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

Quarterly EPS Increases 22% to $0.90 from $0.74 One Year AgoQuarterly Net Interest Margin Increases to 3.80%Quarterly Return on Average Assets Increases to 1.47%Quarterly Return on Average Equity Increases to 11.23%Announces New Stock Repurchase Program HOQUIAM, Wash., July 22, 2025 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ: TSBK) (“Timberland” or “the Company”), the holding company for Timberland Bank (the “Bank”), today reported net income of $7.10 million, or $0.90 per diluted common share for the quarter ended June 30, 2025. This compares to net income of $6.76 million, or $0.85 per diluted common share for the preceding quarter and $5.92 million, or $0.74 per diluted common share, for the comparable quarter one year ago. For the first nine months of fiscal 2025, Timberland’s net income increased 16% to $20.72 million, or $2.60 per diluted common share, from $17.93 million, or $2.21 per diluted common share for the first nine months of fiscal 2024. “Timberland delivered solid third fiscal quarter results, driven by continued net interest margin expansion and steady balance sheet growth,” stated Dean Brydon, Chief Executive Officer. “Net income and earnings per share increased 20% and 22%, respectively, compared to the third fiscal quarter a year ago. Compared to the prior quarter, net income and earnings per share increased 5% and 6%, respectively, primarily due to higher net interest income and non-interest income. We also posted year-over-year improvements across all key profitability metrics, and our tangible book value per share (non-GAAP) continued its upward trend. Looking ahead we believe our strong capital position, solid earnings, and continued focus on disciplined growth position us well to navigate the current environment and drive long-term shareholder value.” “As a result of Timberland’s strong earnings and sound capital position, our Board of Directors announced a quarterly cash dividend to shareholders of $0.26 per share, payable on August 22, 2025, to shareholders of record on August 8, 2025,” stated Jonathan Fischer, President and Chief Operating Officer. “This represents the 51st consecutive quarter Timberland will have paid a cash dividend. In addition, the Company also announced the adoption of a new stock repurchase program. We believe Timberland stock presents a strong investment opportunity, and buying back shares is a strategy to enhance long-term value for shareholders. Under the new repurchase program, the Company may repurchase up to 5% of the outstanding shares, or 393,842 shares. The new stock repurchase program replaces our existing stock repurchase program, which had 31,762 shares available to be repurchased.” “Our net interest margin continued to show positive momentum in the third fiscal quarter, expanding to 3.80%,” said Marci Basich, Chief Financial Officer. “This represents a one basis point increase from the prior quarter and a 27 basis point improvement compared to the same period last year, reflecting our disciplined asset-liability management and favorable shift in earning asset yields. Total deposits grew by $19 million, or 1%, during the quarter, driven primarily by higher balances in certificates of deposit. This growth highlights the continued strength of our customer relationships and the effectiveness of our deposit-gathering strategies. We remain focused on maintaining a well-balanced funding mix while sustaining stable margin performance going forward.” “The loan portfolio continues to expand at a steady pace, with growth of 2% over the prior quarter and 3% year-over year,” Brydon continued. “Credit quality remains an area we are monitoring closely, as we are seeing a mix of stable-to-positive trends alongside a few metrics that have shown modest deterioration. Net charge-offs continue to be minimal, with net recoveries of $1,000 during the third quarter. Our non-performing assets (“NPA”) ratio increased to 0.21% at June 30, 2025, compared to 0.13% at the end of the prior quarter. However, it remains a slight improvement from the 0.22% reported a year ago. Although non-accrual loans increased this quarter primarily due to a single matured loan, total non-accrual balances remain modestly below year-ago levels.” Earnings and Balance Sheet Highlights (at or for the periods ended June 30, 2025, compared to June 30, 2024, or March 31, 2025): Earnings Highlights: Earnings per diluted common share (“EPS”) increased 6% to $0.90 for the current quarter from $0.85 for the preceding quarter and increased 22% from $0.74 for the comparable quarter one year ago; EPS increased 18% to $2.60 for the first nine months of fiscal 2025 from $2.21 for the first nine months of fiscal 2024;Net income increased 5% to $7.10 million for the current quarter from $6.76 million for the preceding quarter and increased 20% from $5.92 million for the comparable quarter one year ago; Net income increased 16% to $20.72 million for the first nine months of fiscal 2025 from $17.93 million for the first nine months of fiscal 2024;Return on average equity (“ROE”) and return on average assets (“ROA”) for the current quarter were 11.23% and 1.47%, respectively;Net interest margin (“NIM”) for the current quarter expanded to 3.80% from 3.79% for the preceding quarter and 3.53% for the comparable quarter one year ago; andThe efficiency ratio for the current quarter improved to 54.48% from 56.25% for the preceding quarter and 58.97% for the comparable quarter one year ago. Balance Sheet Highlights: Total assets increased 1% from the prior quarter and increased 3% year-over-year;Net loans receivable increased 2% from the prior quarter and increased 3% year-over-year;Total deposits increased 1% from the prior quarter and increased 3% year-over-year;Total shareholders’ equity increased 2% from the prior quarter and increased 6% year-over-year; 34,236 shares of common stock were repurchased during the current quarter for $1.02 million;Non-performing assets to total assets ratio was 0.21% at June 30, 2025 compared to 0.13% at March 31, 2025 and 0.22% at June 30, 2024;Book and tangible book (non-GAAP) values per common share increased to $32.58 and $30.62 respectively, at June 30, 2025; andLiquidity (both on-balance sheet and off-balance sheet) remained strong at June 30, 2025 with only $20 million in borrowings and additional secured borrowing line capacity of $674 million available through the Federal Home Loan Bank (“FHLB”) and the Federal Reserve. Operating Results Operating revenue (net interest income before the provision for credit losses plus non-interest income) for the current quarter increased 3% to $20.50 million from $19.90 million for the preceding quarter and increased 9% from $18.77 million for the comparable quarter one year ago. The increase in operating revenue compared to the preceding quarter was primarily due to increases in total interest and dividend income and non-interest income, which were partially offset by an increase in total funding costs. Operating revenue increased 8% to $60.06 million for the first nine months of fiscal 2025 from $55.82 million for the first nine months of fiscal 2024, primarily due to an increase in total interest and dividend income, which was partially offset by an increase in funding costs. Net interest income increased $409,000, or 2%, to $17.62 million for the current quarter from $17.21 million for the preceding quarter and increased $1.64 million, or 10%, from $15.98 million for the comparable quarter one year ago. The increase in net interest income compared to the preceding quarter was primarily due to a $20.80 million increase in the average balance of total interest-earning assets and, to a lesser extent, a two-basis point increase in the weighted average yield on total interest-earning assets to 5.50% from 5.48%. These increases were partially offset by a $20.21 million increase in the average balance of interest-bearing liabilities and a two-basis point increase in the weighted average cost of interest-bearing liabilities. Timberland’s NIM for the current quarter expanded to 3.80% from 3.79% for the preceding quarter and 3.53% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately four basis points due to the collection of $102,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $68,000 of the fair value discount on acquired loans. The NIM for the preceding quarter was increased by approximately five basis points due to the collection of $201,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $17,000 of the fair value discount on acquired loans. The NIM for the comparable quarter one year ago was increased by approximately three basis points due to the collection of $124,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $9,000 of the fair value discount on acquired loans. Net interest income for the first nine months of fiscal 2025 increased $4.19 million, or 9%, to $51.81 million from $47.62 million for the first nine months of fiscal 2024, primarily due to a 32 basis point increase in the weighted average yield of total interest-earning assets to 5.49% from 5.17% and a $49.96 million increase in the average balance of total interest-earning assets. These increases to net interest income were partially offset by a seven basis point increase in the weighted average cost of interest-bearing liabilities to 2.53% from 2.46% and a $58.86 million increase in the average balance of total interest-bearing liabilities. Timberland’s NIM expanded to 3.74% for the first nine months of fiscal 2025 from 3.53% for the first nine months of fiscal 2024. A $351,000 provision for credit losses on loans was recorded for the quarter ended June 30, 2025. The provision was primarily due to loan portfolio growth and changes in the composition of the loan portfolio. This compares to a $237,000 provision for credit losses on loans for the preceding quarter and a $264,000 provision for credit losses on loans for the comparable quarter one year ago. In addition, a $93,000 provision for credit losses on unfunded commitments and a $4,000 recapture of credit losses on investment securities were recorded for the current quarter. Non-interest income increased $188,000, or 7%, to $2.88 million for the current quarter from $2.69 million for the preceding quarter and increased $84,000, or 3%, from $2.79 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter was primarily due to an increase in ATM and debit card interchange transaction fees and smaller changes in several other categories. Fiscal year-to-date non-interest income increased by 1%, to $8.26 million from $8.20 million for the first nine months of fiscal 2024. Total operating (non-interest) expenses for the current quarter decreased $27,000 (less than 1%), to $11.17 million from $11.19 million for the preceding quarter and increased $98,000, or 1%, from $11.07 million for the comparable quarter one year ago. The decrease in operating expenses compared to the preceding quarter was primarily due to decreases in salaries and employee benefits, premises and equipment, technology and communications, professional fees, and smaller decreases in several other expense categories. These decreases were partially offset by increases in state and local taxes and smaller increases in several other expense categories. The efficiency ratio for the current quarter improved to 54.48% from 56.25% for the preceding quarter and 58.97% for the comparable quarter one year ago. Fiscal year-to-date operating expenses increased 2% to $33.43 million from $32.68 million for the first nine months of fiscal 2024. The efficiency ratio for the first nine months of fiscal 2025 improved to 55.65% from 58.55% for the first nine months of fiscal 2024. The provision for income taxes for the current quarter increased $85,000, or 5%, to $1.79 million from $1.71 million for the preceding quarter, primarily due to higher taxable income. Timberland’s effective income tax rate was 20.1% for the quarter ended June 30, 2025, compared to 20.2% for the quarter ended March 31, 2025 and 20.6% for the quarter ended June 30, 2024. Timberland’s effective income tax rate was 20.1% for the first nine months of fiscal 2025 compared to 20.2% for the first nine months of fiscal 2024. Balance Sheet Management Total assets increased $24.46 million, or 1%, during the quarter to $1.96 billion at June 30, 2025 from $1.93 billion at March 31, 2025 and increased $56.56 million, or 3%, from $1.90 billion one year ago. The increase during the current quarter was primarily due to a $21.42 million increase in net loans receivable and smaller increases in several other categories. Liquidity Timberland has continued to maintain a strong liquidity position, both on-balance sheet and off-balance sheet. