Timberland Bancorp Reports Second Fiscal Quarter Net Income of $6.76 Million

Quarterly EPS Increases 21% to $0.85 from $0.70 One Year AgoQuarterly Net Interest Margin Increases to 3.79%Quarterly Return on Average Assets of 1.43%Quarterly Return on Average Equity of 10.95%Announces a 4% Increase in the Quarterly Cash Dividend HOQUIAM, Wash., April 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 $6.76 million, or $0.85 per diluted common share for the quarter ended March 31, 2025. This compares to net income of $6.86 million, or $0.86 per diluted common share for the preceding quarter and $5.71 million, or $0.70 per diluted common share, for the comparable quarter one year ago. For the first six months of fiscal 2025, Timberland’s net income increased 13% to $13.62 million, or $1.71 per diluted common share, from $12.00 million, or $1.47 per diluted common share for the first six months of fiscal 2024. “Our second fiscal quarter operating results were strong, highlighted by net interest margin expansion and modest balance sheet growth,” stated Dean Brydon, Chief Executive Officer. “Second fiscal quarter net income and earnings per share increased 18% and 21%, respectively, compared to the second fiscal quarter a year ago, reflecting an improvement in our net interest margin. Compared to the prior quarter, net income and earnings per share decreased 2% and 1%, respectively, as the increase in net interest income was offset by a higher provision for credit losses and a modest increase in expenses. All profitability metrics improved compared to the year ago quarter, and tangible book value per share (non-GAAP) continued to trend upward.” “As a result of Timberland’s solid earnings and strong capital position, our Board of Directors announced a 4% increase to the quarterly cash dividend to shareholders to $0.26 per share, payable on May 23, 2025, to shareholders of record on May 9, 2025,” stated Jonathan Fischer, President and Chief Operating Officer. “This represents the 50th consecutive quarter Timberland will have paid a cash dividend.” “During the second fiscal quarter our net interest margin continued to improve, expanding 15 basis points to 3.79%, compared to the preceding quarter,” said Marci Basich, Chief Financial Officer. “The improvement was primarily driven by a reduction in funding costs as the weighted average cost of interest-bearing liabilities decreased by 15 basis points during the quarter. Total deposits increased $20 million, or 1% during the quarter, due to increases in checking and certificates of deposit account balances.” “The loan portfolio continues to grow at a moderate pace, increasing 1% from the prior quarter and 4% year-over year,” Brydon continued. “We continue to monitor credit quality closely and saw improvements in several metrics during the quarter. The non-performing asset ratio improved to just 13 basis points, non-accrual loans decreased by 15%, and net charge-offs were less than $1,000 during the quarter. However, we experienced an increase in loans graded “Substandard”, as two loans related to one borrowing relationship were downgraded. Both of the loans are performing and Timberland remains well collateralized based on recent appraisals, but the loans were downgraded primarily because the borrower is experiencing a legal issue stemming from an unrelated project. We view this as an isolated event, and remain encouraged by the overall strength of our loan portfolio.” Earnings and Balance Sheet Highlights (at or for the periods ended March 31, 2025, compared to March 31, 2024, or December 31, 2024): Earnings Highlights: Earnings per diluted common share (“EPS”) decreased 1% to $0.85 for the current quarter from $0.86 for the preceding quarter and increased 21% from $0.70 for the comparable quarter one year ago; EPS increased 16% to $1.71 for the first six months of fiscal 2025 from $1.47 for the first six months of fiscal 2024;Net income decreased 2% to $6.76 million for the current quarter from $6.86 million for the preceding quarter and increased 18% from $5.71 million for the comparable quarter one year ago; Net income increased 13% to $13.62 