Quarterly EPS of $0.74 Quarterly Return on Average Assets of 1.25% Quarterly Net Interest Margin improves to 3.53% Net Loans Increased by 11% Year-Over-Year Deposits Increased by 5% Year-Over-Year Announces Quarterly Cash Dividend HOQUIAM, Wash., July 23, 2024 (GLOBE NEWSWIRE) -- Timberland Bancorp, Inc. (NASDAQ:TSBK) ("Timberland" or "the Company"), the holding company for Timberland Bank (the "Bank"), today reported net income of $5.92 million, or $0.74 per diluted common share, for the quarter ended June 30, 2024. This compares to net income of $5.71 million, or $0.70 per diluted common share, for the preceding quarter and $6.31 million, or $0.77 per diluted common share, for the comparable quarter one year ago. For the first nine months of fiscal 2024, Timberland's net income decreased 12% to $17.93 million, or $2.21 per diluted common share, compared to $20.48 million, or $2.47 per diluted common share for the first nine months of fiscal 2023. "We are pleased with our third quarter fiscal year 2024 operating results, which were highlighted by increased earnings, net interest margin improvement, and continued loan portfolio growth," stated Dean Brydon, Chief Executive Officer. "Net income and EPS increased by 4% and 6%, respectively, compared to the prior quarter primarily due to an improvement in our net interest margin and higher non-interest income. While third quarter earnings increased compared to the prior quarter, they were lower compared to the year ago quarter, which was near the highest point of our margin in this interest rate cycle before deposit cost increases began compressing margins." As a result of Timberland's solid earnings and strong capital position, its Board of Directors announced a quarterly cash dividend to shareholders to $0.24 per share, payable on August 23, 2024, to shareholders of record on August 9, 2024. This represents the 47th consecutive quarter Timberland will have paid a cash dividend. "The loan portfolio continues to grow nicely, with solid quarterly and year-over-year growth," Brydon continued. "Net loans receivable grew by $38 million, or 3%, during the quarter, with increases primarily in the commercial real estate, 1-4 family and multi-family portfolios. We continue to remain optimistic regarding the overall strength of our loan portfolio and the opportunities for loan growth in our markets. Credit quality metrics are still holding up relatively well, with $36,000 in net charge-offs for the quarter and non-performing assets at 22 basis points of total assets, at the end of the third quarter." "A highlight of the quarter was the five basis point improvement in the net interest margin to 3.53% for the third quarter, compared to the preceding quarter, as the yield improvements on interest-earning assets outpaced the increase in cost of funds," said Jonathan Fischer, President and Chief Operating Officer. "Total deposits decreased $10 million during the quarter as deposit competition remained strong." Earnings and Balance Sheet Highlights (at or for the periods ended June 30, 2024, compared to June 30, 2023, or March 31, 2024): Earnings Highlights: Earnings per diluted common share ("EPS") increased 6% to $0.74 for the current quarter from $0.70 for the preceding quarter and decreased 4% from $0.77 for the comparable quarter one year ago; EPS for the first nine months of fiscal 2024 decreased 11% to $2.21 from $2.47 for the first nine months of fiscal 2023; Net income increased 4% to $5.92 million for the current quarter from $5.71 million for the preceding quarter and decreased 6% from $6.31 million for the comparable quarter one year ago; Net income decreased 12% to $17.93 million for the first nine months of fiscal 2024 compared to $20.48 million for the first nine months of fiscal 2023; Return on average equity ("ROE") and return on average assets ("ROA") for the current quarter were 9.95% and 1.25%, respectively; Net interest margin ("NIM") for the current quarter expanded to 3.53% from 3.48% for the preceding quarter and compressed from 3.94% for the comparable quarter one year ago; and The efficiency ratio for the current quarter was 58.97% compared to 60.22% for the preceding quarter and 56.01% 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 increased 3% from the prior quarter and increased 11% year-over-year; Total deposits decreased 1% from the prior quarter and increased 5% year-over-year; Total shareholders' equity increased 1% from the prior quarter and increased 5% year-over-year; 70,000 shares of common stock were repurchased during the quarter for $1.77 million; Non-performing assets to total assets ratio was 0.22% at June 30, 2024 compared to 0.19% at March 31, 2024 and 0.09% at June 30, 2023; Book and tangible book (non-GAAP) values per common share increased to $30.33 and $28.36, respectively, at June 30, 2024; and Liquidity (both on-balance sheet and off-balance sheet) remained strong at June 30, 2024 with only $20 million in borrowings and additional secured borrowing line capacity of $665 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 $18.77 million from $18.25 million for the preceding quarter and decreased 4% from $19.51 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, investment securities and overnight funds and an increase in non-interest income. These increases to operating revenue were partially offset by an increase