Exhibit 99.1

Contact:

Michael R. Sand,

President & CEO

Dean J. Brydon, CFO

(360) 533-4747

www.timberlandbank.com

Timberland Bancorp's First Fiscal Quarter Earnings Per Share Increases 38%

·	First Fiscal Quarter Net Income Increases 55% to $5.62 Million

·	Total Assets Increase to $1.2 Billion with the Acquisition of South Sound Bank

·	Announces 15% Increase in the Quarterly Cash Dividend

HOQUIAM, WA - January 22, 2019 - Timberland Bancorp, Inc. (NASDAQ: TSBK) ("Timberland" or "the Company") today reported, for the quarter ended December 31, 2018, record quarterly net income of $5.62 million and record earnings of $0.66 per diluted common share. This compares to net income of $4.42 million, or $0.59 per diluted common share, for the preceding quarter and net income of $3.61 million, or $0.48 per diluted common share, for the quarter ended December 31, 2017.

Timberland's Board of Directors also announced a 15% increase in the quarterly cash dividend to shareholders to $0.15 per common share, payable on February 28, 2019, to shareholders of record on February 14, 2019.

"We are pleased today to report a strong first fiscal quarter for the Company," commented Michael Sand, President and CEO. "Net income increased 55% and earnings per diluted common share increased 38% from the prior year's first fiscal quarter. Return on assets, return on equity and net interest margin meaningfully increased compared to the results for the comparable quarter one year ago. The acquisition of South Sound Bank, completed October 1, 2018, contributed to the quarter's significant loan and deposit growth and to the expansion of Timberland's net interest margin. Additionally, the Company's efficiency ratio for the quarter improved 223 basis points to 54.85% from 57.08% reported for the quarter ended December 31, 2017."

"Financial benefits from the South Sound Bank acquisition were clearly recognized during the first full quarter of ownership," Sand continued. "The acquisition expanded Timberland's presence along Washington State's economically important I-5 corridor and, at closing, brought Timberland $121.5 million in loans, $151.5 million in deposits and $180.8 million in total assets. Despite the issuance of 904,826 shares in the transaction, earnings per share for the quarter increased considerably from the earnings per share posted for last year's comparable quarter."

"During the quarter, preparations progressed in earnest toward our scheduled February 21^st conversion to a new core operating system. The conversion will add new technologies for customers and improve operational efficiencies. Upon the completion of the February conversion we will shift our focus to the scheduled July integration of South Sound's core system into Timberland's. During the quarters ending March 31 and June 30, 2019, we anticipate incurring IT conversion related pre-tax expenses of approximately $450,000 ($356,000 after tax) and $580,000 ($458,000 after tax), respectively, as we migrate both companies to a new core operating system."

The Company's federal income tax rate decreased to 21.0% on October 1, 2018 representing a 14.3% reduction from the 24.5% blended federal income tax rate used during the fiscal year ended September 30, 2018.

First Fiscal Quarter 2019 Earnings and Balance Sheet Highlights (at or for the period ended December 31, 2018, compared to December 31, 2017, or September 30, 2018):

Earnings Highlights:

·	Net income increased 55% to $5.62 million from $3.61 million for the comparable quarter one year ago and increased 27% from $4.42 million for the preceding quarter;

·	Quarterly EPS increased 38% to $0.66 from $0.48 for the comparable quarter one year ago and increased 12% from $0.59 for the preceding quarter;

·	Return on average equity and return on average assets for the current quarter remained strong at 14.56% and 1.88%, respectively; and

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January 22, 2019

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·	Net interest margin increased to 4.47% from 4.19% for the comparable quarter one year ago and 4.35% for the preceding quarter.

Balance Sheet Highlights:

·	Total assets increased 18% from the prior quarter (primarily due to the South Sound Bank merger);

·	Total deposits increased 18% year-over-year and 16% from the prior quarter;

·	Net loans receivable increased 22% year-over-year and 18% from the prior quarter; and

·	Book and tangible book (non-GAAP) values per common share increased to $18.87 and $16.83, respectively, at December 31, 2018.