million for the first six months of fiscal 2025 from $12.00 million for the first six months of fiscal 2024;Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were 10.95% and 1.43%, respectively;Net interest margin (“NIM”) for the current quarter expanded to 3.79% from 3.64% for the preceding quarter and 3.48% for the comparable quarter one year ago; andThe efficiency ratio for the current quarter improved to 56.25% from 56.27% for the preceding quarter and 60.22% for the comparable quarter one year ago. Balance Sheet Highlights: Total assets increased 1% from the prior quarter and increased 1% year-over-year;Net loans receivable increased 1% from the prior quarter and increased 4% year-over-year;Total deposits increased 1% from the prior quarter and increased 1% year-over-year;Total shareholders’ equity increased 1% from the prior quarter and increased 6% year-over-year; 61,764 shares of common stock were repurchased during the current quarter for $1.91 million;Non-performing assets to total assets ratio improved to 0.13% at March 31, 2025 compared to 0.16% at December 31, 2024 and 0.19% at March 31, 2024;Book and tangible book (non-GAAP) values per common share increased to $31.95 and $29.99, respectively, at March 31, 2025; andLiquidity (both on-balance sheet and off-balance sheet) remained strong at March 31, 2025 with only $20 million in borrowings and additional secured borrowing line capacity of $675 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 1% to $19.90 million from $19.67 million for the preceding quarter and increased 9% from $18.25 million for the comparable quarter one year ago. The increase in operating revenue compared to the preceding quarter was primarily due to a decrease in funding costs, which was partially offset by a decrease in total interest and dividend income. Operating revenue increased 7%, to $39.57 million for the first six months of fiscal 2025 from $37.05 million for the first six months of fiscal 2024, primarily due to increases in interest income from loans and interest-bearing deposits in banks, which was partially offset by an increase in funding costs and a decrease in interest income on investment securities. Net interest income increased $243,000, or 1%, to $17.21 million for the current quarter from $16.97 million for the preceding quarter and increased $1.58 million, or 10%, from $15.64 million for the comparable quarter one year ago. The increase in net interest income compared to the preceding quarter was primarily due to a 15 basis point decrease in the weighted average cost of total interest-bearing liabilities to 2.47% from 2.62% and a six basis point increase in the weighted average yield on total interest-earning assets to 5.48% from 5.42%. These increases to net interest income were partially offset by an $11.44 million decrease in the average balance of total interest-earning assets. Timberland’s NIM for the current quarter expanded to 3.79% from 3.64% for the preceding quarter and 3.48% for the comparable quarter one year ago. The NIM for the current 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 preceding quarter was increased by approximately three basis points due to the collection of $115,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $8,000 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 $90,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $10,000 of the fair value discount on acquired loans. Net interest income for the first six months of fiscal 2025 increased $2.54 million, or 8%, to $34.18 million from $31.64 million for the first six months of fiscal 2024, primarily due to a $55.11 million increase in the average balance of total interest-earning assets and a 34 basis point increase in the weighted average yield of total interest-earning assets to 5.44% from 5.10%. These increases to net interest income were partially offset by an 18 basis point increase in the weighted average cost of interest-bearing liabilities to 2.55% from 2.37%. Timberland’s NIM expanded to 3.71% for the first six months of fiscal 2025 from 3.53% for the first six months of fiscal 2024. A $237,000 provision for credit