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Item 1. Financial Statements

2026-02-06 compared with 2025-08-08 · 184 added, 288 removed, 901 unchanged (34% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 30, 2025 and September 30, 2024

December 31, 2025 and September 30, 2025

(Dollars in thousands, except per share amounts)

29 unchanged sentences

Total deposits 1,704,482 1,716,635

FHLB borrowings 20,000 20,000

Operating lease liabilities 3,015 3,077

FHLB borrowings 20,000 20,000

Other liabilities and accrued expenses 10,221 10,453

5 unchanged sentences

CONSOLIDATED BALANCE SHEETS (continued)

June 30, 2025 and September 30, 2024

December 31, 2025 and September 30, 2025

(Dollars in thousands, except per share amounts)

7 unchanged sentences

50,000,000 shares authorized;

7,876,853 shares issued and outstanding - June 30, 2025 7,960,127 shares issued and outstanding - September 30, 2024

7,879,828 shares issued and outstanding - December 31, 2025 7,889,571 shares issued and outstanding - September 30, 2025

26,025 26,305

Retained earnings 242,617 236,607

Accumulated other comprehensive (loss) income ( 775 ) 20

Accumulated other comprehensive loss ( 233 ) ( 298 )

Total shareholders’ equity 268,409 262,614

5 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

For the three and nine months ended June 30, 2025 and 2024

For the three months ended December 31, 2025 and 2024

(Dollars in thousands, except per share amounts)

Three Months Ended June 30, Nine Months Ended

2025 2024 2025 2024

Three Months Ended December 31,

Interest and dividend income

12 unchanged sentences

Recapture of credit losses - investment securities ( 2 ) ( 5 )

Provision for (recapture of) credit losses - unfunded commitments 93 ( 8 ) 87 ( 130 )

Recapture of credit losses - unfunded commitments ( 49 ) ( 20 )

Total provision for (recapture of) credit losses - net ( 35 ) 27

2 unchanged sentences

Net recoveries on investment securities 5 3

Gain on sale of investment securities available for sale, net 24 — 24 —

Service charges on deposits 989 999

10 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME (continued)

For the three and nine months ended June 30, 2025 and 2024

For the three months ended December 31, 2025 and 2024

(Dollars in thousands, except per share amounts)

Three Months Ended June 30, Nine Months Ended

2025 2024 2025 2024

Three Months Ended December 31,

Non-interest expense

1 unchanged sentence

Premises and equipment 1,074 950

Gain on sales/dispositions of premises and equipment, net — ( 3 ) — ( 3 )

Advertising 192 181

25 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and nine months ended June 30, 2025 and 2024

For the three months ended December 31, 2025 and 2024

(Dollars in thousands)

Three Months Ended June 30 Nine Months Ended

2025 2024 2025 2024

Three Months Ended December 31

Comprehensive income

2 unchanged sentences

Unrealized holding gain (loss) on investment securities available for sale, net of income taxes of $ 17 , and $( 216 ), respectively

( 105 ) 200 ( 795 ) 530

Change in other than temporary impairment ("OTTI") on investment securities held to maturity, net of income taxes:

Accretion of OTTI on investment securities held to maturity, net of income taxes of $ 0 , $ 0 , $ 0 and $ 2 , respectively

Total other comprehensive income (loss), net of income taxes 65 ( 812 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three and nine months ended June 30, 2025 and 2024

For the three months ended December 31, 2025 and 2024

(Dollars in thousands, except per share amounts)

4 unchanged sentences

Earnings Total

Balance, March 31, 2024 8,023,121 $ 32,338 $ 207,086 $ ( 745 ) $ 238,679

Net income — — 5,924 — 5,924

Other comprehensive income — — — 200 200

Repurchase of common stock, net of tax ( 70,000 ) ( 1,767 ) — — ( 1,767 )

Exercise of stock options 300 5 — — 5

Common stock dividends ($ 0.24 per common share)

— — ( 1,923 ) — ( 1,923 )

Stock-based compensation expense — 105 — — 105

Balance, June 30, 2024 7,953,421 $ 30,681 $ 211,087 $ ( 545 ) $ 241,223

Balance, March 31, 2025 7,903,489 $ 28,028 $ 225,166 $ ( 670 ) $ 252,524

Balance, September 30, 2024 7,960,127 $ 29,862 $ 215,531 $ 20 $ 245,413

Net income — — 6,860 — 6,860

1 unchanged sentence

Repurchase of common stock, net of tax ( 27,404 ) ( 884 ) — — ( 884 )

Restricted stock grant forfeitures ( 450 ) — — — —

Exercise of stock options 22,400 474 — — 474

2 unchanged sentences

Stock-based compensation expense — 141 — — 141

Balance, June 30, 2025 7,876,853 $ 27,226 $ 230,213 $ ( 775 ) $ 256,664

Common Stock Accumulated

Compre-hensive

Income (Loss)

Number of Shares Amount Retained

Earnings Total

Balance, December 31, 2024 7,954,673 $ 29,593 $ 220,398 $ ( 792 ) $ 249,199

Balance, September 30, 2025 7,889,571 $ 26,305 $ 236,607 $ ( 298 ) $ 262,614

2 unchanged sentences

Repurchase of common stock, net of tax ( 29,303 ) ( 1,000 ) — — ( 1,000 )

Exercise of stock options 30,200 395 — — 395

Common stock dividends ($ 0.71 per common share)

— — ( 5,739 ) — ( 5,739 )

Stock-based compensation expense — 316 — — 316

Adoption of Accounting Standards Update ("ASU") 2016-13, net of tax — — ( 488 ) — ( 488 )

Balance, June 30, 2024 7,953,421 $ 30,681 $ 211,087 $ ( 545 ) $ 241,223

Balance, September 30, 2024 7,960,127 $ 29,862 $ 215,531 $ 20 $ 245,413

Net income — — 20,715 — 20,715

Other comprehensive loss — — — ( 795 ) ( 795 )

Repurchase of common stock, net of tax ( 123,404 ) ( 3,846 ) — — ( 3,846 )

Restricted stock grant forfeitures ( 2,080 ) — — — —

3 unchanged sentences

Stock-based compensation expense — 158 — — 158

Balance, June 30, 2025 7,876,853 $ 27,226 $ 230,213 $ ( 775 ) $ 256,664

Balance, December 31, 2025 7,879,828 $ 26,025 $ 242,617 $ ( 233 ) $ 268,409

See notes to unaudited consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended June 30, 2025 and 2024

For the three months ended December 31, 2025 and 2024

(Dollars in thousands)

Nine Months Ended June 30,

Three Months Ended December 31,

Cash flows from operating activities

Net income $ 8,216 $ 6,860

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses 713 660

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

(Recapture of) provision for credit losses ( 35 ) 27

Depreciation 363 375

Deferred income taxes ( 73 ) —

Accretion of discount on purchased loans ( 9 ) ( 8 )

1 unchanged sentence

Stock-based compensation expense 158 141

Gain on sale of investment securities available for sale, net ( 24 ) —

Net recoveries on investment securities ( 5 ) ( 3 )

2 unchanged sentences

Gain on sales of loans, net ( 78 ) ( 43 )

Gain on sales/dispositions of premises and equipment, net — ( 3 )

Loans originated for sale ( 6,196 ) ( 2,680 )