Acquisition of South Sound Bank

On October 1, 2018, the Company completed the acquisition of South Sound Bank, a Washington-state chartered bank, headquartered in Olympia, Washington ("South Sound Merger"). The Company acquired 100% of the outstanding common stock of South Sound Bank, and South Sound Bank was merged into Timberland Bank and the Company. Pursuant to the terms of the merger agreement, South Sound Bank shareholders received 0.746 of a share of the Company's common stock and $5.68825 in cash per share of South Sound Bank common stock. The Company issued 904,826 shares of its common stock (valued at $28,267,000 based on the Company's closing stock price on September 30, 2018 of $31.24 per share) and paid $6,903,000 in cash in the transaction for total consideration paid of $35,170,000.

The South Sound Merger was accounted for as a business combination. Accordingly, Timberland's cost to acquire South Sound Bank was allocated to the assets acquired (including identifiable intangible assets) and liabilities assumed of South Sound Bank at their respective estimated fair values as of the acquisition date. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill.

The following table summarizes the fair value of consideration transferred, the estimated fair value of the assets acquired and liabilities assumed at October 1, 2018, and the resulting goodwill from the transaction ($ in thousands):

Total merger consideration	$	35,170

Assets
Cash and cash equivalents	$	21,187
Certificates of deposits ("CDs") held for investment		2,973
FHLB stock		205
Investment securities		24,724
Loans receivable		121,544
Premises and equipment		3,337
Other real estate owned ("OREO")		25
Bank owned life insurance ("BOLI")		2,629
Accrued interest receivable		554
Mortgage servicing rights		281
Other assets		883
Core deposit intangible ("CDI")		2,483
Total assets	$	180,825

Liabilities
Deposits	$	151,538
Other liabilities and accrued expenses		3,087
Total liabilities	$	154,625

Fair value of net assets acquired	$	26,200

Goodwill	$	8,970

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January 22, 2019

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The estimated fair values in the above table are preliminary and represent management's best estimates based on available information on the facts and circumstances in existence on January 22, 2019. Fair values (including the related deferred tax adjustments) are subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available.

Operating Results

Operating revenue (net interest income before the provision for loan losses, plus non-interest income excluding recoveries on investment securities) increased 24% to $15.59 million from $12.55 million for the comparable quarter one year ago and increased 16% from $13.44 million for the preceding quarter.

Net interest income for the current quarter increased 20% to $12.34 million from $10.27 million for the preceding quarter and increased 31% from $9.43 million for the comparable quarter one year ago. The increase in net interest income compared to the preceding quarter was primarily due to the South Sound Merger, which increased average interest-earning assets and average interest-bearing liabilities.

Timberland's net interest margin ("NIM") for the current quarter increased to 4.47% from 4.35% for the preceding quarter and 4.19% for the comparable quarter one year ago. The NIM for the current quarter was increased by approximately four basis points due to the accretion of $87,000 of the fair value discount on loans acquired in the South Sound Merger. The NIM for the current quarter was not impacted by the collection of non-accrual interest. The NIM for the preceding quarter was increased by approximately five basis points due to the collection of $107,000 of non-accrual interest and late fees. The NIM for the comparable quarter one year ago was increased approximately two basis points due to the collection of $45,000 of non-accrual interest.

Non-interest income increased 3% to $3.27 million for the current quarter from $3.18 million for the preceding quarter and increased 4% from $3.14 million for the comparable quarter one year ago. The increase in non-interest income compared to the preceding quarter consisted of an $82,000 increase in services charges on deposits and smaller increases in several other categories. These increases were partially offset by an $81,000 decrease in gain on sale of loans. The increase in service charges was primarily a result of increased service charges on commercial business accounts and service charges on the accounts acquired in the South Sound Merger. The decrease in gains on sale of loans was primarily due to a decrease in the dollar amount of fixed rate one- to four-family loans sold and a decrease in the average pricing spread.