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 17.0% of total liabilities at June 30, 2025, compared to 16.9% at March 31, 2025, and 14.7% one year ago. Timberland also had secured borrowing line capacity of $674 million available through the FHLB and the Federal Reserve at June 30, 2025. With a strong and diversified deposit base, only 17% of Timberland’s deposits were uninsured or uncollateralized at June 30, 2025. (Note: This calculation excludes public deposits that are fully collateralized.) Loans Net loans receivable increased $21.42 million, or 2%, during the quarter to $1.44 billion at June 30, 2025 from $1.42 billion at March 31, 2025. This increase was primarily due to a $21.83 million increase in multi-family loans, a $5.67 million increase in commercial real estate loans, a $3.89 million increase in land loans and smaller increases in several other loan categories. These increases were partially offset by a $5.50 million decrease in construction loans, a $4.80 million decrease in commercial business loans, and smaller decreases in several other loan categories. The increase in multi-family loans was, in large part, due to several multi-family construction projects being completed and converting to permanent financing during the quarter. Loan Portfolio($ in thousands) June 30, 2025 March 31, 2025 June 30, 2024 Amount Percent Amount Percent Amount PercentMortgage loans: One- to four-family (a)$317,574 21% $315,421 21% $288,611 19% Multi-family 200,418 13 178,590 12 177,950 12 Commercial 607,924 40 602,248 40 597,865 40 Construction - custom and owner/builder 128,900 8 114,401 7 128,222 9Construction - speculativeone-to four-family 9,595 1 9,791 1 11,441 1 Construction - commercial 15,992 1 22,352 1 32,130 2 Construction - multi-family 32,731 2 46,602 3 35,631 2 Construction - land development 15,461 1 15,032 1 19,104 1 Land 36,193 2 32,301 2 32,384 2 Total mortgage loans 1,364,788 89 1,336,738 88 1,323,338 88 Consumer loans: Home equity and second mortgage 47,511 3 47,458 3 43,679 3 Other 2,176 -- 2,375 -- 3,121 -- Total consumer loans 49,687 3 49,833 3 46,800 3 Commercial loans: Commercial business loans 126,497 8 131,243 9 136,213 9 SBA PPP loans 101 -- 156 -- 314 -- Total commercial loans 126,598 8 131,399 9 136,527 9 Total loans 1,541,073 100% 1,517,970 100% 1,506,665 100% Less: Undisbursed portion of construction loans in process (76,272) (75,042) (87,196) Deferred loan origination fees (5,427) (5,329) (5,404) Allowance for credit losses (17,878) (17,525) (17,046) Total loans receivable, net$1,441,496 $1,420,074 $1,397,019 _______________________(a) Does not include one- to four-family loans held for sale totaling $1,763, $1,151, and $1,795 at June 30, 2025, March 31, 2025, and June 30, 2024, respectively. The following table provides a breakdown of commercial real estate (“CRE”) mortgage loans by collateral type as of June 30, 2025: CRE Loan Portfolio Breakdown by Collateral ($ in thousands)Collateral Type Balance Percent of CRE Portfolio Percent of Total Loan Portfolio Average Balance Per Loan Non-AccrualIndustrial warehouses $128 822 21% 8% $1 301 $161Medical/dental offices 81 238 13 5 1 269 --Office buildings 68 916 11 5 801 --Other retail buildings 54 472 9 3 567 --Mini-storage 38 483 6 2 1 539 --Hotel/motel 31 656 5 2 2 638 --Restaurants 27 485 5 2 585 --Gas stations/conv. stores 24 359 4 2 1 015 --Churches 14 690 3 1 918 --Nursing homes 13 532 2 1 2 255 --Shopping centers 10 507 2 1 1 751 --Mobile home parks 8 882 2 1 444 --Additional CRE 104 882 17 7 760 -- Total CRE $607 924 100% 40% $951 $161 Timberland originated $81.99 million in loans during the quarter ended June 30, 2025, compared to $56.76 million for the preceding quarter and $74.32 million for the comparable quarter one year ago. Timberland continues to originate fixed-rate one- to four-family mortgage loans, a portion of which are sold into the secondary market for asset-liability management purposes and to generate non-interest income. During the current quarter, fixed-rate one- to four-family mortgage loans totaling $5.11 million were sold compared to $5.17 million for the preceding quarter and $3.05 million for the comparable quarter one year ago. Investment Securities Timberland’s investment securities and CDs held for investment increased $2.04 million, or 1%, to $237.36 million at June 30, 2025, from $235.33 million at March 31, 2025. The increase was primarily due to the purchase of additional U.S. government agency mortgage-backed investment securities and U.S. Treasury investment securities. Partially offsetting these increases was the sale of $13.49 million available for sale investment securities, which resulted in a net gain of $24,000. Deposits Total deposits increased $18.65 million, or 1%, during the quarter to $1.67 billion at June 30, 2025, from $1.65 billion at March 31, 2025. The quarter’s increase consisted of a $16.01 million increase in certificates of deposit account balances, a $4.66 million increase in money market account balances, and a $1.60 million increase in NOW checking account balances. These decreases were partially offset by