in funding costs. Operating revenue decreased by 7%, to $55.82 million for the first nine months of fiscal 2024 from $59.74 million for the first nine months of fiscal 2023, primarily due to an increase in funding costs, which outpaced the increase in interest income. Net interest income increased $346,000, or 2%, to $15.98 million for the current quarter from $15.64 million for the preceding quarter and decreased $653,000, or 4%, from $16.63 million for the comparable quarter one year ago. The increase in net interest income compared to the preceding quarter was primarily due to an increase in the weighted average yield of interest-earning assets to 5.33% from 5.16% in for the preceding quarter and a $15.42 million increase in average total interest-earning assets. Partially offsetting the increase in the weighted average yield of interest-earning assets, was in increase in the weighted average cost of interest bearing liabilities to 2.64% from 2.50% for the preceding quarter. Timberland's NIM for the current quarter expanded to 3.53% from 3.48% for the preceding quarter and compressed from 3.94% for the comparable quarter one year ago. The NIM for the current quarter 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. The NIM for the preceding quarter was increased by approximately three basis points due to the collection of $90,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $10,000 of the fair value discount on acquired loans. The NIM for the comparable quarter one year ago was increased by approximately three basis points due to the collection of $87,000 in pre-payment penalties, non-accrual interest, and late fees, and the accretion of $22,000 of the fair value discount on acquired loans. Net interest income for the first nine months of fiscal 2024 decreased $3.91 million, or 8%, to $47.62 million from $51.53 million for the first nine months of fiscal 2023, primarily due to funding cost increases, which outpaced the increase in interest income. Timberland's NIM compressed to 3.53% for the first nine months of fiscal 2024 from 3.99% for the first nine months of fiscal 2023. A $264,000 provision for credit losses on loans was recorded for the quarter ended June 30, 2024. The provision was primarily due to loan portfolio growth and changes in the composition of the loan portfolio. This compares to a $166,000 provision for credit losses on loans for the preceding quarter and a $610,000 provision for credit losses on loans for the comparable quarter one year ago. In addition, a $12,000 recapture of credit losses on investments securities and an $8,000 recapture of credit losses for unfunded commitments were recorded for the current quarter. Non-interest income increased $176,000, or 7%, to $2.79 million for the current quarter from $2.62 million for the preceding quarter and decreased $84,000, or 3%, from $2.88 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter was primarily due to increases in ATM and debit card interchange transaction fees, gain on sale of loans, service charges on deposits, and smaller changes in several other categories. Fiscal year-to-date non-interest income decreased slightly (less than 1%) to $8.20 million from $8.22 million for the first nine months of fiscal 2023. Total operating (non-interest) expenses for the current quarter increased $78,000, or 1%, to $11.07 million from $10.99 million for the preceding quarter and increased $142,000, or 1%, from $10.93 million for the comparable quarter one year ago. The increase in operating expenses compared to the preceding quarter was primarily due to increases in deposit operations, advertising, technology and communications, and smaller increases in several other expense categories. These increases were partially offset by decreases in salaries and employee benefits, premises and equipment, and smaller decreases in several other expense categories. The efficiency ratio for the current quarter was 58.97% compared to 60.22% for the preceding quarter and 56.01% for the comparable quarter one year ago. Fiscal year-to-date operating expenses increased 1% to $32.68 million from $32.41 million for the first nine months of fiscal 2023. The efficiency ratio for the first nine months of fiscal 2024 was 58.55% compared to 54.24% for the first nine months of fiscal 2023. The provision for income taxes for the current quarter increased $65,000, or 4%, to $1.54 million from $1.47 million for the preceding quarter, primarily due to higher taxable income. Timberland's effective income tax rate was 20.6% for the quarter ended June 30, 2024 compared to 20.5% for the quarter ended March 31, 2024 and 20.9% for the quarter ended June 30, 2023. Timberland's effective income tax rate was 20.2% for the first nine months of fiscal 2024 compared to 20.4% for the first nine months of fiscal 2023. Balance Sheet Management Total assets decreased $6.61 million, or less than 1%, during the quarter to $1.90 billion at June 30, 2024 from $1.91 billion at March 31, 2024 and increased $92.92 million, or 5%, from $1.81 billion one year ago. The decrease in assets during the current quarter was primarily due to a $23.01 million net decrease in investment securities and CDs held for investment and a $21.44 million decrease in total cash and cash equivalents, which was partially offset by a $37.90 million increase in net loans receivable. Total deposits decreased by $10.01 million during the quarter and total shareholders' equity increased by $2.54 million. Liquidity Timberland has maintained a strong liquidity position (both on-balance sheet and off-balance sheet) while continuing to grow the loan portfolio. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment, and available for sale investment securities, was 14.7% of total liabilities at June 30, 2024, compared to 15.2% at March 31, 2024, and 12.1% one year ago. Timberland had secured borrowing line capacity of $665 million available through the FHLB and the Federal Reserve at June 30, 2024. With a strong and diversified deposit base, only 18% of Timberland's deposits were uninsured or uncollateralized at June 30, 2024. (Note: This calculation excludes public deposits that are fully collateralized.) Loans Net loans receivable increased $37.90 million, or 3%, during the quarter to $1.40 billion at June 30, 2024 from $1.36 billion at March 31, 2024. This increase was primarily due to a $20.49 million increase in commercial real estate loans, a $12.18 million increase in one- to four-family loans, a $10.68 million increase in multi-family loans and smaller increases in several other loan categories. These increases to net loans receivable were partially offset by a $9.69 million increase in undisbursed portion of construction and land development loans and smaller decreases in several other loan categories.   Loan Portfolio ($ in thousands)     June 30, 2024   March 31, 2024   June 30, 2023   Amount   Percent   Amount   Percent   Amount   Percent Mortgage loans:                                   One- to four-family (a) $288,611     19 %   $276,433     19 %   $229,274     17 % Multi-family 177,950     12     167,275     12     111,777     8   Commercial 597,865     40     577,373     40     557,015     40   Construction - custom and owner/builder 128,222     9     122,988     8     136,595     10   Construction - speculative one-to four-family 11,441     1     16,407     1     12,522     1   Construction - commercial 32,130     2     32,318     2     42,657     3   Construction - multi-family 35,631     2     36,795     3     73,859     5   Construction - land development 19,104     1     16,051     1     15,968     1   Land 32,384     2     31,821     2     25,908     2   Total mortgage loans 1,323,338     88     1,277,461     88     1,205,575     87                                       Consumer loans:                                   Home equity and second mortgage 43,679     3     42,357     3     40,008     3   Other 3,121     --     2,925     --     2,469     --   Total consumer loans 46,800     3     45,282     3     42,477     3                                       Commercial loans:                                   Commercial business loans 136,213     9     135,505     9     137,114     10   SBA PPP loans 314     --     367     --     519     --   Total commercial loans 136,527     9     135,872     9     137,633     10   Total loans 1,506,665     100 %   1,458,615     100 %   1,385,685     100 % Less:                                   Undisbursed portion of construction loans inprocess (87,196 )         (77,502 )         (104,774 )       Deferred loan origination fees (5,404 )         (5,179 )         (4,957 )       Allowance for credit losses (17,046 )         (16,818 )         (15,307 )       Total loans receivable, net $1,397,019           $1,359,116           $1,260,647                                             _______________________ (a) Does not include one- to four-family loans held for sale totaling $1,795, $1,311, and $0 at June 30, 2024, March 31, 2024, and June 30, 2023, respectively.     The following table provides a breakdown of commercial real estate ("CRE") mortgage loans by collateral type as of June 30, 2024:   CRE Loan Portfolio Breakdown by Collateral ($ in thousands)   Collateral Type   Balance   Percent of CRE Portfolio   Percent of Total Loan Portfolio   Average Balance Per Loan   Non-Accrual Industrial warehouse   $ 126,605     21 %   8 %   $ 1,241     $ 195   Medical/dental offices     81,099     14     5       1,287       --   Office buildings     69,314     12     5       797       --   Other retail buildings     50,365     8     3       536       --   Mini-storage     38,908     6     3       1,441       --   Hotel/motel     31,450     5     2       2,859       --   Restaurants     27,294     5     2       557       161   Gas stations/conv. stores     25,406     4     2       1,059       --   Nursing homes     18,548     3     1       2,319       --   Churches     14,375     2     1       799       --   Shopping centers     10,788     2     1       1,798       --   Mobile home parks     9,942     2     1       473       --   Additional CRE     93,771     16     6       705       954   Total CRE   $ 597,865     100 %   40 %   $ 930     $ 1,310                                         Timberland originated $74.32 million in loans during the quarter ended June 30, 2024, compared to $39.37 million for the preceding quarter and $93.72 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 $3.05 million were sold compared to $2.28 million for the preceding quarter and $3.41 million for the comparable quarter one year ago. Investment Securities Timberland's investment securities and CDs held for investment decreased $23.01 million, or 8%, to $262.60 million at June 