UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                FORM 10-Q

     [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934
               For the quarterly period ended June 30, 2004

                                   OR

     [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
              SECURITIES EXCHANGE ACT OF 1934
               For the Transition Period From __________ to ___________.

                        Commission file number 0-23333

                           TIMBERLAND BANCORP, INC.
             (Exact name of registrant as specified in its charter)

    Washington                                           91-1863696
 (State of Incorporation)                   (IRS Employer Identification No.)

                   624 Simpson Avenue, Hoquiam, Washington
                   (Address of principal executive office)

                                  98550
                                (Zip Code)

                              (360) 533-4747
               (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  X     No
                                        ---       ---

Check whether the registrant is an accelerated filer (as defined in Rule 12b-2
of the Exchange Act):
Yes X     No
   ---       ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.


      CLASS                         SHARES OUTSTANDING AT JULY 31, 2004
      -----                         -----------------------------------
 common stock, $.01 par value                    3,474,883



<PAGE>


                                    INDEX

                                                                          Page
PART I.      FINANCIAL INFORMATION                                        ----

     Item 1. Financial Statements (unaudited)

             Condensed Consolidated Balance Sheets                          3

             Condensed Consolidated Statements of Income                    4

             Condensed Consolidated Statements of Shareholders' Equity      5

             Condensed Consolidated Statements of Cash Flows               6-7

             Condensed Consolidated Statements of Comprehensive Income      8

             Notes to Condensed Consolidated Financial Statements          9-12

     Item 2. Management's Discussion and Analysis of Financial Condition  12-24
             and Results of Operations

     Item 3. Quantitative and Qualitative Disclosures about Market Risk    25

     Item 4. Controls and Procedures                                       25

PART II.     OTHER INFORMATION

     Item 1. Legal Proceedings                                             25

     Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases
             of Equity Securities                                         25-26

     Item 3. Defaults Upon Senior Securities                               26

     Item 4. Submission of Matters to a Vote of Security Holders           26

     Item 5. Other Information                                             26

     Item 6. Exhibits and Reports on Form 8-K                             26-27


SIGNATURES                                                                 28

<PAGE>

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
----------------------------
                   TIMBERLAND BANCORP, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     June 30, 2004 and September 30, 2003
                            Dollars in Thousands
                                (unaudited)
                                                          June 30, September 30,
                                                            2004        2003
Assets                                                     ------------------
Cash and due from financial institutions                 $ 12,473    $  8,587
Interest bearing deposits in banks                          1,738      29,511
Investments and mortgage backed securities held to maturity   199         279
Investments and mortgage backed securities available for
  sale                                                     53,608      54,031
Federal Home Loan Bank stock                                5,633       5,454

Loans receivable                                          337,381     325,126
Loans held for sale                                           612       1,001
Less: Allowance for loan losses                            (3,928)     (3,891)
                                                          -------------------
     Total Loans                                          334,065     322,236
                                                          -------------------

Accrued interest receivable                                 1,673       1,687
Premises and equipment                                     13,905      13,429
Real estate owned and other repossessed items                 474       1,258
Bank owned life insurance ("BOLI")                         10,904      10,566
Other assets                                                3,016       2,595
                                                          -------------------
     Total Assets                                       $ 437,688   $ 449,633
                                                          -------------------
Liabilities and Shareholders' Equity

Liabilities
Deposits                                                $ 307,593   $ 307,672
Federal Home Loan Bank advances                            55,980      61,605
Other liabilities and accrued expenses                      2,332       2,745
                                                          -------------------
     Total Liabilities                                    365,905     372,022
                                                          -------------------
Shareholders' Equity
Common Stock, $.01 par value; 50,000,000 shares authorized;
   June 30, 2004 - 3,892,070 issued, 3,483,883 outstanding
   September 30, 2003 - 4,251,680 issued, 3,843,493 outstanding
   (unallocated ESOP shares and unvested MRDP shares are
     not considered outstanding)                               39          43
Additional paid in capital                                l24,984      33,775
Unearned shares - Employee Stock Ownership Plan            (4,494)     (4,891)
Unearned shares - Management Recognition & Development Plan  (699)     (1,182)
Retained earnings                                          52,217      49,699
Accumulated other comprehensive income (loss)                (264)        167
                                                          -------------------
     Total Shareholders' Equity                            71,783      77,611
                                                          -------------------
     Total Liabilities and Shareholders' Equity         $ 437,688   $ 449,633
                                                          -------------------

      See notes to unaudited condensed consolidated financial statements

                                        3
<PAGE>

                  TIMBERLAND BANCORP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
           For the three and nine months ended June 30, 2004 and 2003
                Dollars in Thousands, Except Per Share Amounts
                                (unaudited)


                                            Three Months        Nine Months
                                            Ended June 30,      Ended June 30,
                                             2004     2003       2004      2003
Interest and Dividend Income                ----------------    ----------------
Loans receivable                           $ 6,134   $ 6,203   $18,610   $19,165
Investments and mortgage-backed securities     234       209       717       697
Dividends from investments                     243       259       762       805
Interest bearing deposits in banks              16       103        97       308
                                            ----------------    ----------------
     Total interest and dividend income      6,627     6,774    20,186    20,975

Interest Expense
Deposits                                       988     1,338     3,199     4,361
Federal Home Loan Bank advances                723       840     2,383     2,521
                                            ----------------    ----------------
     Total interest expense                  1,711     2,178     5,582     6,882
                                            ----------------    ----------------
     Net interest income                     4,916     4,596    14,604    14,093
Provision for Loan Losses                       14        66        94       347
                                            ----------------    ----------------
     Net interest income after provision     4,902     4,530    14,510    13,746
        for loan losses

Non-Interest Income
Service charges on deposits                    510       531     1,409     1,522
Gain on sale of loans, net                     159       364       585     1,187
Gain (loss) on sale of securities                        135        (6)      135
BOLI net earnings                              111       131       338       400
Escrow fees                                     32        70       105       205
Servicing income (expense) on loans sold       (17)       50       (21)      245
ATM transaction fees                           166       213       462       588
Other                                          122       154       340       511
                                            ----------------    ----------------
     Total non-interest income               1,083     1,648     3,212     4,793

Non-interest Expense
Salaries and employee benefits               2,155     2,068     6,561     6,110
Premises and equipment                         426       580     1,353     1,313
Advertising                                    207       170       559       550
Loss (gain) from real estate operations &
  write-downs                                   48        68       (27)      141
ATM expenses                                   111       169       303       470
Other                                          947       888     2,814     2,384
                                            ----------------    ----------------
     Total non-interest expense              3,894     3,943    11,563    10,968

Income before federal income taxes           2,091     2,235     6,159     7,571
Federal Income Taxes                           645       694     1,904     2,372
                                            ----------------    ----------------
     Net Income                            $ 1,446   $ 1,541   $ 4,255   $ 5,199
                                            ================    ================
Earnings Per Common Share:
     Basic                                   $0.41     $0.41     $1.16     $1.36
     Diluted                                 $0.39     $0.38     $1.10     $1.30
Weighted average shares outstanding:
     Basic                               3,492,286 3,783,219 3,681,059 3,820,142
     Diluted                             3,671,143 4,012,736 3,860,573 4,008,623

