Timberland Bancorp's First Fiscal Quarter Net Income Increases to $6.86 Million

Quarterly EPS Increases 12% to $0.86 from $0.77 One Year AgoQuarterly Return on Average Assets Increases to 1.41%Quarterly Return on Average Equity Increases to 11.03%Quarterly Net Interest Margin Increases to 3.64% HOQUIAM, Wash., Jan. 27, 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 $6.86 million, or $0.86 per diluted common share for the quarter ended December 31, 2024. This compares to net income of $6.36 million, or $0.79 per diluted common share for the preceding quarter and $6.30 million, or $0.77 per diluted common share, for the comparable quarter one year ago. “We started off our 2025 fiscal year on solid footing, with net income, earnings per share and profitability metrics all improving compared to the prior quarter,” stated Dean Brydon, Chief Executive Officer. “Fiscal first quarter net income and earnings per share increased 8% and 9%, respectively, compared to the prior quarter, reflecting an improvement in our net interest margin and lower provisions for credit losses compared to the prior quarter. Compared to the first fiscal quarter a year ago, net income and earnings per share increased 9% and 12%, respectively. In addition to all key performance metrics improving compared to the prior quarter and year ago quarter, tangible book value per share continued to trend upward.” “As a result of Timberland’s solid earnings and strong capital position, our Board of Directors announced a quarterly cash dividend to shareholders of $0.25 per share, payable on February 28, 2025, to shareholders of record on February 14, 2025,” stated Jonathan Fischer, President and Chief Operating Officer. “This represents the 49th consecutive quarter Timberland will have paid a cash dividend.” “A highlight of the quarter was our net interest margin expanding six basis points to 3.64%, 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 eight basis points during the quarter. Total deposits decreased $17 million, or 1%, during the quarter, in part due to some larger customers ending the calendar year with lower balances, while total borrowings stayed unchanged at $20 million compared to the prior quarter end.” “While we experienced an increase in loan originations during the quarter, they were more than offset by a significant increase in loan payoffs, resulting in a 1% decrease in net loans compared to the prior quarter end,” Brydon continued. “Some of the larger payoffs were on participation loans, as well as our largest substandard loan. Credit quality metrics are also holding up relatively well. While we experienced higher than normal net charge-offs during the quarter of $242,000 related to one loan, all other credit quality metrics improved. Non-performing assets improved to 16 basis points of total assets at the end of the first quarter, compared to 20 basis points three months earlier, total delinquencies decreased by 10% during the quarter and non-accrual loans decreased by nearly 30%. We remain encouraged by the overall strength of our loan portfolio and opportunities for loan growth in our markets.” “During the quarter we were excited to partner with the Federal Home Loan Bank of Des Moines and their Member Impact Fund grant program. Timberland applied for grants on behalf of 43 local non-profit organizations in our market areas and we were pleased that all were approved. The Member Impact Fund provided $3 for every $1 we donated to an eligible non-profit organization in our community. In total, $772,000 was donated to 43 local non-profit organizations. We were thrilled to be a part of the grant program that helped make a positive impact and advance housing and community development needs in the communities we serve,” added Fischer. Earnings and Balance Sheet Highlights (at or for the periods ended December 31, 2024, compared to December 31, 2023, or September 30, 2024): Earnings Highlights: Earnings per diluted common share (“EPS”) increased 9% to $0.86 for the current quarter from $0.79 for the preceding quarter and 12% from $0.77 for the comparable quarter one year ago;Net income increased 8% to $6.86 million for the current quarter from $6.36 million for the preceding quarter and 9% from $6.30 million for the comparable quarter one year ago;Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were 11.03% and 