2 unchanged sentences

BOLI net earnings ( 158 ) ( 166 )

Increase in deferred loan origination fees 2 162

Change in deferred loan origination fees ( 190 ) 20

Net change in accrued interest receivable and other assets, and other liabilities and accrued expenses 426 ( 9,910 )

Net cash provided by operating activities 20,076 16,404

Net cash provided by (used in) operating activities 6,084 ( 3,056 )

Cash flows from investing activities

Net decrease in CDs held for investment 747 2,739

Proceeds from sale of investment securities available for sale 13,494 —

Purchase of investment securities held to maturity ( 5,413 ) ( 1,919 )

Purchase of investment securities available for sale ( 3,958 ) ( 8,577 )

1 unchanged sentence

Proceeds from maturities and prepayments of investment securities available for sale 7,158 2,860

Purchase of FHLB stock ( 8 ) —

Redemption of FHLB stock — 1,565

Increase in loans receivable, net ( 20,744 ) ( 96,118 )

Purchases of premises and equipment ( 1,135 ) ( 1,010 )

Proceeds from sales of premises and equipment — 8

Net cash used in investing activities ( 3,924 ) ( 28,676 )

Decrease in loans receivable, net 4,941 9,419

Purchase of premises and equipment ( 505 ) ( 506 )

Net cash provided by investing activities 12,149 22,054

S ee notes to unaudited consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the nine months ended June 30, 2025 and 2024

For the three months ended December 31, 2025 and 2024

(Dollars in thousands)

Nine Months Ended June 30,

Three Months Ended December 31,

Cash flows from financing activities

Net increase in deposits $ 21,809 $ 67,609

Repayment of FHLB borrowings — ( 15,000 )

Net decrease in deposits $ ( 12,153 ) $ ( 17,252 )

Proceeds from exercise of stock options 562 474

Repurchase of common stock ( 3,846 ) ( 4,801 )

Repurchase of common stock, net of tax ( 1,000 ) ( 884 )

Payment of dividends ( 2,206 ) ( 1,993 )

Net cash provided by financing activities 12,747 42,464

Net increase in cash and cash equivalents 28,899 30,192

Net cash used in financing activities ( 14,797 ) ( 19,655 )

Net increase (decrease) in cash and cash equivalents 3,436 ( 657 )

Cash and cash equivalents

5 unchanged sentences

Supplemental disclosure of non-cash investing activities

Other comprehensive (loss) income related to investment securities $ ( 795 ) $ 539

Loans transferred to OREO $ 221 $ —

Adjustment to retained earnings, net of deferred tax - adoption of ASU 2016-13 $ — $ ( 488 )

Other comprehensive income (loss) related to investment securities $ 65 $ ( 812 )

Loans transferred to OREO and other repossessed assets $ — $ 221

See notes to unaudited consolidated financial statements

9 unchanged sentences

The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2025 (“2025 Form 10-K”).

The unaudited consolidated results of operations for the nine months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the entire fiscal year ending September 30, 2025.

The unaudited consolidated results of operations for the three months ended December 31, 2025 are not necessarily indicative of the results that may be expected for the entire fiscal year ending September 30, 2026.

(b) Principles of Consolidation:

2 unchanged sentences

The Company has one reportable operating segment which is defined as community banking in western Washington under the operating name, "Timberland Bank."

The Company's revenue is primarily derived from the business of banking.

Management has assigned certain responsibilities by business-line and evaluates financial performance on a Company-wide basis.

The Company's financial performance is monitored on a consolidated basis by the Company's Chief Executive Officer, President and Chief Financial Officer, which are considered the Company's chief operating decision makers ("CODMs") for financial oversight.

The primary measure of performance is consolidated net income.

Financial performance is reviewed monthly by the CODMs.

The presentation of financial performance is consistent with amounts and financial statement line items shown in the Company's consolidated balance sheets and consolidated statements of income.

All of the Company's operations are considered by management to be aggregated in one reportable operating segment.

(d) The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, as of the date of the consolidated balance sheets, and the reported amounts of income and expenses during the reporting period.

Actual results could differ from those estimates.

(e) Certain prior period amounts have been reclassified to conform to the June 30, 2025 presentation with no change to previously reported net income or total shareholders’ equity.

(e) Certain prior period amounts have been reclassified to conform to the December 31, 2025 presentation with no change to previously reported net income or total shareholders’ equity.

Timberland Bancorp, Inc.

and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(2) INVESTMENT SECURITIES

Held to maturity and available for sale investment securities have been classified according to management’s intent and were as follows as of June 30, 2025 and September 30, 2024 (dollars in thousands):

Held to maturity and available for sale investment securities have been classified according to management’s intent and were as follows as of December 31, 2025 and September 30, 2025 (dollars in thousands):

Losses Estimated

Fair Value Allowance for Credit Losses

June 30, 2025

December 31, 2025

Held to Maturity

7 unchanged sentences

Total $ 133,259 $ 426 $ ( 4,290 ) $ 129,395 $ 34

June 30, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

December 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

Available for Sale

Treasury and U.S.

government agency securities $ 14,888 $ — $ ( 22 ) $ 14,866

government agencies $ 75,538 $ 449 $ ( 744 ) $ 75,243

11 unchanged sentences

Available for Sale

Treasury and U.S.

government agency securities $ 3,934 $ 6 $ ( 1 ) $ 3,939

government securities $ 4,968 $ — $ — $ 4,968

government agencies 73,649 382 ( 759 ) 73,272

Total $ 78,617 $ 382 $ ( 759 ) $ 78,240

Held to maturity and available for sale investment securities with unrealized losses were as follows as of June 30, 2025 (dollars in thousands):

Held to maturity and available for sale investment securities with unrealized losses were as follows as of December 31, 2025 (dollars in thousands):

Less Than 12 Months 12 Months or Longer Total

6 unchanged sentences

Private label residential 14 — 1 13,090 ( 747 ) 15 13,104 ( 747 )

Bank issued trust preferred securities

495 ( 4 ) 1 — — — 495 ( 4 )

$ 744 $ ( 5 ) 5 $ 96,317 $ ( 4,285 ) 67 $ 97,061 $ ( 4,290 )

Available for sale

Treasury and U.S.

government agency securities $ 14,866 $ ( 22 ) 3 $ — $ — — $ 14,866 $ ( 22 )

government agencies $ 10,020 $ ( 52 ) 3 $ 28,258 $ ( 692 ) 24 $ 38,278 $ ( 744 )

14 unchanged sentences

Available for sale

Treasury and U.S.

government agency securities $ 1,962 $ ( 1 ) 1 $ — $ — — $ 1,962 $ ( 1 )

government securities $ 3,977 $ — 1 $ — $ — — $ 3,977 $ —

government agencies 11,922 ( 67 ) 3 28,947 ( 692 ) 24 40,869 ( 759 )

$ 15,899 $ ( 67 ) 4 $ 28,947 $ ( 692 ) 24 $ 44,846 $ ( 759 )

During the nine months ended June 30, 2025, the Company recorded a $ 3,000 net realized loss on 13 held to maturity investment securities, all of which had been recognized previously as a credit loss.

During the nine months ended June 30,

During the three months ended December 31, 2025, the Company recorded a $ 3,000 net realized loss on 13 held to maturity investment securities, all of which had been recognized previously as a credit loss.

