Timberland Bancorp Reports First Fiscal Quarter Net Income of $8.2 Million
EPS Increases 21% to $1.04 from $0.86 for the Comparable Quarter One Year Ago
Quarterly Return on Average Assets of 1.60%
Quarterly Return on Average Equity of 12.33%
Quarterly Net Interest Margin Increases to 3.85%
Announces a 4% Increase in the Quarterly Cash Dividend
HOQUIAM, Wash., Jan. 26, 2026 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) ("Timberland" or "the Company"), the holding company for Timberland Bank (the "Bank"), today reported net income of $8.22 million, or $1.04 per diluted common share for the quarter ended December 31, 2025. This compares to net income of $6.86 million, or $0.86 per diluted common share for the comparable quarter one year ago, and $8.45 million, or $1.07 per diluted common share, for the preceding quarter.
"Timberland delivered strong profitability this quarter, demonstrating the fundamental strength and resilience of our business model," stated Dean Brydon, Chief Executive Officer. "In the first quarter, net income increased 20% from a year ago, with earnings per share up 21%, reflecting our disciplined approach to growth and operation efficiency. Compared to the prior quarter, net income was down 3%, largely due to a $1.04 million bank owned life insurance ("BOLI") benefit claim realized during the prior quarter. However, when adjusted for the one-time BOLI impact, net income and earnings per share increased by approximately 11% over the prior quarter."
"As a result of Timberland's strong earnings and capital position, our Board of Directors announced a 4% increase to the quarterly cash dividend to shareholders to $0.29 per share, payable on February 27, 2026, to shareholders of record on February 13, 2026," stated Jonathan Fischer, President and Chief Operating Officer. "This represents the 53rd consecutive quarter Timberland will have paid a cash dividend and demonstrates the Board's continued confidence in our long-term outlook."
"Our strong quarterly results reflect several positive trends across our business," said Marci Basich, Chief Financial Officer. "We continued to see expansion in our net interest margin, which increased three basis points from the prior quarter and 21 basis points year-over-year. The current quarter included additional non-accrual interest and late fees collected, which increased the margin by approximately 6 basis points. Our balance sheet positioning and proactive deposit pricing strategies successfully offset the headwinds from recent Federal Reserve rate cuts and the resulting lower rate environment. Total deposits decreased 1% from the prior quarter and increased 5% year-over-year, with a portion of the quarterly decrease due to a reduction in brokered deposits. Going forward, our focus remains on preserving a diversified funding mix and sustaining stable margin performance."
"We're taking a disciplined approach to balance sheet expansion in the current environment, prioritizing quality and returns over volume," Brydon continued. "Net loans decreased slightly during the quarter primarily due to an increase in loan payoffs. Credit quality remains an area we continue to monitor closely, though performance across the portfolio remains solid with net recoveries of $18,000 for the quarter. The non-performing assets ("NPA") ratio remained flat at 0.23% at December 31, 2025, compared to the prior quarter end, and loans graded "Substandard" decreased significantly during the period. We remain confident in the overall health of our loan portfolio and our disciplined approach to credit risk management."
"We are pleased to announce that we officially opened our new full-service branch in University Place on January 12, 2026. University Place is near Tacoma, WA and the new branch is located between our Gig Harbor and Tacoma branches. This strategic expansion positions us to deepen our presence in a dynamic market and build stronger commercial banking relationships with the businesses driving growth in this community," said Fischer.
Earnings and Balance Sheet Highlights (at or for the periods ended December 31, 2025, compared to December 31, 2024, or September 30, 2025): Earnings Highlights:
EPS increased 21% to $1.04 for the current quarter from $0.86 for the comparable quarter one year ago and decreased 3% from $1.07 for the preceding quarter;
Net income increased 20% to $8.22 million for the current quarter from $6.86 million for the comparable quarter one year ago and decreased 3% from $8.45 million for the preceding quarter (which included a $1.04 million BOLI benefit claim);
Return on average equity ("ROE") and return on average assets ("ROA") for the current quarter were 12.33% and 1.60%, respectively;
Net interest margin ("NIM") for the current quarter increased to 3.85% from 3.82% for the preceding quarter and 3.64% for the comparable quarter one year ago; and
The efficiency ratio for the current quarter improved to 52.65% from 53.18% for the preceding quarter and 56.27% for the comparable quarter one year ago.
