Timberland's Q4 Earnings Decline Y/Y on Higher Credit Costs

Shares of Timberland Bancorp, Inc. TSBK have gained 2.3% since the company reported earnings for the quarter ended Sept. 30, 2026, outperforming the S&P 500 Index, which has declined 0.8% over the same period. Over the past month, TSBK shares have advanced 5.5%, while the S&P 500 has declined 2.3%.

Timberland reported fourth-quarter fiscal 2026 earnings per share (EPS) of $1.04, which declined 3% from $1.07 recorded in the prior-year quarter.

Operating revenues increased 1% year over year to $22.8 million from $22.5 million. The prior-year quarter included a $1 million bank-owned life insurance (BOLI) benefit claim, which affected earnings comparisons.

Net income was $8.1 million, down 4% from $8.5 million in the year-ago quarter.

Timberland Bancorp, Inc. price-consensus-eps-surprise-chart | Timberland Bancorp, Inc. Quote

Net interest income increased 7% year over year to $19.7 million from $18.4 million, supported by higher earning assets and improved interest spreads.Net interest margin (NIM) expanded 14 basis points year over year to 3.96% from 3.82%.

Non-interest income declined 24% to $3.1 million from $4.1 million, primarily reflecting the absence of the prior-year BOLI benefit.

Non-interest expenses increased 3% year over year to $12.3 million from $12 million. The efficiency ratio deteriorated to 53.94% from 53.18%, indicating modest pressure on operating efficiency.

Provision for credit losses on loans increased to $0.5 million from $0.2 million a year earlier, primarily reflecting loan portfolio growth and changes in its composition.

Net charge-offs reached $1.1 million compared with less than $0.001 million in the year-ago quarter.

The non-performing assets-to-total assets ratio increased to 0.42% from 0.23% a year earlier.

Net loans receivable increased 4% year over year to $1.5 billion, supported by lending activity across several categories.

Total deposits increased 3% to $1.8 billion, while total assets grew 3% to $2.1 billion.

Shareholders' equity increased 5% year over year to $276.3 million. Book value per share reached $35.51, while tangible book value per share stood at $33.54.

The company maintained a strong capital position, with a total risk-based capital ratio of 20.86%. Borrowings declined 75% year over year to $5 million.

For fiscal 2026, net income increased 7% to $31.2 million. EPS advanced 8% to $3.96.

Annual operating revenues rose 6% to $87.3 million.

Net interest income increased 8% year over year to $75.7 million from $70.2 million in fiscal 2025. Net interest margin expanded 11 basis points to 3.87% from 3.76%.

Chief Executive Officer Dean Brydon highlighted record annual EPS, improving profitability and continued loan growth. He noted that the prior-year BOLI benefit distorted earnings comparisons, while underlying quarterly performance remained favorable.

Chief Financial Officer Marci Basich attributed margin expansion to disciplined pricing across the balance sheet. Management also emphasized stable sequential credit quality despite increased charge-offs related to previously established loan reserves.

Timberland announced a 3% increase in its quarterly cash dividend to 31 cents per share, payable Nov. 27, 2026, to shareholders of record on Nov. 12, 2026. This marks its 56th consecutive quarterly dividend.

During the quarter, the company repurchased 40,395 common shares for $1.9 million, reinforcing its shareholder-return initiatives.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Timberland Bancorp, Inc. (TSBK) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).