During the three months ended December

31, 2024, the Company recorded a $ 2,000 net realized loss on 13 held to maturity investment securities all of which had been recognized previously as credit losses.

The recorded amount of investment securities pledged as collateral for public fund deposits, federal treasury tax and loan deposits, FHLB collateral and other non-profit organization deposits totaled $ 207.83 million and $ 208.81 million at June 30, 2025 and September 30, 2024, respectively.

The contractual maturities of investment securities at June 30, 2025 were as follows (dollars in thousands).

The recorded amount of investment securities pledged as collateral for public fund deposits, federal treasury tax and loan deposits, FHLB collateral and other non-profit organization deposits totaled $ 194.02 million and $ 195.93 million at December 31, 2025 and September 30, 2025, respectively.

The contractual maturities of investment securities at December 31, 2025 were as follows (dollars in thousands).

Expected maturities may differ from scheduled maturities due to the prepayment of principal or call provisions.

11 unchanged sentences

The Company assesses each available for sale investment security that is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis results from a credit loss or other factors.

The Company did not record an ACL on any available for sale investment securities at June 30, 2025 or September 30, 2024.

The Company did not record an ACL on any available for sale investment securities at December 31, 2025 or September 30, 2025.

As of both dates, the Company considered the unrealized losses across the classes of major security-type to be related to fluctuations in market conditions, primarily interest rates, and not reflective of a deterioration in credit value.

12 unchanged sentences

The calculation is completed on a quarterly basis using the default studies provided by an industry leading source.

At June 30, 2025 and September 30, 2024, the ACL on the held to maturity securities portfolio totaled $ 46,000 and $ 60,000 , respectively.

The following tables set forth information for the three and nine months ended June 30, 2025 and 2024, respectively, regarding activity in the ACL by portfolio segment (dollars in thousands):

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

At December 31, 2025 and September 30, 2025, the ACL on the held to maturity securities portfolio totaled $ 34,000 and $ 36,000 , respectively.

The following tables set forth information for the three months ended December 31, 2025 and 2024 regarding activity in the ACL by portfolio segment (dollars in thousands):

Three Months Ended December 31, 2025 Three Months Ended December 31, 2024

Beginning Allowance Provision for (Recapture of) Credit Losses Ending Allowance Beginning Allowance Provision for (Recapture of) Credit Losses Ending Allowance

2 unchanged sentences

Bank issued trust preferred securities 1 — 1 5 ( 2 ) 3

2 ( 1 ) 1 8 ( 2 ) 6

Total $ 36 $ ( 2 ) $ 34 $ 60 $ ( 5 ) $ 55

*Amount differs from Income Statement due to rounding.

Nine Months Ended June 30, 2025 Nine Months Ended June 30, 2024

Beginning Allowance Provision for (Recapture of) Credit Losses Ending Allowance Beginning Allowance Impact of Adopting CECL (ASU 2016-13) Provision for (Recapture of) Credit Losses Ending Allowance

Held to Maturity

Private label residential $ 55 $ ( 10 ) $ 45 $ — $ 82 $ ( 16 ) $ 66

Bank issued trust preferred securities

5 ( 4 ) 1 — 10 ( 4 ) 6

Total $ 60 $ ( 14 ) $ 46 $ — $ 92 $ ( 20 ) $ 72

The ACL on held to maturity securities is included within investment securities held to maturity on the consolidated balance sheets.

Changes in the ACL are recorded through the provision for (recapture of) credit losses on the consolidated income statement.

Accrued interest receivable on held to maturity investment securities totaled $ 698,000 at June 30, 2025 and is included in accrued interest receivable on the consolidated balance sheet.

Accrued interest receivable on held to maturity investment securities totaled $ 418,000 a t December 31, 2025 and is included in accrued interest receivable on the consolidated balance sheet.

This amount is excluded from the estimate of expected credit losses.

1 unchanged sentence

When held to maturity investment securities are placed on non-accrual status, unpaid interest credited to income is reversed.

The Company had $ 38,000 of private label mortgage-backed held to maturity investment securities in non-accrual status at June 30, 2025.

The Company had $ 32,000 of private label mortgage-backed held to maturity investment securities in non-accrual status at December 31, 2025.

The Company monitors the credit quality of investment securities held to maturity using credit ratings from Moody's, S&P and Fitch.

The Company monitors the credit ratings on a quarterly basis.

The following tables set forth the Company's held to maturity investment securities at June 30, 2025 and September 30, 2024, by credit quality indicator:

The following tables set forth the Company's held to maturity investment securities at December 31, 2025 and September 30, 2025, by credit quality indicator (dollars in thousands):

Credit Ratings

As of June 30, 2025 AAA/AA/A BBB/BB/B Unrated Total

As of December 31, 2025 AAA/AA/A BBB/BB/B Unrated Total

Held to Maturity

16 unchanged sentences

Total held to maturity $ 131,441 $ — $ 5,420 $ 136,861

Prior to adopting ASU 2016-13, the Company bifurcated OTTI into (1) amounts related to credit losses which are recognized through earnings and (2) amounts related to all other factors which are recognized as a component of other comprehensive income (loss).

Prior to adopting ASU 2016-13 during the year ended September 30, 2024, the Company bifurcated OTTI into (1) amounts related to credit losses which are recognized through earnings and (2) amounts related to all other factors which are recognized as a component of other comprehensive income (loss).

To determine the component of the gross OTTI related to credit losses, the Company compared the amortized cost basis of the OTTI security to the present value of its revised expected cash flows, discounted using its pre-impairment yield.

2 unchanged sentences

The amounts written off due to credit loss remain and continue to be recovered on a cash basis.

The following table presents a roll forward of the credit loss component of held to maturity investment securities that have been written down for OTTI with the credit loss component recognized in earnings for the nine months ended June 30, 2025 and 2024 (dollars in thousands):

Nine Months Ended

The following table presents a roll forward of the credit loss component of held to maturity investment securities that have been written down for OTTI with the credit loss component recognized in earnings for the three months ended December 31, 2025 and 2024 (dollars in thousands):

Three Months Ended

Beginning balance of credit loss $ 788 $ 803

1 unchanged sentence

Net realized loss previously recorded as credit losses ( 3 ) —

Recapture of prior credit loss ( 6 ) ( 9 )

Recovery of prior credit loss ( 5 ) ( 2 )

Ending balance of credit loss $ 780 $ 801

11 unchanged sentences

Based on this assessment, the Company determined that it is not "more likely than not" that the Company's fair value is less than its carrying amount, and, therefore, goodwill was determined not to be impaired at May 31, 2025.

As of June 30, 2025, management believes that there have been no events or changes in the circumstances since May 31, 2025 that would indicate a potential impairment of goodwill.

As of December 31, 2025, management believes that there have been no events or changes in the circumstances since May 31, 2025 that would indicate a potential impairment of goodwill.

No assurances can be given, however, that the Company will not record an impairment loss on goodwill in the future.

4 unchanged sentences

CDI is evaluated for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, with any changes in estimated useful life accounted for prospectively over the revised remaining life.

As of June 30, 2025, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

As of December 31, 2025, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

(4) LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable by portfolio segment consisted of the following at June 30, 2025 and September 30, 2024 (dollars in thousands):

Loans receivable by portfolio segment consisted of the following at December 31, 2025 and September 30, 2025 (dollars in thousands):

2025 September 30,

26 unchanged sentences

__________________

(1) Does not include one- to four-family loans held for sale totaling $ 1.76 million and $ 0 at June 30, 2025 and September 30, 2024, respectively.