Total operating expenses for the current quarter increased 12% to $8.56 million from $7.66 million for the preceding quarter and increased 19% from $7.18 million for the comparable quarter one year ago. The increase in expenses for the current quarter compared to the preceding quarter consisted of a $729,000 increase in salaries and employee benefits, a $109,000 increase in CDI amortization, a $108,000 increase in ATM and debit card processing and smaller increases in several other categories. These increases were partially offset by a $326,000 decrease in professional fees and smaller decreases in several other categories. The increase in salaries and employee benefits expense was primarily due to the additional employees added in connection with the South Sound Merger and annual salary adjustments. The CDI amortization expense and the increase in ATM and debit card processing expense were also primarily due to the South Sound Merger. The decrease in professional fees was primarily due to a reduction in acquisition related expenses in the current quarter. Acquisition related expenses totaled $64,000 during the current quarter compared to $344,000 in the quarter ended September 30, 2018. The efficiency ratio improved to 54.85% for the current quarter from 56.94% for the preceding quarter.

The provision for income taxes for the current quarter increased by $63,000 to $1.43 million from $1.37 million for the preceding quarter and decreased by $348,000 from the comparable quarter one year ago. These changes were primarily due to higher pre-tax income and changes in the federal corporate income tax rates. The Tax Cuts and Jobs Acts legislation, which was signed into law on December 22, 2017, decreased the federal corporate income tax rate to 21.0% from 35.0%. As a result of the new legislation, Timberland recorded a one-time income tax expense of $548,000 in conjunction with writing down its net deferred tax asset during the quarter ended December 31, 2017, and began using a lower blended federal income tax rate for the 2018 fiscal year. Since Timberland is a September 30^th fiscal year-end corporation, it used a blended federal income tax rate of 24.5% for the fiscal year ended September 30, 2018, and began using a 21.0% federal income tax rate on October 1, 2018. Timberland's effective tax rate was 20.3% for the quarter ended December 31, 2018, compared to 23.7% for the quarter ended September 30, 2018 and 33.0% for the quarter ended December 31, 2017.

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January 22, 2019

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Balance Sheet Management

Total assets increased $182.03 million, or 18%, during the first fiscal quarter to $1.20 billion at December 31, 2018, from $1.02 billion at September 30, 2018. The increase was primarily due to the South Sound Merger, which resulted in a $182.89 million increase of total assets (including goodwill and net of cash consideration paid) at the merger date (October 1, 2018). The quarterly increase in asset size was primarily comprised of a $131.68 million increase in net loans receivable, a $23.65 million increase in investment securities and CDs held for investment, a $12.88 million increase in cash and cash equivalents, and an $11.34 million increase in goodwill and CDI.

Net loans receivable increased $131.68 million, or 18%, during the current quarter to $857.07 million at December 31, 2018, from $725.39 million at September 30, 2018, primarily due to loans acquired in the South Sound Merger ($121.54 million at merger date) and to a lesser extent organic loan growth. The quarterly increase consisted of an $81.03 million increase in commercial real estate loans, a $27.43 million increase in construction loans, a $15.15 million increase in commercial business loans, a $14.28 million increase in one- to four-family loans, a $10.15 million increase in multi-family loans and a $4.01 million increase in consumer loans. These increases to net loans receivable were partially offset by a $17.36 million increase in the undisbursed portion of construction loans in process and smaller decreases in several other loan categories.