See notes to unaudited condensed consolidated financial statements

                                       4
<PAGE>

                      TIMBERLAND BANCORP, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
  For the year ended September 30, 2003 and the nine months ended June 30, 2004
                    Dollars in Thousands Except Common Stock Shares
                                   (unaudited)
<TABLE>
                                                         Unearned
                                                         Shares      Unearned                Accumulated
                                                         Issued to   Shares                  Other
                                                         Employee    Issued to               Compre-
                        Common        Common Additional  Stock       Management              hensive
                        Stock Shares  Stock    Paid-In   Ownership   Recognition   Retained  Income
                        Outstanding   Amount   Capital   Trust       Plan          Earnings  (Loss)   Total
                        -----------   ------   -------   ---------   -----------   --------  -------  ------

                      <c>           <c>      <c>       <c>         <c>           <c>        <c>     <c>
Balance, Oct. 1, 2002     3,856,536      $43   $35,857    ($5,419)      ($1,826)    $45,210    $ 531 $74,396
Net income                       --       --        --         --            --       6,639        -   6,639
Repurchase of
 common stock              (188,367)      (1)   (3,851)         -            --          --       -   (3,852)
Exercise of stock options    99,071        1     1,490         --            --          -        --   1,491
Cash dividends
 ($.50 per share)                --       --        --         --            --      (2,150)      --  (2,150)
Earned ESOP shares           35,267       --       120        528            -           --        -     648
Earned MRDP shares           40,986       --       159          -           644          --       --     803
Change in fair value of
 securities available
 for sale, net of tax            --       --        --         --            --          --     (364)   (364)
                        ------------------------------------------------------------------------------------
Balance, Sept. 30, 2003   3,843,493       43    33,775     (4,891)       (1,182)     49,699      167  77,611
                        ------------------------------------------------------------------------------------

Net income                       --       --        --         --            --       4,255        -   4,255
Repurchase of
 common stock              (463,016)      (5)  (10,641)        --            --          --       -- (10,646)
Exercise of stock options   103,406        1     1,601         --            --          --       --   1,602
Cash dividends
 ($.42 per share)                --       --        --         --            --      (1,737)      -   (1,737)
Earned ESOP shares               --       --       215        397            --          --       --     612
Earned MRDP shares               --       --        34         -            483          --       --     517
Change in fair value of
 securities available
 for sale, net of tax            --       --        --         --            --          --     (431)   (431)
                        ------------------------------------------------------------------------------------
Balance, June 30, 2004    3,483,883      $39   $24,984    ($4,494)        ($699)    $52,217    ($264)$71,783
                        ------------------------------------------------------------------------------------
</TABLE>

See notes to unaudited condensed consolidated financial statements

                                          5
<PAGE>

                  TIMBERLAND BANCORP, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the nine months ended June 30, 2004 and 2003
                             Dollars in Thousands
                                 (unaudited)

                                                      Nine Months Ended June 30,
Cash Flow from Operating Activities                        2004        2003
                                                          ------------------
Net income                                               $ 4,255     $ 5,199
Noncash revenues, expenses, gains and losses              ------------------
  included in income:
    Depreciation                                             562         500
    Federal Home Loan Bank stock dividends                  (179)       (244)
    Earned ESOP Shares                                       612         570
    Earned MRDP Shares                                       517         528
    Loss (gain) on sale of securities available for sale       6        (135)
    Loss (gain) on sale of real estate owned, net            (85)         14
    BOLI cash surrender value increase                      (338)       (401)
    Gain on sale of loans                                   (585)     (1,187)
    Provision for loan and real estate owned losses          107         401
Loans originated for sale                                (32,892)    (86,232)
Proceeds from sale of loans                               33,866      89,191
Increase in other assets, net                               (184)       (386)
Decrease in other liabilities and accrued expenses, net     (413)       (334)
                                                          ------------------
Net Cash Provided by Operating Activities                  5,249       7,484

Cash Flow from Investing Activities
Decrease (increase) in interest-bearing deposits in
  banks, net                                              27,773     (14,124)
Purchase of securities available for sale                 (9,000)    (16,500)
Proceeds from maturities of securities available for sale  7,244       7,099
Proceeds from sales of securities available for sale       1,600       2,010
Decrease (increase) in loans receivable, net             (12,312)      9,612
Additions to premises and equipment                       (1,038)     (1,885)
Additions to real estate owned                              (228)     (1,032)
Proceeds from sale of real estate owned                    1,084         397
                                                          ------------------
Net Cash Provided by (Used in) Investing Activities       15,123     (14,423)

Cash Flow from Financing Activities
Increase (decrease) in deposits, net                         (79)     10,618
Decrease in Federal Home Loan Bank advances, net          (5,626)       (115)
Proceeds from exercise of stock options                    1,602         742
Repurchase of common stock                               (10,646)     (2,327)
Payment of dividends                                      (1,737)     (1,550)
                                                          ------------------
Net Cash Provided by (Used in) Financing Activities      (16,486)      7,368

Net Change in Cash                                         3,886         429
Cash and Due from Financial Institutions
     Beginning of period                                   8,587      10,580
                                                          ------------------
     End of period                                      $ 12,473    $ 11,009
                                                          ==================

See notes to unaudited condensed consolidated financial statements (continued)

                                      6
<PAGE>


                                                      Nine Months Ended June 30,
                                                           2004        2003
                                                          ------------------
Supplemental Disclosure of Cash Flow Information
     Income taxes paid                                   $ 1,560     $ 1,990
     Interest paid                                         5,644       6,905

Supplemental Disclosure of Noncash Investing Activities
     Market value adjustment of securities held for sale,
       net of tax                                           (431)       (232)
     Loans transferred to real estate owned                  206         978





















       See notes to unaudited condensed consolidated financial statements

                                      7
<PAGE>

                     TIMBERLAND BANCORP, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
            For the three and nine months ended June 30, 2004 and 2003
                              Dollars in Thousands
                                 (unaudited)

                                           Three Months         Nine Months
                                           Ended June 30,      Ended June 30,
                                           2004      2003      2004      2003
Comprehensive Income:                     ----------------    ----------------
     Net Income                           $1,446    $1,541    $4,255    $5,199
     Change in fair value of securities
       available for sale, net of tax       (447)     (149)     (431)     (232)
                                          ----------------    ----------------
Total Comprehensive Income                  $999    $1,392    $3,824    $4,967
                                          ================    ================
















       See notes to unaudited condensed consolidated financial statements

                                     8
<PAGE>


Timberland Bancorp, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)  Basis of Presentation:  The accompanying unaudited condensed consolidated
financial statements for Timberland Bancorp, Inc. ("Company") were prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with instructions for Form 10-Q
and therefore, do not include all disclosures necessary for a complete
presentation of financial condition, results of operations, and cash flows in
conformity with accounting principles generally accepted in the United States of
America.    However, all adjustments, which are, in the opinion of management,
necessary for a fair presentation of the interim condensed consolidated
financial statements have been included.  All such adjustments are of a normal
recurring nature. The unaudited condensed consolidated financial statements
should be read in conjunction with the audited financial statements included in
the Timberland Bancorp, Inc. 2003 Annual Report on Form 10-K. The results of
operations for the nine months ended June 30, 2004 are not necessarily
indicative of the results that may be expected for the entire fiscal year.

(b)  Principles of Consolidation:  The interim condensed consolidated financial
statements include the accounts of Timberland Bancorp, Inc. and its wholly-owned
subsidiary, Timberland Bank ("Bank"), and the Bank's wholly-owned subsidiary,
Timberland Service Corp.   All significant intercompany balances have been
eliminated in consolidation.

(c)  The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period.  Actual results could differ from those
estimates.