1.41%, respectively;Net interest margin (“NIM”) for the current quarter expanded to 3.64% from 3.58% for the preceding quarter and 3.60% for the comparable quarter one year ago; andThe efficiency ratio for the current quarter improved to 56.27% from 56.79% for the preceding quarter and 56.50% for the comparable quarter one year ago. Balance Sheet Highlights: Total assets decreased 1% from the prior quarter and increased 1% year-over-year;Net loans receivable decreased 1% from the prior quarter and increased 6% year-over-year;Total deposits decreased 1% from the prior quarter and increased slightly (less than 1%) year-over-year;Total shareholders’ equity increased 2% from the prior quarter and increased 5% year-over-year; 27,260 shares of common stock were repurchased during the current quarter for $883,000;Non-performing assets to total assets ratio was 0.16% at December 31, 2024 compared to 0.20% at September 30, 2024 and 0.18% at December 31, 2023;Book and tangible book (non-GAAP) values per common share increased to $31.33 and $29.37, respectively, at December 31, 2024; andLiquidity (both on-balance sheet and off-balance sheet) remained strong at December 31, 2024 with only $20 million in borrowings and additional secured borrowing line capacity of $656 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 $19.67 million from $19.48 million for the preceding quarter and increased 5% from $18.80 million for the comparable quarter one year ago. The increase in operating revenue compared to the preceding quarter was primarily due to an increase in interest income from loans and a decrease in funding costs, which was partially offset by a decrease in non-interest income and decreases in interest income on investment securities and interest bearing deposits in banks. Net interest income increased $423,000, or 3%, to $16.97 million for the current quarter from $16.55 million for the preceding quarter and increased $966,000 or 6%, from $16.00 million for the comparable quarter one year ago. The increase in net interest income compared to the preceding quarter was primarily due a $12.72 million increase in average total interest-earning assets and a decrease in the weighted average cost of interest-bearing liabilities to 2.62% from 2.70% for the preceding quarter. Timberland’s NIM for the current quarter expanded to 3.64% from 3.58% for the preceding quarter and 3.60% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately 3 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 preceding quarter 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. The NIM for the comparable quarter one year ago was increased by approximately three basis points due to the collection of $142,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $10,000 of the fair value discount on acquired loans. A $52,000 provision for credit losses on loans was recorded for the quarter ended December 31, 2024. The provision was primarily due to changes in the composition of the loan portfolio and net charge-offs. This compares to a $444,000 provision for credit losses on loans for the preceding quarter and a $379,000 provision for credit losses on loans for the comparable quarter one year ago. In addition, a $20,000 recapture of 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 $235,000, or 8% to $2.70 million for the current quarter from $2.93 million for the preceding quarter and decreased $101,000, or 4%, from $2.80 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 gain on sales of loans and smaller changes in several other categories. Total operating (non-interest) expenses for the current quarter increased $5,000, or less than 1%, to $11.07 million from $11.06 million for the preceding quarter and increased $443,000, or 4%, from $10.62 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 and smaller increases in several other expense categories. These increases were partially offset by decreases in deposit operations expense, and smaller decreases in several other expense categories. The efficiency ratio for the current quarter was 56.27% compared to 56.79% for the preceding quarter and 56.50% for the comparable quarter one year ago. The provision for income taxes for the current quarter increased $141,000, or 9%, to $1.71 million from $1.57 million for the preceding quarter, primarily due to higher taxable income. Timberland’s effective