LOAN PORTFOLIO

($ in thousands)	December 31, 2018						September 30, 2018						December 31, 2017
	Amount			Percent			Amount			Percent			Amount			Percent

Mortgage loans:
One- to four-family (a)	$	130,219			14	%	$	115,941			14	%	$	116,976			15	%
Multi-family		72,076			8			61,928			8			61,366			8
Commercial		426,144			44			345,113			42			333,085			42
Construction - custom and
owner/builder		119,214			12			119,555			15			123,365			15
Construction - speculative one-to four-family		17,934			2			15,433			2			7,253			1
Construction - commercial		42,416			4			39,590			5			22,000			3
Construction - multi-family		25,645			3			10,740			1			24,601			3
Construction - land
development		10,578			1			3,040			--			--			--
Land		22,734			2			25,546			3			21,122			2
Total mortgage loans		866,960			90			736,886			90			709,768			89

Consumer loans:
Home equity and second
mortgage		40,468			4			37,341			5			38,975			5
Other		4,443			--			3,515			--			4,050			--
Total consumer loans		44,911			4			40,856			5			43,025			5

Commercial business loans (b)		58,202			6			43,053			5			43,993			6
Total loans		970,073			100	%		820,795			100	%		796,786			100	%
Less:
Undisbursed portion of
construction loans in
process		(100,595	)					(83,237	)					(79,449	)
Deferred loan origination
fees		(2,875	)					(2,637	)					(2,504	)
Allowance for loan losses		(9,533	)					(9,530	)					(9,565	)
Total loans receivable, net	$	857,070					$	725,391					$	705,268

_______________________

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January 22, 2019

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(a)	Does not include one- to four-family loans held for sale totaling $2,988, $1,785 and $3,236 at December 31, 2018, September 30, 2018 and December 31, 2017, respectively.

(b)	Does not include commercial business loans held for sale totaling $171 at December 31, 2017.

Timberland originated $106.39 million in loans during the quarter ended December 31, 2018, compared to $82.51 million for the comparable quarter one year ago and $99.27 million for the preceding quarter. Timberland continues to sell fixed-rate one- to four-family mortgage loans into the secondary market for asset-liability management purposes and to generate non-interest income. Timberland also periodically sells the guaranteed portion of U.S. Small Business Administration ("SBA") loans. During the first quarter of fiscal 2019 fixed-rate one- to four-family mortgage loans and SBA loans totaling $16.12 million were sold compared to $15.91 million for the comparable quarter one year ago and $17.42 million for the preceding quarter.

Timberland's investment securities and CDs held for investment increased $23.65 million, or 31%, to $100.90 million at December 31, 2018, from $77.25 million at September 30, 2018. The increase was primarily due to the investment securities and CDs held for investment acquired in the South Sound Merger.

Timberland's liquidity remained strong after the South Sound Merger. Liquidity, as measured by the sum of cash and cash equivalents, CDs held for investment and available for sale investment securities, was 22.1% of total liabilities at December 31, 2018, compared to 23.9% at September 30, 2018, and 25.1% one year ago.

DEPOSIT BREAKDOWN ($ in thousands)
	December 31, 2018					September 30, 2018					December 31, 2017
	Amount		Percent			Amount		Percent			Amount		Percent
Non-interest-bearing demand	$	271,251		26	%	$	233,258		26	%	$	210,108		24	%
NOW checking		286,052		28			225,290		25			218,422		25
Savings		160,673		15			151,404		17			142,660		16
Money market		153,208		15			127,791		15			156,665		18
Money market – reciprocal		9,220		1			9,955		1			10,796		1
Certificates of deposit under $250		129,822		13			120,443		14			118,017		14
Certificates of deposit $250 and over		21,747		2			18,164		2			16,208		2
Certificates of deposit – brokered		3,204		--			3,201		--			3,198		--
Total deposits	$	1,035,177		100	%	$	889,506		100	%	$	876,074		100	%

Total deposits increased $145.67 million, or 16%, during the current quarter to $1.035 billion at December 31, 2018, from $889.51 million at September 30, 2018, primarily due to deposits acquired in the South Sound Merger. The quarterly increase consisted of a $60.76 million increase in NOW checking account balances, a $37.99 million increase in non-interest bearing demand account balances, a $24.68 million increase in money market account balances, a $12.97 million increase in certificate of deposit account balances and a $9.27 million increase in savings account balances.