Balance Sheet Highlights:
Total assets decreased slightly, less than 1%, from the prior quarter and increased 5% year-over-year;
Net loans receivable decreased slightly, less than 1% from the prior quarter and increased 3% year-over-year;
Total deposits decreased 1% from the prior quarter and increased 5% year-over-year;
Total shareholders' equity increased 2% from the prior quarter and increased 8% year-over-year; 29,303 shares of common stock were repurchased during the current quarter for $1.01 million;
Non-performing assets to total assets ratio was 0.23% at December 31, 2025, compared to 0.23% at September 30, 2025, and 0.16% at December 31, 2024;
Book and tangible book (non-GAAP) values per common share increased to $34.06 and $32.11 respectively, at December 31, 2025; and
Liquidity (both on-balance sheet and off-balance sheet) remained strong at December 31, 2025, with only $20 million in borrowings and additional secured borrowing line capacity of $761 million available through the Federal Home Loan Bank ("FHLB") and the Federal Reserve.
Operating Results
Operating revenue (net interest income before the provision for credit losses plus non-interest income) for the current quarter decreased 3% to $21.71 million from $22.49 million for the preceding quarter and increased 10% from $19.67 million for the comparable quarter one year ago. The decrease in operating revenue compared to the preceding quarter was primarily due to a decrease in non-interest income, and to a lesser extent, a decrease in interest income from investment securities, which was partially offset by an increase in interest income on loans receivable and on interest bearing deposits in banks. Non-interest income was higher in the quarter ended September 30, 2025, primarily due to a $1.04 million BOLI death benefit claim recorded during the quarter.
Net interest income increased $554,000, or 3%, to $18.95 million for the current quarter from $18.40 million for the preceding quarter and increased $1.98 million, or 12%, from $16.97 million for the comparable quarter one year ago. The increase in net interest income compared to the preceding quarter was primarily due to a $43.49 million increase in the average balance of total interest-earning assets and a five-basis point decrease in the weighted average cost of interest-bearing liabilities. These increases were partially offset by a $36.02 million increase in the average balance of interest-bearing liabilities and a one-basis point decrease in the weighted average yield of interest-bearing assets.
Timberland's NIM for the current quarter improved to 3.85% from 3.82% for the preceding quarter and 3.64% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately six basis points due to the collection of $282,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $9,000 of the fair value discount on acquired loans. The NIM for the preceding quarter was increased by approximately two basis points due to the collection of $102,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $11,000 of the fair value discount on acquired loans. The NIM for the comparable quarter one year ago 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.
Non-interest income decreased $1.33 million, or 32%, to $2.76 million for the current quarter from $4.09 million for the preceding quarter and increased $67,000, or 2%, from $2.70 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 BOLI net income (from a $1.04 million death benefit claim) and, to a lesser extent, smaller decreases in several other categories.
Total operating (non-interest) expenses for the current quarter decreased $528,000, or 4%, to $11.43 million from $11.96 million for the preceding quarter and increased $364,000, or 3%, 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 professional fees, loan administration and foreclosure, technology and communications, premises and fixed assets, and several expense recoveries on items in the other, net category. These decreases were partially offset by an increase in salary and employee benefits expense and smaller increases in several other expense categories. The efficiency ratio for the current quarter improved to 52.65% from 53.18% for the preceding quarter and 56.27% for the comparable quarter one year ago.
The provision for income taxes for the current quarter increased $240,000, or 13%, to $2.10 million from $1.86 million for the preceding quarter, primarily due to higher taxable income. Timberland's effective income tax rate was 20.4% for the quarter ended December 31, 2025, compared to 18.1% for the quarter ended September 30, 2025, and 20.0% for the quarter ended December 31, 2024. The lower effective income tax rate for the September 30, 2025 quarter was primarily due to a higher percentage of non-taxable income as a result of a BOLI benefit claim.
Balance Sheet Management
Total assets decreased $6.65 million, or less than 1%, during the quarter to $2.01 billion at December 31, 2025, from $2.01 billion at September 30, 2025, and increased $96.65 million, or 5%, from $1.91 billion one year ago.
Liquidity
Timberland has continued to maintain a strong liquidity position, both on-balance sheet and off-balance sheet. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 18.9% of total liabilities at December 31, 2025, compared to 18.8% at September 30, 2025, and 15.0% one year ago. Timberland also had secured borrowing line capacity of $761 million available through the FHLB and the Federal Reserve at December 31, 2025. With a strong and diversified deposit base, only 18% of Timberland's deposits were uninsured or uncollateralized at December 31, 2025. (Note: This calculation excludes public deposits that are fully collateralized.)
Loans
Net loans receivable decreased $4.76 million, or less than 1%, during the quarter to $1.46 billion at December 31, 2025, from $1.46 billion at September 30, 2025, and increased $47.01 million, or 3%, from $1.41 billion at December 31, 2024. The decrease during the quarter was primarily due to an $18.16 million decrease in construction loans, a $2.41 million decrease in land loans and smaller decreases in several other loan categories. These decreases were partially offset by an $8.03 million increase in one- to four-family loans, a $4.56 million increase in multi-family loans, a $2.09 million increase in home equity and second mortgage loans and smaller increases in several other loan categories.