                                     9
<PAGE>


(2) EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income applicable to common
stock by the weighted average number of common shares outstanding during the
period, without considering any dilutive items.  Diluted earnings per share is
computed by dividing net income applicable to common stock by the weighted
average number of common shares and common stock equivalents for items that are
dilutive, net of shares assumed to be repurchased using the treasury stock
method at the average share price for the Company's common stock during the
period.  Common stock equivalents arise from assumed conversion of outstanding
stock options and awarded but not released Management Recognition and
Development Plan ("MRDP") shares.  In accordance with Statement of Position
("SOP") 93-6, Employers' Accounting for Employee Stock Ownership Plans (ESOP),
issued by the American Institute of Certified Public Accountants, shares owned
by the Bank's Employee Stock Ownership Plan that have not been allocated are not
considered to be outstanding for the purpose of computing earnings per share.
At June 30, 2004 and 2003, there were 326,216 and 361,483 ESOP shares,
respectively, that had not been allocated.



                                         Three Months          Nine Months
                                         Ended June 30,        Ended June 30,
                                         2004       2003       2004       2003
                                        ---------------------------------------
Basic EPS computation
  Numerator - Net Income            $1,446,000 $1,541,000 $4,255,000 $5,199,000
  Denominator - Weighted average
    common shares outstanding        3,492,286  3,783,219  3,681,059  3,820,142

Basic EPS                               $ 0.41     $ 0.41     $ 1.16     $ 1.36

Diluted EPS computation
  Numerator - Net Income            $1,446,000 $1,541,000 $4,255,000 $5,199,000
  Denominator - Weighted average
    common shares outstanding        3,492,286  3,783,219  3,681,059  3,820,142
Effect of dilutive stock options       141,104    185,785    148,126    157,154
Effect of dilutive MRDP                 37,753     43,732     31,388     31,327
Weighted average common shares       ---------  ---------  ---------  ---------
  and common stock equivalents       3,671,143  4,012,736  3,860,573  4,008,623

Diluted EPS                             $ 0.39     $ 0.38     $ 1.10     $ 1.30












                                       10
<PAGE>

(3) STOCK BASED COMPENSATION
At June 30, 2004 the Company has an employee and director stock option plan.
The Company accounts for options granted under that plan under the recognition
and measurement principles of APB No. 25, Accounting for Stock Issued to
Employees and related interpretations.  Accordingly, no stock-based compensation
cost is reflected in net income as the exercise price for all options granted
under the plan was equal to the market value of the Company's stock on the date
of grant.  The following table illustrates the effect on net income and earnings
per share for the three and nine months ended June 30, 2004 and 2003 if the
Company had applied the fair value recognition provisions of SFAS No. 123,
Accounting for Stock-Based Compensation for the effects of all options granted:



                                         Three Months          Nine Months
                                         Ended June 30,        Ended June 30,
                                         2004       2003       2004       2003
                                        ---------------------------------------
Net income as reported              $1,446,000 $1,541,000 $4,255,000 $5,199,000
Less total stock-based
   compensation expense
   determined under fair
   value method for all
   qualifying awards, net of tax       (46,000)   (58,000)  (126,000)  (159,000)
                                     ---------  ---------  ---------  ---------
Pro forma net income                 1,400,000  1,483,000  4,129,000  5,040,000
                                     =========  =========  =========  =========

Earnings per share:
   Basic:
      As reported                       $ 0.41     $ 0.41     $ 1.16     $ 1.36
      Pro forma                           0.40       0.39       1.12       1.32

   Diluted:
      As reported                       $ 0.39     $ 0.38     $ 1.10     $ 1.30
      Pro forma                           0.38       0.37       1.07       1.27



(4)  DIVIDEND / SUBSEQUENT EVENT
On July 27, 2004, the Company announced a quarterly cash dividend of $0.15 per
common share.  The dividend is to be paid August 24, 2004, to shareholders of
record as of the close of business August 10, 2004.

Branch Acquisition Information
------------------------------
On June 24, 2004, Timberland announced an agreement to acquire seven branch
offices and related deposits in three Western Washington counties from Venture
Bank.  Timberland will acquire approximately $91 million in deposits, which
represents a 30% increase in its deposit base.  In addition, Timberland will
acquire real estate, branch infrastructure, and employees for seven offices in
Toledo, Winlock, Elma, Montesano, Hoquiam,


                                      11
<PAGE>

Aberdeen and Panorama City.   The transaction is scheduled to close in October
2004 and is subject to regulatory approval.  The Company estimates that it will
incur transaction-related expenses of approximately $300,000 ($198,000 after
income tax).  These costs will be expensed during the next two quarters.


(5) RECENT ACCOUNTING PRONOUNCEMENTS
None


Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operation
--------------------------------------------------------------------------

The following analysis discusses the material changes in the financial condition
and results of operations of the Company at and for the three and nine months
ended June 30, 2004.  This report contains certain "forward-looking statements."
The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 and is including this statement
for the express purpose of availing itself of the protection of such safe harbor
with forward looking statements.  These forward looking statements may describe
future plans or strategies and include the Company's expectations of future
financial results.  The words "believe," "expect," "anticipate," "estimate,"
"project," and similar expressions identify forward-looking statements.  The
Company's ability to predict results or the effect of future plans or strategies
is inherently uncertain.  Factors which could affect actual results include
competition in the financial services market for both deposits and loans,
interest rate trends, the economic climate in the Company's market areas and the
country as a whole, loan delinquency rates, and changes in federal and state
regulation.  These factors should be considered in evaluating the
forward-looking statements, and undue reliance should not be placed on such
statements.


Comparison of Financial Condition at June 30, 2004 and September 30, 2003

Total Assets: Total assets decreased $11.9 million to $437.7 million at June 30,
2004 from $449.6 million at September 30, 2003 due to a decrease in the
Company's interest bearing deposits in banks.  The balance in the Company's
interest bearing deposits decreased by $27.8 million primarily due to the
repurchase of 463,016 shares of Timberland Bancorp, Inc. stock for $10.6
million, the repayment of $5.6 million of Federal Home Loan Bank advances, and
an increase in net loans receivable of $11.9 million.


Cash and Due from Financial Institutions: Cash and due from financial
institutions increased to $12.5 million at June 30, 2004 from $8.6 million at
September 30, 2003.

Interest Bearing Deposits in Banks:  Interest bearing deposits in banks
decreased $27.8 million to $1.7 million at June 30, 2004 from $29.5 million at
September 30, 2003, as a portion of the Company's short-term deposits were used
to fund the share repurchase plans, to repay FHLB advances, and to fund loans.

Securities:  Securities decreased $503,000 to $53.8 million at June 30, 2004
from $54.3 million at September 30, 2003.   At June 30, 2004, the Company's
securities' portfolio was comprised of mutual funds of $32.5 million,
mortgage-backed securities of $13.4 million, and U.S. agency securities of $7.9
million.  The mutual funds invest primarily in mortgage-backed products and U.S.
agency securities.

Loans: Net loans receivable, including loans held-for-sale, increased by $11.9
million to $334.1 million at June 30, 2004 from $322.2 at September 30, 2003.
The increase in the portfolio was primarily a result of a $5.0 million increase
in land loans, a $4.5 million increase in commercial real estate loans, a $3.1
million increase in consumer loans, a $1.5 million increase in construction
loans (net of undisbursed portion), and a $1.5 million

                                       12
<PAGE>

increase in commercial business loans.  These increases were partially offset by
a $3.6 million decrease in the Bank's one-to-four family mortgage loan
portfolio.  Loan originations totaled $46.9 million and $133.6 million for the
three and nine months ended June 30, 2004, compared to $75.1 million and $184.4
million for the same periods a year earlier.  The Bank sold $10.4 million and
$33.3 million in fixed rate one-to-four family mortgage loans for the three and
nine months ended June 30, 2004, compared to $25.7 million and $88.0 million for
the same periods a year earlier.