Shareholders' Equity

Total shareholders' equity increased $32.25 million to $156.91 million at December 31, 2018, from $124.66 million at September 30, 2018. The increase in shareholders' equity was primarily due to $28.27 million in common stock issued in the South Sound Merger and net income of $5.62 million for the quarter, which was partially offset by dividend payments to shareholders of $1.91 million.

Capital Ratios and Asset Quality

Timberland remains well capitalized with a total risk-based capital ratio of 18.43% and a Tier 1 leverage capital ratio of 11.96% at December 31, 2018.

Asset quality remains strong with the non-performing assets to total assets ratio improving to 0.33% at December 31, 2018, compared to 0.55% one year ago and 0.36% at September 30, 2018.

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January 22, 2019

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No provision for loan losses was made for the quarters ended December 31, 2018, September 30, 2018, and December 31, 2017. There was a net recovery of $3,000 for the current quarter compared to net charge-offs of $2,000 for the preceding quarter and a net recovery of $12,000 for the comparable quarter one year ago. The allowance for loan losses to loans receivable decreased to 1.10% at December 31, 2018, from 1.30% at September 30, 2018, primarily as a result of an increase in loans from the South Sound Merger. Included in the recorded value of loans acquired in mergers are net discounts which may reduce the need for an allowance for loan losses on these loans because they are carried at an amount below the outstanding principal balance. The recorded value of loans acquired in the South Sound Merger was $123.62 million and the related fair value discount was $2.08 million, or 1.68% of the loans acquired. The remaining fair value discount on loans acquired in the South Sound Merger was $2.00 million at December 31, 2018. The allowance for loan losses to loans receivable (excluding the remaining balance of the loans acquired in the South Sound Merger) was 1.27% at December 31, 2018.

Total delinquent loans (past due 30 days or more) and non-accrual loans increased $235,000, or 8%, to $3.36 million at December 31, 2018, from $3.12 million one year ago and increased $800,000, or 31%, from $2.56 million at September 30, 2018. Non-accrual loans decreased $523,000, or 25%, to $1.59 million at December 31, 2018, from $2.11 million one year ago and increased $273,000, or 21%, from $1.32 million at September 30, 2018.

NON-ACCRUAL LOANS

($ in thousands)	December 31, 2018				September 30, 2018				December 31, 2017
	Amount		Quantity		Amount		Quantity		Amount		Quantity
Mortgage loans:
One- to four-family	$	509		4	$	545		5	$	947		8
Commercial		--		--		--		--		402		3
Land		396		2		243		2		395		4
Total mortgage loans		905		6		788		7		1,744		15

Consumer loans:
Home equity and second
mortgage		386		6		359		5		188		4
Total consumer loans		386		6		359		5		188		4

Commercial business loans		299		6		170		2		181		2
Total loans	$	1,590		18	$	1,317		14	$	2,113		21

OREO and other repossessed assets decreased 30% to $2.03 million at December 31, 2018, from $2.89 million at December 31, 2017, and increased 6% from $1.91 million at September 30, 2018. At December 31, 2018, the OREO and other repossessed asset portfolio consisted of 11 individual land parcels and three commercial real estate properties. During the quarter ended December 31, 2018, there were no OREO property sales.

OREO and OTHER REPOSSESSED ASSETS

($ in thousands)	December 31, 2018				September 30, 2018				December 31, 2017
	Amount		Quantity		Amount		Quantity		Amount		Quantity
One- to four-family	$	--		--	$	--		--	$	516		1
Commercial		473		3		448		2		332		1
Land		1,553		11		1,465		10		2,026		12
Consumer		--		--		--		--		13		1
Total	$	2,026		14	$	1,913		12	$	2,887		15

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures. Timberland believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company's financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.

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January 22, 2019

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Financial measures that exclude intangible assets are non-GAAP measures. To provide investors with a broader understanding of capital adequacy, Timberland provides non-GAAP financial measures for tangible common equity, along with the GAAP measure. Tangible common equity is calculated as shareholders' equity less goodwill and CDI. In addition, tangible assets equal total assets less goodwill and CDI.

