Timberland Bancorp, Inc., the holding company for Timberland Bank, reported net income of $7.72 million, or $0.98 per diluted common share, for the quarter ended June 30, 2026. This represents a 9% increase from net income of $7.10 million, or $0.90 per diluted common share, in the comparable quarter of fiscal 2025. The results reflect strong performance in net interest income and operating revenue, supporting the bank’s continued profitability and capital strength in the Washington state market.

Key Earnings Highlights

The following table summarizes key earnings metrics for the quarter ended June 30, 2026, compared to the preceding and year-ago quarters:

Earnings per diluted common share increased 9% to $0.98 for the current quarter from $0.90 for both the comparable quarter one year ago and the preceding quarter. For the first nine months of fiscal 2026, diluted EPS increased 12% to $2.92 from $2.60 for the first nine months of fiscal 2025.

Operating Results

Operating revenue (net interest income before the provision for credit losses plus non-interest income) for the current quarter increased 4% to $21.79 million from $21.05 million for the preceding quarter and increased 6% from $20.50 million for the comparable quarter one year ago. For the first nine months of fiscal 2026, operating revenue increased 7% to $64.56 million from $60.06 million for the first nine months of fiscal 2025.

Net interest income increased $562,000, or 3%, to $18.81 million for the current quarter from $18.24 million for the preceding quarter and increased $1.18 million, or 7%, from $17.62 million for the comparable quarter one year ago. Net interest income for the first nine months of fiscal 2026 increased $4.19 million, or 8%, to $56.00 million from $51.81 million for the first nine months of fiscal 2025. The net interest margin for the current quarter increased to 3.85% from 3.81% for the preceding quarter and from 3.80% for the comparable quarter one year ago. Timberland's NIM expanded to 3.84% for the first nine months of fiscal 2026 from 3.74% for the first nine months of fiscal 2025.

A $600,000 provision for credit losses on loans was recorded for the quarter ended June 30, 2026, compared to a $523,000 provision for the preceding quarter and a $351,000 provision for the comparable quarter one year ago. Non-interest income increased $181,000, or 6%, to $2.99 million for the current quarter from $2.81 million for the preceding quarter and increased $113,000, or 4%, from $2.88 million for the comparable quarter one year ago. Fiscal year-to-date non-interest income increased by 4% to $8.56 million from $8.26 million for the first nine months of fiscal 2025.

Total operating (non-interest) expenses for the current quarter decreased $21,000, or less than 1%, to $11.64 million from $11.66 million for the preceding quarter and increased $471,000, or 4%, from $11.17 million for the comparable quarter one year ago. Fiscal year-to-date operating expenses increased 4% to $34.73 million from $33.43 million for the first nine months of fiscal 2025. The provision for income taxes for the current quarter increased $190,000, or 11%, to $1.93 million from $1.74 million for the preceding quarter. Timberland's effective income tax rate was 20.0% for the quarter ended June 30, 2026, compared to 19.6% for the quarter ended March 31, 2026, and 20.1% for the quarter ended June 30, 2025.

Balance Sheet and Liquidity

Total assets increased $14.44 million, or 1%, during the quarter to $2.06 billion at June 30, 2026, from $2.05 billion at March 31, 2026, and increased $103.63 million, or 5%, from $1.96 billion one year ago. Net loans receivable increased $44.77 million, or 3%, during the quarter to $1.50 billion at June 30, 2026, from $1.45 billion at March 31, 2026, and increased $54.16 million, or 4%, from $1.44 billion at June 30, 2025. The increase during the quarter was primarily driven by a $35.26 million increase in commercial real estate loans and a $30.48 million increase in construction loans.

Total deposits increased $20.34 million, or 1%, during the quarter to $1.76 billion at June 30, 2026, from $1.74 billion at March 31, 2026, and increased $94.07 million, or 6%, from $1.67 billion at June 30, 2025. Total borrowings decreased $10.00 million, or 50%, to $10.00 million at June 30, 2026, from $20.00 million at March 31, 2026. Timberland originated $133.67 million in loans during the quarter ended June 30, 2026, compared to $71.12 million for the preceding quarter and $81.99 million for the comparable quarter one year ago.

Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 19.3% of total liabilities at June 30, 2026, compared to 22.1% at March 31, 2026, and 17.0% one year ago. Timberland also had secured borrowing line capacity of $791 million available through the FHLB and the Federal Reserve at June 30, 2026. Bank owned life insurance (BOLI) increased $15.25 million, or 69%, to $37.39 million at June 30, 2026, from $22.14 million at March 31, 2026, primarily due to $15.00 million in additional BOLI policies purchased during the quarter.

Shareholders' Equity, Capital, and Dividend

Total shareholders' equity increased $2.12 million, or 1%, to $273.21 million at June 30, 2026, from $271.09 million at March 31, 2026, and increased $16.54 million, or 6%, from $256.66 million at June 30, 2025. During the quarter, 70,000 shares of common stock were repurchased for $2.83 million (an average price of $40.49 per share). Book value per common share increased to $35.16 and tangible book value per common share (non-GAAP) increased to $33.19 at June 30, 2026.

Timberland remains well capitalized with the following capital ratios at June 30, 2026:

The Board of Directors announced a 3% increase in the quarterly cash dividend to $0.30 per share, payable on August 24, 2026, to shareholders of record on August 10, 2026. This represents the 55th consecutive quarter Timberland will have paid a cash dividend.

Asset Quality

Timberland's non-performing assets to total assets ratio was 0.43% at June 30, 2026, compared to 0.47% at March 31, 2026, and 0.21% at June 30, 2025. Net recoveries were $1,000 for the current quarter. Non-accrual loans decreased $849,000, or 9%, to $8.56 million at June 30, 2026, from $9.41 million at March 31, 2026. Loans graded "Substandard" decreased $874,000, or 9%, to $8.66 million at June 30, 2026, from $9.54 million at March 31, 2026, and decreased $23.71 million, or 73%, from $32.37 million at June 30, 2025. The allowance for credit losses for loans as a percentage of loans receivable was 1.27% at June 30, 2026, unchanged from March 31, 2026, and compared to 1.23% one year ago.

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 24 branches.