Timberland Bancorp(TSBK) - 2025 Q3 - Quarterly Results

Financial Highlights Timberland Bancorp reported strong Q3 2025 results, with net income and EPS growing over 20% year-over-year, driven by NIM expansion Q3 Fiscal 2025 Key Earnings Metrics | Metric | Q3 2025 | Q2 2025 | Q3 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | $7.10M | $6.76M | $5.92M | +20% | | Diluted EPS | $0.90 | $0.85 | $0.74 | +22% | Nine-Month Fiscal Performance Comparison | Metric | Nine Months Ended 6/30/2025 | Nine Months Ended 6/30/2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Income | $20.72M | $17.93M | +16% | | Diluted EPS | $2.60 | $2.21 | +18% | Q3 Fiscal 2025 Profitability Ratios | Ratio | Q3 2025 | Q2 2025 | Q3 2024 | | :--- | :--- | :--- | :--- | | Net Interest Margin (NIM) | 3.80% | 3.79% | 3.53% | | Return on Average Assets (ROA) | 1.47% | 1.43% | 1.25% | | Return on Average Equity (ROE) | 11.23% | 10.95% | 9.95% | Operating Results Analysis Operating revenue grew 9% year-over-year, driven by a 10% increase in net interest income and an improved efficiency ratio of 54.48% - Net interest income for Q3 2025 increased by 10% year-over-year to $17.62 million, driven by a higher average balance of interest-earning assets and an expanded Net Interest Margin (NIM) of 3.80%[8] - A provision for credit losses on loans of $351,000 was recorded, primarily due to loan portfolio growth and changes in its composition[11] - Non-interest income rose 7% from the preceding quarter to $2.88 million, mainly due to higher ATM and debit card interchange fees[12] - Operating expenses remained stable, decreasing slightly from the prior quarter, with the efficiency ratio improving to 54.48%[13] Balance Sheet Management The balance sheet showed steady growth, with total assets increasing 3% year-over-year to $1.96 billion, supported by loan and deposit growth Asset Composition Total assets grew 1% to $1.96 billion, driven by a 2% increase in net loans receivable to $1.44 billion, led by multi-family and commercial real estate - Total assets increased by $24.46 million (1%) during the quarter to $1.96 billion, and by $56.56 million (3%) year-over-year[15] - The company maintains strong liquidity, with cash, equivalents, and available-for-sale securities representing 17.0% of total liabilities, and an additional $674 million in secured borrowing capacity[16] - Net loans receivable grew by 2% during the quarter, driven by a $21.83 million increase in multi-family loans and a $5.67 million increase in commercial real estate loans[17] Loan Portfolio Composition ($ in thousands) | Loan Category | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Mortgage Loans | $1,364,788 | $1,336,738 | $1,323,338 | | Total Consumer Loans | $49,687 | $49,833 | $46,800 | | Total Commercial Loans | $126,598 | $131,399 | $136,527 | | Total Loans | $1,541,073 | $1,517,970 | $1,506,665 | Liabilities and Deposits Total deposits increased 1% to $1.67 billion during the quarter, driven by certificates of deposit, with non-interest-bearing demand deposits at 24% of the mix - Total deposits grew by $18.65 million (1%) during the quarter, led by a $16.01 million increase in certificates of deposit[23] Deposit Composition ($ in thousands) | Deposit Type | June 30, 2025 | % of Total | June 30, 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Non-interest-bearing demand | $406,222 | 24% | $407,125 | 25% | | Interest-bearing | $1,263,255 | 76% | $1,221,419 | 75% | | Total Deposits | $1,669,477 | 100% | $1,628,544 | 100% | - Total borrowings remained stable at $20.00 million with a weighted average rate of 3.97%[26] Shareholders' Equity and Capital Adequacy Shareholders' equity grew 2% to $256.66 million, supported by net income, with strong capital ratios including a total risk-based capital ratio of 20.54% - Total shareholders' equity increased by $4.14 million (2%) during the quarter, driven by net income, and partially offset by $2.05 million in dividends and $1.02 million in stock repurchases[27] Key Capital Ratios | Ratio | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Tier 1 leverage capital | 12.63% | 12.55% | 12.04% | | Total risk-based capital | 20.54% | 20.29% | 19.22% | Asset Quality Asset quality remained generally stable, with the non-performing assets to total assets ratio at 0.21%, despite an increase in