About Timberland Bancorp

Timberland Bancorp, Inc. operates as the bank holding company for Timberland Bank (the bank) that provides various banking products and services. The bank serves consumers and businesses across Grays Harbor, Pierce, Thurston, King, Kitsap and Lewis counties, Washington with a full range of lending and deposit services through its branches (including its main office in Hoquiam). The bank's deposits are insured up to applicable legal limits by the FDIC. The bank is a community-oriented bank which has traditionally offered a variety of savings products to its retail customers while concentrating its lending activities on real estate mortgage loans. Lending activities have been focused primarily on the origination of loans secured by real estate, including residential and commercial / multi-family construction loans, one- to four-family residential loans, multi-family loans, commercial real estate loans and land loans. The bank originates adjustable-rate residential mortgage loans that do not qualify for sale in the secondary market. The bank also originates commercial business loans and other consumer loans. Market Area The bank considers Grays Harbor, Pierce, Thurston, King, Kitsap and Lewis counties, Washington as its primary market areas. The bank conducts operations from its main office in Hoquiam (Grays Harbor County); branch offices in Grays Harbor County (Ocean Shores, Montesano, Elma and two branches in Aberdeen); branch offices in Pierce County (Edgewood, Puyallup, Spanaway, Tacoma and Gig Harbor); branch offices in Thurston County (Tumwater, Yelm, two branches in Lacey and branches in Olympia); branch offices in Kitsap County (Poulsbo and Silverdale); a branch office in King County (Auburn); and branch offices in Lewis County (Winlock, Toledo and Chehalis). Lending Activities Residential One- to Four-Family Lending: The bank originates both fixed-rate loans and adjustable-rate loans. The bank also offers adjustable-rate mortgage (ARM) loans. All the bank's ARM loans are retained in its loan portfolio. The bank offers several ARM products which adjust annually or every three to five years after an initial period ranging from one to five years. The bank also offers ARM loans tied to the Wall Street Journal prime lending rate (Prime Rate) index which typically do not have periodic or lifetime adjustment limits. The bank requires that fire and extended coverage casualty insurance, and flood insurance if appropriate, be maintained on the collateral for all of its real estate secured loans. Multi-Family Lending: Multi-family loans are generally originated with variable rates of interest ranging from 1.00% to 3.50% over the one-year constant maturity the U.S. Treasury Bill Index, the Prime Rate or a matched term FHLB borrowing, with principal and interest payments fully amortizing over terms of up to 30 years. Commercial Real Estate Lending: The bank originates commercial real estate loans generally at variable interest rates with principal and interest payments fully amortizing over terms of up to 30 years. These loans are secured by properties, such as industrial warehouses, medical/dental offices, office buildings, retail/wholesale facilities, mini-storage facilities, hotel/motels, nursing homes, restaurants, convenience stores, shopping centers and mobile home parks, generally located in the bank's primary market area. The bank typically requires appraisals of properties securing commercial real estate loans. Construction Lending: The bank originates two types of residential construction loans: custom construction and owner/builder construction loans and speculative construction loans. The bank also originates construction loans for commercial properties, multi-family properties, and land development projects. The bank's construction loans generally provide for the payment of interest only during the construction phase, which is billed monthly, although during the term of some construction loans, no payment from the borrower is required since the accumulated interest is added to the principal of the loan through an interest reserve. The bank also provides construction financing for multi-family and commercial properties. The bank originates construction loan applications primarily through customer referrals, contacts in the business community and, occasionally, real estate brokers seeking financing for their clients. The bank is originating land development loans on a limited basis. Land development loans are secured by a lien on the property and typically are made for a period of two to five years with fixed or variable interest rates, with loan-to-value ratios generally not exceeding 75%. Land Lending: The bank originates loans for the acquisition of land upon which the purchaser can then build or make improvements necessary to build or to use for recreational purposes. Land loans originated by the bank generally have