The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible shareholders' equity (non-GAAP), and ending total assets (GAAP) to ending tangible assets (non-GAAP).

($ in thousands)	December 31, 2018			September 30, 2018			December 31, 2017

Shareholders' equity	$	156,905		$	124,657		$	114,112
Less goodwill and CDI		(16,994	)		(5,650	)		(5,650	)
Tangible common equity	$	139,911		$	119,007		$	108,462

Total assets	$	1,200,315		$	1,018,290		$	993,895
Less goodwill and CDI		(16,994	)		(5,650	)		(5,650	)
Tangible assets	$	1,183,321		$	1,012,640		$	988,245

About Timberland Bancorp, Inc.

Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank ("Bank"). The Bank opened for business in 1915 and serves consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties, Washington with a full range of lending and deposit services through its 24 branches (including its main office in Hoquiam).

Disclaimer

Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plan, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and often include the words "believes," "expects," "anticipates," "estimates," "forecasts," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook" or similar expressions or future or conditional verbs such as "may," "will," "should," "would" and "could." Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future performance. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results anticipated or implied by our forward-looking statements, including, but not limited to: the expected cost savings, synergies and other financial benefits from our acquisition of South Sound Bank might not be realized within the expected time frames or at all; the integration of the combined company, including personnel changes/retention, might not proceed as planned; and the combined company might not perform as well as expected; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets which may lead to increased losses and non-performing assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our loan loss reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; secondary market conditions for loans and our ability to sell loans in the secondary market; results of examinations of us by the Board of Governors of the Federal Reserve System and our bank subsidiary by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action or require us to increase our allowance for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules including as a result of Basel III; the impact of the Dodd Frank Wall Street Reform and Consumer Protection Act and the implementation of related rules and regulations; our ability to attract and retain deposits; increases in premiums for deposit insurance; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates

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may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risk associated with the loans on our consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; our ability to manage loan delinquency rates; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common and stock; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of war or any terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations; pricing, products and services; and other risks detailed in our reports filed with the Securities and Exchange Commission.

Any of the forward-looking statements that we make in this press release and in the other public statements we make are based upon management's beliefs and assumptions at the time they are made. We do not undertake and specifically disclaim any obligation to publicly update or revise any forward-looking statements included in this report to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this document might not occur and we caution readers not to place undue reliance on any forward-looking statements. These risks could cause our actual results for fiscal 2019 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us, and could negatively affect the Company's consolidated financial condition and results of operations as well as its stock price performance.

Timberland Fiscal Q1 2019 Earnings

January 22, 2019

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TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended
($ in thousands, except per share amounts)	Dec. 31,		Sept. 30,		Dec. 31,
(unaudited)	2018		2018		2017
Interest and dividend income
Loans receivable	$	11,782	$	9,956	$	9,328
Investment securities		278		70		58
Dividends from mutual funds, FHLB stock and other investments		39		37		26
Interest bearing deposits in banks		1,216		989		623
Total interest and dividend income		13,315		11,052		10,035

Interest expense
Deposits		971		782		601
Total interest expense		971		782		601
Net interest income		12,344		10,270		9,434

Provision for loan losses		--		--		--
Net interest income after provision for loan losses		12,344		10,270		9,434

Non-interest income
Service charges on deposits		1,216		1,134		1,179
ATM and debit card interchange transaction fees		949		922		845
Gain on sale of loans, net		386		467		521
Bank owned life insurance ("BOLI") net earnings		157		140		136
Servicing income on loans sold		148		127		116
Recoveries on investment securities, net		20		13		22
Other		390		378		318
Total non-interest income		3,266		3,181		3,137