non-accrual loans due to a single well-collateralized loan - The ratio of non-performing assets to total assets was 0.21% at quarter-end, compared to 0.13% in the prior quarter and 0.22% a year ago[31] - Net recoveries were $1,000 for the quarter, an improvement from net charge-offs of $36,000 in the comparable quarter one year ago[31] - Non-accrual loans increased by $1.52 million from the prior quarter to $3.84 million, primarily due to one well-collateralized loan secured by single-family homes being past maturity[32] Non-Accrual Loans by Type ($ in thousands) | Loan Category | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Mortgage loans | $1,942 | $371 | $1,597 | | Consumer loans | $575 | $575 | $615 | | Commercial business loans | $1,326 | $1,381 | $1,908 | | Total Non-Accrual Loans | $3,843 | $2,327 | $4,120 | Shareholder Return Initiatives The company demonstrated strong commitment to shareholder returns through a $0.26 per share quarterly cash dividend and a new stock repurchase program for up to 5% of outstanding shares - A quarterly cash dividend of $0.26 per share was declared, payable on August 22, 2025, marking the 51st consecutive quarterly cash dividend[3] - A new stock repurchase program was adopted, allowing the Company to repurchase up to 5% of its outstanding shares, or 393,842 shares, replacing the existing program[3][29] - During the third fiscal quarter, the company repurchased 34,236 shares of its common stock for $1.02 million, at an average price of $29.74 per share[9][27] Financial Statements and Supplementary Data This section provides detailed unaudited consolidated financial statements, including income statements, balance sheets, key ratios, and non-GAAP reconciliations for periods ended June 30, 2025 Consolidated Statements of Income The income statement details Q3 2025 net interest income of $17.62 million and net income of $7.10 million, with nine-month figures of $51.81 million and $20.72 million respectively Quarterly Income Statement Highlights ($ in thousands) | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Net Interest Income | $17,622 | $15,981 | | Provision for Credit Losses | $440 | $248 | | Non-interest Income | $2,875 | $2,791 | | Non-interest Expense | $11,167 | $11,069 | | Net Income | $7,100 | $5,924 | Nine-Month Income Statement Highlights ($ in thousands) | Line Item | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | | Net Interest Income | $51,805 | $47,620 | | Provision for Credit Losses | $640 | $680 | | Non-interest Income | $8,259 | $8,204 | | Non-interest Expense | $33,428 | $32,684 | | Net Income | $20,715 | $17,928 | Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows total assets of $1.96 billion, total liabilities of $1.70 billion, and total shareholders' equity of $256.66 million Key Balance Sheet Items ($ in thousands) | Line Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Cash and Cash Equivalents | $193,627 | $158,913 | | Net Loans Receivable | $1,441,496 | $1,397,019 | | Total Assets | $1,957,192 | $1,900,629 | | Total Deposits | $1,669,477 | $1,628,544 | | Total Liabilities | $1,700,528 | $1,659,406 | | Total Shareholders' Equity | $256,664 | $241,223 | Key Performance and Capital Ratios Performance ratios improved, with ROA at 1.47% and ROE at 11.23%, while capital ratios remained robust, including a total risk-based capital ratio of 20.54% Quarterly Performance Ratios | Ratio | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Return on average assets (annualized) | 1.47% | 1.25% | | Return on average equity (annualized) | 11.23% | 9.95% | | Net interest margin (annualized) | 3.80% | 3.53% | | Efficiency ratio | 54.48% | 58.97% | Non-GAAP Financial Measures Reconciliation This section reconciles GAAP to non-GAAP measures, adjusting for intangible assets, showing tangible common equity of $241.22 million and tangible assets of $1.94 billion as of June 30, 2025 Reconciliation of GAAP to Non-GAAP Tangible Equity and Assets ($ in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Shareholders' equity (GAAP) | $256,664 | $241,223 | | Less: Goodwill and CDI | ($15,447) | ($15,639) | | Tangible common equity (Non-GAAP) | $241,217 | $225,584 | | Total assets (GAAP) | $1,957,192 | $1,900,629 | | Less: Goodwill and CDI | ($15,447) | ($15,639) | | Tangible assets (Non-GAAP) | $1,941,745 | $1,884,990 |