maturities of one to ten years. The largest land loan is secured by land in Grays Harbor County. Consumer Lending: Consumer loans generally have shorter terms to maturity and may have higher interest rates than mortgage loans. Consumer loans include home equity lines of credit, second mortgage loans, savings account loans, automobile loans, boat loans, motorcycle loans, recreational vehicle loans and unsecured loans. Consumer loans are made with both fixed and variable interest rates and with varying terms. Home equity lines of credit and second mortgage loans are made for purposes, such as the improvement of residential properties, debt consolidation and education expenses, among others. Commercial Business Lending: Commercial business loans are generally secured by business equipment, accounts receivable, inventory and/or other property and are made at variable rates of interest equal to a negotiated margin above the Prime Rate. The bank also obtains personal guarantees from the principals based on a review of personal financial statements. The bank has increased commercial business loan originations made under the U.S. Small Business Administration (SBA) 7(a) program. Loans made by the bank under the SBA 7(a) program generally are made to small businesses to provide working capital or to provide funding for the purchase of businesses, real estate, or equipment. These loans generally are secured by a combination of assets that may include equipment, receivables, inventory, business real property, and sometimes a lien on the personal residence of the borrower. The terms of these loans vary by purpose and type of underlying collateral. Typical maturities for this type of loan vary but can be up to ten years. SBA 7(a) loans are all adjustable rate loans based on the Prime Rate. Under the SBA 7(a) program, the bank can sell in the secondary market the guaranteed portion of its SBA 7(a) loans and retain the related unguaranteed portion of these loans, as well as the servicing on such loans, for which it is paid a fee. The loan servicing spread is generally a minimum of 1.00% on all SBA 7(a) loans. The bank offers SBA 7(a) loans within a range of $50,000 to $1.50 million. Commercial business loans include SBA (the U.S. Small Business Administration) PPP (Paycheck Protection Program) loans. Investment Portfolio As of September 30, 2023, the company's investment portfolio included Mortgage-backed securities (MBS): the U.S. government agencies. Deposits Deposits are attracted from within the bank's market area through the offering of a broad selection of deposit instruments, including money market deposit accounts, checking accounts, regular savings accounts and certificates of deposit. Regulation As a bank holding company, the company is subject to examination and supervision by, and is required to file certain reports with, the Federal Reserve. The company is also subject to the rules and regulations of the SEC under the federal securities laws. The company is supervised by the Federal Reserve under the Bank Holding Company Act of 1956, as amended (BHCA). The bank, as a state-chartered savings bank, is subject to regulation and oversight by the Federal Deposit Insurance Corporation (FDIC) and the Washington State Department of Financial Institutions, Division of Banks (Division) extending to all aspects of its operations. The bank is a member of the Federal Home Loan Bank System. As a member, the bank is required to purchase and maintain stock in the FHLB based on the bank's asset size and level of borrowings from the Federal Home Loan Bank of Des Moines (FHLB). The bank is subject to consumer protection regulations issued by the Consumer Financial Protection Bureau (CFPB), but as a smaller financial institution, is subject to supervision and enforcement by the FDIC and the Washington State Department of Financial Institutions, Division of Banks (Division or DFI) with respect to its compliance with federal and state consumer financial protection laws and regulations. The bank is subject to a broad array of federal and state consumer protection laws and regulations that govern almost every aspect of its business relationships with consumers. These include the Truth-in-Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Home Mortgage Disclosure Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Right to Financial Privacy Act, the Home Ownership and Equity Protection Act, the Consumer Leasing Act, the Fair Credit Billing Act, the Homeowners Protection Act, the Check Clearing for the 21st Century Act, laws governing flood insurance, laws governing consumer protections in connection with the sale of insurance, federal and state laws prohibiting unfair and deceptive business practices, and various regulations that implement some or all of the foregoing. History Timberland Bancorp, Inc. was founded in 1915. The company, a Washington corporation, was incorporated in 1997.