase of 56,562 shares of common stock for $1.89 million (an average price of $33.34 per share). At September 30, 2025, Timberland had 337,280 shares available to be repurchased in accordance with the terms of its existing stock repurchase plan.
Timberland remains well capitalized with a total risk-based capital ratio of 20.67%, a Tier 1 leverage capital ratio of 12.59%, a tangible common equity to tangible assets ratio (non-GAAP) of 12.38%, and a shareholders' equity to total assets ratio of 13.05% at September 30, 2025. Timberland's held to maturity investment securities were $136.86 million at September 30, 2025, with a net unrealized loss of $4.56 million (pre-tax). Although not permitted by U.S. Generally Accepted Accounting Principles ("GAAP"), including these unrealized losses in accumulated other comprehensive income (loss) ("AOCI") would result in a ratio of shareholders' equity to total assets of 12.89%, compared to 13.05%, as reported.
Asset Quality Timberland's non-performing assets to total assets ratio was 0.23% at September 30, 2025, compared to 0.21% at June 30, 2025, and 0.20% at September 30, 2024. Net charge-offs totaled less than $1,000 for the current quarter compared to net recoveries of $1,000 for the preceding quarter and net charge-offs of $12,000 for the comparable quarter one year ago. During the current quarter, provisions for credit losses of $213,000 on loans and $18,000 unfunded commitments were made, which was partially offset by a $10,000 recapture of credit losses on investment securities. The allowance for credit losses ("ACL") for loans as a percentage of loans receivable was 1.22% at September 30, 2025, compared to 1.23% at June 30, 2025, and 1.21% one year ago.
Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $515,000 or 8%, to $5.66 million at September 30, 2025, from $6.18 million at June 30, 2025, and increased $1.18 million, or 26%, from $4.49 million at September 30, 2024. Non-accrual loans increased $564,000, or 15%, to $4.41 million at September 30, 2025 from $3.84 million at June 30, 2025, and increased $522,000, or 13%, from $3.89 million at September 30, 2024. The quarterly increase in non-accrual loans was primarily due to one single-family construction loan being placed on non-accrual status. Loans graded "Substandard" totaled $32.80 million (or 2% of total loans receivable) at September 30, 2025. (Note: Subsequent to September 30, 2025, the Bank's largest "Substandard" loan, an $11.55 million land development loan, paid off in full.)
Non-Accrual Loans($ in thousands)
September 30, 2025
June 30, 2025
September 30, 2024
Amount
Quantity
Amount
Quantity
Amount
Quantity
Mortgage loans:
One- to four-family
$
1,781
1
$
1,781
1
$
49
1
Commercial
159
1
161
2
1,158
6
Construction, custom and
owner/builder
553
1
--
--
--
--
Total mortgage loans
2,493
3
1,942
3
1,207
7
Consumer loans:
Home equity and second
mortgage
602
4
575
3
618
3
Other
22
1
--
--
--
--
Total consumer loans
624
4
575
3
618
3
Commercial business loans
1,290
9
1,326
9
2,060
8
Total loans
$
4,407
17
$
3,843
15
$
3,885
18
Timberland had two properties classified as other real estate owned ("OREO") at September 30, 2025:
September 30, 2025
June 30, 2025
September 30, 2024
Amount
Quantity
Amount
Quantity
Amount
Quantity
Other real estate owned:
Commercial
$
221
1
$
221
1
$
--
--
Land
--
1
--
1
--
1
Total mortgage loans
$
221
2
$
221
2
$
--
1
About Timberland Bancorp, Inc. Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank. The Bank opened for business in 1915 and primarily serves consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties, Washington with a full range of lending and deposit services through its 23 branches (including its main office in Hoquiam).
DisclaimerCertain 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 ...