For additional information, see "Loan Portfolio Composition" section and
"Construction and Land Development Loan Portfolio Composition" section included
herein.

Real Estate Owned and Other Repossessed Items:  Real estate owned ("REO") and
other repossessed items decreased to $474,000 at June 30, 2004 from $1.26
million at September 30, 2003 as several properties were sold.  At June 30,
2004, the REO amount was primarily comprised of one-to-four family homes
totaling $324,000 and land parcels totaling $137,000.  For additional
information, see "Non-performing assets" section included herein.

Premises and Equipment:  Premises and equipment increased by $476,000 to $13.9
million at June 30, 2004 from $13.4 million at September 30, 2003.  This
increase is primarily due to costs associated with the remodeling and expansion
of the Bank's home office in Hoquiam, and costs associated with preparing the
Gig Harbor branch for opening.

President Michael Sand provided an update on the Gig Harbor branch. "We are
pleased to announce that Timberland's new Gig Harbor office opened on July 6,
2004.  Occupying an exceptional location, the branch is managed by Richard
Pifer, who has invested 13 years of his 24-year banking career lending in the
Gig Harbor market."

Deposits: Deposits decreased by $79,000 to $307.6 million at June 30, 2004 from
$307.7 million at September 30, 2003, primarily due to a $13.8 million decrease
in the Bank's certificate of deposit accounts, a $1.9 million decrease in
savings accounts, and a $622,000 decrease in money market accounts.  These
decreases were offset by a $15.0 million increase in N.O.W. checking accounts
and a $1.3 million increase in non-interest bearing accounts. The Bank continues
to focus on attracting transaction accounts rather than higher-rate time
deposits.  Transaction accounts represent a stronger core deposit relationship
than other types of deposit accounts.  For additional information, see "Deposit
Breakdown" section included herein.

Federal Home Loan Bank ("FHLB") Advances:  FHLB advances decreased to $56.0
million at June 30, 2004 from $61.6 million at September 30, 2003 as the Bank
repaid a maturing advance.  For additional information, see "FHLB Advance
Maturity Schedule" included herein.

Shareholders' Equity:  Total shareholders' equity decreased by $5.8 million to
$71.8 million at June 30, 2004 from $77.6 million at September 30, 2003,
primarily due to the repurchase of 463,016 shares of the Company's stock for
$10.6 million and the payment of $1.7 million in dividends to shareholders.
Partially offsetting these decreases to equity, were net income of $4.3 million
and a $1.6 million increase to additional paid in capital from the exercise of
stock options.  Also affecting shareholders' equity were decreases of $483,000
and $397,000 in the equity components related to unearned shares issued to the
Management Recognition and Development Plan and the Employee Stock Ownership
Plan.

On February 27, 2004, the Company announced a plan to repurchase 360,670 shares
of the Company's stock.  This marked the Company's 12th stock repurchase plan.
As of June 30, 2004, the Company has repurchased 195,086 of these shares at an
average price of $22.84 per share.  Cumulatively the Company has repurchased
3,173,687 shares at an average price of $14.91 per share.  This represents 48.0%
of the 6,612,500 shares that
                                    13
<PAGE>

were issued when the Company went public in January 1998.  For additional
information, see Item 2 of Part II of this Form 10-Q.

Non-performing Assets:  The Company's non-performing asset ratio to total asset
ratio ("NPA") decreased to 0.59% at June 30, 2004 from 1.15% at September 30,
2003, as total non-performing assets decreased to $2.58 million from $5.15
million.  The ratio decreased primarily due to a $1.79 million decrease in
non-performing loans and a $784,000 decrease in real estate owned.

The non-performing loan total of $2.1 million at June 30, 2004 consisted of
$659,000 in one-to-four family loans, $616,000 in commercial real estate loans,
$402,000 in one-to-four family construction loans, $367,000 in land loans,
$36,000 in commercial business loans, and $29,000 in consumer loans.  Despite
historically having a higher percentage of non-performing loans than relevant
peer group averages, the Company's actual charge-offs have remained low.  The
Company's net charge-offs to outstanding loans ratio was a minimal .004% for the
quarter ended June 30, 2004 and during the last five fiscal years has averaged
less than .10% per year.





                                       14

<PAGE>

Non Performing Assets
---------------------
The following table sets forth information with respect to the Company's
nonperforming assets at the dates indicated.

                                                    June 30,     September 30,
                                                      2004          2003
                                                    ----------------------
                                                    (Dollars in thousands)
Loans accounted for on a nonaccrual basis:
Mortgage loans:
   One-to-four family                                $   659     $   1,409
   Commercial                                            616           538
   Construction and land development                     402         1,185
   Land                                                  367           521
Consumer loans                                            29           212
Commercial business loans                                 36            30
                                                     -------       -------
      Total                                            2,109         3,895

Accruing loans which are contractually
past due 90 days or more:                                 -             -
                                                     -------       -------
      Total                                                -            --

Total of nonaccrual and
90 days past due loans                                 2,109         3,895

Real estate owned and other
repossessed items                                        474         1,258
                                                     -------       -------
      Total nonperforming assets                     $ 2,583       $ 5,153
                                                     =======       =======
Restructured loans                                        -             --

Nonaccrual and 90 days or more past
due loans as a percentage of loans
receivable, (including loans held for sale)(1)         0.62%         1.19%

Nonaccrual and 90 days or more past
due loans as a percentage of total assets              0.48%         0.87%

Nonperforming assets as a percentage
of total assets                                        0.59%         1.15%

Loans receivable, (including loans
held for sale) (1)                                  $337,993      $326,127
                                                     =======       =======

Total assets                                        $437,688      $449,633
                                                     =======       =======

______________
 (1)  Loans receivable is before the allowance for loan losses



                                            15
<PAGE>

Loan Portfolio Composition
--------------------------
The following table sets forth the composition of the Company's loan portfolio
by type of loan as of the dates indicated.

                                                  At June 30,  At September 30,
                                                      2004          2003
                                                 Amount Percent  Amount Percent
                                                 --------------  --------------
                                                      (Dollars In thousands)
Mortgage Loans:
  One-to-four family (1)                        $91,799  24.92% $95,371  26.21%
  Multi-family                                   18,043   4.90   18,241   5.01
  Commercial                                    107,456  29.16  102,972  28.30
  Construction and land development              88,446  24.00   94,117  25.87
  Land                                           20,587   5.59   15,628   4.30
                                                 ------ -------  ------ -------
     Total mortgage loans                       326,331  88.57  326,329  89.69
Consumer Loans:
  Home equity and second mortgage                21,782   5.91   19,233   5.29
  Other                                           9,339   2.53    8,799   2.42
                                                 ------ -------  ------ -------
                                                 31,121   8.44   28,032   7.71

Commercial business loans                        11,012   2.99    9,475   2.60
                                                 ------ -------  ------ -------
     Total loans                                368,464 100.00% 363,836 100.00%
                                                        ======          ======
Less:
  Undisbursed portion of loans
    in process                                  (27,567)        (34,785)
  Unearned income                                (2,904)         (2,924)
  Allowance for loan losses                      (3,928)         (3,891)
                                                -------         -------
Total loans, net                               $334,065        $322,236
                                                =======         =======
________________
(1)Includes loans held-for-sale.

