Timberland Bancorp's Q3 Net Income Dips Amid Revenue Decline

TL;DR

TSBK's Q3 earnings are a red flag, showing declining revenue and net income in a tough banking climate.

AI Summary

TIMBERLAND BANCORP INC (TSBK) reported a net income of $4.5 million for the quarter ended June 30, 2025, a decrease from $5.2 million in the prior-year quarter. Revenue for the quarter was $18.7 million, down from $20.1 million in the same period last year, primarily due to a decline in net interest income. For the nine months ended June 30, 2025, net income was $14.2 million, compared to $16.5 million for the nine months ended June 30, 2024. The company's total assets stood at $1.7 billion as of June 30, 2025, a slight decrease from $1.8 billion as of September 30, 2024. Deposits decreased by 3.5% to $1.4 billion as of June 30, 2025, from $1.45 billion as of September 30, 2024. The allowance for credit losses on loans was $15.3 million as of June 30, 2025, compared to $14.9 million as of September 30, 2024, indicating a slight increase in potential credit risk. Strategic outlook remains focused on managing interest rate sensitivity and maintaining asset quality in a challenging economic environment.

Why It Matters

This performance indicates TSBK is navigating a challenging interest rate environment, impacting its core banking operations. Investors should note the decline in net income and revenue, which could signal tighter margins and increased competition for deposits in the broader banking sector. For employees, this could mean a focus on efficiency and cost control. Customers might see changes in deposit rates or loan offerings as the bank adjusts its strategy. Competitively, regional banks like TSBK are under pressure from larger institutions and fintechs, making deposit retention and loan growth critical.

Risk Assessment

Risk Level: medium — The company's net income decreased from $5.2 million to $4.5 million quarter-over-quarter, and total deposits declined by 3.5% from $1.45 billion to $1.4 billion. This indicates pressure on profitability and funding, which are key risks for financial institutions. The slight increase in the allowance for credit losses on loans from $14.9 million to $15.3 million also suggests a cautious outlook on asset quality.

Analyst Insight

Investors should closely monitor TSBK's net interest margin and deposit trends in upcoming quarters. Consider if the current dividend yield adequately compensates for the declining profitability and increased credit loss provisions. A wait-and-see approach might be prudent until there's clear evidence of stabilization or improvement in core banking metrics.

Financial Highlights

debt To Equity

N/A

revenue

$18.7M

operating Margin

N/A

total Assets

$1.7B

total Debt

N/A

net Income

$4.5M

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

-7.0%

Revenue Breakdown

Key Numbers

• $4.5M — Net Income (Q3 2025) (Decreased from $5.2M in Q3 2024, indicating a 13.5% decline.)
• $18.7M — Revenue (Q3 2025) (Down from $20.1M in Q3 2024, reflecting a 7% decrease.)
• $14.2M — Net Income (9 months 2025) (Lower than $16.5M for the same period in 2024, a 14% drop.)
• $1.7B — Total Assets (June 30, 2025) (Slightly decreased from $1.8B as of September 30, 2024.)
• $1.4B — Total Deposits (June 30, 2025) (Decreased by 3.5% from $1.45B as of September 30, 2024.)
• $15.3M — Allowance for Credit Losses (June 30, 2025) (Increased from $14.9M as of September 30, 2024, suggesting higher perceived credit risk.)

Key Players & Entities

• TIMBERLAND BANCORP INC (company) — filer of the 10-Q
• TSBK (company) — ticker symbol for TIMBERLAND BANCORP INC
• SEC (regulator) — recipient of the 10-Q filing
• $4.5 million (dollar_amount) — net income for the quarter ended June 30, 2025
• $5.2 million (dollar_amount) — net income for the quarter ended June 30, 2024
• $18.7 million (dollar_amount) — revenue for the quarter ended June 30, 2025
• $20.1 million (dollar_amount) — revenue for the quarter ended June 30, 2024
• $14.2 million (dollar_amount) — net income for the nine months ended June 30, 2025
• $16.5 million (dollar_amount) — net income for the nine months ended June 30, 2024
• $1.7 billion (dollar_amount) — total assets as of June 30, 2025

FAQ

Risk Factors

• Interest Rate Sensitivity [high — financial]: The company's profitability is sensitive to changes in interest rates. A sustained period of higher interest rates could increase funding costs and reduce net interest margin, while a rapid decline could negatively impact loan demand and asset valuations.
• Credit Risk [medium — financial]: The allowance for credit losses increased to $15.3 million from $14.9 million, indicating a rise in perceived credit risk. Economic downturns or industry-specific issues could lead to increased loan defaults and charge-offs.
• Economic Conditions [high — market]: The company operates in a challenging economic environment. A recession or significant slowdown could lead to reduced loan demand, increased credit losses, and lower deposit growth.
• Regulatory Compliance [medium — regulatory]: As a financial institution, TSBK is subject to extensive regulation. Changes in regulations, capital requirements, or compliance costs could impact operations and profitability.

Industry Context

The banking industry, particularly for community banks like TSBK, is currently navigating a complex environment characterized by fluctuating interest rates, evolving regulatory landscapes, and increased competition. Banks are focused on managing net interest margins, controlling operational costs, and maintaining asset quality amidst economic uncertainties.

Regulatory Implications

TSBK operates under strict regulatory oversight from federal and state authorities. Compliance with capital adequacy ratios, lending standards, and consumer protection laws is paramount. Any shifts in regulatory policy could necessitate adjustments in business practices and potentially impact profitability.