Loans receivable at June 30, 2025 and September 30, 2024, are reported net of unamortized discounts totaling $ 63,000 and $ 155,000 , respectively.

(1) Does not include one- to four-family loans held for sale totaling $ 3.74 million and $ 1.13 million at December 31, 2025 and September 30, 2025, respectively.

Loans receivable at December 31, 2025 and September 30, 2025, are reported net of unamortized discounts totaling $ 43,000 and $ 51,000 , respectively.

Credit Quality Indicators

14 unchanged sentences

Loans in this classification have the weaknesses of substandard loans with the additional characteristic that the weaknesses make the collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss.

At June 30, 2025 and September 30, 2024, there was one loan classified as doubtful which is supported by an SBA guarantee of the remaining balance.

At December 31, 2025, no loans were classified as doubtful.

At September 30, 2025, there was one loan classified as doubtful which is supported by an SBA guarantee of the remaining balance.

Loans in this classification are considered uncollectible and of such little value that continuance as an asset is not warranted.

This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this loan even though partial recovery may be realized in the future.

At June 30, 2025 and September 30, 2024, there were no loans classified as loss.

The following table sets forth the Company's loan portfolio at June 30, 2025, by risk attribute and year of origination as well as current period gross charge-offs (dollars in thousands):

At December 31, 2025 and September 30, 2025, there were no loans classified as loss.

The following table sets forth the Company's loan portfolio at December 31, 2025 by risk attribute and year of origination as well as current period gross charge-offs (dollars in thousands):

Term Loans Amortized Cost Basis by Origination Fiscal Year

2 unchanged sentences

Pass $ 136 $ 12,291 $ 40,200 $ 74,354 $ 101,198 $ 89,908 $ — $ 318,087

Watch — — — 550 — 270 — 820

Special Mention — — — — 4,829 — — 4,829

3 unchanged sentences

Watch — — — — — 11,107 — 11,107

Substandard — — — — 9,704 — — 9,704

Total multi-family $ 5,505 $ 16,257 $ 13,128 $ 39,852 $ 38,905 $ 97,090 $ 1,594 $ 212,331

10 unchanged sentences

Watch — 767 5,810 3,735 306 1,312 — 11,930

Substandard — — — — 553 — — 553

Total construction-custom & owner/builder $ 2,341 $ 39,952 $ 11,233 $ 5,235 $ 1,957 $ 1,312 $ — $ 62,030

1 unchanged sentence

Pass $ 1,789 $ 5,847 $ 235 $ 322 $ — $ — $ — $ 8,193

Watch — — 477 — — — — 477

Total construction-speculative one-to four-family $ 1,789 $ 5,847 $ 235 $ 322 $ — $ — $ — $ 8,193

7 unchanged sentences

Pass $ — $ — $ — $ 2,067 $ — $ — $ — $ 2,067

Substandard — — — 11,549 — — — 11,549

Total construction-land development $ — $ — $ — $ 2,067 $ — $ — $ — $ 2,067

14 unchanged sentences

Total other consumer $ 439 $ 105 $ 450 $ 381 $ 68 $ 395 $ 60 $ 1,898

Current period gross write-offs $ 2 $ 1 $ — $ — $ — $ — $ 1 $ 4

Commercial business

2 unchanged sentences

Substandard — — — 159 140 510 254 1,063

Doubtful — 202 — — — — — 202

Total commercial business $ 1,488 $ 10,706 $ 12,455 $ 17,192 $ 25,990 $ 13,952 $ 46,614 $ 128,397

Current period gross write-offs $ — $ — $ — $ 241 $ — $ — $ — $ 241

Pass $ — $ — $ — $ — $ — $ 20 $ — $ 20

5 unchanged sentences

Substandard — — — 1,940 1,204 4,895 573 8,612

Doubtful — 202 — — — — — 202

Total loans receivable $ 21,561 $ 171,288 $ 127,351 $ 230,810 $ 303,394 $ 529,963 $ 97,928 $ 1,482,295

7 unchanged sentences

Pass $ 10,885 $ 25,692 $ 79,193 $ 102,942 $ 45,274 $ 47,078 $ — $ 311,064

Watch — 1,796 — — — — — 1,796

Special Mention — — — 4,846 — — — 4,846

Substandard — — 1,781 — — — — 1,781

1 unchanged sentence

Pass $ 16,305 $ 13,129 $ 40,004 $ 39,064 $ 22,489 $ 62,516 $ 1,334 $ 194,841

Watch — — — — — 3,264 — 3,264

Substandard — — — — 9,662 — — 9,662

Total multi-family $ 16,305 $ 13,129 $ 40,004 $ 39,064 $ 32,151 $ 65,780 $ 1,334 $ 207,767

8 unchanged sentences

Watch — 3,875 5,367 1,855 1,232 — — 12,329

Substandard — — — 553 — — — 553

Total construction-custom & owner/builder $ 32,733 $ 37,660 $ 5,927 $ 2,408 $ 1,990 $ — $ — $ 80,718

1 unchanged sentence

Pass $ 6,375 $ 16 $ 44 $ — $ — $ — $ — $ 6,435

Watch — — 488 — — — — 488

Total construction-speculative one-to four-family $ 6,375 $ 16 $ 532 $ — $ — $ — $ — $ 6,923

9 unchanged sentences

Pass $ — $ 358 $ 1,629 $ — $ — $ — $ — $ 1,987

Watch — — 11,549 — — — — 11,549

Substandard — — — 11,549 — — — 11,549

Total construction-land development $ — $ 358 $ 1,629 $ 11,549 $ — $ — $ — $ 13,536

4 unchanged sentences

Pass $ 2,528 $ 5,154 $ 3,574 $ 1,556 $ 237 $ 2,112 $ 34,649 $ 49,810

Watch — — — — — 10 — 10

Substandard — — — — — 57 602 659

3 unchanged sentences

Watch — — — — — 7 — 7

Substandard — — — — — — 22 22

Total other consumer $ 565 $ 459 $ 390 $ 82 $ 48 $ 430 $ 60 $ 2,034

3 unchanged sentences

Watch — — — — 649 — — 649

Special Mention — — — 187 304 201 — 692

Substandard — — 159 140 — 790 — 1,089

2 unchanged sentences

Current period gross write-offs $ — $ — $ — $ 241 $ — $ — $ — $ 241

Pass $ — $ — $ — $ 224 $ 36 $ — $ — $ 260

Total SBA PPP $ — $ — $ — $ 224 $ 36 $ — $ — $ 260

Term Loans Amortized Cost Basis by Origination Fiscal Year

Type 2025 2024 2023 2022 2021 Prior Revolving Loans Total Loans Receivable

Pass $ — $ — $ — $ — $ 58 $ — $ — $ 58

Total SBA PPP $ — $ — $ — $ — $ 58 $ — $ — $ 58

Total loans receivable, gross (1)

14 unchanged sentences

The ACL is calculated for loan segments utilizing loan level information and relevant information from internal and external sources related to past events and current conditions.

The calculation utilizes the discounted cash flow ("DCF") methodology for all segments.

Management has adopted the discounted cash flow ("DCF") methodology for all segments.