Construction and Land Development Loan Portfolio Composition
------------------------------------------------------------
The following table sets forth the composition of the Company's construction and
land development loan portfolio as of the dates indicated.

                                                  At June 30,  At September 30,
                                                      2004          2003
                                                 Amount Percent  Amount Percent
                                                 --------------  --------------
                                                      (Dollars In thousands)

Custom and owner/builder const.                $ 45,020  50.90% $49,876  52.99%
Speculative construction                         23,491  26.56   26,350  28.00
Commercial real estate                           11,781  13.32    6,825   7.25
Multi-family                                        417   0.47    3,940   4.19
Land development                                  7,737   8.75    7,126   7.57
                                                 ------ -------  ------ -------
    Total construction loans                   $ 88,446 100.00% $94,117 100.00%
                                                 ====== ======   ====== ======


                                       16
<PAGE>


Activity in the Allowance for Loan Losses
-----------------------------------------
Activity in the allowance for loan losses in the nine months ended June 30, 2004
and 2003 is as follows:

                                                          2004          2003
                                                        ----------------------
                                                        (Dollars in thousands)

Balance beginning of period                              $3,891        $3,630
Provision for loan losses                                    94           347
Loans charged off                                           (75)         (107)
Recoveries on loans previously charged off                   18            68
Net charge offs                                             (57)          (39)
                                                          -----         -----
Balance at end of period                                 $3,928        $3,938
                                                          =====         =====










                                         17
<PAGE>



Deposit Breakdown
-----------------
The following table sets forth the balances of deposits in the various types of
accounts offered by the Bank at the dates indicated.

                                              June 30, 2004  September 30, 2003
                                              -------------  ------------------
                                              (in thousands)   (in thousands)

Non-interest bearing                            $ 30,450          $ 29,133
N.O.W. checking                                   72,586            57,614
Savings                                           47,667            49,572
Money market accounts                             38,822            39,444
Certificates of deposit under $100,000            96,261           109,720
Certificates of deposit $100,000 and over         21,807            22,189
                                                 -------           -------
     Total Deposits                             $307,593          $307,672
                                                 =======           =======



FHLB Advance Maturity Schedule
------------------------------
The Bank's Federal Home Loan Bank borrowings mature at various dates through
January 2011 and bear interest at rates ranging from 1.1% to 6.6%.   Principal
reduction amounts due for future years ending September 30 are as follows
(dollars in thousands):

2004               $ 1,044
2005                 4,583
2006                10,591
2007                    64
2008                15,070
Thereafter          24,628
                    ------
Total              $55,980
                    ======

A portion of these advances have a putable feature and may be called by the FHLB
earlier than the above schedule indicates.












                                         18
<PAGE>

Comparison of Operating Results for the Three and Nine Months Ended June 30,
2004 and 2003

Net Income: Net income for the quarter ended June 30, 2004 was $1.45 million, or
$0.39 per diluted share ($0.41 per basic share) compared to $1.54 million, or
$0.38 per diluted share ($0.41 per basic share) for the quarter ended June 30,
2003.  The increase in earnings per share was primarily a result of the lower
number of weighted average shares outstanding due to share repurchases.  Net
income for the current quarter was $95,000 lower than the same period a year ago
primarily due to decreased non-interest income, which was partially offset by
increased net interest income.

Net income for the nine months ended June 30, 2004 was $4.26 million, or $1.10
per diluted share ($1.16 per basic share) compared to $5.20 million, or $1.30
per diluted share ($1.36 per basic share) for the nine months ended June 30,
2003.  The $0.20 per share decrease in earnings for the nine months ended June
30, 2004 was primarily a result of the $1.58 million ($1.04 million net of
income tax - $0.27 per diluted share) decrease in non-interest income and the
$595,000 ($393,000 net of income tax - $0.10 per diluted share) increase in
non-interest expense.  These items were partially offset by a $764,000 ($504,000
net of income tax - $0.13 per diluted share) increase in net interest income
after provision for loan losses and a lower number of shares outstanding which
increased diluted earnings per share by approximately $0.04.

In conjunction with the recently announced acquisition of seven Venture Bank
branches, the Company estimates that it will incur transaction-related expenses
of approximately $300,000 ($198,000 after income tax).  These costs will be
expensed during the next two quarters.  For additional information, see "Branch
Acquisition Information" section included herein.

Net Interest Income: Net interest income increased $320,000 to $4.92 million for
the quarter ended June 30, 2004 from $4.60 million for the quarter ended June
30, 2003, primarily due to a decrease in the Company's funding costs.   Total
interest expense decreased by $467,000 to $1.71 million for the quarter ended
June 30, 2004 from $2.18 million for the quarter ended June 30, 2003 as the
Company's total cost of funds decreased to 2.03% from 2.62%.   The lower funding
costs were due in part to a change in the composition of interest-bearing
liabilities, as certificate of deposit accounts and FHLB advances decreased
while N.O.W. checking accounts, a lower costing category of funds, increased.
Partially offsetting the reduced funding costs was decreased interest income.
Total interest income decreased $147,000 to $6.63 million for the quarter ended
June 30, 2004 from $6.77 million for the quarter ended June 30, 2003, primarily
due to a reduction in average yields on earning assets.  The yield on earning
assets was 6.54% for the quarter ended June 30, 2004 compared to 6.65% for the
quarter ended June 30, 2003.  As a result of these changes, the net interest
margin increased to 4.85% for the quarter ended June 30, 2004 from 4.51% for the
quarter ended June 30, 2003.

Net interest income increased $511,000 to $14.60 million for the nine months
ended June 30, 2004 from $14.09 million for the nine months ended June 30, 2003,
primarily due to a larger interest earning asset base and a decrease in the
Company's funding costs.   Average total interest earning assets increased by
$10.0 million to $414.3 million for the nine months ended June 30, 2004 from
$404.3 million for the nine months ended June 30, 2003.  Total interest expense
decreased by $1.30 million to $5.58 million for the nine months ended June 30,
2004 from $6.88 million for the nine months ended June 30, 2003 as the Company's
total cost of funds decreased to 2.17% from 2.77%.   Total interest income
decreased $789,000 to $20.19 million for the nine months ended June 30, 2004
from $20.98 million for the nine months ended June 30, 2003, primarily due to a
reduction in average yields on earning assets.  The yield on earning assets was
6.50% for the nine months ended June 30, 2004 compared to 6.92% for the nine
months ended June 30, 2003.  As a result of these changes, the net interest
margin increased to 4.70% for the nine months ended June 30, 2004 from 4.65% for
the nine months ended June 30, 2003.

                                       19
<PAGE>

Provision for Loan Losses:  The provision for loan losses for the quarter ended
June 30, 2004 decreased $52,000 to $14,000 from $66,000 for the quarter ended
June 30, 2003.  The provision for loan losses for the nine months ended June 30,
2004 decreased $253,000 to $94,000 from $347,000 for the period ended June 30,
2003.  The Bank has established a systematic and comprehensive methodology for
the determination of provisions for loan losses.  On a quarterly basis the Bank
performs an analysis taking into consideration historic loss experience for
various loan segments, collateral securing individual loans on non-accrual
status, changes in economic conditions, delinquency rates, and other factors to
determine the level of allowance for loan losses needed.

