Executive Summary

Fiscal Q1 2025 EPS was $0.86, up 9% q/q and 12% y/y, with net income of $6.86M; ROA rose to 1.41% and ROE to 11.03% as NIM expanded 6 bps to 3.64% .
Operating revenue increased to $19.67M (+1% q/q, +5% y/y); net interest income rose to $16.97M on lower funding costs (interest‑bearing liabilities cost fell to 2.62%) .
Credit quality improved: non‑performing assets fell to 0.16% of assets, non‑accrual loans down ~30% q/q to $2.73M, though net charge‑offs ticked up to $242k on one loan .
Dividend maintained at $0.25 per share (49th consecutive quarterly dividend); buybacks continued (27,260 shares for $883k) .
Potential stock reaction catalysts: sustained NIM expansion and better asset quality offset modest deposit decline (-$17M, ~1%) and net loans down 1% on elevated payoffs .

What Went Well and What Went Wrong

What Went Well

Net interest margin expanded to 3.64% (+6 bps q/q), driven by an 8 bps reduction in the weighted average cost of interest‑bearing liabilities to 2.62%; CFO: “The improvement was primarily driven by a reduction in funding costs…” .
ROA improved to 1.41% and ROE to 11.03%; efficiency ratio edged down to 56.27% (better q/q and y/y), reflecting solid operating leverage .
Credit metrics strengthened: non‑performing assets/total assets fell to 0.16%; non‑accrual loans declined nearly 30% q/q to $2.73M; CEO cited overall portfolio strength and payoff of largest substandard loan .

What Went Wrong

Total deposits decreased $17.25M (~1%) q/q, with declines in money market (-$15.51M), non‑interest demand (-$10.21M), and NOW (-$9.92M), partially offset by CDs (+$17.53M) .
Net loans receivable declined 1% q/q to $1.41B due to significant payoffs and higher undisbursed construction balances (+$15.47M) .
Non‑interest income fell 8% q/q to $2.70M, primarily on lower gain on sales of loans .

Financial Results

Metric	Q3 FY2024 (Jun 30, 2024)	Q4 FY2024 (Sep 30, 2024)	Q1 FY2025 (Dec 31, 2024)
Diluted EPS ($)	$0.74	$0.79	$0.86
Net Income ($MM)	$5.92	$6.36	$6.86
Operating Revenue ($MM)	$18.77	$19.48	$19.67
Net Interest Income ($MM)	$15.98	$16.55	$16.97
Non‑interest Income ($MM)	$2.79	$2.93	$2.70
Net Interest Margin (%)	3.53%	3.58%	3.64%
Efficiency Ratio (%)	58.97%	56.79%	56.27%
ROA (%)	1.25%	1.32%	1.41%
ROE (%)	9.95%	10.43%	11.03%

Segment and balance mix

Category ($MM)	Dec 31, 2023	Sep 30, 2024	Dec 31, 2024
One‑ to four‑family mortgages	$263.12	$299.12	$306.44
Multi‑family mortgages	$147.32	$177.35	$177.86
Commercial real estate (CRE)	$579.04	$599.22	$597.05
Construction – custom/owner	$134.88	$132.10	$124.10
Construction – multi‑family	$57.02	$28.40	$48.94
Commercial business loans	$136.94	$138.74	$135.31
Total loans (gross)	$1,462.96	$1,514.30	$1,519.90
Net loans receivable	$1,336.28	$1,421.52	$1,411.82

KPIs and asset quality

KPI	Q3 FY2024	Q4 FY2024	Q1 FY2025
Total deposits ($MM)	$1,628.54	$1,647.67	$1,630.42
Borrowings ($MM)	$20.00	$20.00	$20.00
Liquidity ratio (% of liabilities)	14.7%	14.7%	15.0%
Uninsured/un‑collateralized deposits (%)	18%	18%	19%
Non‑performing assets ($MM)	$4.19	$3.94	$3.00
NPA / Assets (%)	0.22%	0.20%	0.16%
Non‑accrual loans ($MM)	$4.12	$3.89	$2.73
Net charge‑offs ($000)	$36	$12	$242
ACL – loans / loans receivable (%)	1.21%	1.21%	1.21%
Tier 1 leverage capital (%)	12.04%	12.12%	12.32% (as of 9/30/24)
Book value per share ($)	$30.33	$30.83	$31.33
Tangible book value per share ($)	$28.36	$28.87	$29.37

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly cash dividend per share	FQ1 2025 payable Feb 28, 2025	$0.25 (raised in FQ4 2024)	$0.25 (announced Jan 27, 2025)	Maintained

Note: No quantitative revenue, margin, OpEx, OI&E, or tax rate guidance was provided in the company’s materials .

