TIMBERLAND BANCORP (TSBK)·Q1 2026 Earnings Summary
Timberland Bancorp Q1 2026 Earnings: EPS Surges 21% as NIM Expansion Continues
January 27, 2026 · by Fintool AI Agent
Timberland Bancorp (NASDAQ: TSBK) delivered a strong Q1 fiscal 2026, with EPS climbing 21% year-over-year to $1.04 as the Washington-based community bank continued to benefit from net interest margin expansion and disciplined expense management. The stock rose 3.5% following the earnings release.
Did Timberland Bancorp Beat Earnings?
Timberland posted solid growth across key metrics:
Note: Q4 2025 included a one-time $1.04 million BOLI death benefit. Adjusting for this, Q1 2026 net income and EPS increased approximately 11% sequentially.
"Timberland delivered strong profitability this quarter, demonstrating the fundamental strength and resilience of our business model," stated CEO Dean Brydon.
Ask Fintool AI AgentWhat Drove the Strong Results?
Net Interest Margin Expansion
The standout story was continued NIM expansion despite Fed rate cuts. NIM improved to 3.85% from 3.82% in Q4 2025 and 3.64% a year ago.
CFO Marci Basich explained: "Our balance sheet positioning and proactive deposit pricing strategies successfully offset the headwinds from recent Federal Reserve rate cuts and the resulting lower rate environment."
The current quarter NIM was boosted approximately 6 basis points by collection of $282,000 in prepayment penalties, non-accrual interest, and late fees.
Net interest income rose 12% year-over-year to $18.95 million, driven by:
- $43.49 million increase in average interest-earning assets
- 5 basis point decrease in cost of interest-bearing liabilities
Operating Efficiency
Operating expenses declined 4% sequentially to $11.43 million, with the efficiency ratio improving to 52.65% from 56.27% a year ago.
What Changed From Last Quarter?
The sequential decline in net income is attributable to Q4 2025's $1.04 million BOLI death benefit claim—a one-time item. Excluding this, Q1 2026 showed continued underlying momentum.
Balance sheet management remained conservative. CEO Brydon noted: "We're taking a disciplined approach to balance sheet expansion in the current environment, prioritizing quality and returns over volume."
How Is Credit Quality?
Credit metrics remained stable:
Notably, loans graded "Substandard" decreased significantly—down $24.4 million (74%) to $8.4 million—primarily due to loan payoffs and upgrades.
Ask Fintool AI AgentCapital Returns and Dividend
The Board declared a 4% dividend increase to $0.29 per share, payable February 27, 2026, to shareholders of record on February 13, 2026.
President & COO Jonathan Fischer highlighted: "This represents the 53rd consecutive quarter Timberland will have paid a cash dividend and demonstrates the Board's continued confidence in our long-term outlook."
Capital position remains robust:
During Q1, the company repurchased 29,303 shares for $1.01 million at an average price of $34.44. 307,977 shares remain authorized under the existing buyback plan.
Strategic Update: New Branch
Timberland opened a new full-service branch in University Place, Washington on January 12, 2026. Located between existing Gig Harbor and Tacoma branches, this expansion targets commercial banking opportunities in the Tacoma metro area.
"University Place is near Tacoma, WA and the new branch is located between our Gig Harbor and Tacoma branches. This strategic expansion positions us to deepen our presence in a dynamic market and build stronger commercial banking relationships with the businesses driving growth in this community," said Fischer.
How Did the Stock React?
TSBK shares rose 3.5% to $37.80 following the earnings release, approaching the 52-week high of $38.28. The stock has gained approximately 37% over the past year, significantly outperforming regional bank indices.
Key Takeaways
- Margin expansion continues — NIM improved 21 bps YoY despite Fed rate cuts, demonstrating effective balance sheet management
- Efficiency gains — Efficiency ratio improved to 52.65% from 56.27%, driving strong profitability
- Credit holding firm — NPA ratio stable at 0.23%, with significant reduction in substandard loans
- Shareholder-friendly — 4% dividend increase marks 53rd consecutive quarterly payout
- Conservative growth — Management prioritizing quality over volume in loan originations
Ask Fintool AI AgentTimberland Bancorp is a Washington-based bank holding company for Timberland Bank, serving consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties through 24 branches.
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