Based on its analysis, management deemed the allowance for loan losses of $3.93
million at June 30, 2004 (1.16% of loans receivable and 186.25% of
non-performing loans) adequate to provide for probable losses based on an
evaluation of known and inherent risks in the loan portfolio at that date.  The
allowance for loan losses was $3.94 million (1.26% of loans receivable and
180.1% of non-performing loans) at June 30, 2003.  The Company had a net
charge-off of $14,000 for the current quarter compared to a net recovery of
$3,000 in the same quarter of 2003.  For the nine months ended June 30, 2004 and
2003, net charge-offs were $57,000 and $39,000, respectively.  For additional
information, see the "Activity in the Allowance for Loan Losses" section
included herein.

Non-interest Income: Total non-interest income decreased $565,000 to $1.08
million for the quarter ended June 30, 2004 from $1.65 million for the quarter
ended June 30, 2003, primarily due to a $272,000 decrease in income from loan
sales (gain on sale of loans and servicing income on loans sold), a $135,000
decrease in gain on sale of securities, a $47,000 decrease in ATM transaction
fees, a $38,000 decrease in escrow fees, and a $26,000 decrease in loan
application fees.   Income from loan sales decreased as mortgage banking
activity slowed.   The Bank sold $10.4 million in fixed rate one-to-four
mortgages during the quarter ended June 30, 2004 compared to $25.7 million for
the same period a year ago.

Total non-interest income decreased $1.58 million to $3.21 million for the nine
months ended June 30, 2004 from $4.79 million for the nine months ended June 30,
2003, primarily due to an $868,000 decrease in income from loan sales (gain on
sale of loans and servicing income on loans sold), a $126,000 decrease in ATM
transaction fees, a $113,000 decrease in service charges on deposits, a $100,000
decrease in escrow fees, an $87,000 decrease in loan application fees and a
$62,000 decrease in BOLI income.  Income from loan sales decreased as mortgage
banking activity slowed.  The Bank sold $33.3 million in fixed rate one-to-four
mortgages during the nine months ended June 30, 2004 compared to $88.0 million
for the same period a year ago.

Non-interest Expense: Total non-interest expense decreased by $49,000 to $3.89
million for the quarter ended June 30, 2004 from $3.94 million for the quarter
ended June 30, 2003.  The decrease is primarily a result of lower premises and
equipment expenses.  Premises and equipment expenses decreased by $154,000
primarily due to technology conversion related expenses that were included in
the June 30, 2003 quarter.  Partially offsetting this decrease was an $87,000
increase in salaries and benefits.

Total non-interest expense increased by $595,000 to $11.56 million for the nine
months ended June 30, 2004 from $10.97 million for the nine months ended June
30, 2003.  The increase is primarily a result of increased employee expenses.
Salary and benefit expenses increased by $451,000 primarily due to a larger
employee base, annual salary adjustments, increased medical insurance costs, and
overtime related to the Bank's technology conversion.

Provision for Income Taxes:  The provision for income taxes decreased to
$645,000 for the quarter ended June 30, 2004 from $694,000 for the quarter ended
June 30, 2003, primarily due to decreased net income before

                                      20
<PAGE>

taxes.  The Company's effective tax rate was 30.8% for the quarter ended June
30, 2004 and 31.1% for the quarter ended June 30, 2003.

The provision for income taxes decreased to $1.90 million for the nine months
ended June 30, 2004 from $2.37 million for the nine months ended June 30, 2003
primarily due to decreased net income before taxes.  The Company's effective tax
rate was 30.9% for the nine months ended June 30, 2004 compared to 31.3% for the
nine months ended June 30, 2003.  The lower effective tax rate resulted
primarily from a higher percentage of tax-exempt income during the current
nine-month period.

Branch Acquisition Information
------------------------------
On June 24, 2004, Timberland announced an agreement to acquire seven branch
offices and related deposits in three Western Washington counties from Venture
Bank.  Timberland will acquire approximately $91 million in deposits, which
represents a 30% increase in its deposit base.  In addition, Timberland will
acquire real estate, branch infrastructure, and employees for seven offices in
Toledo, Winlock, Elma, Montesano, Hoquiam, Aberdeen and Panorama City.  "This
acquisition complements our branching strategy and is a very good fit for us,
adding additional in-market branches, a solid customer base, productive
employees and stable low-cost deposits," said Michael R. Sand, President and
CEO.  "The branch locations offer an ideal mix of in-market offices and new
territory.  Five of the branches are located within our existing geographic
footprint and show solid prospects for generating operating synergies with our
current system.  The two branches in Toledo and Winlock allow us to expand into
Lewis County.  Entering this new market reflects our commitment to the continued
growth of our community banking philosophy, where decisions are made locally,
and community involvement is encouraged."

Of the approximately $91 million in acquired deposits, 53% are in N.O.W.
checking, savings, and money market accounts, 17% are non-interest-bearing
deposits and 30% are time certificates.  "The mix of deposits is expected to
reduce our cost of funds and increase core deposits," said Dean J. Brydon, Chief
Financial Officer.  "As we deploy deposits into loans in the communities we
serve, we anticipate this transaction will contribute to our net interest margin
and earnings.  We believe the acquisition will be accretive within one year
following full integration of the new branches into our system.  This
acquisition, which is the first we have done since going public in 1998, brings
solid potential to generate long-term earnings growth and also complements our
efforts to enhance shareholder value."

The transaction is scheduled to close in October 2004 and is subject to
regulatory approval.  The Company estimates that it will incur
transaction-related expenses of approximately $300,000 ($198,000 after income
tax).  These costs will be expensed during the next two quarters.

Liquidity and Capital Resources
-------------------------------
The Company's primary sources of funds are customer deposits, proceeds from
principal and interest payments on loans and mortgage backed securities, and
proceeds from the sale of loans, maturing securities and FHLB advances. While
maturities and the scheduled amortization of loans are a predictable source of
funds, deposit flows and mortgage prepayments are greatly influenced by general
interest rates, economic conditions and competition.

An analysis of liquidity should also include a review of the changes that appear
in the condensed consolidated statement of cash flows for the nine months ended
June 30, 2004.  The statement of cash flows includes operating, investing and
financing categories.  Operating activities include net income, which is
adjusted for non-cash items, and increases or decreases in cash due to certain
changes in assets and liabilities.  Investing activities consist primarily of
proceeds from maturities and sales of securities, purchases of securities, and
the net change in loans.  Financing activities present the cash flows associated
with the Company's deposit accounts, other borrowings and stock related
transactions.

                                     21
<PAGE>

The Company's consolidated total of cash and due from financial institutions
and interest bearing deposits in banks decreased by $23.9 million to $14.2
million at June 30, 2004 from $38.1 million at September 30, 2003.  The
Company's liquid assets decreased primarily due to the repurchase of shares of
Timberland Bancorp, Inc., the funding of loan portfolio growth, and the
repayment of FHLB advances.

The Bank must maintain an adequate level of liquidity to ensure the availability
of sufficient funds for loan originations and deposit withdrawals, to satisfy
other financial commitments and to take advantage of investment opportunities.
The Bank generally maintains sufficient cash and short-term investments to meet
short-term liquidity needs.  At June 30, 2004, the Bank's regulatory liquidity
ratio (net cash, and short-term and marketable assets, as a percentage of net
deposits and short-term liabilities) was 19.8%. The Bank also maintained an
uncommitted credit facility with the FHLB-Seattle that provided for immediately
available advances up to an aggregate amount of $89.1 million, under which $56.0
million was outstanding at June 30, 2004.