Earnings Call Themes & Trends

No Q1 2025 earnings call transcript was available in our sources; commentary below reflects press‑release narratives.

Topic	Previous Mentions (Q3, Q4 FY2024)	Current Period (Q1 FY2025)	Trend
Net interest margin trajectory	NIM improved 3Q to 3.53% (+5 bps); 4Q to 3.58% (+5 bps) as asset yields outpaced funding costs	NIM expanded to 3.64% (+6 bps), driven by 8 bps lower cost of interest‑bearing liabilities; ~3 bps benefit from prepayment/fees	Improving
Funding cost dynamics	Weighted avg cost of interest‑bearing liabilities rose to 2.64% (3Q) and then to 2.70% (4Q)	Fell to 2.62% in Q1; deposit mix shifted toward CDs	Improving
Deposit mix and competition	3Q deposits −$10M; 4Q +$19M; mix shifted toward money market and CDs; competition strong	Deposits −$17.25M; declines in money market/NIB/NOW offset by higher CDs (+$17.53M)	Mixed (seasonal outflow)
Loan growth/originations	3Q net loans +$37.9M; 4Q +$24.5M; originations $74.32M (3Q), $48.82M (4Q)	Originations $72.07M; net loans −1% on elevated payoffs and higher undisbursed construction balances	Soft near‑term (payoffs)
Credit quality	NPA/Assets 0.22% (3Q) → 0.20% (4Q); non‑accrual $4.12M (3Q) → $3.89M (4Q)	NPA/Assets 0.16%; non‑accrual $2.73M; net charge‑offs of $242k on one loan	Improving
Capital/Buybacks	Well‑capitalized; buybacks of 70k shares (3Q) and 36,859 (4Q)	Shareholders’ equity +2% q/q; buybacks 27,260 shares; TCE/TA 12.34%	Stable/Shareholder returns sustained

Management Commentary

CEO: “We started off our 2025 fiscal year on solid footing, with net income, earnings per share and profitability metrics all improving compared to the prior quarter… [driven by] an improvement in our net interest margin and lower provisions for credit losses” .
CFO: “A highlight of the quarter was our net interest margin expanding six basis points to 3.64%… primarily driven by a reduction in funding costs as the weighted average cost of interest‑bearing liabilities decreased by eight basis points during the quarter” .
CEO on credit: “While we experienced higher than normal net charge‑offs… all other credit quality metrics improved. Non‑performing assets improved to 16 basis points… total delinquencies decreased by 10%… non‑accrual loans decreased by nearly 30%” .
President/COO: “As a result of Timberland’s solid earnings and strong capital position, our Board… announced a quarterly cash dividend… $0.25 per share… This represents the 49th consecutive quarter…” .
President/COO on community impact: Total of $772,000 donated to 43 local non‑profits via FHLB Member Impact Fund partnership .

Q&A Highlights

No earnings call transcript was available for Q1 2025 in our document set; therefore, no Q&A themes or guidance clarifications can be provided from a call [ListDocuments result: 0 transcripts].

Estimates Context

Consensus estimates: We attempted to retrieve S&P Global/Capital IQ Street consensus for EPS and revenue for Q1 2025, but data was unavailable in this session due to API limits. As a result, comparisons to consensus cannot be provided here (values unavailable; S&P Global) [functions.GetEstimates errors].
Given limited micro‑cap coverage and unavailable consensus in this session, we expect modest upward estimate drift for NIM‑sensitive metrics given demonstrated funding cost relief and better asset quality; formalized revisions require updated Street data .

Key Takeaways for Investors

Positive spread dynamics: NIM rose to 3.64% on an 8 bps decline in funding costs; further relief could sustain margin expansion if asset yields hold .
Solid profitability trajectory: ROA 1.41%, ROE 11.03%, and efficiency 56.27% reflect disciplined expense control and leverage of franchise scale .
Credit quality tailwinds: NPA/Assets down to 0.16% and non‑accrual loans −30% q/q; watch net charge‑offs (one‑off $242k) for persistence vs. transience .
Deposit mix shift: −$17.25M q/q total deposits with rotation into CDs; seasonal year‑end effects cited—monitor competitive pressure and cost of deposits into FQ2 .
Loan growth pause driven by payoffs and construction disbursement timing; originations remained healthy at $72.07M, setting up for potential rebound as payoffs normalize .
Capital and shareholder returns: TCE/TA 12.34%, ongoing buybacks and $0.25 dividend reinforce return of capital while maintaining robust buffers .
Trading setup: The narrative of margin expansion + asset‑quality improvement is constructive; near‑term stock moves likely to key off incremental deposit cost trends and loan growth resumption, with dividend continuity as a support .

TIMBERLAND BANCORP INC (TSBK)·Q1 2025 Earnings Summary