Non-interest expense
Salaries and employee benefits		4,606		3,877		3,950
Premises and equipment		954		871		768
Loss on disposition of premises and equipment, net		--		11		--
Advertising		191		191		209
OREO and other repossessed assets, net		50		29		113
ATM and debit card processing		422		314		331
Postage and courier		110		115		105
State and local taxes		196		190		161
Professional fees		235		561		218
FDIC insurance		74		52		65
Loan administration and foreclosure		87		89		79
Data processing and telecommunications		613		511		467
Deposit operations		294		376		278
Amortization of CDI		109		--		--
Other, net		621		472		432
Total non-interest expense, net		8,562		7,659		7,176

Income before income taxes		7,048		5,792		5,395
Provision for income taxes		1,433		1,370		1,781
Net income	$	5,615	$	4,422	$	3,614

Net income per common share:
Basic	$	0.68	$	0.60	$	0.49
Diluted		0.66		0.59		0.48

Weighted average common shares outstanding:
Basic		8,293,212		7,352,013		7,312,531
Diluted		8,457,703		7,549,778		7,508,169

Timberland Fiscal Q1 2019 Earnings

January 22, 2019

Page 10

TIMBERLAND BANCORP INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts) (unaudited)	Dec. 31,			Sept. 30,			Dec. 31,
	2018			2018			2017
Assets
Cash and due from financial institutions	$	18,938		$	20,238		$	16,952
Interest-bearing deposits in banks		142,805			128,626			149,255
Total cash and cash equivalents		161,743			148,864			166,207

Certificates of deposit ("CDs") held for investment, at cost		65,830			63,290			53,528
Investment securities:
Held to maturity, at amortized cost		31,950			12,810			7,077
Available for sale, at fair value		3,122			1,154			1,221
FHLB stock		1,395			1,190			1,107
Other investments, at cost		3,000			3,000			3,000
Loans held for sale		2,988			1,785			3,407

Loans receivable		866,603			734,921			714,833
Less: Allowance for loan losses		(9,533	)		(9,530	)		(9,565	)
Net loans receivable		857,070			725,391			705,268

Premises and equipment, net		22,884			18,953			18,307
OREO and other repossessed assets, net		2,026			1,913			2,887
BOLI		22,599			19,813			19,402
Accrued interest receivable		3,497			2,877			2,743
Goodwill		14,620			5,650			5,650
CDI		2,374			--			--
Mortgage servicing rights, net		2,338			2,028			1,871
Escrow deposit for acquisition		--			6,900			--
Other assets		2,879			2,672			2,220
Total assets	$	1,200,315		$	1,018,290		$	993,895

Liabilities and shareholders' equity
Deposits: Non-interest-bearing demand	$	271,251		$	233,258		$	210,108
Deposits: Interest-bearing		763,926			656,248			665,966
Total deposits		1,035,177			889,506			876,074

Other liabilities and accrued expenses		8,233			4,127			3,709
Total liabilities		1,043,410			893,633			879,783

Shareholders' equity
Common stock, $.01 par value; 50,000,000 shares authorized; 8,313,403 shares issued and outstanding – December 31, 2018 7,401,177 shares issued and outstanding – September 30, 2018 7,367,327 shares issued and outstanding – December 31, 2017		42,951			14,394			13,540
Unearned shares issued to Employee Stock Ownership Plan ("ESOP")		(67	)		(133	)		(331	)
Retained earnings		114,166			110,525			101,039
Accumulated other comprehensive loss		(145	)		(129	)		(136	)
Total shareholders' equity		156,905			124,657			114,112
Total liabilities and shareholders' equity	$	1,200,315		$	1,018,290		$	993,895

Timberland Fiscal Q1 2019 Earnings

January 22, 2019

Page 11

KEY FINANCIAL RATIOS AND DATA	Three Months Ended
($ in thousands, except per share amounts) (unaudited)	Dec. 31,			Sept. 30,			Dec. 31,
	2018			2018			2017
PERFORMANCE RATIOS:
Return on average assets (a)		1.88	%		1.76	%		1.50	%
Return on average equity (a)		14.56	%		14.47	%		12.90	%
Net interest margin (a)		4.47	%		4.35	%		4.19	%
Efficiency ratio		54.85	%		56.94	%		57.08	%