income tax rate was 20.0% for the quarter ended December 31, 2024 compared to 19.8% for the quarter ended September 30, 2024 and 19.7% for the quarter ended December 31, 2023. Balance Sheet Management Total assets decreased $14.00 million, or 1%, during the quarter to $1.91 billion at December 31, 2024 from $1.92 billion at September 30, 2024 and increased $14.37 million, or 1%, from $1.90 billion one year ago. The decrease during the current quarter was primarily due to an $11.20 million decrease in investment securities, a $9.70 million decrease in net loans receivable and smaller decreases in several other categories. These decreases were partially offset by smaller increases in several other asset 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 15.0% of total liabilities at December 31, 2024, compared to 14.7% at September 30, 2024, and 12.7% one year ago. Timberland had secured borrowing line capacity of $656 million available through the FHLB and the Federal Reserve at December 31, 2024. With a strong and diversified deposit base, only 19% of Timberland’s deposits were uninsured or uncollateralized at December 31, 2024. (Note: This calculation excludes public deposits that are fully collateralized.) Loans Net loans receivable decreased $9.70 million, or 1%, during the quarter to $1.41 billion at December 31, 2024 from $1.42 billion at September 30, 2024. This decrease was primarily due to a $15.47 million increase in the undisbursed portion of construction loans, a $3.43 million decrease in commercial business loans and a $2.17 million decrease in commercial real estate loans. These decreases were partially offset by a $7.32 million increase in one- to four-family loans, a $1.55 million increase in construction loans and smaller increases in several other loan categories. Loan Portfolio($ in thousands) December 31, 2024 September 30, 2024 December 31, 2023 Amount Percent Amount Percent Amount Percent Mortgage loans: One- to four-family (a)$ 306,443 20% $ 299,123 20% $ 263,122 18% Multi-family 177,861 12 177,350 11 147,321 10 Commercial 597,054 39 599,219 40 579,038 40 Construction - custom and owner/builder 124,104 8 132,101 9 134,878 9 Construction - speculative one-to four-family 8,887 1 11,495 1 17,609 1 Construction - commercial 22,841 2 29,463 2 36,702 3 Construction - multi-family 48,940 3 28,401 2 57,019 4 Construction - land development 15,977 1 17,741 1 18,878 1 Land 30,538 2 29,366 2 28,697 2 Total mortgage loans 1,332,645 88 1,324,259 88 1,283,264 88 Consumer loans: Home equity and second mortgage 48,851 3 47,913 3 39,403 3 Other 2,889 -- 3,129 -- 2,926 -- Total consumer loans 51,740 3 51,042 3 42,329 3 Commercial loans: Commercial business loans 135,312 9 138,743 9 136,942 9 SBA PPP loans 204 -- 260 -- 423 -- Total commercial loans 135,516 9 139,003 9 137,365 9 Total loans 1,519,901 100% 1,514,304 100% 1,462,958 100% Less: Undisbursed portion of construction loans in process (85,350) (69,878) (104,683) Deferred loan origination fees (5,444) (5,425) (5,337) Allowance for credit losses (17,288) (17,478) (16,655) Total loans receivable, net$ 1,411,819 $ 1,421,523 $1,336,283 _______________________(a) Does not include one- to four-family loans held for sale totaling $411, $0, and $1,425 at December 31, 2024, September 30, 2024, and December 31, 2023, respectively. The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of December 31, 2024: CRE Loan Portfolio Breakdown by Collateral ($ in thousands) Collateral Type Balance Percent of CRE Portfolio Percent of Total Loan Portfolio Average Balance Per Loan Non-AccrualIndustrial warehouse $ 126,435 21% 8% $ 1,228 $195Medical/dental offices 84,786 14 6 1,265 --Office buildings 67,600 11 4 768 --Other retail buildings 52,313 9 3 545 --Mini-storage 33,773 6 2 1,351 --Hotel/motel 32,367 5 2 2,697 --Restaurants 27,977 5 2 560 273Gas stations/conv. stores 24,881 4 2 1,037 --Churches 15,874 3 1 934 --Nursing homes 13,745 2 1 1,964 --Mobile home parks 10,694 2 1 465 --Shopping centers 10,648 2 1 1,774 --Additional CRE 95,961 16 6 706 230 Total CRE $ 597,054 100% 39% $ 913 $ 698 Timberland originated $72.07 million in loans during the quarter ended December 31, 2024, compared to $48.82 million for the preceding quarter and $88.93 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 $2.31 million were sold compared to $5.62 million for the preceding