The Company incorporates a reasonable and supportable forecast that utilizes current period national gross domestic product ("GDP") and national unemployment figures.

2 unchanged sentences

Loans that are evaluated individually are not included in the collective analysis.

The ACL on loans that are individually evaluated may be estimated based on their expected cash flows, or in the case of loans for which repayment is expected substantially through the operation or sale of collateral when the borrower is experiencing financial difficulty, may be measured based on the fair value of the collateral less estimated selling costs.

The ACL on loans that are evaluated individually may be estimated based on their expected cash flows, or in the case of loans for which repayment is expected substantially through the operation or sale of collateral when the borrower is experiencing financial difficulty, may be measured based on the fair value of the collateral less estimated selling costs.

When available information confirms that specific loans or portions thereof are uncollectible, identified amounts are charged against the ACL.

9 unchanged sentences

In addition, regulatory agencies, as integral part of their examination process, periodically review the Company's ACL and may require the Company to make adjustments to the ACL based on their judgment about information available to them at the time of their examinations.

The following tables set forth information for the three months ended June 30, 2025 and 2024, regarding activity in the ACL by portfolio segment (dollars in thousands):

Three Months Ended June 30, 2025

The following tables set forth information for the three months ended December 31, 2025 and 2024 regarding activity in the ACL by portfolio segment (dollars in thousands):

Three Months Ended December 31, 2025

Allowance Provision for

16 unchanged sentences

Total $ 18,091 $ 16 $ — $ 18 $ 18,125

Three Months Ended June 30, 2024

Allowance Provision for

(Recapture of) Loan Losses Charge-

Offs Recoveries Ending

Mortgage loans:

One- to four-family $ 2,185 $ 49 $ — $ 43 $ 2,277

Multi-family 1,358 84 — — 1,442

Commercial real estate 6,954 241 — — 7,195

Construction – custom and owner/builder 1,215 76 — — 1,291

Construction – speculative one- to four-family 142 ( 47 ) — — 95

Construction – commercial 451 ( 58 ) — — 393

Construction – multi-family 478 ( 121 ) — — 357

Construction – land development 255 35 — — 290

Land 840 ( 12 ) — — 828

Consumer loans:

Home equity and second mortgage 305 9 — — 314

Other 45 2 ( 2 ) — 45

Commercial business loans 2,590 6 ( 79 ) 2 2,519

Total $ 16,818 $ 264 $ ( 81 ) $ 45 $ 17,046

The following tables set forth information for the nine months ended June 30, 2025 and 2024, regarding activity in the ACL by portfolio segment (dollars in thousands):

Nine Months Ended June 30, 2025

Three Months Ended December 31, 2024

Allowance Provision for

(Recapture of) Credit Losses Charge-

Offs Recoveries Ending

Mortgage loans:

One-to four-family $ 2,632 $ 261 $ — $ — $ 2,893

Multi-family 1,308 272 — — 1,580

Commercial real estate 6,934 229 — — 7,163

Construction – custom and owner/builder 1,328 ( 86 ) — — 1,242

Construction – speculative one- to four-family 128 ( 31 ) — — 97

Construction – commercial 537 ( 280 ) — — 257

Construction – multi-family 456 ( 78 ) — — 378

Construction – land development 335 78 — — 413

Land 793 20 — — 813

Consumer loans:

Home equity and second mortgage 348 63 — — 411

Other 39 2 ( 4 ) 1 38

Commercial business loans 2,640 190 ( 241 ) 4 2,593

Total $ 17,478 $ 640 $ ( 245 ) $ 5 $ 17,878

Nine Months Ended June 30, 2024

Allowance Impact of Adopting CECL (ASU 2016-13) Provision for

(Recapture of) Loan Losses Charge-

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A loan is generally not removed from non-accrual until all delinquent principal, interest and late fees have been brought current and the borrower demonstrates repayment ability over a period of not less than six months and all taxes are current.

The following tables present an analysis of loans by aging category and portfolio segment at June 30, 2025 and September 30, 2024 (dollars in thousands):

The following tables present an analysis of loans by aging category and portfolio segment at December 31, 2025 and September 30, 2025 (dollars in thousands):

Past Due 60-89

3 unchanged sentences

Past Due Current Total

June 30, 2025

December 31, 2025

Mortgage loans:

50 unchanged sentences

(2) Net of construction LIP.

At June 30, 2025, the Company had $ 523,000 of non-accrual loans with an ACL of $ 308,000 and $ 3.32 million of non-accrual loans with no ACL.

The following table is a summary of the amortized cost of collateral dependent non-accrual loans as of June 30, 2025 (in thousands):

At December 31, 2025, the Company had $ 534,000 of non-accrual loans with an ACL of $ 362,000 and $ 3.75 million of non-accrual loans with no ACL.

The following table is a summary of the amortized cost of collateral dependent non-accrual loans as of December 31, 2025 (in thousands):

Recorded Investment Related ACL

2 unchanged sentences

Commercial real estate 304 —

Construction - custom and owner/builder 553 —

Consumer loans:

8 unchanged sentences

Commercial real estate 159 —

Construction - custom and owner/builder 553 —

Consumer loans:

9 unchanged sentences

These methods incorporate the post-modification of loan terms, as well as defaults and charge-offs associated with historical modified loans.

The following tables present the amortized cost basis of loans at June 30, 2025 that were both experiencing financial difficulty and modified during the nine months ended June 30, 2025, by loan class and modification type (dollars in thousands):

Combination - Term Extension and Collateral Addition

June 30, 2025 Amortized Cost Basis % of Total Loan Type Financial Effect

Commercial Business Loan $ 256 0.20 % Loan extended three months and secured a deed of trust on a land parcel

Combination - Term Extension and Payment Modification

June 30, 2025 Amortized Cost Basis % of Total Loan Type Financial Effect

Commercial Business Loan $ 2 — % Loan extended seven months , monthly payment reduced with principal payments due at time of change in terms and 1.5 months after signing

The loans above are performing according to modified terms.

There were no modified loans to borrowers experiencing financial difficulty at June 30, 2024.

At June 30, 2025, the Company has operating leases for two retail bank branch offices and an administrative office.

The Company's leases have remaining lease terms of two to seven years , and include options to extend the leases for up to five years .

There were no loan modifications to borrowers experiencing financial difficulty during the three months ended December 31, 2025 and 2024.

All loans modified during the past twelve months are performing according to modified terms.

At December 31, 2025, the Company has operating leases for three retail bank branch offices and an administrative office.

The Company's leases have remaining lease terms of one to twenty-four years , and include options to extend the leases for up to fifteen years .

Lease extensions are not certain, and the Company evaluates each lease based on the specific circumstances for the location to determine the probability of exercising the extensions in the calculation of ROU assets and lease liabilities.