losses on loans was recorded for the quarter ended March 31, 2025. The provision was primarily due to loan portfolio growth and changes in the composition of the loan portfolio. This compares to a $52,000 provision for credit losses on loans for the preceding quarter and a $166,000 provision for credit losses on loans for the comparable quarter one year ago. In addition, a $14,000 provision for credit losses on unfunded commitments and a $5,000 recapture of credit losses on investment securities were recorded for the current quarter. Non-interest income decreased $10,000, (less than 1%) to $2.69 million for the current quarter from $2.70 million for the preceding quarter and increased $72,000, or 3%, from $2.62 million for the comparable quarter one year ago. The decrease in non-interest income compared to the preceding quarter was primarily due to a decrease in ATM and debit card interchange transaction fees and smaller changes in several other categories, which was partially offset by an increase in gain on sales of loans and smaller changes in several other categories. Fiscal year-to-date non-interest income decreased by 1%, to $5.38 million from $5.41 million for the first six months of fiscal 2024. Total operating (non-interest) expenses for the current quarter increased $127,000, or 1%, to $11.19 million from $11.07 million for the preceding quarter and increased $203,000, or 2%, from $10.99 million for the comparable quarter one year ago. The increase in operating expenses compared to the preceding quarter was primarily due to increases in premises and equipment expenses, professional fees and smaller increases in several other expense categories. These increases were partially offset by decreases in salaries and employee benefits and smaller decreases in several other expense categories. The efficiency ratio for the current quarter was 56.25% compared to 56.27% for the preceding quarter and 60.22% for the comparable quarter one year ago. Fiscal year-to-date operating expenses increased 3% to $22.26 million from $21.62 million for the first six months of fiscal 2024. The provision for income taxes for the current quarter decreased $8,000, or less than 1%, to $1.71 million from $1.71 million for the preceding quarter, primarily due to lower taxable income. Timberland’s effective income tax rate was 20.2% for the quarter ended March 31, 2025, compared to 20.0% for the quarter ended December 31, 2024 and 20.5% for the quarter ended March 31, 2024. Timberland’s effective income tax rate was 20.1% for the first six months of fiscal 2025 and fiscal 2024. Balance Sheet Management Total assets increased $23.25 million, or 1%, during the quarter to $1.93 billion at March 31, 2025 from $1.91 billion at December 31, 2024 and increased $25.50 million, or 1%, from $1.91 billion one year ago. The increase during the current quarter was primarily due to a $27.14 million increase in total cash and cash equivalents, an $8.26 million increase in net loans receivable and smaller increases in several other categories. These increases were partially offset by a $7.42 million decrease in investment securities and smaller decreases 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 16.9% of total liabilities at March 31, 2025, compared to 15.0% at December 31, 2024, and 15.2% one year ago. Timberland had secured borrowing line capacity of $675 million available through the FHLB and the Federal Reserve at March 31, 2025. With a strong and diversified deposit base, only 18% of Timberland’s deposits were uninsured or uncollateralized at March 31, 2025. (Note: This calculation excludes public deposits that are fully collateralized.) Loans Net loans receivable increased $8.26 million, or 1%, during the quarter to $1.42 billion at March 31, 2025 from $1.41 billion at December 31, 2024. This increase was primarily due to a $10.31 million decrease in the undisbursed portion of construction loans in process, an $8.98 million increase in one- to four-family loans and a $5.19 million increase in commercial real estate loans. These increases were partially offset by a $12.57 million decrease in construction