quarter and $3.80 million for the comparable quarter one year ago. Investment Securities Timberland’s investment securities and CDs held for investment decreased $13.93 million, or 5%, to $241.50 million at December 31, 2024, from $255.43 million at September 30, 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 decreased $17.25 million, or 1%, during the quarter to $1.63 billion at December 31, 2024, from $1.65 billion at September 30, 2024. The quarter’s decrease consisted of a $15.51 million decrease in money market account balance, a $10.21 million decrease in non-interest bearing account balances, and a $9.92 decrease NOW checking account balances. These decreases were partially offset by a $17.53 million increase in certificate of deposit account balances and an $852,000 increase in savings account balances. Deposit Breakdown ($ in thousands) December 31, 2024 September 30, 2024 December 31, 2023 Amount Percent Amount Percent Amount Percent Non-interest-bearing demand $402,911 25% $413,116 25% $433,065 27% NOW checking 323,412 20 333,329 20 389,463 24 Savings 206,845 13 205,993 13 215,948 13 Money market 311,413 19 326,922 20 269,686 17 Certificates of deposit under $250 212,764 13 205,970 12 181,762 11 Certificates of deposit $250 and over 122,997 7 113,579 7 96,145 6 Certificates of deposit – brokered 50,074 3 48,759 3 41,000 2 Total deposits $1,630,416 100% $1,647,668 100% $1,627,069 100% Borrowings Total borrowings were $20.00 million at both December 31, 2024 and September 30, 2024. At December 31, 2024, the weighted average rate on the borrowings was 3.97%. Shareholders’ Equity and Capital Ratios Total shareholders’ equity increased $3.79 million, or 2%, to $249.20 million at December 31, 2024, from $245.41 million at September 30, 2024, and increased $11.83 million, or 5%, from $237.37 million at December 31, 2023. The quarter’s increase in shareholders’ equity was primarily due to net income of $6.86 million, which was partially offset by the payment of $1.99 million in dividends to shareholders, an $812,000 change in the accumulated other comprehensive income (loss) category for fair value adjustments on available for sale investment securities, and the repurchase of 27,260 shares of common stock for $883,000 (an average price of $32.38 per share). There were 127,906 shares available to be repurchased in accordance with the terms of its existing stock repurchase plan at December 31, 2024. Timberland remains well capitalized with a total risk-based capital ratio of 19.95%, a Tier 1 leverage capital ratio of 12.32%, a tangible common equity to tangible assets ratio (non-GAAP) of 12.34%, and a shareholders’ equity to total assets ratio of 13.05% at September 30, 2024. Timberland’s held to maturity investment securities were $156.11 million at December 31, 2024, with a net unrealized loss of $8.44 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 12.75%, compared to 13.05%, as reported. Asset Quality Timberland’s non-performing assets to total assets ratio improved to 0.16% at December 31, 2024, compared to 0.20% at September 30, 2024 and 0.18% at December 31, 2023. Net charge-offs totaled $242,000 for the current quarter compared to net charge-offs of $12,000 for the preceding quarter and net charge-offs of $2,000 for the comparable quarter one year ago. During the current quarter, provisions for credit losses of $52,000 on loans were made, which was partially offset by a $20,000 recapture of credit losses on unfunded commitments and 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 1.21% at December 31, 2024, compared to 1.21% at September 30, 2024 and 1.23% one year ago. Total delinquent loans (past due 30 days or more) and non-accrual loans decreased $458,000 or 10%, to $4.02 million at December 31, 2024, from $4.49 million at September 30, 2024. Non-accrual loans decreased $1.15 million, or 30%, to $2.73 million at December 31, 2024 from $3.89 million at September 30, 2024. The quarterly decrease in non-accrual loans was primarily due to decreases in commercial business loans and commercial real estate loans on non-accrual status. Non-Accrual Loans($ in thousands) December 31, 2024 September 30, 2024 December 31, 2023 Amount Quantity Amount Quantity Amount QuantityMortgage loans: One- to four-family$ 47 1 $ 49 1 $ 602 4 Commercial 698 5 1,158 6 683 2 Construction – custom and owner/builder -- -- -- -- 150 1 Total mortgage loans 745 6 1,207 7 1,435 7 Consumer loans: Home equity and second mortgage 587 3 618 3 171 1 Other -- -- -- -- -- -- Total consumer loans 587 3 618 3 171 1 Commercial business loans 1,401 11 2,060 8 1,760 6Total loans$2,733 20 $3,885 18 $3,366 14 Timberland had two properties classified as other real estate owned (“OREO”) at December 31, 2024: December 31, 2024 September 30, 2024 December 31, 2023 Amount Quantity Amount Quantity Amount QuantityOther real estate owned: Commercial$221 1 $-- -- $-- -- Land -- 1 -- 1 -- 1 Total mortgage loans$221 2 $-- 1 $-- 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 INCOME Three Months Ended($ in thousands, except per share amounts) (unaudited) Dec. 31, Sept. 30, Dec. 31, 2024 2024 2023 Interest and dividend income Loans receivable $21,032 $20,589 $18,395 Investment securities 2,138 2,237 2,311 Dividends from mutual funds, FHLB stock and other investments 86 95 91 Interest bearing deposits in banks 2,001 2,114 1,699 Total interest and dividend income 25,257 25,035 22,496 Interest expense Deposits 8,084 8,277 6,143 Borrowings 203 211 349 Total interest expense 8,287 8,488 6,492 Net interest income 16,970 16,547 16,004 Provision for credit losses – loans 52 444 379 Recapture of credit losses – investment securities (5) (13) (10) Prov. for (recapture of ) credit losses - unfunded commitments (20) 59 (33) Net int. income after provision for (recapture of) credit losses 16,943 16,057 15,668 Non-interest income Service charges on deposits 999 1,037 1,023 ATM and debit card interchange transaction fees 1,267 1,293 1,264 Gain on sales of loans, net 43 135 78 Bank owned life insurance (“BOLI”) net earnings 167 175 156 Recoveries on investment securities, net 3 3 5 Other 218 289 272 Total non-interest income, net 2,697 2,932 2,798 Non-interest expense Salaries and employee benefits 6,092 5,867 5,911 Premises and equipment 950 933 973 Gain on sales/disposition of premises and equipment, net -- 1 -- Advertising 181 205 186 OREO and other repossessed assets, net -- 4 -- ATM and debit card processing 521 588 615 Postage and courier 121 137 126 State and local taxes 346 343 319 Professional fees 346 410 253 FDIC insurance 210 209 210 Loan administration and foreclosure 128 125 105 Technology and communications 1,140 1,163 974 Deposit operations 332 446 320 Amortization of core deposit intangible (“CDI”) 45 57 56 Other, net 655 574 576 Total non-interest expense, net 11,067 11,062 10,624 Income before income taxes 8,573 7,927 7,842 Provision for income taxes 1,713 1,572 1,546 Net income $ 6,860 $ 6,355 $ 6,296 Net income per common share: Basic $0.86 $0.80 $0.78 Diluted 0.86 0.79 0.77 Weighted average common shares outstanding: Basic 7,958,275 7,954,112 8,114,209 Diluted 7,999,504 7,995,024 8,166,048 TIMBERLAND BANCORP INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS ($ in thousands, except per share amounts) (unaudited) Dec. 31, Sept. 30, Dec. 31, 2024 2024 2023 Assets Cash and due from financial institutions $ 24,538 $ 29,071 $ 28,656 Interest-bearing deposits in banks 139,533 135,657 129,365 Total cash and cash equivalents 164,071 164,728 158,021 Certificates of deposit (“CDs”) held for investment, at cost 7,470 10,209 12,449 Investment securities: Held to maturity, at amortized cost (net of ACL – investment securities) 156,105 172,097 266,085 Available for sale, at fair value 77,080 72,257 40,446 Investments in equity securities, at fair value 840 866 848 FHLB stock 2,037 2,037 2,001 Other investments, at cost 3,000 3,000 3,000 Loans held for sale 411 -- 1,425 Loans receivable 1,429,107 1,439,001 1,352,938 Less: ACL – loans (17,288) (17,478) (16,655) Net loans receivable 1,411,819 1,421,523 1,336,283 Premises and equipment, net 21,617 21,486 21,584 OREO and other repossessed assets, net 221 -- -- BOLI 23,777 23,611 23,122 Accrued interest receivable 7,095 6,990 6,731 Goodwill 15,131 15,131 15,131 CDI 406 451 621 Loan servicing rights, net 1,195 1,372 1,925 Operating lease right-of-use assets 1,400 1,475 1,698 Other assets 15,805 6,242 3,745 Total assets $1,909,480 $1,923,475 $1,895,115 Liabilities and shareholders’ equity Deposits: Non-interest-bearing demand $ 402,911 $ 413,116 $ 433,065 Deposits: Interest-bearing 1,227,505 1,234,552 1,194,004 Total deposits 1,630,416 1,647,668 1,627,069 Operating lease liabilities 1,501 1,575 