30, 2024, from $285.61 million at March 31, 2024. The decrease was primarily due to maturities of U.S. Treasury investment securities (classified as held to maturity) totaling $30.00 million and, to a lesser extent, 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 $10.01 million, or 1%, during the quarter to $1.63 billion at June 30, 2024, from $1.64 billion at March 31, 2024. The quarter's decrease consisted of a $17.78 million decrease in non-interest bearing deposit balances, an $11.83 million decrease in NOW checking account balances and a $3.16 million decrease in savings account balances. These decreases were partially offset by a $15.17 million increase in money market account balances and a $7.60 million increase in certificate of deposit account balances.                                     Deposit Breakdown($ in thousands)               June 30, 2024   March 31, 2024   June 30, 2023   Amount   Percent   Amount   Percent   Amount   Percent Non-interest-bearing demand $407,125     25 %   $424,906     26 %   $452,729     29 % NOW checking 324,795     20     336,621     20     397,761     26   Savings 207,921     13     211,085     13     241,651     16   Money market 327,162     20     311,994     19     209,276     13   Certificates of deposit under $250 195,022     12     190,762     12     148,142     10   Certificates of deposit $250 and over 117,788     7     118,698     7     64,849     4   Certificates of deposit – brokered 48,731     3     44,488     3     38,322     2   Total deposits $1,628,544     100 %   $1,638,554     100 %   $1,552,730     100 %                                     Borrowings Total borrowings were $20.00 million at both June 30, 2024 and March 31, 2024. At June 30, 2024, the weighted average rate on the borrowings was 4.34%. Shareholders' Equity and Capital Ratios Total shareholders' equity increased $2.54 million, or 1%, to $241.23 million at June 30, 2024, from $238.70 million at March 31, 2024. The increase in shareholders' equity was primarily due to net income of $5.92 million for the quarter and a $200,000 reduction in the accumulated other comprehensive loss category for fair value adjustments on available for sale investment securities. These increases to shareholders' equity were partially offset by the payment of $1.92 million in dividends to shareholders and the repurchase of 70,000 shares of common stock for $1.77 million (an average price of $25.24 per share). Timberland had 192,025 shares available to be repurchased in accordance with the terms of its existing stock repurchase plan at June 30, 2024. Timberland remains well capitalized with a total risk-based capital ratio of 19.22%, a Tier 1 leverage capital ratio of 12.04%, a tangible common equity to tangible assets ratio (non-GAAP) of 11.97%, and a shareholders' equity to total assets ratio of 12.69% at June 30, 2024. Timberland's held to maturity investment securities were $176.79 million at June 30, 2024, with a net unrealized loss of $10.00 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 12.33%, compared to 12.69%, as reported. Asset Quality Timberland's non-performing assets to total assets ratio was 0.22% at June 30, 2024 compared to 0.19% at March 31, 2024 and 0.09% at June 30, 2023. Net charge-offs totaled $36,000 for the current quarter compared to net charge-offs of $3,000 for the preceding quarter and net charge-offs of $1,000 for the comparable quarter one year ago. During the current quarter, a provision for credit losses on loans of $264,000 was made, which was partially offset by recaptures of credit losses of $12,000 on investment securities and $8,000 on unfunded commitments. The ACL for loans as a percentage of loans receivable was 1.21% at June 30, 2024, compared to 1.22% at March 31, 2024 and 1.20% one year ago. Total delinquent loans (past due 30 days or more) and non-accrual loans increased $33,000 or 1%, to $4.23 million at June 30, 2024, from $4.20 million at March 31, 2024. Non-accrual loans increased $515,000, or 14%, to $4.12 million at June 30, 2024 from $3.61 million at March 31, 2024. The quarterly increase in non-accrual loans was primarily due to a $450,000 increase in home equity and second mortgage loans, a $161,000 increase in commercial real estate loans, and a $149,000 increase in commercial business loans on non-accrual status. These increases were partially offset by a $245,000 decrease in one- to four-family loans on non-accrual status.   Non-Accrual Loans ($ in thousands)     June 30, 2024   March 31, 2024   June 30, 2023   Amount   Quantity   Amount   Quantity   Amount   Quantity Mortgage loans:                       One- to four-family $ 135     2   $ 380     3   $ 373     2 Commercial   1,310     4     1,149     3     686     2 Construction – custom and owner/builder   152     1     152     1     --     -- Land   --     --     --     --     54     1 Total mortgage loans   1,597     7     1,681     7     1,113     5                         Consumer loans:                       Home equity and second mortgage   615     3     165     1     184     2 Total consumer loans   615     3     165     1     184     2                         Commercial business loans   1,908     8     1,759     6     289     4 Total loans $ 4,120     18   $ 3,605     14   $ 1,586     11                                     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 ...