a $2.03 million decrease in savings account balances and a $1.59 million decrease in non-interest-bearing checking account balances. Deposit Breakdown($ in thousands) June 30, 2025 March 31, 2025 June 30, 2024 Amount Percent Amount Percent Amount Percent Non-interest-bearing demand $406,222 24% $407,811 25% $407,125 25% NOW checking 334,922 20 333,325 20 324,795 20 Savings 205,829 12 207,857 13 207,921 13 Money market 305,207 18 300,552 18 327,162 20 Certificates of deposit under $250 244,063 15 227,137 14 195,022 12 Certificates of deposit $250 and over 126,254 8 124,009 7 117,788 7 Certificates of deposit – brokered 46,980 3 50,139 3 48,731 3 Total deposits $1,669,477 100% $1,650,830 100% $1,628,544 100% Borrowings Total borrowings were $20.00 million at both June 30, 2025 and March 31, 2025. At June 30, 2025, the weighted average rate on the borrowings was 3.97%. Shareholders’ Equity and Capital Ratios Total shareholders’ equity increased $4.14 million, or 2%, to $256.66 million at June 30, 2025, from $252.52 million at March 31, 2025, and increased $15.44 million, or 6%, from $241.22 million at June 30, 2024. The increase in shareholders’ equity during the quarter was primarily due to net income of $7.10 million, which was partially offset by the payment of $2.05 million in dividends to shareholders and the repurchase of 34,236 shares of common stock for $1.02 million (an average price of $29.74 per share). Timberland remains well capitalized with a total risk-based capital ratio of 20.54%, a Tier 1 leverage capital ratio of 12.63%, a tangible common equity to tangible assets ratio (non-GAAP) of 12.42%, and a shareholders’ equity to total assets ratio of 13.11% at June 30, 2025. Timberland’s held to maturity investment securities were $141.57 million at June 30, 2025, with a net unrealized loss of $5.99 million (pre-tax). Although not permitted by U.S. Generally Accepted Accounting Principles (“GAAP”), including these unrealized losses in accumulated other comprehensive income (loss) (“AOCI”) would result in a ratio of shareholders’ equity to total assets of 12.90%, compared to 13.11%, as reported. New Stock Repurchase Program The Company announced a new stock repurchase program today. Under the repurchase program, the Company may repurchase up to 5% of the Company’s outstanding shares, or 393,842 shares. The new stock repurchase program replaces the existing stock repurchase program which had 31,762 shares available to be repurchased. The repurchase program permits shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission (“SEC”). Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interest of both the Company and its shareholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. Open market purchases will be conducted in accordance with the limitations set forth in Rule 10b-18 of the SEC and other applicable legal requirements. The repurchase program may be suspended, terminated, or modified at any time for any reason, including market conditions, the cost of repurchasing the shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase any particular number of shares. Asset Quality Timberland’s non-performing assets to total assets ratio was 0.21% at June 30, 2025, compared to 0.13% at March 31, 2025 and 0.22% at June 30, 2024. Net recoveries totaled $1,000 for the current quarter compared to net charge-offs of less than $1,000 for the preceding quarter and net charge-offs of $36,000 for the comparable quarter one year ago. During the current quarter, provisions for credit losses of $351,000 on loans and $93,000 unfunded commitments were made, which was partially offset by a $4,000 recapture of credit losses on investment securities. The allowance for credit losses (“ACL”) for loans as a percentage of loans receivable was 1.23% at June 30, 2025, compared to 1.22% at March 31, 2025 and 1.21% one year ago. Total delinquent loans (past due 30 days or more) and non-accrual loans increased $2.86 million or 86%, to $6.18 million at June 30, 2025, from $3.32 million at March 31, 2025 and increased $1.95 million, or 46%, from $4.23 million at June 30, 2024. Non-accrual loans increased $1.52 million, or 65%, to $3.84 million at June 30, 2025 from $2.33 million at March 31, 2025 and decreased $277,000, or 7%, from $4.12 million at March 31, 2024. The quarterly increase in non-accrual loans was primarily due to one loan (secured by several single family homes) being past maturity. The loan is well collateralized (based