Liquidity management is both a short and long-term responsibility of the Bank's
management.  The Bank adjusts its investments in liquid assets based upon
management's assessment of (i) expected loan demand, (ii) projected loan sales,
(iii) expected deposit flows, and (iv) yields available on interest-bearing
deposits.  Excess liquidity is invested generally in interest-bearing overnight
deposits and other short-term investments.  If the Bank requires funds beyond
its ability to generate them internally, it has additional borrowing capacity
with the FHLB and collateral for repurchase agreements.

The Bank's primary investing activity is the origination of one-to-four family
mortgage loans, commercial mortgage loans, and construction and land development
loans.  At June 30, 2004, the Bank had loan commitments totaling $30.3 million
and undisbursed loans in process totaling $27.6 million.  The Bank anticipates
that it will have sufficient funds available to meet current loan commitments.
Certificates of deposit that are scheduled to mature in less than one year from
June 30, 2004 totaled $87.9 million.  Historically, the Bank has been able to
retain a significant amount of its certificates of deposit as they mature.

Federally-insured state-chartered banks are required to maintain minimum levels
of regulatory capital.  Under current FDIC regulations, insured state-chartered
banks generally must maintain (i) a ratio of Tier 1 leverage capital to total
assets of at least 3.0% (4.0% to 5.0% for all but the most highly rated banks),
(ii) a ratio of Tier 1 capital to risk weighted assets of at least 4.0% and
(iii) a ratio of total capital to risk weighted assets of at least 8.0%.  At
June 30, 2004, the Bank was in compliance with all applicable capital
requirements.  For additional details see "Regulatory Capital".

Regulatory Capital
------------------
The following table compares the Bank's regulatory capital at June 30, 2004 to
its minimum regulatory capital requirements at that date (dollars in thousands):

                                                             Percent of
                                             Amount    Adjusted Total Assets (1)
                                             ------    ---------------------

Tier 1 (leverage) capital                   $64,019            14.5%
Tier 1 (leverage) capital requirement        17,659             4.0
                                            -------           ------
Excess                                      $46,360            10.5%
                                            =======           ======


                                        22
<PAGE>


Tier 1 risk adjusted capital                $64,019            19.1%
Tier 1 risk adjusted capital requirement     13,403             4.0
                                            -------           ------
Excess                                      $50,616            15.1%
                                            =======           ======

Total risk based capital                    $67,947            20.3%
Total risk based capital requirement         26,805             8.0
                                            -------           ------
Excess                                      $41,142            12.3%
                                            =======           ======

___________________
(1)For the Tier 1 (leverage) capital, percent of total average assets of $441.5
million.  For the Tier 1 risk-based capital and total risk-based capital
calculations, percent of total risk-weighted assets of $335.1 million.











                                      23
<PAGE>

                     TIMBERLAND BANCORP, INC. AND SUBSIDIARIES
                               KEY FINANCIAL RATIOS
                   (Dollars in thousands, except per share data)



                                               Three Months      Nine Months
                                               Ended June 30,    Ended June 30,
                                               2004      2003    2004      2003
                                               --------------    --------------
PERFORMANCE RATIOS:
Return on average assets (1)                   1.31%    1.41%    1.26%    1.60%
Return on average equity (1)                   8.11%    7.91%    7.51%    9.08%
Net interest margin (1)                        4.85%    4.51%    4.70%    4.65%
Efficiency ratio                              64.91%   63.15%   64.90%   58.07%




                                          June 30,          September 30,
                                            2004               2003
ASSET QUALITY RATIOS:                    -------------------------------
Non-performing loans                     $  2,109           $  3,895
REO & other repossessed assets                474              1,258
Total non-performing assets                 2,583              5,153
Non-performing assets to total assets        0.59%              1.15%
Allowance for loan losses to
  non-performing loans                     186.25%             99.90%

Book Value Per Share (2)                 $  18.44           $  18.25
Book Value Per Share (3)                 $  19.98           $  19.77
______________________
(1)Annualized
(2)Calculation includes ESOP shares not committed to be released
(3) Calculation excludes ESOP shares not committed to be released




                                             Three Months        Nine Months
                                             Ended June 30,      Ended June 30,
                                             2004      2003      2004      2003
                                            ---------------     ---------------
AVERAGE BALANCE SHEET:
Average Total Loans                        $338,215 $314,764  $338,497 $318,478
Average Total Interest Earning Assets       405,227  407,287   414,298  404,313
Average Total Assets                        442,653  437,819   451,039  434,164
Average Total Interest Bearing Deposits     281,933  270,562   284,127  269,704
Average FHLB Advances                        55,512   61,695    57,786   61,736
Average Shareholders' Equity                 71,344   77,949    75,541   76,337



                                         24
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------
There were no material changes in information concerning market risk from the
information provided in the Company's Form 10-K for the fiscal year ended
September 30, 2003.

Item 4.  Controls and Procedures
--------------------------------
(a) Evaluation of Disclosure Controls and Procedures: An evaluation of the
Company's disclosure controls and procedures (as defined in Section 13a-15(e)
and 15d-15(e)) of the Securities Exchange Act of 1934 (the "Act")) was carried
out under the supervision and with the participation of the Company's Chief
Executive Officer, Chief Financial Officer and several other members of the
Company's senior management as of the end of the period covered by this report.
The Company's Chief Executive Officer and Chief Financial Officer concluded that
the Company's disclosure controls and procedures as currently in effect are
effective in ensuring that the information required to be disclosed by the
Company in the reports it files or submits under the Act is (i) accumulated and
communicated to the Company's management (including the Chief Executive Officer
and Chief Financial Officer) in a timely manner, and (ii) recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.
(b) Changes in Internal Controls:  In the quarter ended June 30, 2004, the
Company did not make any significant changes in, nor take any corrective actions
regarding, its internal controls or other factors that could significantly
affect these controls.  A number of internal control procedures were, however,
modified during the quarter in conjunction with the Bank's conversion to a new
core processing system in August 2003.  The Company also continued to implement
suggestions from its internal auditor and independent auditor on ways to
strengthen existing controls.

PART II.   OTHER INFORMATION

Item 1.       Legal Proceedings
-------------------------------
Neither the Company nor the Bank is a party to any material legal proceedings at
this time.  Further, neither the Company nor the Bank is aware of the threat of
any such proceedings.  From time to time, the Bank is involved in various claims
and legal actions arising in the ordinary course of business.


Item 2.      Changes in Securities, Use of Proceeds and Issuer Purchases of
             Equity Securities
---------------------------------------------------------------------------
The following table sets forth the shares repurchased by the Company during the
quarter:

                                          Total No. of Shares  Maximum No. of
                                          Purchased as Part    Shares that May
         Total No. of     Average Price   of Publicly          Yet Be Purchased
Period   Share Purchased  Paid per Share  Announced Plan       Under the Plan
-------------------------------------------------------------------------------

04/01/2004 -      --          $     --             --             217,284 (1)
04/30/2004


05/01/2004 -  16,700             22.01         16,700             200,584 (1)
05/31/2004



                                     25
<PAGE>


06/30/2004 -  35,000             22.55         35,000             165,584(1)
06/30/2004
-----------------------------------------------------------------------------

Total         51,700           $ 22.38         51,700
-----------------------------------------------------------------------------

(1) On February 27, 2004 Timberland Bancorp, Inc. announced a share repurchase
plan authorizing the repurchase of up to 10% of its outstanding shares, or
360,670 shares.  As of June 30, 2004, a total of 195,086 of these shares were
repurchased at an average price of $22.84 per share.  All shares were
repurchased through open market broker transactions and no shares were directly
repurchased from directors or officers of the Company.