	Dec. 31,			Sept. 30,			Dec. 31,
	2018			2018			2017
ASSET QUALITY RATIOS AND DATA:
Non-accrual loans	$	1,590		$	1,317		$	2,113
Loans past due 90 days and still accruing		--			--			--
Non-performing investment securities		372			406			500
OREO and other repossessed assets		2,026			1,913			2,887
Total non-performing assets (b)	$	3,988		$	3,636		$	5,500


Non-performing assets to total assets (b)		0.33	%		0.36	%		0.55	%
Net charge-offs (recoveries) during quarter	$	(3	)	$	2		$	(12	)
Allowance for loan losses to non-accrual loans		600	%		724	%		453	%
Allowance for loan losses to loans receivable (c)		1.10	%		1.30	%		1.34	%
Troubled debt restructured loans on accrual status (d)	$	2,941		$	2,955		$	3,282


CAPITAL RATIOS:
Tier 1 leverage capital		11.96	%		11.98	%		11.45	%
Tier 1 risk-based capital		17.26	%		17.13	%		16.49	%
Common equity Tier 1 risk-based capital		17.26	%		17.13	%		16.49	%
Total risk-based capital		18.43	%		18.39	%		17.74	%
Tangible common equity to tangible assets (non-GAAP)		11.82	%		11.75	%		10.98	%


BOOK VALUES:
Book value per common share	$	18.87		$	16.84		$	15.49
Tangible book value per common share (e)		16.83			16.08			14.72

________________________________________________

(a) Annualized

(b) Non-performing assets include non-accrual loans, loans past due 90 days and still accruing, non-performing investment securities and OREO and other repossessed assets. Troubled debt restructured loans on accrual status are not included.

(d) Does not include troubled debt restructured loans totaling $308, $323 and $199 reported as non-accrual loans at December 31, 2018, September 30, 2018 and December 31, 2017, respectively.

(e) Tangible common equity divided by common shares outstanding (non-GAAP).

Timberland Fiscal Q1 2019 Earnings

January 22, 2019

Page 12

	For the Three Months Ended
	December 31, 2018					September 30, 2018						December 31, 2017
	Amount		Rate			Amount			Rate			Amount			Rate

Assets
Loans receivable and loans held for sale	$	860,639		5.48	%	$	731,480			5.44	%	$	709,079			5.26	%
Investment securities and FHLB stock (1)		34,419		3.68			16,504			2.62			12,451			2.70
Interest-bearing deposits in banks and CDs		210,757		2.31			195,940			2.00			180,038			1.37
Total interest-earning assets		1,105,815		4.82			943,924			4.68			901,568			4.45
Other assets		91,142					63,746						60,128
Total assets	$	1,196,957				$	1,007,670					$	961,696

Liabilities and Shareholders' Equity
NOW checking accounts	$	281,123		0.26	%	$	216,498			0.21	%	$	212,550			0.21	%
Money market accounts		156,638		0.59			136,026			0.59			136,466			0.38
Savings accounts		160,584		0.07			150,060			0.06			141,266			0.06
Certificates of deposit accounts		155,595		1.33			141,264			1.24			138,687			0.96
Total interest-bearing deposits		753,940		0.51			643,848			0.48			628,969			0.38

Total interest-bearing liabilities		753,940		0.51			643,848			0.48			628,969			0.38

Non-interest-bearing demand deposits		281,620					235,498						216,907
Other liabilities		7,133					6,093						3,732
Shareholders' equity		154,264					122,231						112,088
Total liabilities and shareholders' equity	$	1,196,957				$	1,007,670					$	961,696

Interest rate spread				4.31	%					4.20	%					4.07	%
Net interest margin (2)				4.47	%					4.35	%					4.19	%
Average interest-earning assets to
average interest-bearing liabilities	146.67%						146.61	%					143.34	%