Loan Portfolio($ in thousands)
December 31, 2025
September 30, 2025
December 31, 2024
Amount
Percent
Amount
Percent
Amount
Percent
Mortgage loans:
One- to four-family (a)
$325,724
21
%
$317,691
20
%
$306,443
20
%
Multi-family
212,331
14
207,767
13
177,861
12
Commercial
611,989
39
610,692
39
597,054
39
Construction - custom and
owner/builder
102,177
7
130,341
9
124,104
8
Construction - speculativeone-to four-family
15,110
1
10,745
1
8,887
1
Construction - commercial
20,199
1
21,818
1
22,841
2
Construction - multi-family
65,856
4
45,660
3
48,940
3
Construction - land
development
2,387
--
15,324
1
15,977
1
Land
33,521
2
35,952
2
30,538
2
Total mortgage loans
1,389,294
89
1,395,990
89
1,332,645
88
Consumer loans:
Home equity and second
mortgage
52,569
3
50,479
3
48,851
3
Other
1,898
--
2,034
--
2,889
--
Total consumer loans
54,467
3
52,513
3
51,740
3
Commercial loans:
Commercial business
Loans
128,397
8
126,937
8
135,312
9
SBA PPP loans
20
--
58
--
204
--
Total commercial loans
128,417
8
126,995
8
135,516
9
Total loans
1,572,178
100
%
1,575,498
100
%
1,519,901
100
%
Less:
Undisbursed portion of
construction loans in
process
(89,883
)
(88,289
)
(85,350
)
Deferred loan origination
fees
(5,338
)
(5,528
)
(5,444
)
Allowance for credit losses
(18,125
)
(18,091
)
(17,288
)
Total loans receivable, net
$1,458,832
$1,463,590
$1,411,819
_______________________(a) Does not include one- to four-family loans held for sale totaling $3,736, $1,127, and $411 at December 31, 2025, September 30, 2025, and December 31, 2024, respectively.
The following table provides a breakdown of commercial real estate ("CRE") mortgage loans by collateral type as of December 31, 2025:
CRE Loan Portfolio Breakdown by Collateral
($ in thousands)
Collateral Type
Balance
Percent of CRE Portfolio
Percent of Total Loan Portfolio
Average Balance Per Loan
Non-Accrual
Industrial warehouses
$129,108
21
%
8
%
$1,317
$--
Medical/dental offices
84,338
14
5
1,240
--
Office buildings
68,132
11
4
811
304
Other retail buildings
53,059
9
3
596
--
Mini-storage
38,098
6
2
1,524
--
Hotel/motel
31,031
5
2
2,585
--
Restaurants
28,365
5
2
579
--
Gas stations/conv. stores
26,468
4
2
1,018
--
Churches
14,018
2
1
876
--
Nursing homes
13,379
2
1
2,230
--
Shopping centers
10,363
2
1
1,727
--
Mobile home parks
9,160
2
1
416
--
Additional CRE
106,470
17
7
783
--
Total CRE
$611,989
100
%
39
%
$961
$304
Timberland originated $73.06 million in loans during the quarter ended December 31, 2025, compared to $100.09 million for the preceding quarter and $72.07 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 $3.66 million were sold compared to $9.01 million for the preceding quarter and $2.31 million for the comparable quarter one year ago.
Investment Securities Timberland's investment securities and CDs held for investment decreased $7.34 million, or 3%, to $215.84 million at December 31, 2025, from $223.18 million at September 30, 2025. The decrease was primarily due to the maturities of U.S. Treasury Securities and scheduled amortization, and was partially offset by the purchase of additional U.S. government agency mortgaged-backed investment securities.
Deposits
Total deposits decreased $12.15 million, or 1%, during the quarter to $1.70 billion at December 31, 2025, from $1.72 billion at September 30, 2025, and increased $74.07 million, or 5%, from $1.63 billion at December 31, 2024. The quarter's decrease consisted of a $26.39 million decrease in non-interest-bearing deposit account balances, a $11.42 million decrease in certificate of deposit account balances and a $4.19 million decrease in savings account balances. These decreases were partially offset by a $21.68 million increase in NOW account balances and an $8.16 million increase in money market account balances.
Deposit Breakdown($ in thousands)
December 31, 2025
September 30, 2025
December 31, 2024
Amount
Percent
Amount
Percent
Amount
Percent
Non-interest-bearing demand
$404,300
24
%
$430,685
25
%
$402,911
25
%
NOW checking
367,278
21
345,599
20
323,412
20
Savings
197,490
12
201,678
12
206,845
13
Money market
304,316
18
296,152
17
311,413
19
Certificates of deposit under $250
256,809
15
256,597
15
212,764
13
Certificates of deposit $250 and over
136,764
8
142,813
8
122,997
7
Certificates of deposit, brokered
37,525
2