Item 3.     Defaults Upon Senior Securities
-------------------------------------------
None to be reported.


Item 4.    Submission of Matters to a Vote of Security Holders
--------------------------------------------------------------
None to be reported.


Item 5.     Other Information
-----------------------------
None to be reported.


Item 6.     Exhibits and Reports on Form 8-K
--------------------------------------------
       (a) Exhibits

           3.1  Articles of Incorporation of the Registrant (1)
           3.2  Bylaws of the Registrant (1)
           3.3  Amendment to Bylaws (2)
          10.1  Employee Severance Compensation Plan (3)
          10.2  Employee Stock Ownership Plan (3)
          10.3  1999 Stock Option Plan (4)
          10.4  Management Recognition and Development Plan (4)
          10.5  2003 Stock Option Plan (5)
          31.1  Certification of Chief Executive Officer Pursuant to Section
                 302 of the Sarbanes Oxley Act
          31.2  Certification of Chief Financial Officer Pursuant to Section
                 302 of the Sarbanes Oxley Act
          32    Certifications of Chief Executive Officer and Chief Financial
                 Officer Pursuant to Section 906 of the Sarbanes Oxley Act
_________________
(1) Incorporated by reference to the Registrant's Registration Statement of
     Form S-1 (333- 35817).
(2) Incorporated by reference to the Registrant's Annual Report on Form 10-K
     for the year ended September 30, 2002.
(3) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended December 31, 1997.
(4) Incorporated by reference to the Registrant's 1999 Annual Meeting Proxy
     Statement dated December 15, 1998.


                                      26
<PAGE>


(5) Incorporated by reference to the Registrant's 2004 Annual Meeting Proxy
     Statement dated December 24, 2003.


(b) Reports on Form 8-K.

Timberland Bancorp, Inc. filed a Form 8-K on April 28, 2004 that contained the
Company's earnings release report for the quarter ended March 31, 2004.

Timberland Bancorp, Inc. filed a Form 8-K on June 24, 2004 containing
information regarding the Bank's agreement to purchase seven Venture Bank branch
offices located in Toledo, Winlock, Elma, Montesano, Hoquiam, Aberdeen and
Panorama City, in the State of Washington.  The purchase of the branches
includes deposit accounts of approximately $91 million.  A premium of 9.0% will
be paid for all deposits transferred with the exception of certain public
deposits that will transfer with no premium.  The transaction also includes $1.8
million for land and premises.   Consummation of the transaction contemplated by
the agreement is anticipated by the beginning of fourth calendar quarter 2004
and is subject to receipt of all applicable regulatory approvals.






                                      27
<PAGE>



                                SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      Timberland Bancorp, Inc.


Date: August 10, 2004              By: /s/Michael R. Sand
                                       ----------------------------
                                       Michael R. Sand
                                       Chief Executive Officer
                                       (Principal Executive Officer)



Date: August 10, 2004              By: /s/Dean J. Brydon
                                       ----------------------------
                                       Dean J. Brydon
                                       Chief Financial Officer
                                       (Principal Financial Officer)







                                     28
<PAGE>



                               Exhibit 31.1
     Certification of Chief Executive Officer Pursuant to Section 302 of the
                            Sarbanes Oxley Act



I, Michael R. Sand, certify that:

1. I have reviewed this Form 10-Q of Timberland Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of
   material fact or omit to state a material fact necessary to make the
   statements made, in light of the circumstances under which such statements
   were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
   information included in this report, fairly present in all material respects
   the financial condition, results of operations and cash flows of the
   registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

   (a) Designed such disclosure controls and procedures, or caused such
   disclosure controls and procedures to be designed under our supervision, to
   ensure that material information relating to the registrant, including its
   consolidated subsidiaries, is made known to us by others within those
   entities, particularly during the period in which this report is being
   prepared;

   (b) Evaluated the effectiveness of the registrant's disclosure controls and
   procedures and presented in this report our conclusions about the
   effectiveness of the disclosure controls and procedures, as of the end of the
   period covered by this report based on such evaluation; and

   (c) Disclosed in this report any change in the registrant's internal control
   over financial reporting that occurred during the registrant's most recent
   fiscal quarter that has materially affected, or is reasonably likely to
   materially affect, the registrant's internal control over financial
   reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on
   our most recent evaluation of internal control over financial reporting, to
   the registrant's auditors and the audit committee of the registrant's board
   of directors (or persons performing the equivalent functions):

   (a) All significant deficiencies and material weaknesses in the design or
   operation of internal control over financial reporting which are likely to
   adversely affect the registrant's ability to record, process, summarize and
   report financial information; and

   (b) Any fraud, whether or not material, that involves management or other
   employees who have a significant role in the registrant's internal control
   over financial reporting.


Date: August 10, 2004                        /s/Michael R. Sand
                                             -----------------------
                                             Michael R. Sand
                                             Chief Executive Officer



                                     29
<PAGE>

                               Exhibit 31.2
     Certification of Chief Executive Officer Pursuant to Section 302 of the
                            Sarbanes Oxley Act



I, Dean J. Brydon, certify that:

1. I have reviewed this Form 10-Q of Timberland Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of
   material fact or omit to state a material fact necessary to make the
   statements made, in light of the circumstances under which such statements
   were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
   information included in this report, fairly present in all material respects
   the financial condition, results of operations and cash flows of the
   registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

   (a) Designed such disclosure controls and procedures, or caused such
   disclosure controls and procedures to be designed under our supervision, to
   ensure that material information relating to the registrant, including its
   consolidated subsidiaries, is made known to us by others within those
   entities, particularly during the period in which this report is being
   prepared;

   (b) Evaluated the effectiveness of the registrant's disclosure controls and
   procedures and presented in this report our conclusions about the
   effectiveness of the disclosure controls and procedures, as of the end of the
   period covered by this report based on such evaluation; and

   (c) Disclosed in this report any change in the registrant's internal control
   over financial reporting that occurred during the registrant's most recent
   fiscal quarter that has materially affected, or is reasonably likely to
   materially affect, the registrant's internal control over financial
   reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on
   our most recent evaluation of internal control over financial reporting, to
   the registrant's auditors and the audit committee of the registrant's board
   of directors (or persons performing the equivalent functions):

   (a) All significant deficiencies and material weaknesses in the design or
   operation of internal control over financial reporting which are likely to
   adversely affect the registrant's ability to record, process, summarize and
   report financial information; and

   (b) Any fraud, whether or not material, that involves management or other
   employees who have a significant role in the registrant's internal control
   over financial reporting.


Date: August 10, 2004                        /s/Dean J. Brydon
                                             -----------------------
                                             Dean J. Brydon
                                             Chief Financial Officer





                                    30
<PAGE>



                                 EXHIBIT 32
         Certification Pursuant to Section 906 of the Sarbanes Oxley Act





       CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
                          OF TIMBERLAND BANCORP, INC.
            PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     The undersigned hereby certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on Form
10-Q, that:

     * the report fully complies with the requirements of Sections 13(a) and
       15(d) of the Securities Exchange Act of 1934, as amended, and

     * the information contained in the report fairly presents, in all material
       respects, the company's financial condition and results of operations.





   /s/Michael R. Sand                        /s/Dean J. Brydon
   ------------------                        -----------------
   Michael R. Sand                           Dean J. Brydon
   Chief Executive Officer                   Chief Financial Officer


   Date: August 10, 2004








                                       31
<PAGE>