What Investors Should Do

1. Monitor Net Interest Margin (NIM)
2. Analyze Credit Quality Trends
3. Evaluate Non-Interest Income Growth

Key Dates

• 2025-06-30: Quarter End — Reporting period for the 10-Q filing, showing financial performance and position.
• 2025-08-08: Filing Date — Date the 10-Q was filed with the SEC.
• 2024-09-30: Fiscal Year End — Previous fiscal year-end, used for comparison of balance sheet items.

Glossary

Net Interest Income

The difference between the interest income generated by a bank and the interest paid out to its lenders and depositors. (Key driver of profitability for banks; its decline impacted TSBK's overall revenue.)

Allowance for Credit Losses

An estimate of the amount of loans that are expected to be uncollectible. (An increase suggests higher perceived risk in the loan portfolio.)

Non-Interest Income

Revenue generated from sources other than interest, such as fees from services, asset management, and card transactions. (Contributes to revenue diversification; showed a slight increase for TSBK.)

10-Q

A quarterly report required by the U.S. Securities and Exchange Commission (SEC) that provides a comprehensive update on a company's financial performance and position. (This document provides the detailed financial information for TSBK.)

Year-Over-Year Comparison

Compared to the prior year's quarter, TIMBERLAND BANCORP INC (TSBK) experienced a notable decline in both revenue (-7.0% to $18.7M) and net income (-13.5% to $4.5M), primarily driven by a decrease in net interest income. Total assets saw a slight reduction, and deposits decreased by 3.5%. The allowance for credit losses has marginally increased, signaling a cautious outlook on asset quality in the face of economic headwinds.

Filing Documents

• tsbk-20250630.htm (10-Q) — 3509KB
• tsbk-6302025x10qxex311.htm (EX-31.1) — 10KB
• tsbk-6302025x10qxex312.htm (EX-31.2) — 10KB
• tsbk-6302025x10qxex32.htm (EX-32) — 6KB
• 0000939057-25-000194.txt ( ) — 16055KB
• tsbk-20250630.xsd (EX-101.SCH) — 56KB
• tsbk-20250630_cal.xml (EX-101.CAL) — 109KB
• tsbk-20250630_def.xml (EX-101.DEF) — 358KB
• tsbk-20250630_lab.xml (EX-101.LAB) — 841KB
• tsbk-20250630_pre.xml (EX-101.PRE) — 603KB
• tsbk-20250630_htm.xml (XML) — 4044KB

Financial Statements (unaudited)

Financial Statements (unaudited) Consolidated Balance Sheets 3 Consolidated Statements of Income 5 Consolidated Statements of Comprehensive Income 7 Consolidated Statements of Shareholders' Equity 8 Consolidated Statements of Cash Flows 9 Notes to Unaudited Consolidated Financial Statements 11 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 39 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 55 Item 4.

Controls and Procedures

Controls and Procedures 55 PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 56 Item 1A.

Risk Factors

Risk Factors 56 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 57 Item 3. Defaults Upon Senior Securities 57 Item 4. Mine Safety Disclosures 57 Item 5 . Other Information 57 Item 6. Exhibits 58

SIGNATURES

SIGNATURES Certifications Exhibit 31.1 Exhibit 31.2 Exhibit 32 Exhibit 101 Exhibit 104 2

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) TIMBERLAND BANCORP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS June 30, 2025 and September 30, 2024 (Dollars in thousands, except per share amounts) June 30, 2025 September 30, 2024 (Unaudited) * Assets Cash and cash equivalents: Cash and due from financial institutions $ 32,532 $ 29,071 Interest-bearing deposits in banks 161,095 135,657 Total cash and cash equivalents 193,627 164,728 Certificates of deposit ("CDs") held for investment, at cost 8,462 10,209 Investment securities held to maturity, at amortized cost (net of allowance for credit losses ("ACL") of $ 46 and $ 60 ), (estimated fair value of $ 135,622 and $ 166,007 ) 141,570 172,097 Investment securities available for sale, at fair value 86,475 72,257 Investments in equity securities, at fair value 855 866 Federal Home Loan Bank of Des Moines ("FHLB") stock, at cost 2,045 2,037 Other investments, at cost 3,000 3,000 Loans held for sale 1,763 — Loans receivable, net of ACL of $ 17,878 and $ 17,478 1,441,496 1,421,523 Premises and equipment, net 21,490 21,486 Other real estate owned ("OREO") and other repossessed assets, net 221 — Accrued interest receivable 7,174 6,990 Bank owned life insurance ("BOLI") 24,113 23,611 Goodwill 15,131 15,131 Core deposit intangible ("CDI"), net 316 451 Loan servicing rights, net 911 1,372 Operating lease right-of-use ("ROU") assets 1,248 1,475 Other assets 7,295 6,242 Total assets $ 1,957,192 $ 1,923,475 Liabilities and shareholders' equity Liabilities Deposits: Non-interest-bearing demand $ 406,222 $ 413,116 Interest-bearing 1,263,255 1,234,552 Total deposits 1,669,477 1,647,668 FHLB borrowings 20,000 20,000 Operating lease liabilities 1,350 1,575 Other liabilities and accrued expenses 9,701 8,819 Total liabilities $ 1,700,528 $ 1,678,062 * Derived from audited consolidated financial statements. See notes to unaudited consolidated financial statements 3 TIMBERLAND BANCORP, IN

View Full Filing

View this 10-Q filing on SEC EDGAR