The components of lease cost (included in the premises and equipment expense category in the consolidated statements of income) are as follows for the three and nine months ended June 30, 2025 and 2024 (dollars in thousands):

Three Months Ended June 30, Nine Months Ended June 30,

2025 2024 2025 2024

The components of lease cost (included in the premises and equipment expense category in the consolidated statements of income) are as follows for the three months ended December 31, 2025 and 2024 (dollars in thousands):

Three Months Ended December 31,

Operating lease cost $ 126 $ 96

1 unchanged sentence

Total lease cost $ 126 $ 96

The following tables provide supplemental information related to operating leases at or for the three and nine months ended June 30, 2025 and 2024 (dollars in thousands):

At or For the Three Months Ended June 30, 2025 At or For the Nine Months Ended June 30, 2025

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 84 $ 252

Weighted average remaining lease term-operating leases 5.5 years 5.5 years

Weighted average discount rate-operating leases 2.35 % 2.35 %

At or For the Three Months Ended June 30, 2024 At or For the Nine Months Ended June 30, 2024

The following table provides supplemental information related to operating leases at or for the three months ended December 31, 2025 and 2024 (dollars in thousands):

At or For the Three Months Ended December 31 2025 At or For the Three Months Ended December 31, 2024

Cash paid for amounts included in the measurement of lease liabilities:

4 unchanged sentences

As an alternative, the weighted average discount rate used to estimate the present value of future lease payments in calculating the value of the ROU asset and lease liability was determined by utilizing the FHLB fixed-rate credit advance borrowing rate for the term correlating to the remaining term of each lease.

Maturities of operating lease liabilities at June 30, 2025 for future fiscal years are as follows (dollars in thousands):

Maturities of operating lease liabilities at December 31, 2025 for future fiscal years are as follows (dollars in thousands):

Remainder of Fiscal 2026 $ 285

12 unchanged sentences

Common stock equivalents arise from the assumed conversion of outstanding stock options.

Information regarding the calculation of basic and diluted net income per common share for the three and nine months ended June 30, 2025 and 2024 is as follows (dollars in thousands, except per share amounts):

Three Months Ended June 30, Nine Months Ended June 30,

2025 2024 2025 2024

Information regarding the calculation of basic and diluted net income per common share for the three months ended December 31, 2025 and 2024, is as follows (dollars in thousands, except per share amounts):

Three Months Ended December 31,

Basic net income per common share computation

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____________________________________________

(1) For the three and nine months ended June 30, 2025, average options to purchase 137,720 and 120,049 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per common share because their effect would have been anti-dilutive.

For the three and nine months ended June 30, 2024, average options to purchase 240,820 and 233,081 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per common share because their effect would have been anti-dilutive.

(1) For the three months ended December 31, 2025 and 2024, average options to purchase 1,000 and 96,220 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per common share because their effect would have been anti-dilutive.

(7) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three and nine months ended June 30, 2025 and 2024, are as follows (dollars in thousands):

Three Months Ended June 30, 2025 Nine Months Ended June 30, 2025

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three months ended December 31, 2025 and 2024, are as follows (dollars in thousands):

Three Months Ended Three Months Ended

December 31, 2025 December 31, 2024

Changes in fair value of available for sale securities Total Changes in fair value of available for sale securities Total

Balance of AOCI at the beginning of period $ ( 298 ) $ ( 298 ) $ 20 $ 20

Other comprehensive loss ( 105 ) ( 105 ) ( 795 ) ( 795 )

Balance of AOCI at the end of period $ ( 775 ) $ ( 775 ) $ ( 775 ) $ ( 775 )

__________________________

(1) All amounts are net of income taxes.

Three Months Ended June 30, 2024 Nine Months Ended June 30, 2024

Changes in fair value of available for sale securities (1) Total Changes in fair value of available for sale securities (1) Accretion of other-than-temporary impairment on held to maturity securities (1) Total

Balance of AOCI at the beginning of period $ ( 745 ) $ ( 745 ) $ ( 1,075 ) $ ( 9 ) $ ( 1,084 )

Other comprehensive income 200 200 530 9 539

Other comprehensive income (loss) 65 65 ( 812 ) ( 812 )

Balance of AOCI at the end of period $ ( 233 ) $ ( 233 ) $ ( 792 ) $ ( 792 )

4 unchanged sentences

Under the 2019 Plan, the Company may grant options and awards of restricted stock (with or without performance measures) for up to 350,000 shares of common stock, of which 300,000 shares are reserved for issuance to employees and officers, and 50,000 shares are reserved for issuance to directors and directors emeriti.

Shares issued under the 2019 Plan may be purchased on the open market or issued from the Company's authorized and unissued shares.

Shares issued under the 2019 Plan may be purchased in the open market or issued from the Company's authorized and unissued shares.

The exercise price of each stock option equals the fair market value of the Company’s common stock on the date of grant.

1 unchanged sentence

Restricted stock awards typically vest in equal annual installments over a three - or five-year period beginning on the first anniversary of the grant date.

At June 30, 2025, 162,185 shares of common stock remained available for further issuance under the 2019 Plan, either as stock options or restricted stock.

At December 31, 2025, 132,935 shares of common stock remained available for further issuance under the 2019 Plan, either as stock options or restricted stock.

The Company's 2014 Equity Incentive Plan (the "2014 Plan") expired on January 27, 2025;

therefore, no further awards may be granted under the plan.

As of June 30, 2025, there were 150,780 shares outstanding that had been previously granted in the 2014 Plan, of which 128,350 were vested and 22,430 were unvested.

Stock option activity for the nine months ended June 30, 2025 and 2024, is summarized as follows:

Nine Months Ended June 30, 2025 Nine Months Ended June 30, 2024

As of December 31, 2025, there were 109,890 shares outstanding that had been previously granted in the 2014 Plan, of which 98,090 were vested and 11,800 were unvested.

Stock option activity for the three months ended December 31, 2025 and 2024, is summarized as follows:

Three Months Ended December 31, 2025 Three Months Ended December 31, 2024

Number of Shares Weighted

5 unchanged sentences

The fair value of stock options is determined using the Black-Scholes valuation model.

There were no stock options granted during the nine months ended June 30, 2025 and 2024.

The aggregate intrinsic value of options exercised during the nine months ended June 30, 2025 and 2024 was $ 487,000 and $ 501,000 , respectively.

At June 30, 2025, there were 69,430 unvested options with an aggregate grant date fair value of $ 421,000 , all of which the Company assumes will vest.

The aggregate intrinsic value of unvested options at June 30, 2025 was $ 346,000 .

There were 2,500 options that vested during the nine months ended June 30, 2025 with a total fair value of $ 16,000 .

At June 30, 2024, there were 121,820 unvested options with an aggregate grant date fair value of $ 709,000 .

There were 300 options that vested during the nine months ended June 30, 2024 with a total fair value of $ 2,000 .

Additional information regarding options outstanding at June 30, 2025, is as follows:

There were no stock options granted during the three months ended December 31, 2025 and 2024.

The aggregate intrinsic value of options exercised during the three months ended December 31, 2025 and 2024 was $ 201,000 and $ 239,000 , respectively.

At December 31, 2025, there were 33,400 unvested options with an aggregate grant date fair value of $ 223,000 , all of which the Company assumes will vest.

The aggregate intrinsic value of unvested options at December 31, 2025 was $ 268,000 .

There were 100 options that vested during the three months ended December 31, 2025 with a total fair value of $ 326 .

At December 31, 2024, there were 76,530 unvested options with an aggregate grant date fair value of $ 464,000 .

There were 100 options that vested during the three months ended December 31, 2024 with a total fair value of $ 326 .

Additional information regarding options outstanding at December 31, 2025, is as follows:

Options Outstanding Options Exercisable

8 unchanged sentences

192,090 $ 26.23 4.7 158,690 $ 25.91 4.3

252,980 $ 26.02 4.9 183,550 $ 25.93 4.2

The aggregate intrinsic value of options outstanding at June 30, 2025 and 2024, was $ 1.33 million and $ 1.07 million , respectively.