1,796 FHLB borrowings 20,000 20,000 20,000 Other liabilities and accrued expenses 8,364 8,819 8,881 Total liabilities 1,660,281 1,678,062 1,657,746 Shareholders’ equity Common stock, $.01 par value; 50,000,000 shares authorized; 7,954,673 shares issued and outstanding – December 31, 2024 7,960,127 shares issued and outstanding – September 30, 2024 8,120,708 shares issued and outstanding – December 31, 2023 29,593 29,862 34,869 Retained earnings 220,398 215,531 203,327 Accumulated other comprehensive income (loss) (792) 20 (827) Total shareholders’ equity 249,199 245,413 237,369 Total liabilities and shareholders’ equity $1,909,480 $1,923,475 $1,895,115 Three Months Ended PERFORMANCE RATIOS: Dec. 31, 2024 Sept. 30,2024 Dec. 31,2023Return on average assets (a) 1.41% 1.32% 1.36%Return on average equity (a) 11.03% 10.43% 10.75%Net interest margin (a) 3.64% 3.58% 3.60%Efficiency ratio 56.27% 56.79% 56.50% ASSET QUALITY RATIOS AND DATA: Non-accrual loans $2,733 $3,885 $3,366 Loans past due 90 days and still accruing -- -- -- Non-performing investment securities 45 51 85 OREO and other repossessed assets 221 -- -- Total non-performing assets (b) $2,999 $3,936 $3,451 Non-performing assets to total assets (b) 0.16% 0.20% 0.18%Net charge-offs during quarter $ 242 $ 12 $ 2 Allowance for credit losses - loans to non-accrual loans 633% 450% 495%Allowance for credit losses - loans to loans receivable (c) 1.21% 1.21% 1.23% CAPITAL RATIOS: Tier 1 leverage capital 12.32% 12.12% 12.14%Tier 1 risk-based capital 18.69% 18.14% 18.22%Common equity Tier 1 risk-based capital 18.69% 18.14% 18.22%Total risk-based capital 19.95% 19.39% 19.50%Tangible common equity to tangible assets (non-GAAP) 12.34% 12.05% 11.79% BOOK VALUES: Book value per common share $ 31.33 $ 30.83 $29.23 Tangible book value per common share (d) 29.37 28.87 27.29 ________________________________________________ (a) Annualized(b) Non-performing assets include non-accrual loans, loans past due 90 days and still accruing, non-performing investment securities and OREO and other repossessed assets. (c) Does not include loans held for sale and is before the allowance for credit losses.(d) Tangible common equity divided by common shares outstanding (non-GAAP). AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY ($ in thousands)(unaudited) For the Three Months Ended December 31, 2024 September 30, 2024 December 31, 2023 Amount Rate Amount Rate Amount Rate Assets Loans receivable and loans held for sale$ 1,438,144 5.80% $ 1,428,125 5.74% $ 1,332,971 5.52%Investment securities and FHLB stock (1) 247,236 3.57 254,567 3.64 317,164 3.03 Interest-earning deposits in banks and CDs 166,764 4.76 156,732 5.37 126,253 5.38 Total interest-earning assets 1,852,144 5.42 1,839,424 5.41 1,776,388 5.07 Other assets 75,534 80,940 81,612 Total assets$ 1,927,678 $ 1,920,364 $ 1,858,000 Liabilities and Shareholders’ Equity NOW checking accounts$ 328,455 1.38% $ 337,955 1.40% $ 376,682 1.51%Money market accounts 324,424 3.42 321,151 3.62 224,939 2.34 Savings accounts 205,650 0.28 207,457 0.27 220,042 0.22 Certificates of deposit accounts 331,785 4.09 316,897 4.20 268,628 3.97 Brokered CDs 46,414 4.98 48,719 5.54 42,725 5.38 Total interest-bearing deposits 1,236,728 2.59 1,232,179 2.67 1,133,016 2.18 Borrowings 20,000 4.03 20,000 4.20 28,804 4.81 Total interest-bearing liabilities 1,256,728 2.62 1,252,179 2.70 1,161,820 2.22 Non-interest-bearing demand deposits 414,149 414,603 450,027 Other liabilities 10,146 11,151 11,878 Shareholders’ equity 246,655 242,431 234,275 Total liabilities and shareholders’ equity$ 1,927,678 $ 1,920,364 $ 1,858,000 Interest rate spread 2.80% 2.71% 2.85% Net interest margin (2) 3.64% 3.58% 3.60% Average interest-earning assets to average interest-bearing liabilities 147.38% 146.90% 152.90% _____________________________________(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) December 31, 2024 September 30, 2024 December 31, 2023 Shareholders’ equity $ 249,199 $ 245,413 $ 237,369 Less goodwill and CDI (15,537) (15,582) (15,752)Tangible common equity $ 233,662 $ 229,831 $ 221,617 Total assets $ 1,909,480 $ 1,923,475 $ 1,895,115 Less goodwill and CDI (15,537) (15,582) (15,752)Tangible assets $ 1,893,943 $ 1,907,893 $ 1,879,363

Timberland Bancorp's First Fiscal Quarter Net Income Increases to $6.86 Million

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