loans and smaller decreases in several other loan categories. Loan Portfolio($ in thousands) March 31, 2025 December 31, 2024 March 31, 2024 Amount Percent Amount Percent Amount PercentMortgage loans: One- to four-family (a)$315,421 21% $306,443 20% $276,433 19%Multi-family 178,590 12 177,861 12 167,275 12Commercial 602,248 40 597,054 39 577,373 40Construction - custom and owner/builder 114,401 7 124,104 8 122,988 8Construction - speculative one-to four-family 9,791 1 8,887 1 16,407 1Construction - commercial 22,352 1 22,841 2 32,318 2Construction - multi-family 46,602 3 48,940 3 36,795 3Construction - land development 15,032 1 15,977 1 16,051 1Land 32,301 2 30,538 2 31,821 2Total mortgage loans 1,336,738 88 1,332,645 88 1,277,461 88 Consumer loans: Home equity and second mortgage 47,458 3 48,851 3 42,357 3Other 2,375 -- 2,889 -- 2,925 --Total consumer loans 49,833 3 51,740 3 45,282 3 Commercial loans: Commercial business loans 131,243 9 135,312 9 135,505 9SBA PPP loans 156 -- 204 -- 367 --Total commercial loans 131,399 9 135,516 9 135,872 9Total loans 1,517,970 100% 1,519,901 100% 1,458,615 100%Less: Undisbursed portion of construction loans in process (75,042) (85,350) (77,502) Deferred loan origination fees (5,329) (5,444) (5,179) Allowance for credit losses (17,525) (17,288) (16,818) Total loans receivable, net$1,420,074 $1,411,819 $1,359,116 _______________________(a) Does not include one- to four-family loans held for sale totaling $1,151, $411, and $1,311 at March 31, 2025, December 31, 2024, and March 31, 2024, respectively. The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of March 31, 2025: CRE Loan Portfolio Breakdown by Collateral($ in thousands) Collateral Type Balance Percent of CRE Portfolio Percent of Total Loan Portfolio Average Balance Per Loan Non-AccrualIndustrial warehouse $127,898 21% 8% $1,255 $163Medical/dental offices 84,013 14 5 1,254 --Office buildings 68,239 11 5 784 --Other retail buildings 53,121 9 3 553 --Mini-storage 32,596 5 2 1,358 --Hotel/motel 31,967 5 2 2,664 --Restaurants 27,374 5 2 582 161Gas stations/conv. stores 24,622 4 2 1,026 --Churches 14,823 3 1 988 --Nursing homes 13,606 2 1 2,268 --Shopping centers 10,578 2 1 1,762 --Mobile home parks 8,968 2 1 448 --Additional CRE 104,443 17 7 762 --Total CRE $602,248 100% 40% $938 $324 Timberland originated $56.76 million in loans during the quarter ended March 31, 2025, compared to $72.07 million for the preceding quarter and $39.37 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 $5.17 million were sold compared to $2.31 million for the preceding quarter and $2.28 million for the comparable quarter one year ago. Investment Securities Timberland’s investment securities and CDs held for investment decreased $6.17 million, or 3%, to $235.33 million at March 31, 2025, from $241.50 million at December 31, 2024. The decrease was primarily due to maturities of U.S. Treasury investment securities (classified as held to maturity) and scheduled amortization. Partially offsetting these decreases, was the purchase of additional U.S. government agency mortgage-backed investment securities and U.S. Treasury investment securities, all of which were classified as available for sale. Deposits Total deposits increased $20.41 million, or 1%, during the quarter to $1.65 billion at March 31, 2025, from $1.63 billion at December 31, 2024. The quarter’s increase consisted of a $15.45 million increase in certificates of deposit account balances, a $9.91 million increase in NOW checking account balances, a $4.90 million increase in non-interest bearing account balances, and a $1.01 million increase in savings account balances. These decreases were partially offset by a $10.86 million decrease in money market account balances. Deposit Breakdown($ in thousands) March 31, 2025 December 31, 2024 March 31, 2024 Amount Percent Amount Percent Amount PercentNon-interest-bearing demand$407,811 25% $402,911 25% $424,906 26%NOW checking 333,325 20 323,412 20 336,621 20Savings 207,857 13 206,845 13 211,085 13Money market 300,552 18 311,413 19 311,994 19Certificates of deposit under $250 227,137 14 212,764 13 190,762 12Certificates