As of June 30, 2025, unrecognized compensation cost related to unvested stock options was $ 309,000 , which is expected to be recognized over a weighted average period of 1.37 years.

There were no restricted stock awards granted during the nine months ended June 30, 2025 and 2024.

Nine Months Ended June 30, 2025 Nine Months Ended June 30, 2024

The aggregate intrinsic value of options outstanding at December 31, 2025 and 2024, was $ 1.84 million and $ 1.45 million , respectively.

As of December 31, 2025, unrecognized compensation cost related to unvested stock options was $ 210,000 , which is expected to be recognized over a weighted average period of 1.16 years.

There were no restricted stock awards granted during the three months ended December 31, 2025 and 2024.

The following table presents the activity related to restricted stock for the three months ended December 31, 2025 and 2024:

Three Months Ended December 31, 2025 Three Months Ended December 31, 2024

Number of Unvested Shares Weighted Average Grant Date Fair Value Number of Unvested Shares Weighted Average Grant Date Fair Value

1 unchanged sentence

Forfeited ( 2,080 ) 29.50 ( 450 ) 29.28

Vested ( 200 ) 27.37 — —

Restricted stock outstanding end of period 68,370 $ 32.01 48,565 $ 29.28

1 unchanged sentence

The related stock-based compensation expense is recorded over the requisite service period.

At June 30, 2025, unrecognized compensation cost related to unvested restricted stock awards was $ 1.12 million, which is expected to be recognized over a weighted average period of 2.28 years.

At December 31, 2025, unrecognized compensation cost related to unvested restricted stock awards was $ 2.06 million, which is expected to be recognized over a weighted average period of 2.42 years.

(9) FAIR VALUE MEASUREMENTS

8 unchanged sentences

The Company's assets measured at fair value on a recurring basis consist of investment securities available for sale and investments in equity securities.

The estimated fair values of MBS are based upon quoted market prices (Level 1) and market prices of similar securities or observable inputs (Level 2).

The estimated fair values of mutual funds and U.S.

Treasury and U.S.

government agency securities are based upon quoted market prices (Level 1).

The Company had no liabilities measured at fair value on a recurring basis at June 30, 2025 and September 30, 2024.

The Company's assets measured at estimated fair value on a recurring basis at June 30, 2025 and September 30, 2024, were as follows (dollars in thousands):

June 30, 2025 Estimated Fair Value

The estimated fair values of available for sale investment securities are based upon quoted market prices (Level 1) and market prices of similar securities or observable inputs (Level 2).

The estimated fair values of mutual funds are based upon quoted market prices (Level 1).

The Company had no liabilities measured at fair value on a recurring basis at December 31, 2025 and September 30, 2025.

The Company's assets measured at estimated fair value on a recurring basis at December 31, 2025 and September 30, 2025, were as follows (dollars in thousands):

December 31, 2025 Estimated Fair Value

Level 1 Level 2 Level 3 Total

Available for sale investment securities

Treasury and U.S.

government agency securities $ 14,866 $ — $ — $ 14,866

government agencies $ — $ 75,243 $ — $ 75,243

5 unchanged sentences

Available for sale investment securities

Treasury and U.S.

government agency securities $ 3,939 $ — $ — $ 3,939

government securities $ 4,968 $ — $ — $ 4,968

government agencies — 73,272 — 73,272

2 unchanged sentences

Total $ 5,832 $ 73,272 $ — $ 79,104

There were no transfers among Level 1, Level 2 and Level 3 during the nine months ended June 30, 2025 and the year ended September 30, 2024.

There were no transfers among Level 1, Level 2 and Level 3 during the three months ended December 31, 2025 and the year ended September 30, 2025.

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis in accordance with GAAP.

9 unchanged sentences

The valuation of OREO and other repossessed assets is subject to significant external and internal judgment (Level 3).

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at June 30, 2025 and September 30, 2024 (dollars in thousands):

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at December 31, 2025 and September 30, 2025 (dollars in thousands):

Estimated Fair Value Total Estimated

June 30, 2025 Level 1 Level 2 Level 3 Fair Value

December 31, 2025 Level 1 Level 2 Level 3 Fair Value

Individually evaluated collateral-dependent loans:

7 unchanged sentences

Commercial business loans $ — $ — $ 177 $ 177

Total loans — — 177 177

OREO and other repossessed assets — — 221 221

Total $ — $ — $ 398 $ 398

The following table presents quantitative information about Level 3 inputs for financial instruments measured at fair value on a non-recurring basis as of June 30, 2025 and September 30, 2024:

Technique(s) Unobservable Input(s) Range

The following table presents quantitative information about Level 3 inputs for financial instruments measured at fair value on a non-recurring basis as of December 31, 2025 and September 30, 2025:

Technique(s) Significant Unobservable Input(s) Range

Individually evaluated collateral-dependent loans Market approach Appraised value less estimated selling costs 8 %

5 unchanged sentences

The disclosures also do not include estimated fair value amounts for certain items which are not defined as financial instruments but which may have significant value.

The Company does not believe that it would be practicable to estimate a fair value for these types of items as of June 30, 2025 and September 30, 2024.

The Company does not believe that it would be practicable to estimate a fair value for these types of items as of December 31, 2025 and September 30, 2025.

Because GAAP excludes certain items from fair value disclosure requirements, any aggregation of the fair value amounts presented would not represent the underlying value of the Company.

Additionally, the Company uses the exit price notion in calculating the fair values of financial instruments not measured at fair value on a recurring basis.

The recorded amounts and estimated fair values of financial instruments were as follows as of June 30, 2025 and September 30, 2024 (dollars in thousands):

June 30, 2025

The recorded amounts and estimated fair values of financial instruments were as follows as of December 31, 2025 and September 30, 2025 (dollars in thousands):

December 31, 2025

Fair Value Measurements Using:

24 unchanged sentences

Other investments 3,000 3,000 3,000 — —

Loans held for sale 1,127 1,159 1,159 — —

Loans receivable, net 1,463,590 1,441,850 — — 1,441,850

5 unchanged sentences

(10) RECENT ACCOUNTING PRONOUNCEMENTS

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740):

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in this ASU are intended to provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income tax paid information.

The ASU requires disclosure in the rate reconciliation of specific categories as well as additional information for reconciling items that meet a quantitative threshold.

The ASU requires

disclosure in the rate reconciliation of specific categories as well as additional information for reconciling items that meet a quantitative threshold.

The amendment requires on an annual basis a reconciliation broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

2 unchanged sentences

An entity should apply the amendments in this ASU on a prospective basis.

The Company expects this ASU to only impact its disclosure requirements and does not expect the adoption of this ASU to have a material impact on its business operations or the Company's consolidated financial statements.

The Company expects this ASU to only impact its annual disclosure requirements and does not expect the adoption of this ASU to have a material impact on its business operations or the Company's consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220):

9 unchanged sentences

Early adoption of ASU 2025-01 is permitted.

In November 2025, The FASB issued ASU 2025-08, Financial Instruments - Credit Losses (Topic 326) Purchased loans .

The ASU expands the use of the gross-up method for accounting for certain acquired loans, specifically purchased seasoned loans ("PSLs").

This methods allows entities to recognize an allowance for credit losses at the acquisition date, which is added to the asset's amortized cost basis.