on recent appraisals) and the Bank is working with the borrower to renew the loan. Loans graded “Substandard” totaled $32.37 million (or 2% of total loans receivable) at June 30, 2025. Non-Accrual Loans($ in thousands) June 30, 2025 March 31, 2025 June 30, 2024 Amount Quantity Amount Quantity Amount QuantityMortgage loans: One- to four-family$1,781 1 $47 1 $135 2Commercial 161 2 324 3 1,310 4Construction – custom and owner/builder -- -- -- -- 152 1Total mortgage loans 1,942 3 371 4 1,597 7 Consumer loans: Home equity and second mortgage 575 3 575 3 615 3Other -- -- -- -- -- --Total consumer loans 575 3 575 3 615 3 Commercial business loans 1,326 9 1,381 11 1,908 8Total loans$3,843 15 $2,327 18 $4,120 18 Timberland had two properties classified as other real estate owned (“OREO”) at June 30, 2025: June 30, 2025 March 31, 2025 June 30, 2024 Amount Quantity Amount Quantity Amount 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). 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 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) June 30, March 31, June 30, 2025 2025 2024 Interest and dividend income Loans receivable $21,411 $20,896 $19,537 Investment securities 2,064 2,003 2,335 Dividends from mutual funds, FHLB stock and other investments 83 82 94 Interest bearing deposits in banks 1,986 1,884 2,173 Total interest and dividend income 25,544 24,865 24,139 Interest expense Deposits 7,721 7,454 7,938 Borrowings 201 198 220 Total interest expense 7,922 7,652 8,158 Net interest income 17,622 17,213 15,981 Provision for credit losses – loans 351 237 264 Recapture of credit losses – investment securities (4) (5) (12) Prov. for (recapture of ) credit losses - unfunded commitments 93 14 (8) Net int. income after provision for (recapture of) credit losses 17,182 16,967 15,737 Non-interest income Service charges on deposits 966 959 1,014 ATM and debit card interchange transaction fees 1,262 1,176 1,297 Gain on sales of investment securities, net 24 -- -- Gain on sales of loans, net 138 122 68 Bank owned life insurance (“BOLI”) net earnings 171 165 158 Other 314 265 254 Total non-interest income, net 2,875 2,687 2,791 Non-interest expense Salaries and employee benefits 5,825 5,977 5,928 Premises and equipment 973 1,075 1,011 Gain on sale of premises and equipment, net -- -- (3) Advertising 182 189 211 OREO and other repossessed assets, net 8 9 -- ATM and debit card processing 658 521 580 Postage and courier 137 142 130 State and local taxes 570 335 335 Professional fees 341 431 335 FDIC insurance 211 219 208 Loan administration and foreclosure 99 155 156 Technology and communications 993 1,121 1,086 Deposit operations 345 319 450 Amortization of core deposit intangible (“CDI”) 45 45 56 Other, net 780 656 586 Total non-interest expense, net 11,167 11,194 11,069 Income before income taxes 8,890 8,460 7,459 Provision for income taxes 1,790 1,705 1,535 Net income $7,100 $6,755 $5,924 Net income per common share: Basic $0.90 $0.85 $0.74 Diluted 0.90 0.85 0.74 Weighted average common shares outstanding: Basic 7,893,308 7,937,063 8,004,552 Diluted 7,921,762 7,968,632 8,039,345 TIMBERLAND BANCORP INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME Nine Months Ended($ in thousands, except per share amounts) (unaudited) June 30, June 30, 2025 2024 Interest and dividend income Loans receivable $63,339 $56,841 Investment securities 6,205 6,892 Dividends from mutual funds, FHLB stock and other investments 252 266 Interest bearing deposits in banks 5,870 5,791 Total interest and dividend income 75,666 69,790 Interest expense Deposits 23,259 21,383 Borrowings 602 787 Total interest expense 23,861 22,170 Net interest income 51,805 47,620 Provision for credit losses – loans 640 810 Recapture of credit losses – investment securities (14) (20) Prov. for (recapture of) credit losses - unfunded commitments 87 (130) Net int. income after provision for (recapture of) credit losses 51,092 46,960 Non-interest income Service charges on deposits 2,924 3,024 ATM and debit card interchange transaction fees 3,706 3,773 Gain on sales of investment securities, net 24 -- Gain on sales of loans, net 303 188 Bank owned life insurance (“BOLI”) net earnings 503 470 Other 799 749 Total non-interest income, net 8,259 8,204 Non-interest expense Salaries and employee benefits 17,893 17,863 Premises and equipment 2,998 3,065 Gain on sale of premises and equipment, net -- (3) Advertising 552 556 OREO and other repossessed assets, net 17 1 ATM and debit card processing 1,700 1,796 Postage and courier 401 401 State and local taxes 1,251 979 Professional fees 1,118 908 FDIC insurance 640 624 Loan administration and foreclosure 383 395 Technology and communications 3,253 3,101 Deposit operations 997 1,094 Amortization of core deposit intangible (“CDI”) 135 169 Other, net 2,090 1,735 Total non-interest expense, net 33,428 32,684 Income before income taxes 25,923 22,480 Provision for income taxes 5,208 4,552 Net income $20,715 $17,928 Net income per common share: Basic $2.61 $2.22 Diluted 2.60 2.21 Weighted average common shares outstanding: Basic 7,929,626 8,067,068 Diluted 7,963,412 8,109,043 TIMBERLAND BANCORP INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS ($ in thousands, except per share amounts) (unaudited) June 30, March 31, June 30, 2025 2025 2024 Assets Cash and due from financial institutions $32,532 $26,010 $25,566 Interest-bearing deposits in banks 161,095 165,201 133,347 Total cash and cash equivalents 193,627 191,211 158,913 Certificates of deposit (“CDs”) held for investment, at cost 8,462 8,711 10,458 Investment securities: Held to maturity, at amortized cost (net of ACL – investment securities) 141,570 140,954 176,787 Available for sale, at fair value 86,475 84,807 74,515 Investments in equity securities, at fair value 855 853 836 FHLB stock 2,045 2,045 2,037 Other investments, at cost 3,000 3,000 3,000 Loans held for sale 1,763 1,151 1,795 Loans receivable 1,459,374 1,437,599 1,414,065 Less: ACL – loans (17,878) (17,525) (17,046) Net loans receivable 1,441,496 1,420,074 1,397,019 Premises and equipment, net 21,490 21,436 21,558 OREO and other repossessed assets, net 221 221 -- BOLI 24,113 23,942 23,436 Accrued interest receivable 7,174 7,127 7,045 Goodwill 15,131 15,131 15,131 CDI 316 361 508 Loan servicing rights, net 911 1,051 1,526 Operating lease right-of-use assets 1,248 1,324 1,550 Other assets 7,295 9,331 4,515 Total assets $1,957,192 $1,932,730 $1,900,629 Liabilities and shareholders’ equity Deposits: Non-interest-bearing demand $406,222 $407,811 $407,125 Deposits: Interest-bearing 1,263,255 1,243,019 1,221,419 Total deposits 1,669,477 1,650,830 1,628,544 Operating lease liabilities 1,350 1,426 1,649 FHLB borrowings 20,000 20,000 20,000 Other liabilities and accrued expenses 9,701 7,950 9,213 Total liabilities 1,700,528 1,680,206 1,659,406 Shareholders’ equity Common stock, $.01 par value; 50,000,000 shares authorized; 7,876,853 shares issued and outstanding – June 30, 2025 7,903,489 shares issued and outstanding – March 31, 2025 7,953,431 shares issued and outstanding – June 30, 2024 27,226 28,028 30,681 Retained earnings 230,213 225,166 211,087 Accumulated other comprehensive loss (775) (670) (545) Total shareholders’ equity 256,664 252,524 241,223 Total liabilities and shareholders’ equity $1,957,192 $1,932,730 $1,900,629 Three Months EndedPERFORMANCE RATIOS: June 30, 2025 March 31, 2025 June 30, 2024Return on average assets (a) 1.47% 1.43% 1.25% Return on average equity (a) 11.23% 10.95% 9.95% Net interest margin (a) 3.80% 3.79% 3.53% Efficiency ratio 54.48% 56.25% 58.97% Nine Months Ended June 30, 2025 June 30, 2024Return on average assets (a) 1.44% 1.27% Return on average equity (a) 11.07% 10.10% Net interest margin (a) 3.74% 3.53% Efficiency ratio 55.65% 58.55% Three Months EndedASSET QUALITY RATIOS AND DATA: ($ in thousands) June 30, 2025 March 31, 2025 June 30, 2024Non-accrual loans $3,843 $2,327 $4,120 Loans past due 90 days and still accruing -- -- -- Non-performing investment securities 38 41 72 OREO and other repossessed assets 221 221 -- Total non-performing assets (b) $4,102 $2,589 $4,192 Non-performing assets to total assets (b) 0.21% 0.13% 0.22% Net charge-offs (recoveries) during quarter $(1) $-- $36 Allowance for credit losses - loans to non-accrual loans 465% 753% 414% Allowance for credit losses - loans to loans receivable (c) 1.23% 1.22% 1.21% CAPITAL RATIOS: Tier 1 leverage capital 12.63% 12.55% 12.04% Tier 1 risk-based capital 19.29% 19.04% 17.97% Common equity Tier 1 risk-based capital 19.29% 19.04% 17.97% Total risk-based capital 20.54% 20.29% 19.22% Tangible common equity to tangible assets (non-GAAP) 12.42% 12.36% 11.97% BOOK VALUES: Book value per common share $32.58 $31.95 $30.33 Tangible book value per common share (d) 30.62 29.99 28.36 ________________________________________________ (a) Annualized(b) Non-performing assets include non-accrual loans, loans past due 90 days and still accruing, non-performing investment securities and OREO and other repossessed assets. (c) Does not include loans held for sale and is before the allowance for credit losses.(d) Tangible common equity divided by common shares outstanding (non-GAAP). AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY ($ in thousands)(unaudited) For the Three Months Ended June 30, 2025 March 31, 2025 June 30, 2024 Amount Rate Amount Rate Amount Rate Assets Loans receivable and loans held for sale$1,450,350 5.92% $1,435,999 5.90% $1,391,582 5.65%Investment securities and FHLB stock (1) 232,272 3.71 232,532 3.64 268,954 3.63 Interest-earning deposits in banks and CDs 178,887 4.45 172,175 4.44 161,421 5.41 Total interest-earning assets 1,861,509 5.50 1,840,706 5.48 1,821,957 5.33 Other assets 79,715 77,563 82,008 Total assets$1,941,224 $1,918,269 $1,903,965 Liabilities and Shareholders’ Equity NOW checking accounts$333,074 1.39% $328,115 1.32% $329,344 1.29%Money market accounts 304,526 3.16 306,137 3.18 326,023 3.56 Savings accounts 205,592 0.35 206,054 0.28 208,488 0.27 Certificates of deposit accounts 363,342 3.77 343,945 3.82 311,545 4.21 Brokered CDs 48,028 4.83 50,104 4.85 45,442 5.32 Total interest-bearing deposits 1,254,562 2.47 1,234,355 2.45 1,220,842 2.62 Borrowings 20,002 4.03 20,000 4.04 20,001 4.42 Total interest-bearing liabilities 1,274,564 2.49 1,254,355 2.47 1,240,843 2.64 Non-interest-bearing demand deposits 402,717 403,738 413,494 Other liabilities 10,266 10,064 10,245 Shareholders’ equity 253,677 250,112 239,383 Total liabilities and shareholders’ equity$1,941,224 $1,918,269 $1,903,965 Interest rate spread 3.01% 3.01% 2.69%Net interest margin (2) 3.80% 3.79% 3.53%Average interest-earning assets to average interest-bearing liabilities 146.05% 146.75% 146.83% _____________________________________(1) Includes other investments(2) Net interest margin = annualized net interest income / average interest-earning assets AVERAGE BALANCES, YIELDS, AND RATES ($ in thousands)(unaudited) For the Nine Months Ended June 30, 2025 June 30, 2024 Amount Rate Amount Rate Assets Loans receivable and loans held for sale$1,441,506 5.87% $1,363,213 5.57%Investment securities and FHLB stock (1) 237,400 3.81 294,789 3.24 Interest-earning deposits in banks and CDs 172,591 4.55 143,537 5.39 Total interest-earning assets 1,851,497 5.49 1,801,539 5.17 Other assets 77,595 81,650 Total assets$1,929,092 $1,883,189 Liabilities and Shareholders’ Equity NOW checking accounts$329,883 1.36% $358,052 1.48%Money market accounts 311,762 3.26 273,683 3.09 Savings accounts 205,764 0.30 214,275 0.24 Certificates of deposit accounts 346,313 3.89 291,707 4.12 Brokered CDs 48,169 4.71 42,856 5.37 Total interest-bearing deposits 1,241,891 2.50 1,180,573 2.42 Borrowings 20,001 4.02 22,457 4.68 Total interest-bearing liabilities 1,261,892 2.53 1,203,030 2.46 Non-interest-bearing demand deposits 406,906 431,849 Other liabilities 10,159 11,273 Shareholders’ equity 250,135 237,037 Total liabilities and shareholders’ equity$1,929,092 $1,883,189 Interest rate spread 2.96% 2.71%Net interest margin (2) 3.74% 3.53%Average interest-earning assets to average interest-bearing liabilities 146.72% 149.75% _____________________________________(1) Includes other investments(2) Net interest margin = annualized net interest income / average interest-earning assets Non-GAAP Financial MeasuresIn addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. Timberland believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported. Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Timberland provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders’ equity less goodwill and CDI. In addition, tangible assets equal total assets less goodwill and CDI. The following table provides a reconciliation of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP) and ending total assets (GAAP) to ending tangible assets (non-GAAP). ($ in thousands) June 30, 2025 March 31, 2025 June 30, 2024 Shareholders’ equity $256,664 $252,524 $241,223 Less goodwill and CDI (15,447) (15,492) (15,639) Tangible common equity $241,217 $237,032 $225,584 Total assets $1,957,192 $1,932,730 $1,900,629 Less goodwill and CDI (15,447) (15,492) (15,639) Tangible assets $1,941,745 $1,917,238 $1,884,990 Contact: Dean J. Brydon, CEO Jonathan A. Fischer, President & COO Marci A. Basich, CFO (360) 533-4747 www.timberlandbank.com

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

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