of deposit $250 and over 124,009 7 122,997 7 118,698 7Certificates of deposit – brokered 50,139 3 50,074 3 44,488 3Total deposits$1,650,830 100% $1,630,416 100% $1,638,554 100% Borrowings Total borrowings were $20.00 million at both March 31, 2025 and December 31, 2024. At March 31, 2025, the weighted average rate on the borrowings was 3.97%. Shareholders’ Equity and Capital Ratios Total shareholders’ equity increased $3.32 million, or 1%, to $252.52 million at March 31, 2025, from $249.20 million at December 31, 2024, and increased $13.84 million, or 6%, from $238.68 million at March 31, 2024. The quarter’s increase in shareholders’ equity was primarily due to net income of $6.76 million, which was partially offset by the payment of $1.99 million in dividends to shareholders and the repurchase of 61,764 shares of common stock for $1.91 million (an average price of $30.85 per share). There were 65,995 shares available to be repurchased in accordance with the terms of its existing stock repurchase plan at March 31, 2025. Timberland remains well capitalized with a total risk-based capital ratio of 20.29%, a Tier 1 leverage capital ratio of 12.55%, a tangible common equity to tangible assets ratio (non-GAAP) of 12.36%, and a shareholders’ equity to total assets ratio of 13.07% at March 31, 2025. Timberland’s held to maturity investment securities were $140.95 million at March 31, 2025, with a net unrealized loss of $6.62 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 12.83%, compared to 13.07%, as reported. Asset Quality Timberland’s non-performing assets to total assets ratio improved to 0.13% at March 31, 2025, compared to 0.16% at December 31, 2024 and 0.19% at March 31, 2024. Net charge-offs totaled less than $1,000 for the current quarter compared to net charge-offs of $242,000 for the preceding quarter and net charge-offs of $3,000 for the comparable quarter one year ago. During the current quarter, provisions for credit losses of $237,000 on loans and $14,000 unfunded commitments were made, which was partially offset by a $5,000 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 March 31, 2025, compared to 1.21% at December 31, 2024 and 1.22% one year ago. Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $697,000 or 17%, to $3.32 million at March 31, 2025, from $4.02 million at December 31, 2024 and decreased $879,000, or 21%, from $4.20 million at March 31, 2024. Non-accrual loans decreased $406,000, or 15%, to $2.33 million at March 31, 2025 from $2.73 million at December 31, 2024 and decreased $1.28 million, or 35%, from $3.61 million at March 31, 2024. The quarterly decrease in non-accrual loans was primarily due to decreases in commercial business loans and commercial real estate loans on non-accrual status. Loans graded “Substandard”, however, increased to $23.51 million at March 31, 2025 from $2.12 million at December 31, 2024 and $8.42 million at March 31, 2024. The increase in loans graded “Substandard” was primarily a result of two loans (totaling $21.30 million) to one borrowing relationship being downgraded during the March 31, 2025 quarter. Both of these loans are performing and Timberland remains well collateralized (based on recent appraisals), but the loans were downgraded primarily because the borrower is experiencing a legal issue stemming from an unrelated project. Non-Accrual Loans($ in thousands) March 31, 2025 December 31, 2024 March 31, 2024 Amount Quantity Amount Quantity Amount QuantityMortgage loans: One- to four-family$47 1 $47 1 $380 3Commercial 324 3 698 5 1,149 3Construction – custom and owner/builder -- -- -- -- 152 1Total mortgage loans 371 4 745 6 1,681 7 Consumer loans: Home equity and second mortgage 575 3 587 3 165 1Other -- -- -- -- -- --Total consumer loans 575 3 587 3 165 1 Commercial business loans 1,381 11 1,401 11 1,759 6Total loans$2,327 18 $2,733 20 $3,605 14 Timberland had two properties classified as other real estate owned (“OREO”) at March 31, 2025: March 31, 2025 December 31, 2024 March 31, 2024 Amount Quantity Amount Quantity Amount QuantityOther real estate owned: Commercial$221 1 $221 1 $-- --Land -- 1 -- 1 -- 1Total 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 SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOMEThree Months Ended($ in thousands, except per share amounts) (unaudited)March 31, Dec. 31 March 31, 2025 2024 2024 Interest and dividend income Loans receivable$20,896 $21,032 $18,909 Investment securities 2,003 2,138 2,246 Dividends from mutual funds, FHLB stock and other investments 82 86 82 Interest bearing deposits in banks 1,884 2,001 1,919 Total interest and dividend income 24,865 25,257 23,156 Interest expense Deposits 7,454 8,084 7,301 Borrowings 198 203 220 Total interest expense 7,652 8,287 7,521 Net interest income 17,213 16,970 15,635 Provision for credit losses – loans 237 52 166 Prov. for (recapture of) credit losses – investment securities (5) (5) 3 Prov. for (recapture of ) credit losses - unfunded commitments 14 (20) (88) Net int. income after provision for (recapture of) credit losses 16,967 16,943 15,554 Non-interest income Service charges on deposits 959 999 988 ATM and debit card interchange transaction fees 1,176 1,267 1,212 Gain on sales of loans, net 122 43 41 Bank owned life insurance (“BOLI”) net earnings 165 167 156 Recoveries on investment securities, net 4 3 2 Other 261 218 216 Total non-interest income, net 2,687 2,697 2,615 Non-interest expense Salaries and employee benefits 5,977 6,092 6,024 Premises and equipment 1,075 950 1,081 Advertising 189 181 159 OREO and other repossessed assets, net 9 -- -- ATM and debit card processing 521 521 601 Postage and courier 142 121 145 State and local taxes 335 346 325 Professional fees 431 346 319 FDIC insurance 219 210 206 Loan administration and foreclosure 155 128 134 Technology and communications 1,121 1,140 1,040 Deposit operations 319 332 324 Amortization of core deposit intangible (“CDI”) 45 45 57 Other, net 656 655 576 Total non-interest expense, net 11,194 11,067 10,991 Income before income taxes 8,460 8,573 7,178 Provision for income taxes 1,705 1,713 1,470 Net income$6,755 $6,860 $5,708 Net income per common share: Basic$0.85 $0.86 $0.71 Diluted 0.85 0.86 0.70 Weighted average common shares outstanding: Basic 7,937,063 7,958,275 8,081,924 Diluted 7,968,632 7,999,504 8,121,109 TIMBERLAND BANCORP INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOMESix Months Ended($ in thousands, except per share amounts) (unaudited)March 31, March 31, 2025 2024 Interest and dividend income Loans receivable$41,928 $37,304 Investment securities 4,141 4,556 Dividends from mutual funds, FHLB stock and other investments 168 173 Interest bearing deposits in banks 3,885 3,618 Total interest and dividend income 50,122 45,651 Interest expense Deposits 15,538 13,444 Borrowings 402 568 Total interest expense 15,940 14,012 Net interest income 34,182 31,639 Provision for credit losses – loans 289 545 Recapture of credit losses – investment securities (10) (7) Recapture of credit losses - unfunded commitments (7) (121) Net int. income after provision for (recapture of) credit losses 33,910 31,222 Non-interest income Service charges on deposits 1,958 2,011 ATM and debit card interchange transaction fees 2,443 2,476 Gain on sales of loans, net 165 120 Bank owned life insurance (“BOLI”) net earnings 331 312 Recoveries on investment securities, net 7 7 Other 480 487 Total non-interest income, net 5,384 5,413 Non-interest expense Salaries and employee benefits 12,068 11,936 Premises and equipment 2,025 2,054 Advertising 370 345 OREO and other repossessed assets, net 9 -- ATM and debit card processing 1,043 1,216 Postage and courier 264 271 State and local taxes 680 644 Professional fees 777 572 FDIC insurance 429 416 Loan administration and foreclosure 283 239 Technology and communications 2,261 2,014 Deposit operations 652 644 Amortization of core deposit intangible (“CDI”) 90 113 Other, net 1,309 1,151 Total non-interest expense, net 22,260 21,615 Income before income taxes 17,034 15,020 Provision for income taxes 3,419 3,016 Net income$13,615 $12,004 Net income per common share: Basic$1.71 $1.48 Diluted 1.71 1.47 Weighted average common shares outstanding: Basic 7,947,786 8,098,155 Diluted 7,984,238 8,143,701 TIMBERLAND BANCORP INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS ($ in thousands, except per share amounts) (unaudited)March 31, Dec. 31, March 31, 2025 2024 2024Assets Cash and due from financial institutions$26,010 $24,538 $22,310 Interest-bearing deposits in banks 165,201 139,533 158,039 Total cash and cash equivalents 191,211 164,071 180,349 Certificates of deposit (“CDs”) held for investment, at cost 8,711 7,470 11,204 Investment securities: Held to maturity, at amortized cost (net of ACL – investment securities) 140,954 156,105 211,818 Available for sale, at fair value 84,807 77,080 61,746 Investments in equity securities, at fair value 853 840 839 FHLB stock 2,045 2,037 2,037 Other investments, at cost 3,000 3,000 3,000 Loans held for sale 1,151 411 1,311 Loans receivable 1,437,599 1,429,107 1,375,934 Less: ACL – loans (17,525) (17,288) (16,818) Net loans receivable 1,420,074 1,411,819 1,359,116 Premises and equipment, net 21,436 21,617 21,718 OREO and other repossessed assets, net 221 221 -- BOLI 23,942 23,777 23,278 Accrued interest receivable 7,127 7,095 7,108 Goodwill 15,131 15,131 15,131 CDI 361 406 564 Loan servicing rights, net 1,051 1,195 1,717 Operating lease right-of-use assets 1,324 1,400 1,624 Other assets 9,331 15,805 4,674 Total assets$1,932,730 1,909,480 $1,907,234 Liabilities and shareholders’ equity Deposits: Non-interest-bearing demand$407,811 402,911 $424,906 Deposits: Interest-bearing 1,243,019 1,227,505 1,213,648 Total deposits 1,650,830 1,630,416 1,638,554 Operating lease liabilities 1,426 1,501 1,723 FHLB borrowings 20,000 20,000 20,000 Other liabilities and accrued expenses 7,950 8,364 8,278 Total liabilities 1,680,206 1,660,281 1,668,555 Shareholders’ equity Common stock, $.01 par value; 50,000,000 shares authorized; 7,903,489 shares issued and outstanding – March 31, 2025 7,954,673 shares issued and outstanding – December 31, 2024 8,023,121shares issued and outstanding – March 31, 2024 28,028 29,593 32,338 Retained earnings 225,166 220,398 207,086 Accumulated other comprehensive loss (670) (792) (745) Total shareholders’ equity 252,524 249,199 238,679 Total liabilities and shareholders’ equity$1,932,730 1,909,480 $1,907,234 Three Months EndedPERFORMANCE RATIOS:March 31, 2025 Dec. 31, 2024 March 31, 2024Return on average assets (a) 1.43% 1.41% 1.22%Return on average equity (a) 10.95% 11.03% 9.67%Net interest margin (a) 3.79% 3.64% 3.48%Efficiency ratio 56.25% 56.27% 60.22% Six Months Ended March 31, 2025 March 31, 2024Return on average assets (a) 1.42% 1.28%Return on average equity (a) 10.99% 10.18%Net interest margin (a) 3.71% 3.53%Efficiency ratio 56.26% 58.34% Three Months EndedASSET QUALITY RATIOS AND DATA: ($ in thousands)March 31, 2025 Dec. 31, 2024 March 31, 2024Non-accrual loans$2,327 $2,733 $3,605 Loans past due 90 days and still accruing -- -- -- Non-performing investment securities 41 45 79 OREO and other repossessed assets 221 221 -- Total non-performing assets (b)$2,589 $2,999 $3,684 Non-performing assets to total assets (b) 0.13% 0.16% 0.19%Net charge-offs during quarter$-- $242 $3 Allowance for credit losses - loans to non-accrual loans 753% 633% 467%Allowance for credit losses - loans to loans receivable (c) 1.22% 1.21% 1.22% CAPITAL RATIOS: Tier 1 leverage capital 12.55% 12.32% 12.01%Tier 1 risk-based capital 19.04% 18.69% 18.08%Common equity Tier 1 risk-based capital 19.04% 18.69% 18.08%Total risk-based capital 20.29% 19.95% 19.33%Tangible common equity to tangible assets (non-GAAP) 12.36% 12.34% 11.79% BOOK VALUES: Book value per common share$31.95 $31.33 $29.75 Tangible book value per common share (d) 29.99 29.37 27.79 ________________________________________________ (a) Annualized(b) Non-performing assets include non-accrual loans, loans past due 90 days and still accruing, non-performing investment securities and OREO and other repossessed assets. (c) Does not include loans held for sale and is before the allowance for credit losses.(d) Tangible common equity divided by common shares outstanding (non-GAAP). AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY ($ in thousands)(unaudited) For the Three Months Ended March 31, 2025 December 31, 2024 March 31, 2024 Amount Rate Amount Rate Amount Rate Assets Loans receivable and loans held for sale$1,435,999 5.90% $1,438,144 5.80% $1,365,417 5.57%Investment securities and FHLB stock (1) 232,532 3.64 247,236 3.57 298,003 3.14 Interest-earning deposits in banks and CDs 172,175 4.44 166,764 4.76 143,121 5.39 Total interest-earning assets 1,840,706 5.48 1,852,144 5.42 1,806,541 5.16 Other assets 77,563 75,534 81,337 Total assets$1,918,269 $1,927,678 $1,887,878 Liabilities and Shareholders’ Equity NOW checking accounts$328,115 1.32% $328,455 1.38% $367,924 1.61%Money market accounts 306,137 3.18 324,424 3.42 270,623 3.14 Savings accounts 206,054 0.28 205,650 0.28 214,233 0.23 Certificates of deposit accounts 343,945 3.82 331,785 4.09 295,202 4.16 Brokered CDs 50,104 4.85 46,414 4.98 40,402 5.40 Total interest-bearing deposits 1,234,355 2.45 1,236,728 2.59 1,188,384 2.47 Borrowings 20,000 4.04 20,000 4.03 20,001 4.42 Total interest-bearing liabilities 1,254,355 2.47 1,256,728 2.62 1,208,385 2.50 Non-interest-bearing demand deposits 403,738 414,149 431,826 Other liabilities 10,064 10,146 10,182 Shareholders’ equity 250,112 246,655 237,485 Total liabilities and shareholders’ equity$1,918,269 $1,927,678 $1,887,878 Interest rate spread 3.01% 2.80% 2.66%Net interest margin (2) 3.79% 3.64% 3.48%Average interest-earning assets to average interest-bearing liabilities 146.75% 147.38% 149.50% _____________________________________(1) Includes other investments(2) Net interest margin = annualized net interest income / average interest-earning assets AVERAGE BALANCES, YIELDS, AND RATES ($ in thousands)(unaudited) For the Six Months Ended March 31, 2025 March 31, 2024 Amount Rate Amount Rate Assets Loans receivable and loans held for sale$1,437,081 5.85% $1,349,105 5.53%Investment securities and FHLB stock (1) 239,966 3.60 307,636 3.08 Interest-earning deposits in banks and CDs 169,444 4.60 134,643 5.37 Total interest-earning assets 1,846,491 5.44 1,791,384 5.10 Other assets 76,535 81,473 Total assets$1,923,026 $1,872,857 Liabilities and Shareholders’ Equity NOW checking accounts$328,287 1.35% $372,327 1.56%Money market accounts 315,381 3.31 247,656 2.78 Savings accounts 205,849 0.28 217,153 0.23 Certificates of deposit accounts 337,798 3.95 281,842 4.07 Brokered CDs 48,239 4.91 41,570 5.39 Total interest-bearing deposits 1,235,554 2.52 1,160,548 2.32 Borrowings 20,000 4.02 24,427 4.65 Total interest-bearing liabilities 1,255,554 2.55 1,184,975 2.37 Non-interest-bearing demand deposits 409,000 440,976 Other liabilities 10,107 11,035 Shareholders’ equity 248,365 235,871 Total liabilities and shareholders’ equity$1,923,026 $1,872,857 Interest rate spread 2.89% 2.73%Net interest margin (2) 3.71% 3.53%Average interest-earning assets to average interest-bearing liabilities 147.07% 151.17% _____________________________________(1) Includes other investments(2) Net interest margin = annualized net interest income / average interest-earning assets Non-GAAP Financial MeasuresIn addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. Timberland believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported. Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Timberland provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders’ equity less goodwill and CDI. In addition, tangible assets equal total assets less goodwill and CDI. The following table provides a reconciliation of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP) and ending total assets (GAAP) to ending tangible assets (non-GAAP). ($ in thousands)March 31, 2025 December 31, 2024 March 31, 2024 Shareholders’ equity$252,524 $249,199 $238,679 Less goodwill and CDI (15,492) (15,537) (15,695)Tangible common equity$237,032 $233,662 $222,984 Total assets$1,932,730 $1,909,480 $1,907,234 Less goodwill and CDI (15,492) (15,537) (15,695)Tangible assets$1,917,238 $1,893,943 $1,891,539 Contact:Dean J. Brydon, CEO Jonathan A. Fischer, President & COO Marci A. Basich, CFO (360) 533-4747 www.timberlandbank.com

Timberland Bancorp Reports Second Fiscal Quarter Net Income of $6.76 Million

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