The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The Company does not expect this ASU to impact the Company's consolidated financial statements since there are no PSLs in the loan portfolio.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements.

The ASU adds additional interim disclosures from various Codification Topics to ASC 270.

It requires entities to disclose events that occurred since the end of the last annual reporting period that materially affect the entity.

The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company expects this ASU to only impact its disclosure requirements and does not expect the adoption of the ASU to have a material impact on its business operations or the Company's consolidated financial statements.

Other accounting standards that have been issued by the FASB or other standards-setting bodies are not currently expected to have a material effect on the Company's financial position, results of operations or cash flows.

2 unchanged sentences

The majority of the Company's revenues are composed of interest income, deferred loan fee accretion, premium/discount accretion, gains on sales of loans and investments, BOLI net earnings, servicing income on loans sold and other loan fee income, which are not within the scope of ASC 606.

Revenue reported as service charges on deposits, ATM and debit card interchange transaction fees, merchant services fees, non-deposit investment fees and escrow fees are within the scope of ASC 606.

Revenue reported as service charges on deposits, ATM and debit card interchange transaction fees, non-deposit investment fees and escrow fees are within the scope of ASC 606.

All of the Company's revenue from contracts with customers within the scope of ASC 606 is recognized in non-interest income with the exception of gains on sales of OREO and gains on sales/disposition of premises and equipment, which are included in non-interest expense.

For the three months ended June 30, 2025, the Company recognized $ 966,000 in service charges on deposits, $ 1.26 million in ATM and debit card interchange transaction fees, $ 32,000 in escrow fees, and $ 9,000 in fee income from non-deposit investment sales included in "Other" on the consolidated statement of income, all considered within the scope of ASC 606.

For the nine months ended June 30, 2025, the Company recognized $ 2.92 million in service charges on deposits, $ 3.71 million in ATM and debit card interchange transaction fees, $ 66,000 in escrow fees, and $ 12,000 in fee inco me from non-deposit investment sales.

For the three months ended June 30, 2024, the Company recognized $ 1.01 million in service charges on deposits, $ 1.30 million in ATM and debit card interchange transaction fees, $ 18,000 in escrow fees, and $ 3,000 in fee income from non-deposit investment sales.

For the nine months ended June 30, 2024, the Company recognized $ 3.02 million in service charges on deposits, $ 3.77 million in ATM and debit card interchange transaction fees, $ 51,000 in escrow fees, and $ 6,000 in fee income from non-deposit investment sales.

For the three months ended December 31, 2025, the Company recognized $ 989,000 in service charges on deposits, $ 1.19 million in ATM and debit card interchange transaction fees, $ 24,000 in escrow fees, and $ 23,000 in fee income from non-deposit investment sales included in "Other, net" in non-interest income on the consolidated statement of income, all considered within the scope of ASC 606.

For the three months ended December 31, 2024, the Company recognized $ 999,000 in service charges on deposits,

$ 1.27 million in ATM and debit card interchange transaction fees, $ 18,000 in escrow fees, and $ 1,000 in fee income from non-deposit investment sales.

If a contract is determined to be within the scope of ASC 606, the Company recognizes revenue when it satisfies its performance obligation.

24 unchanged sentences

The Company evaluates each customer’s credit - worthiness on a case-by-case basis.

The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit

evaluation of the party.

The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party.

However, such loan to value ratios will subsequently change, based on increases and decreases in the supporting collateral values.

Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate, land and income-producing commercial properties.

A summary of the Company's commitments at June 30, 2025 and 2024, are listed below (in thousands):

June 30, 2025 June 30, 2024

A summary of the Company's commitments at December 31, 2025 and 2024, are listed below (in thousands):

December 31, 2025 December 31, 2024

Undisbursed portion of construction loans in process (see Note 4) $ 89,883 $ 85,350

3 unchanged sentences

The Company maintains a separate ACL related to unfunded loan commitments.

Management estimates the amount of expected losses related to unfunded, off-balance sheet commitments over the contractual period during which it is exposed to credit risk from its obligation to extend credit, unless the Company has determined that obligation is unconditionally cancellable.

The methodology for calculating the ACL on unfunded loan commitments is similar to the methodology for calculating the ACL on loans but also includes an estimate of the future utilization of the commitment as determined by historical utilization.

Management estimates the amount of expected losses related to unfunded, off-balance sheet commitments over the contractual period in which there is exposure to credit risk from a contractual obligation to extend credit, unless the Company has determined that obligation is unconditionally cancellable.

historical utilization.

Credit risk associated with the unfunded commitments is consistent with the loss ratio for each loan segment within the ACL for loans.

The ACL on unfunded commitments is recognized in other liabilities and accrued expenses in the consolidated balance sheets and is adjusted as a provision for (recapture of) credit losses on the consolidated income statements.

The ACL on unfunded loan commitments totaled $ 413,000 and $ 267,000 at June 30, 2025 and 2024, respectively

The following table sets forth information for the three and nine months ended June 30, 2025 and 2024 regarding activity in the ACL on unfunded loan commitments (dollars in thousands):

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

Beginning ACL $ 320 $ 276

Provision for (recapture of) credit losses 93 ( 9 ) *

Ending ACL $ 413 $ 267

ACL Nine Months Ended June 30, 2025 Nine Months Ended June 30, 2024

The ACL on unfunded loan commitments totaled $ 383,000 and $ 307,000 at December 31, 2025 and 2024, respectively

The following table sets forth information for the three months ended December 31, 2025 and 2024, regarding activity in the ACL on unfunded loan commitments (dollars in thousands):

Three Months Ended December 31, 2025 Three Months Ended December 31, 2024

Beginning ACL $ 432 $ 327

Impact of adopting CECL (ASU 2016-13) — 65

Provision for (recapture of) credit losses ( 49 ) ( 20 )

Ending ACL $ 383 $ 307

*Amount differs from Income Statement due to rounding.

The Bank has an employee severance compensation plan which expires in 2027 that provides severance pay benefits to eligible employees in the event of a change in control of Timberland Bancorp or the Bank (as defined in the plan).

2 unchanged sentences

The maximum payment for any eligible employee would be equal to 18 months of the employee’s current compensation.

Timberland Bancorp has entered into employment agreements with its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Lending Officer, Chief Credit Officer and Chief Technology Officer.

These agreements provide for severance payments and other benefits in the event of an involuntary termination of employment following a change in control of Timberland Bancorp or its subsidiary, Timberland Bank.

Timberland Bancorp has employment agreements with its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Lending Officer and Chief Technology Officer which provide for severance payments and other benefits if the officers are involuntarily terminated following a change in control of Timberland Bancorp or the Bank.

The maximum value of the severance benefits under these agreements is equal to 2.99 times the officer's average annual compensation during the five-year period preceding the effective date of the change in control.

1 unchanged sentence

In the opinion of management, liabilities arising from these claims, if any, will not have a material effect on the future consolidated financial position of the Company.

(13) SUBSEQUENT EVENTS

On July 24, 2025, the Company learned of the passing of a former officer on which the Company has BOLI policies.

The Company is in the process of filing claims relating to these policies.

Based on initial information, the Company anticipates recording death benefit claim income of approximately $ 1.00 million during the September 30, 2025 quarter.

The transaction will be recorded once the insurance carriers have confirmed the final values of the policies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements