MOUNTLAKE TERRACE, Wash., July 22, 2025 (GLOBE NEWSWIRE) -- FS Bancorp, Inc. (NASDAQ: FSBW) (the "Company"), the holding company for 1st Security Bank of Washington (the "Bank") today reported 2025 second quarter net income of $7.7 million, or $0.99 per diluted share, compared to $9.0 million, or $1.13 per diluted share, for the comparable quarter one year ago. For the six months ended June 30, 2025, net income was $15.7 million, or $1.99 per diluted share, compared to net income of $17.4 million, or $2.20 per diluted share, for the comparable six-month period in 2024.
"We are proud of the balance sheet growth this quarter driven by solid loan demand. Additionally, our share repurchase activity reflects our continued confidence and commitment to delivering long-term value to our shareholders," stated Phillip Whittington, CFO.
"We are pleased to announce that our Board of Directors has approved our 50th consecutive quarterly cash dividend of $0.28 per common share, demonstrating our continued commitment to delivering value to our shareholders. In recognition of this milestone, the Board also approved a special dividend of $0.22 per common share. Both dividends will be paid on August 21, 2025, to shareholders of record as of August 7, 2025," noted Matthew Mullet, President.
2025 Second Quarter Highlights
- Net income was $7.7 million for the second quarter of 2025, compared to $8.0 million for the previous quarter, and $9.0 million for the comparable quarter one year ago;
- Total deposits decreased $61.8 million, or 2.4%, to $2.55 billion at June 30, 2025, primarily due to a decrease of $59.1 million in brokered deposits, compared to $2.62 billion at March 31, 2025, and increased $170.6 million, or 7.2%, from $2.38 billion at June 30, 2024. Noninterest-bearing deposits were $654.1 million at June 30, 2025, $676.7 million at March 31, 2025, and $623.3 million at June 30, 2024;
- Borrowings increased $165.5 million, or 240.5% to $234.3 million at June 30, 2025, compared to $68.8 million at March 31, 2025, and increased $52.4 million, or 28.8%, from $181.9 million at June 30, 2024;
- Loans receivable, net increased $81.2 million, or 3.2%, to $2.58 billion at June 30, 2025, compared to $2.50 billion at March 31, 2025, and increased $125.1 million, or 5.1%, from $2.46 billion at June 30, 2024;
- Consumer loans were $606.3 million at June 30, 2025, a decrease of $2.6 million, or 0.4%, from $608.9 million in the previous quarter, and a decrease of $35.4 million, or 5.5%, from $641.7 million in the comparable quarter one year ago. During the three months ended June 30, 2025, consumer loan originations included 82.5% of home improvement loans originated with a Fair Isaac Corporation ("FICO") score above 720;
- Repurchased 132,282 shares of the Company's common stock in the second quarter of 2025 at an average price of $38.92 per share with $725,000 remaining for future purchases under the existing share repurchase plan at June 30, 2025. In addition, as previously announced on July 9, 2025, the Board approved a new share repurchase plan authorizing the repurchase of up to $5.0 million in shares of the Company's outstanding common stock;
- Book value per share increased $0.43 to $39.55 at June 30, 2025, compared to $39.12 at March 31, 2025, and increased $2.40 from $37.15 at June 30, 2024. Tangible book value per share (non-GAAP financial measure) increased $0.50 to $37.46 at June 30, 2025, compared to $36.96 at March 31, 2025, and increased $2.80 from $34.66 at June 30, 2024. See, "Non-GAAP Financial Measures;"
- Segment reporting in the second quarter of 2025 reflected net income of $7.4 million for the Commercial and Consumer Banking segment and $351,000 for the Home Lending segment, compared to net income of $7.8 million and $242,000 in the prior quarter, and net income of $8.0 million and $1.0 million in the second quarter of 2024, respectively; and
- Regulatory capital ratios at the Bank were 14.1% for total risk-based capital and 11.2% for Tier 1 leverage capital at June 30, 2025, compared to 14.4% for total risk-based capital and 11.3% for Tier 1 leverage capital at March 31, 2025.
Segment Reporting
The Company operates through two reportable segments: Commercial and Consumer Banking and Home Lending. The Commercial and Consumer Banking segment provides diversified financial products and services to our commercial and consumer customers. These products and services include deposit products; residential, consumer, business and commercial real estate lending and cash management services. This segment also manages the Bank's investment portfolio and other assets. The Home Lending segment originates one-to-four-family residential mortgage loans primarily for sale in the secondary markets as well as loans held for investment.
The tables below provide a summary of segment reporting at or for the three and six months ended June 30, 2025 and 2024 (dollars in thousands):
| At or For the Three Months Ended June 30, 2025 | ||||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | |||||||||
| Net interest income(1) | $ | 29,179 | $ | 2,933 | $ | 32,112 | ||||||
| Provision for credit losses | (1,849 | ) | (172 | ) | (2,021 | ) | ||||||
| Noninterest income(2) | 2,297 | 2,873 | 5,170 | |||||||||
| Noninterest expense(3) | (20,313 | ) | (5,189 | ) | (25,502 | ) | ||||||
| Income before provision for income taxes | 9,314 | 445 | 9,759 | |||||||||
| Provision for income taxes | (1,937 | ) | (94 | ) | (2,031 | ) | ||||||
| Net income | $ | 7,377 | $ | 351 | $ | 7,728 | ||||||
| Total average assets for period ended | $ | 2,466,917 | $ | 649,443 | $ | 3,116,360 | ||||||
| Full-time employees ("FTEs") | 452 | 115 | 567 | |||||||||
| At or Three Months Ended June 30, 2024 | ||||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | |||||||||
| Net interest income(1) | $ | 28,051 | $ | 2,350 | $ | 30,401 | ||||||
| (Provision) recovery for credit losses | (1,214 | ) | 137 | (1,077 | ) | |||||||
| Noninterest income(2) | 2,269 | 3,599 | 5,868 | |||||||||
| Noninterest expense(3) | (19,043 | ) | (4,814 | ) | (23,857 | ) | ||||||
| Income before provision for income taxes | 10,063 | 1,272 | 11,335 | |||||||||
| Provision for income taxes | (2,113 | ) | (263 | ) | (2,376 | ) | ||||||
| Net income | $ | 7,950 | $ | 1,009 | $ | 8,959 | ||||||
| Total average assets for period ended | $ | 2,359,741 | $ | 588,090 | $ | 2,947,831 | ||||||
| FTEs | 450 | 121 | 571 | |||||||||
| At or For the Six Months Ended June 30, 2025 | ||||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | |||||||||
| Net interest income(1) | $ | 57,586 | $ | 5,507 | $ | 63,093 | ||||||
| Provision for credit losses | (3,170 | ) | (443 | ) | (3,613 | ) | ||||||
| Noninterest income(2) | 4,542 | 5,754 | 10,296 | |||||||||
| Noninterest expense(3) | (40,489 | ) | (10,067 | ) | (50,556 | ) | ||||||
| Income before provision for income taxes | 18,469 | 751 | 19,220 | |||||||||
| Provision for income taxes | (3,314 | ) | (157 | ) | (3,471 | ) | ||||||
| Net income | $ | 15,155 | $ | 594 | $ | 15,749 | ||||||
| Total average assets for period ended | $ | 2,440,654 | $ | 634,013 | $ | 3,074,667 | ||||||
| FTEs | 452 | 115 | 567 | |||||||||
| At or For the Six Months Ended June 30, 2024 | ||||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | |||||||||
| Net interest income(1) | $ | 56,137 | $ | 4,610 | $ | 60,747 | ||||||
| Provision for credit losses | (2,465 | ) | (11 | ) | (2,476 | ) | ||||||
| Noninterest income(2) | 4,662 | 6,317 | 10,979 | |||||||||
| Noninterest expense(3) | (38,051 | ) | (9,335 | ) | (47,386 | ) | ||||||
| Income before provision for income taxes | 20,283 | 1,581 | 21,864 | |||||||||
| Provision for income taxes | (4,182 | ) | (326 | ) | (4,508 | ) | ||||||
| Net income | $ | 16,101 | $ | 1,255 | $ | 17,356 | ||||||
| Total average assets for period ended | $ | 2,380,803 | $ | 572,386 | $ | 2,953,189 | ||||||
| FTEs | 450 | 121 | 571 | |||||||||
__________________________
| (1) | Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to the other segment. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of assigned liabilities to fund segment assets. | |
| (2) | Noninterest income includes activity from certain residential mortgage loans that were initially originated for sale and measured at fair value and subsequently transferred to loans held for investment. Gains and losses from changes in fair value for these loans are reported in earnings as a component of noninterest income. For the three and six months ended June 30, 2025, the Company recorded a net increase in fair value of $3,000 and $266,000, respectively, compared to a net increase in fair value of $184,000 and $186,000, respectively for the three and six months ended June 30, 2024. As of June 30, 2025 and 2024, there were $13.2 million and $13.9 million, respectively, in residential mortgage loans recorded at fair value as they were previously transferred from loans held for sale to loans held for investment. | |
| (3) | Noninterest expense includes allocated overhead expense from general corporate activities. Allocation is determined based on a combination of segment assets and FTEs. For the three and six months ended June 30, 2025 and 2024, the Home Lending segment included allocated overhead expenses of $1.8 million and $3.7 million, compared to $1.5 million and $3.0 million, respectively. | |
Asset Summary
The following table presents the components and changes in total assets as of the dates indicated.
| ASSETS | Linked Quarter | Prior Year | ||||||||||||||||||||||||||
| (Dollars in thousands) | June 30, | March 31, | June 30, | Change | Quarter Change | |||||||||||||||||||||||
| 2025 | 2025 | 2024 | $ | % | $ | % | ||||||||||||||||||||||
| Cash and due from banks | $ | 15,168 | $ | 18,657 | $ | 20,005 | $ | (3,489 | ) | (19 | )% | $ | (4,837 | ) | (24 | )% | ||||||||||||
| Interest-bearing deposits at other financial institutions | 18,027 | 44,084 | 13,006 | (26,057 | ) | (59 | ) | 5,021 | 39 | |||||||||||||||||||
| Total cash and cash equivalents | 33,195 | 62,741 | 33,011 | (29,546 | ) | (47 | ) | 184 | 1 | |||||||||||||||||||
| Certificates of deposit at other financial institutions | 248 | 1,234 | 12,707 | (986 | ) | (80 | ) | (12,459 | ) | (98 | ) | |||||||||||||||||
| Securities available-for-sale, at fair value | 302,692 | 291,133 | 221,182 | 11,559 | 4 | 81,510 | 37 | |||||||||||||||||||||
| Securities held-to-maturity, net | 31,562 | 10,434 | 8,455 | 21,128 | 202 | 23,107 | 273 | |||||||||||||||||||||
| Loans held for sale, at fair value | 53,630 | 31,038 | 53,811 | 22,592 | 73 | (181 | ) | - | ||||||||||||||||||||
| Loans receivable, net | 2,582,272 | 2,501,117 | 2,457,184 | 81,155 | 3 | 125,088 | 5 | |||||||||||||||||||||
| Accrued interest receivable | 14,270 | 14,406 | 13,792 | (136 | ) | (1 | ) | 478 | 3 | |||||||||||||||||||
| Premises and equipment, net | 30,098 | 29,451 | 29,999 | 647 | 2 | 99 | - | |||||||||||||||||||||
| Operating lease right-of-use | 7,969 | 4,979 | 5,784 | 2,990 | 60 | 2,185 | 38 | |||||||||||||||||||||
| Federal Home Loan Bank stock, at cost | 11,579 | 5,256 | 10,322 | 6,323 | 120 | 1,257 | 12 | |||||||||||||||||||||
| Deferred tax asset, net | 7,782 | 7,009 | 4,590 | 773 | 11 | 3,192 | 70 | |||||||||||||||||||||
| Bank owned life insurance ("BOLI"), net | 38,262 | 38,778 | 38,201 | (516 | ) | (1 | ) | 61 | - | |||||||||||||||||||
| MSRs, held at the lower of cost or fair value | 8,652 | 8,926 | 9,352 | (274 | ) | (3 | ) | (700 | ) | (7 | ) | |||||||||||||||||
| Goodwill | 3,592 | 3,592 | 3,592 | - | - | - | - | |||||||||||||||||||||
| Core deposit intangible, net | 12,071 | 12,879 | 15,483 | (808 | ) | (6 | ) | (3,412 | ) | (22 | ) | |||||||||||||||||
| Other assets | 38,139 | 43,105 | 23,912 | (4,966 | ) | (12 | ) | 14,227 | 59 | |||||||||||||||||||
| TOTAL ASSETS | $ | 3,176,013 | $ | 3,066,078 | $ | 2,941,377 | $ | 109,935 | 4 | % | $ | 234,636 | 8 | % | ||||||||||||||
The increase in total assets reflects the Company's continued focus on balance sheet growth through loan origination and selective investment activity, funded by a combination of on-balance sheet liquidity and borrowings.
| Prior | ||||||||||||||||||||||||||||||||
| LOAN PORTFOLIO | Linked | Year | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | Quarter | Quarter | ||||||||||||||||||||||||||||||
| COMMERCIAL REAL ESTATE | June 30, 2025 | March 31, 2025 | June 30, 2024 | $ | $ | |||||||||||||||||||||||||||
| ("CRE") LOANS | Amount | Percent | Amount | Percent | Amount | Percent | Change | Change | ||||||||||||||||||||||||
| CRE owner occupied | $ | 180,250 | 6.8 | % | $ | 164,911 | 6.5 | % | $ | 177,723 | 7.1 | % | $ | 15,339 | $ | 2,527 | ||||||||||||||||
| CRE non-owner occupied | 171,979 | 6.6 | 174,188 | 6.9 | 181,681 | 7.3 | (2,209 | ) | (9,702 | ) | ||||||||||||||||||||||
| Commercial and speculative construction and development | 300,723 | 11.5 | 288,978 | 11.4 | 220,793 | 8.9 | 11,745 | 79,930 | ||||||||||||||||||||||||
| Multi-family | 263,185 | 10.1 | 244,940 | 9.7 | 239,675 | 9.6 | 18,245 | 23,510 | ||||||||||||||||||||||||
| Total CRE loans | 916,137 | 35.0 | 873,017 | 34.5 | 819,872 | 32.9 | 43,120 | 96,265 | ||||||||||||||||||||||||
| RESIDENTIAL REAL ESTATE LOANS | ||||||||||||||||||||||||||||||||
| One-to-four-family (excludes HFS) | 639,881 | 24.4 | 637,299 | 25.2 | 588,966 | 23.7 | 2,582 | 50,915 | ||||||||||||||||||||||||
| Home equity | 85,613 | 3.3 | 73,846 | 2.9 | 73,749 | 3.0 | 11,767 | 11,864 | ||||||||||||||||||||||||
| Residential custom construction | 54,024 | 2.1 | 48,810 | 1.9 | 53,416 | 2.1 | 5,214 | 608 | ||||||||||||||||||||||||
| Total residential real estate loans | 779,518 | 29.8 | 759,955 | 30.0 | 716,131 | 28.8 | 19,563 | 63,387 | ||||||||||||||||||||||||
| CONSUMER LOANS | ||||||||||||||||||||||||||||||||
| Indirect home improvement | 530,375 | 20.3 | 532,038 | 21.0 | 563,621 | 22.6 | (1,663 | ) | (33,246 | ) | ||||||||||||||||||||||
| Marine | 72,765 | 2.8 | 73,737 | 2.9 | 74,627 | 3.0 | (972 | ) | (1,862 | ) | ||||||||||||||||||||||
| Other consumer | 3,151 | 0.1 | 3,118 | 0.1 | 3,440 | 0.1 | 33 | (289 | ) | |||||||||||||||||||||||
| Total consumer loans | 606,291 | 23.2 | 608,893 | 24.0 | 641,688 | 25.7 | (2,602 | ) | (35,397 | ) | ||||||||||||||||||||||
| COMMERCIAL BUSINESS LOANS | ||||||||||||||||||||||||||||||||
| Commercial and industrial ("C&I") | 294,563 | 11.3 | 274,956 | 10.9 | 285,183 | 11.6 | 19,607 | 9,380 | ||||||||||||||||||||||||
| Warehouse lending | 17,952 | 0.7 | 15,949 | 0.6 | 25,548 | 1.0 | 2,003 | (7,596 | ) | |||||||||||||||||||||||
| Total commercial business loans | 312,515 | 12.0 | 290,905 | 11.5 | 310,731 | 12.6 | 21,610 | 1,784 | ||||||||||||||||||||||||
| Total loans receivable, gross | 2,614,461 | 100.0 | % | 2,532,770 | 100.0 | % | 2,488,422 | 100.0 | % | 81,691 | 126,039 | |||||||||||||||||||||
| Allowance for credit losses on loans | (32,189 | ) | (31,653 | ) | (31,238 | ) | (536 | ) | (951 | ) | ||||||||||||||||||||||
| Total loans receivable, net | $ | 2,582,272 | $ | 2,501,117 | $ | 2,457,184 | $ | 81,155 | $ | 125,088 | ||||||||||||||||||||||
The composition of CRE loans at the dates indicated were as follows:
| (Dollars in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | |||||||||
| CRE by Type: | Amount | Amount | Amount | |||||||||
| CRE non-owner occupied: | ||||||||||||
| Office | $ | 39,141 | $ | 39,406 | $ | 41,380 | ||||||
| Retail | 38,652 | 35,520 | 37,507 | |||||||||
| Hospitality/restaurant | 26,489 | 27,377 | 28,314 | |||||||||
| Self-storage | 19,075 | 19,092 | 19,141 | |||||||||
| Mixed use | 18,387 | 18,868 | 18,062 | |||||||||
| Industrial | 14,444 | 15,033 | 17,163 | |||||||||
| Senior housing/assisted living | 7,448 | 7,506 | 7,675 | |||||||||
| Other | 3,670 | 6,579 | 6,847 | |||||||||
| Land | 2,206 | 2,314 | 3,021 | |||||||||
| Education/worship | 2,467 | 2,493 | 2,571 | |||||||||
| Total CRE non-owner occupied | 171,979 | 174,188 | 181,681 | |||||||||
| CRE owner occupied: | ||||||||||||
| Industrial | 77,419 | 66,618 | 63,970 | |||||||||
| Office | 40,156 | 40,447 | 41,978 | |||||||||
| Retail | 19,470 | 20,535 | 20,885 | |||||||||
| Other | 9,483 | 8,529 | 8,354 | |||||||||
| Hospitality/restaurant | 7,230 | 7,306 | 10,800 | |||||||||
| Automobile related | 7,215 | 7,266 | 8,200 | |||||||||
| Mixed use | 5,548 | 5,579 | 5,680 | |||||||||
| Agriculture | 4,652 | 3,990 | 3,639 | |||||||||
| Education/worship | 4,630 | 4,641 | 4,610 | |||||||||
| Car wash | 4,447 | - | 9,607 | |||||||||
| Total CRE owner occupied | 180,250 | 164,911 | 177,723 | |||||||||
| Total | $ | 352,229 | $ | 339,099 | $ | 359,404 | ||||||
The following table includes CRE loans repricing or maturing within the next two years, excluding loans that reprice simultaneously with changes to the prime rate:
| Current | ||||||||||||||||||||||||||||||
| (Dollars in | Weighted | |||||||||||||||||||||||||||||
| thousands) | For the Quarter Ended | Average | ||||||||||||||||||||||||||||
| CRE by type: | Sep 30, 2025 | Dec 31, 2025 | Mar 31, 2026 | Jun 30, 2026 | Sep 30, 2026 | Dec 31, 2026 | Mar 31, 2027 | Jun 30, 2027 | Total | Rate | ||||||||||||||||||||
| Agriculture | $ | 716 | $ | 314 | $ | 178 | $ | 265 | $ | 287 | $ | - | $ | - | $ | - | $ | 1,760 | 6.28 | % | ||||||||||
| Apartment | - | 13,679 | 1,128 | 13,788 | 9,747 | 7,062 | 4,117 | - | 49,521 | 4.96 | % | |||||||||||||||||||
| Hotel / hospitality | 2,393 | - | 113 | 1,243 | - | - | 103 | - | 3,852 | 5.26 | % | |||||||||||||||||||
| Industrial | - | 10,002 | 976 | 586 | 1,578 | - | 13,412 | 263 | 26,817 | 5.12 | % | |||||||||||||||||||
| Mixed use | 241 | - | 7,101 | - | - | 379 | - | - | 7,721 | 8.14 | % | |||||||||||||||||||
| Office | 15,015 | 6,055 | 515 | 1,629 | 554 | 7,695 | 2,857 | 1,213 | 35,533 | 5.50 | % | |||||||||||||||||||
| Other | 1,921 | 240 | 884 | - | - | 1,485 | - | 3,515 | 8,045 | 4.80 | % | |||||||||||||||||||
| Retail | 1,020 | - | 421 | 3,448 | - | 3,399 | 3,027 | 2,801 | 14,116 | 4.26 | % | |||||||||||||||||||
| Education/worship | 1,314 | - | - | - | 2,467 | - | - | - | 3,781 | 5.18 | % | |||||||||||||||||||
| Senior housing and assisted living | - | - | 2,142 | - | - | - | - | 1,372 | 3,514 | 4.76 | % | |||||||||||||||||||
| Total | $ | 22,620 | $ | 30,290 | $ | 13,458 | $ | 20,959 | $ | 14,633 | $ | 20,020 | $ | 23,516 | $ | 9,164 | $ | 154,660 | 5.22 | % | ||||||||||
The composition of construction loans at the dates indicated were as follows:
| (Dollars in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | |||||||||||||||||||||
| Construction Types: | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||
| Commercial construction - retail | $ | 8,447 | 2.4 | % | $ | 8,157 | 2.4 | % | $ | 8,698 | 3.2 | % | ||||||||||||
| Commercial construction - office | 9,083 | 2.6 | 6,487 | 1.9 | 4,737 | 1.7 | ||||||||||||||||||
| Commercial construction - self storage | 16,553 | 4.7 | 16,012 | 4.7 | 10,000 | 3.6 | ||||||||||||||||||
| Commercial construction - hotel | 3,673 | 1.0 | 402 | 0.1 | 7,807 | 2.8 | ||||||||||||||||||
| Multi-family | 23,119 | 6.5 | 31,275 | 9.3 | 30,960 | 11.3 | ||||||||||||||||||
| Custom construction - single family residential and single family manufactured residential | 45,570 | 12.8 | 41,143 | 12.2 | 46,106 | 16.8 | ||||||||||||||||||
| Custom construction - land, lot and acquisition and development | 8,454 | 2.4 | 7,667 | 2.3 | 7,310 | 2.7 | ||||||||||||||||||
| Speculative residential construction - vertical | 200,375 | 56.5 | 186,042 | 55.1 | 131,294 | 47.9 | ||||||||||||||||||
| Speculative residential construction - land, lot and acquisition and development | 39,473 | 11.1 | 40,603 | 12.0 | 27,297 | 10.0 | ||||||||||||||||||
| Total | $ | 354,747 | 100.0 | % | $ | 337,788 | 100.0 | % | $ | 274,209 | 100.0 | % | ||||||||||||
Originations of one-to-four-family loans to purchase and refinance a home for the periods indicated were as follows:
| (Dollars in | Prior Year | |||||||||||||||||||||||||||||
| thousands) | For the Three Months Ended | Linked Quarter | Quarter | |||||||||||||||||||||||||||
| June 30, 2025 | March 31, 2025 | June 30, 2024 | $ | % | $ | % | ||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | Change | Change | Change | Change | |||||||||||||||||||||
| Purchase | $ | 170,854 | 85.7 | % | $ | 120,719 | 83.0 | % | $ | 193,715 | 92.3 | % | $ | 50,135 | 41.5 | $ | (22,861 | ) | (11.8 | )% | ||||||||||
| Refinance | 28,470 | 14.3 | 24,677 | 17.0 | 16,173 | 7.7 | 3,793 | 15.4 | 12,297 | 76.0 | % | |||||||||||||||||||
| Total | $ | 199,324 | 100.0 | % | $ | 145,396 | 100.0 | % | $ | 209,888 | 100.0 | % | $ | 53,928 | 37.1 | $ | (10,564 | ) | (5.0 | )% | ||||||||||
| (Dollars in thousands) | For the Six Months Ended June 30, | |||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Amount | Percent | Amount | Percent | $ Change | % Change | |||||||||||||||
| Purchase | $ | 290,737 | 84.3 | % | $ | 329,292 | 90.5 | % | $ | (38,555 | ) | (11.7 | ) | % | ||||||
| Refinance | 53,983 | 15.7 | 34,545 | 9.5 | 19,438 | 56.3 | % | |||||||||||||
| Total | $ | 344,720 | 100.0 | % | $ | 363,837 | 100.0 | % | $ | (19,117 | ) | (5.3 | ) | % | ||||||
During the quarter ended June 30, 2025, the Company sold $127.1 million of one-to-four-family loans compared to $91.9 million during the previous quarter and $164.5 million during the same quarter one year ago. The increase in the volume of loans sold during the current quarter compared to the prior quarter was primarily due to seasonal factors, including the spring homebuying season. This increased demand for homes generally results in a higher volume of loan originations and, consequently, more loans available for sale. Gross margins on home loan sales decreased to 3.06% for the quarter ended June 30, 2025, compared to 3.26% in the previous quarter and increased from 2.96% in the same quarter one year ago. Gross margins are defined as the margin on loans sold (cash sales) without the impact of deferred costs.
Liabilities and Equity Summary
The following table summarizes the components and changes in deposits, borrowings, equity, and book value per common share at the dates indicated.
| (Dollars in thousands) | Linked | Prior Year | ||||||||||||||||||||||||||||||
| Deposits | June 30, 2025 | March 31, 2025 | June 30, 2024 | Quarter | Quarter | |||||||||||||||||||||||||||
| Transactional deposits: | Amount | Percent | Amount | Percent | Amount | Percent | $ Change | $ Change | ||||||||||||||||||||||||
| Noninterest-bearing checking | $ | 643,573 | 25.2 | % | $ | 659,417 | 25.2 | % | $ | 613,137 | 25.7 | % | $ | (15,844 | ) | $ | 30,436 | |||||||||||||||
| Interest-bearing checking: | ||||||||||||||||||||||||||||||||
| Retail deposits | 181,240 | 7.1 | 171,396 | 6.6 | 166,839 | 7.0 | 9,844 | 14,401 | ||||||||||||||||||||||||
| Brokered deposits | 30,020 | 1.2 | 30,073 | 1.1 | - | - | (53 | ) | 30,020 | |||||||||||||||||||||||
| Total interest-bearing checking | 211,260 | 8.3 | 201,469 | 7.7 | 166,839 | 7.0 | 9,791 | 44,421 | ||||||||||||||||||||||||
| Escrow accounts related to mortgages serviced(1) | 10,496 | 0.4 | 17,289 | 0.7 | 10,212 | 0.4 | (6,793 | ) | 284 | |||||||||||||||||||||||
| Subtotal | 865,329 | 33.9 | 878,175 | 33.6 | 790,188 | 33.1 | (12,846 | ) | 75,141 | |||||||||||||||||||||||
| Savings and money market: | ||||||||||||||||||||||||||||||||
| Savings | 159,601 | 6.3 | 160,332 | 6.1 | 151,398 | 6.4 | (731 | ) | 8,203 | |||||||||||||||||||||||
| Money market: | ||||||||||||||||||||||||||||||||
| Retail deposits | 350,548 | 13.6 | 343,098 | 13.1 | 339,946 | 14.2 | 7,450 | 10,602 | ||||||||||||||||||||||||
| Brokered deposits | 251 | 0.1 | 251 | - | 4,049 | 0.2 | - | (3,798 | ) | |||||||||||||||||||||||
| Total money market | 350,799 | 13.7 | 343,349 | 13.1 | 343,995 | 14.4 | 7,450 | 6,804 | ||||||||||||||||||||||||
| Subtotal | 510,400 | 20.0 | 503,681 | 19.2 | 495,393 | 20.8 | 6,719 | 15,007 | ||||||||||||||||||||||||
| Certificates of deposit: | ||||||||||||||||||||||||||||||||
| Retail CDs | 891,355 | 34.9 | 881,630 | 33.7 | 823,866 | 34.6 | 9,725 | 67,489 | ||||||||||||||||||||||||
| Nonretail CDs: | ||||||||||||||||||||||||||||||||
| Online CDs | 3,423 | 0.1 | 9,354 | 0.4 | 9,354 | 0.4 | (5,931 | ) | (5,931 | ) | ||||||||||||||||||||||
| Public CDs | 2,114 | 0.1 | 2,440 | 0.1 | 2,983 | 0.1 | (326 | ) | (869 | ) | ||||||||||||||||||||||
| Brokered CDs | 280,754 | 11.0 | 339,871 | 13.0 | 261,019 | 11.0 | (59,117 | ) | 19,735 | |||||||||||||||||||||||
| Total nonretail CDs | 286,291 | 11.2 | 351,665 | 13.5 | 273,356 | 11.5 | (65,374 | ) | 12,935 | |||||||||||||||||||||||
| Subtotal | 1,177,646 | 46.1 | 1,233,295 | 47.2 | 1,097,222 | 46.1 | (55,649 | ) | 80,424 | |||||||||||||||||||||||
| Total deposits | $ | 2,553,375 | 100.0 | % | $ | 2,615,151 | 100.0 | % | $ | 2,382,803 | 100.0 | % | $ | (61,776 | ) | $ | 170,572 | |||||||||||||||
| Borrowings(2) | $ | 234,305 | $ | 68,805 | $ | 181,895 | $ | 165,500 | $ | 52,410 | ||||||||||||||||||||||
| Equity | $ | 297,203 | $ | 298,840 | $ | 284,026 | $ | (1,637 | ) | $ | 13,177 | |||||||||||||||||||||
| Book value per common share | $ | 39.55 | $ | 39.12 | $ | 37.15 | $ | 0.43 | $ | 2.40 | ||||||||||||||||||||||
__________________________
| (1) | Primarily noninterest-bearing accounts based on applicable state law. | |
| (2) | Comprised of FHLB advances and Federal Reserve Bank borrowings. | |
At June 30, 2025, the Bank had uninsured deposits of approximately $677.2 million, compared to approximately $679.4 million at March 31, 2025, and $586.6 million at June 30, 2024. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.
In reference to the table above, the linked quarter decrease in stockholders' equity at June 30, 2025, compared to March 31, 2025, was primarily due to share repurchases of $5.1 million, cash dividends paid of $2.1 million, and $525,000 in equity award compensation, partially offset by net income of $7.7 million. Stockholders' equity was also impacted by a decline in unrealized fair value on securities available for sale of $1.2 million, net of tax, and fair value and cash flow hedges of $1.6 million, net of tax, reflecting changes in market interest rates during the quarter, resulting in a $2.8 million decrease in accumulated other comprehensive loss, net of tax.
The Bank is considered "well capitalized" under the capital requirement established by the Federal Deposit Insurance Corporation ("FDIC") and the Company exceeded all regulatory capital requirements. At June 30, 2025, capital ratios presented for the Bank and the Company were as follows:
| At June 30, 2025 | ||||||
| Bank | Company | |||||
| Total risk-based capital (to risk-weighted assets) | 14.07 | % | 14.16 | % | ||
| Tier 1 leverage capital (to average assets) | 11.18 | % | 9.65 | % | ||
| CET 1 capital (to risk-weighted assets) | 12.82 | % | 11.07 | % | ||
Credit Quality
The following table summarizes the changes in the ACL on loans, nonperforming loans, and substandard loans at the dates indicated.
| ACL ON LOANS | June 30, | March 31, | June 30, | Linked | Prior Year | |||||||||||||||
| (Dollars in thousands) | 2025 | 2025 | 2024 | Quarter | Quarter | |||||||||||||||
| Amount | Amount | Amount | $ Change | $ Change | ||||||||||||||||
| Beginning ACL balance | $ | (31,653 | ) | $ | (31,870 | ) | $ | (31,479 | ) | $ | 217 | $ | (174 | ) | ||||||
| Provision | (1,715 | ) | (1,505 | ) | (1,001 | ) | (210 | ) | (714 | ) | ||||||||||
| Charge-offs | ||||||||||||||||||||
| Indirect | 1,555 | 1,579 | 825 | (24 | ) | 730 | ||||||||||||||
| Marine | 43 | 20 | 157 | 23 | (114 | ) | ||||||||||||||
| Other | 42 | 37 | 33 | 5 | 9 | |||||||||||||||
| Commercial business | - | 433 | 733 | (433 | ) | (733 | ) | |||||||||||||
| Subtotal | 1,640 | 2,069 | 1,748 | (429 | ) | (108 | ) | |||||||||||||
| Recoveries | ||||||||||||||||||||
| Indirect | (330 | ) | (340 | ) | (307 | ) | 10 | (23 | ) | |||||||||||
| Marine | (54 | ) | (3 | ) | (110 | ) | (51 | ) | 56 | |||||||||||
| Other | (7 | ) | (4 | ) | (4 | ) | (3 | ) | (3 | ) | ||||||||||
| Commercial business | (70 | ) | - | (85 | ) | (70 | ) | 15 | ||||||||||||
| Subtotal | (461 | ) | (347 | ) | (506 | ) | (114 | ) | 45 | |||||||||||
| Ending ACL balance | $ | (32,189 | ) | $ | (31,653 | ) | $ | (31,238 | ) | $ | (536 | ) | $ | (951 | ) | |||||
| NONPERFORMING LOANS | June 30, | March 31, | June 30, | Linked | Prior Year | ||||||||||||
| (Dollars in thousands) | 2025 | 2025 | 2024 | Quarter | Quarter | ||||||||||||
| CRE LOANS | Amount | Amount | Amount | $ Change | $ Change | ||||||||||||
| CRE | $ | 2,046 | $ | 1,196 | $ | 1,116 | $ | 850 | $ | 930 | |||||||
| Commercial and speculative construction and development | 9,083 | 6,487 | 4,737 | 2,596 | 4,346 | ||||||||||||
| Total CRE loans | 11,129 | 7,683 | 5,853 | 3,446 | 5,276 | ||||||||||||
| RESIDENTIAL REAL ESTATE LOANS | |||||||||||||||||
| One-to-four-family (excludes HFS) | 1,809 | 1,134 | 170 | 675 | 1,639 | ||||||||||||
| Home equity | 251 | 252 | 156 | (1 | ) | 95 | |||||||||||
| Total residential real estate loans | 2,060 | 1,386 | 326 | 674 | 1,734 | ||||||||||||
| CONSUMER LOANS | |||||||||||||||||
| Indirect home improvement | 3,365 | 2,821 | 2,319 | 544 | 1,046 | ||||||||||||
| Marine | 567 | 648 | 327 | (81 | ) | 240 | |||||||||||
| Other consumer | 13 | 1 | 6 | 12 | 7 | ||||||||||||
| Total consumer loans | 3,945 | 3,470 | 2,652 | 475 | 1,293 | ||||||||||||
| COMMERCIAL BUSINESS LOANS | |||||||||||||||||
| C&I | 1,862 | 1,932 | 2,575 | (70 | ) | (713 | ) | ||||||||||
| Total nonperforming loans | $ | 18,996 | $ | 14,471 | $ | 11,406 | $ | 4,525 | $ | 7,590 | |||||||
The increase in nonaccrual loans during the period was partly driven by a single commercial construction loan, which remains in active development. Ongoing construction disbursements on this loan contributed to a $2.6 million increase from the prior quarter and a $4.3 million increase compared to the same period last year. Increases in consumer loan delinquencies also contributed to the overall rise in nonaccrual loans between the periods.
| CRITICIZED LOANS | June 30, | March 31, | June 30, | Linked | Prior Year | ||||||||||||
| (Dollars in thousands) | 2025 | 2025 | 2024 | Quarter | Quarter | ||||||||||||
| CRE LOANS | Amount | Amount | Amount | $ Change | $ Change | ||||||||||||
| CRE | $ | 2,046 | $ | 2,040 | $ | 3,926 | $ | 6 | $ | (1,880 | ) | ||||||
| Commercial and speculative construction and development | 9,083 | 6,487 | 4,737 | 2,596 | 4,346 | ||||||||||||
| Total CRE loans | 11,129 | 8,527 | 8,663 | 2,602 | 2,466 | ||||||||||||
| RESIDENTIAL REAL ESTATE LOANS | |||||||||||||||||
| One-to-four-family (excludes HFS) | 4,383 | 3,728 | 2,854 | 655 | 1,529 | ||||||||||||
| Home equity | 251 | 252 | 156 | (1 | ) | 95 | |||||||||||
| Total residential real estate loans | 4,634 | 3,980 | 3,010 | 654 | 1,624 | ||||||||||||
| CONSUMER LOANS | |||||||||||||||||
| Indirect home improvement | 3,365 | 2,821 | 2,319 | 544 | 1,046 | ||||||||||||
| Marine | 567 | 649 | 327 | (82 | ) | 240 | |||||||||||
| Other consumer | 13 | 1 | 6 | 12 | 7 | ||||||||||||
| Total consumer loans | 3,945 | 3,471 | 2,652 | 474 | 1,293 | ||||||||||||
| COMMERCIAL BUSINESS LOANS | |||||||||||||||||
| C&I | 5,220 | 7,524 | 9,954 | (2,304 | ) | (4,734 | ) | ||||||||||
| Total criticized loans | $ | 24,928 | $ | 23,502 | $ | 24,279 | $ | 1,426 | $ | 649 | |||||||
Operating Results
Net interest income increased $1.7 million to $32.1 million for the three months ended June 30, 2025, from $30.4 million for the three months ended June 30, 2024, primarily due to an increase in total interest income of $2.8 million, partially offset by an increase in interest expense of $1.1 million. The $2.8 million increase in total interest income was primarily due to an increase of $2.6 million in interest income on loans receivable, including fees, primarily as a result of net loan growth. The $1.1 million increase in total interest expense was primarily the result of higher average balances of deposits and borrowings to fund asset growth.
For the six months ended June 30, 2025, net interest income increased $2.3 million to $63.1 million, from $60.7 million for the six months ended June 30, 2024, with a $4.7 million increase in total interest income, partially offset by a $2.3 million increase in interest expense for the same reasons mentioned above.
NIM (annualized) increased one basis point to 4.30% for the three months ended June 30, 2025, from 4.29% for the same period in the prior year and increased four basis points from 4.27% to 4.31% for the six months ended June 30, 2025. The change in NIM for the three and six months ended June 30, 2025, compared to the same period in 2024, reflects the increased yields on interest-earning assets, as a result of loan growth and repricing activity. The improvement also reflects a favorable shift in the asset mix and disciplined management of deposit and funding costs.
The average total cost of funds, including noninterest-bearing checking, increased one basis point to 2.39% for the three months ended June 30, 2025, from 2.38% for the three months ended June 30, 2024. This increase was predominantly due to higher average balances in borrowings. The average cost of funds increased eight basis points to 2.38% for the six months ended June 30, 2025, from 2.30% for the six months ended June 30, 2024, primarily for the same reason noted above as well as growth in the deposit mix from the prior year.
For the three and six months ended June 30, 2025, the provision for credit losses on loans was $2.0 million and $3.6 million, compared to $1.1 million and $2.5 million for the three and six months ended June 30, 2024, respectively. The provision for credit losses on loans reflects net loan growth and an increase in net charge-off activity.
During the three months ended June 30, 2025, net charge-offs decreased $63,000 to $1.2 million, compared to the same period the prior year. During the six months ended June 30, 2025, net charge-offs increased $184,000, to $2.9 million, compared to $2.7 million during the six months ended June 30, 2024. The increase was primarily due to a $1.2 million increase in net charge-offs on indirect home improvement loans, partially offset by a $693,000 decrease in net charge-offs on commercial business loans and a $271,000 decrease in net charge-offs on marine loans. Management attributes the increase in net charge-offs for the current six month period to continued volatile economic conditions.
Total noninterest income decreased $698,000 to $5.2 million for the three months ended June 30, 2025, from $5.9 million for the three months ended June 30, 2024. The decrease primarily reflects a $491,000 decrease in gain on sale of loans, primarily due to a decrease of loans available for sale, a $156,000 decrease in service charges and fee income and a $151,000 decrease in gain on sale of investment securities due to no sales activity in the current quarter compared to the same period last year. Total noninterest income decreased $683,000, to $10.3 million, for the six months ended June 30, 2025, from $11.0 million for the six months ended June 30, 2024. This decrease was primarily the result of a $629,000 decrease in gain on sale of loans, a $464,000 decrease in service charges and fee income, and a net decrease of $368,000 from no activity in gain on sales of MSRs and loss on sale of investment securities compared to an $8.2 million net gain on sale of MSRs, offset by the $7.8 million loss on sale of investment securities that occurred in the first half of 2024. These decreases in total noninterest income were partially offset by a $755,000 increase in other noninterest income as result of sales of nonmarketable equity securities at a $312,000 gain, bank owned life insurance proceeds of $195,000, and a $101,000 increase in brokered loans fees.
Total noninterest expense was $25.5 million for the three months ended June 30, 2025, compared to $23.9 million for the three months ended June 30, 2024. The $1.6 million increase was primarily due to a $710,000 increase in salaries and benefits, primarily due to competitive wage adjustments, a $305,000 increase in operations expense, and a $267,000 increase in professional and board fees. Total noninterest expense increased $3.2 million to $50.6 million for the six months ended June 30, 2025, compared to $47.4 million for the six months ended June 30, 2024. Increases during the six month period ended June 30, 2025, compared to the same period last year included $1.7 million in salaries and benefits, $742,000 in operations expense, and $531,000 in professional and board fees.
About FS Bancorp
FS Bancorp, Inc., a Washington corporation, is the holding company for 1st Security Bank of Washington. The Bank offers a range of loan and deposit services primarily to small- and middle-market businesses and individuals in Washington and Oregon. It operates through 27 bank branches, one headquarters office that provides loans and deposit services, and loan production offices in various suburban communities in the greater Puget Sound area, the Kennewick-Pasco-Richland metropolitan area of Washington, also known as the Tri-Cities, and in Vancouver, Washington. Additionally, the Bank services home mortgage customers across the Northwest, focusing on markets in Washington State including the Puget Sound, Tri-Cities, and Vancouver.
Forward-Looking Statements
When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the "SEC"), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "believe," "will," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "plans," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially from those currently expected or projected in these forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: adverse impacts to economic conditions in the Company's local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of employment levels; labor shortages, the effects of inflation, recessionary pressures or slowing economic growth; changes in interest rates and the duration of such changes, including actions by the Federal Reserve, which could adversely affect our revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity; the impact of inflation and monetary and fiscal policy responses thereto and their impact on consumer and business behavior; geopolitical developments and international conflicts including but not limited to tensions or instability in Eastern Europe, the Middle east, and Asia, or the imposition of new or increased tariffs and trade restrictions, which may disrupt financial markets, global supply chains, energy prices, or economic activity in specific industry sectors; the effects of a federal government shutdown, debt ceiling standoff, or other fiscal policy uncertainty; increased competitive pressures, including repricing and competitors' pricing initiatives, and their impact on our market position, loan, and deposit products; adverse changes in the securities markets, the Company's ability to execute its plans to grow its residential construction lending, mortgage banking, and warehouse lending operations, and the geographic expansion of its indirect home improvement lending; challenges arising from expanding into new geographic markets, products, or services; secondary market conditions for loans and the Company's ability to originate loans for sale and sell loans in the secondary market; volatility in the mortgage industry; fluctuations in deposits; liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; the ability to adapt to rapid technological changes, including advancements in artificial intelligence, digital banking, and cybersecurity; legislation or regulatory changes, including but not limited to shifts in capital requirements, banking regulation, tax laws, or consumer protection laws; vulnerabilities in information systems or third-party service providers, including disruptions, breaches, or attacks; environmental, social and governance goals; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, domestic political unrest and other external events on our business; and other factors described in the Company's latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other reports filed with or furnished to the SEC which are available on its website at www.fsbwa.com and on the SEC's website at www.sec.gov.
Any of the forward-looking statements that the Company makes in this press release and in the other public statements are based upon management's beliefs and assumptions at the time they are made and may turn out to be incorrect because of the inaccurate assumptions the Company might make, because of the factors illustrated above or because of other factors that cannot be foreseen by the Company. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
| FS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited) | ||||||||||||||||||||
| Linked | Prior Year | |||||||||||||||||||
| June 30, | March 31, | June 30, | Quarter | Quarter | ||||||||||||||||
| ASSETS | 2025 | 2025 | 2024 | % Change | % Change | |||||||||||||||
| Cash and due from banks | $ | 15,168 | $ | 18,657 | $ | 20,005 | (19 | ) | (24 | ) | ||||||||||
| Interest-bearing deposits at other financial institutions | 18,027 | 44,084 | 13,006 | (59 | ) | 39 | ||||||||||||||
| Total cash and cash equivalents | 33,195 | 62,741 | 33,011 | (47 | ) | 1 | ||||||||||||||
| Certificates of deposit at other financial institutions | 248 | 1,234 | 12,707 | (80 | ) | (98 | ) | |||||||||||||
| Securities available-for-sale, at fair value | 302,692 | 291,133 | 221,182 | 4 | 37 | |||||||||||||||
| Securities held-to-maturity, net | 31,562 | 10,434 | 8,455 | 202 | 273 | |||||||||||||||
| Loans held for sale, at fair value | 53,630 | 31,038 | 53,811 | 73 | - | |||||||||||||||
| Loans receivable, net | 2,582,272 | 2,501,117 | 2,457,184 | 3 | 5 | |||||||||||||||
| Accrued interest receivable | 14,270 | 14,406 | 13,792 | (1 | ) | 3 | ||||||||||||||
| Premises and equipment, net | 30,098 | 29,451 | 29,999 | 2 | - | |||||||||||||||
| Operating lease right-of-use | 7,969 | 4,979 | 5,784 | 60 | 38 | |||||||||||||||
| Federal Home Loan Bank stock, at cost | 11,579 | 5,256 | 10,322 | 120 | 12 | |||||||||||||||
| Deferred tax asset, net | 7,782 | 7,009 | 4,590 | 11 | 70 | |||||||||||||||
| Bank owned life insurance ("BOLI"), net | 38,262 | 38,778 | 38,201 | (1 | ) | - | ||||||||||||||
| MSRs, held at the lower of cost or fair value | 8,652 | 8,926 | 9,352 | (3 | ) | (7 | ) | |||||||||||||
| Goodwill | 3,592 | 3,592 | 3,592 | - | - | |||||||||||||||
| Core deposit intangible, net | 12,071 | 12,879 | 15,483 | (6 | ) | (22 | ) | |||||||||||||
| Other assets | 38,139 | 43,105 | 23,912 | (12 | ) | 59 | ||||||||||||||
| TOTAL ASSETS | $ | 3,176,013 | $ | 3,066,078 | $ | 2,941,377 | 4 | 8 | ||||||||||||
| LIABILITIES | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Noninterest-bearing accounts | $ | 654,069 | $ | 676,706 | $ | 623,349 | (3 | ) | 5 | |||||||||||
| Interest-bearing accounts | 1,899,306 | 1,938,445 | 1,759,454 | (2 | ) | 8 | ||||||||||||||
| Total deposits | 2,553,375 | 2,615,151 | 2,382,803 | (2 | ) | 7 | ||||||||||||||
| Borrowings | 234,305 | 68,805 | 181,895 | 241 | 29 | |||||||||||||||
| Subordinated notes: | ||||||||||||||||||||
| Principal amount | 50,000 | 50,000 | 50,000 | - | - | |||||||||||||||
| Unamortized debt issuance costs | (373 | ) | (389 | ) | (439 | ) | (4 | ) | (15 | ) | ||||||||||
| Total subordinated notes less unamortized debt issuance costs | 49,627 | 49,611 | 49,561 | - | - | |||||||||||||||
| Operating lease liability | 8,138 | 5,149 | 5,979 | 58 | 36 | |||||||||||||||
| Other liabilities | 33,365 | 28,522 | 37,113 | 17 | (10 | ) | ||||||||||||||
| Total liabilities | 2,878,810 | 2,767,238 | 2,657,351 | 4 | 8 | |||||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||||||||||
| Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued or outstanding | - | - | - | - | - | |||||||||||||||
| Common stock, $.01 par value; 45,000,000 shares authorized; 7,618,543 shares issued and outstanding at June 30, 2025, 7,742,907 at March 31, 2025, and 7,742,607 at June 30, 2024 | 76 | 77 | 77 | (1 | ) | (1 | ) | |||||||||||||
| Additional paid-in capital | 48,418 | 52,806 | 55,834 | (8 | ) | (13 | ) | |||||||||||||
| Retained earnings | 268,509 | 262,945 | 243,651 | 2 | 10 | |||||||||||||||
| Accumulated other comprehensive loss, net of tax | (19,800 | ) | (16,988 | ) | (15,536 | ) | 17 | 27 | ||||||||||||
| Total stockholders' equity | 297,203 | 298,840 | 284,026 | (1 | ) | 5 | ||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 3,176,013 | $ | 3,066,078 | $ | 2,941,377 | 4 | 8 | ||||||||||||
| FS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts) (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Linked | Prior Year | ||||||||||||||||||
| June 30, | March 31, | June 30, | Quarter | Quarter | ||||||||||||||||
| INTEREST INCOME | 2025 | 2025 | 2024 | % Change | % Change | |||||||||||||||
| Loans receivable, including fees | $ | 45,038 | $ | 43,303 | $ | 42,406 | 4 | 6 | ||||||||||||
| Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions | 3,665 | 3,485 | 3,534 | 5 | 4 | |||||||||||||||
| Total interest and dividend income | 48,703 | 46,788 | 45,940 | 4 | 6 | |||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||
| Deposits | 14,520 | 13,058 | 13,252 | 11 | 10 | |||||||||||||||
| Borrowings | 1,585 | 2,263 | 1,801 | (30 | ) | (12 | ) | |||||||||||||
| Subordinated notes | 486 | 485 | 486 | - | - | |||||||||||||||
| Total interest expense | 16,591 | 15,806 | 15,539 | 5 | 7 | |||||||||||||||
| NET INTEREST INCOME | 32,112 | 30,982 | 30,401 | 4 | 6 | |||||||||||||||
| PROVISION FOR CREDIT LOSSES | 2,021 | 1,592 | 1,077 | 27 | 88 | |||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 30,091 | 29,390 | 29,324 | 2 | 3 | |||||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||||
| Service charges and fee income | 2,323 | 2,244 | 2,479 | 4 | (6 | ) | ||||||||||||||
| Gain on sale of loans | 1,972 | 1,700 | 2,463 | 16 | (20 | ) | ||||||||||||||
| Gain on sale of investment securities, net | - | - | 151 | NM | NM | |||||||||||||||
| Earnings on cash surrender value of BOLI | 254 | 250 | 242 | 2 | 5 | |||||||||||||||
| Other noninterest income | 621 | 932 | 533 | (33 | ) | 17 | ||||||||||||||
| Total noninterest income | 5,170 | 5,126 | 5,868 | 1 | (12 | ) | ||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||
| Salaries and benefits | 14,088 | 14,533 | 13,378 | (3 | ) | 5 | ||||||||||||||
| Operations | 3,824 | 3,445 | 3,519 | 11 | 9 | |||||||||||||||
| Occupancy | 1,780 | 1,717 | 1,669 | 4 | 7 | |||||||||||||||
| Data processing | 2,137 | 2,045 | 2,058 | 4 | 4 | |||||||||||||||
| Loan costs | 719 | 548 | 653 | 31 | 10 | |||||||||||||||
| Professional and board fees | 1,155 | 1,186 | 888 | (3 | ) | 30 | ||||||||||||||
| FDIC insurance | 554 | 538 | 450 | 3 | 23 | |||||||||||||||
| Marketing and advertising | 398 | 221 | 377 | 80 | 6 | |||||||||||||||
| Amortization of core deposit intangible | 809 | 831 | 919 | (3 | ) | (12 | ) | |||||||||||||
| Impairment (recovery) of servicing rights | 38 | (9 | ) | (54 | ) | (522 | ) | (170 | ) | |||||||||||
| Total noninterest expense | 25,502 | 25,055 | 23,857 | 2 | 7 | |||||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 9,759 | 9,461 | 11,335 | 3 | (14 | ) | ||||||||||||||
| PROVISION FOR INCOME TAXES | 2,031 | 1,440 | 2,376 | 41 | (15 | ) | ||||||||||||||
| NET INCOME | $ | 7,728 | $ | 8,021 | $ | 8,959 | (4 | ) | (14 | ) | ||||||||||
| Basic earnings per share | $ | 1.00 | $ | 1.02 | $ | 1.15 | (2 | ) | (13 | ) | ||||||||||
| Diluted earnings per share | $ | 0.99 | $ | 1.01 | $ | 1.13 | (2 | ) | (12 | ) | ||||||||||
| FS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts) (Unaudited) | ||||||||||||
| Six Months Ended | Year | |||||||||||
| June 30, | June 30, | Over Year | ||||||||||
| INTEREST INCOME | 2025 | 2024 | % Change | |||||||||
| Loans receivable, including fees | $ | 88,340 | $ | 83,403 | 6 | |||||||
| Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions | 7,150 | 7,417 | (4 | ) | ||||||||
| Total interest and dividend income | 95,490 | 90,820 | 5 | |||||||||
| INTEREST EXPENSE | ||||||||||||
| Deposits | 27,578 | 26,134 | 6 | |||||||||
| Borrowings | 3,848 | 2,968 | 30 | |||||||||
| Subordinated note | 971 | 971 | - | |||||||||
| Total interest expense | 32,397 | 30,073 | 8 | |||||||||
| NET INTEREST INCOME | 63,093 | 60,747 | 4 | |||||||||
| PROVISION FOR CREDIT LOSSES | 3,613 | 2,476 | 46 | |||||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 59,480 | 58,271 | 2 | |||||||||
| NONINTEREST INCOME | ||||||||||||
| Service charges and fee income | 4,567 | 5,031 | (9 | ) | ||||||||
| Gain on sale of loans | 3,672 | 4,301 | (15 | ) | ||||||||
| Gain on sale of MSRs | - | 8,215 | NM | |||||||||
| Loss on sale of investment securities, net | - | (7,847 | ) | NM | ||||||||
| Earnings on cash surrender value of BOLI | 505 | 482 | 5 | |||||||||
| Other noninterest income | 1,552 | 797 | 95 | |||||||||
| Total noninterest income | 10,296 | 10,979 | (6 | ) | ||||||||
| NONINTEREST EXPENSE | ||||||||||||
| Salaries and benefits | 28,621 | 26,935 | 6 | |||||||||
| Operations | 7,269 | 6,527 | 11 | |||||||||
| Occupancy | 3,496 | 3,374 | 4 | |||||||||
| Data processing | 4,182 | 4,016 | 4 | |||||||||
| Loan costs | 1,267 | 1,238 | 2 | |||||||||
| Professional and board fees | 2,342 | 1,811 | 29 | |||||||||
| FDIC insurance | 1,092 | 982 | 11 | |||||||||
| Marketing and advertising | 619 | 604 | 2 | |||||||||
| Amortization of core deposit intangible | 1,639 | 1,860 | (12 | ) | ||||||||
| Impairment of servicing rights | 29 | 39 | (26 | ) | ||||||||
| Total noninterest expense | 50,556 | 47,386 | 7 | |||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 19,220 | 21,864 | (12 | ) | ||||||||
| PROVISION FOR INCOME TAXES | 3,471 | 4,508 | (23 | ) | ||||||||
| NET INCOME | $ | 15,749 | $ | 17,356 | (9 | ) | ||||||
| Basic earnings per share | $ | 2.02 | $ | 2.23 | (9 | ) | ||||||
| Diluted earnings per share | $ | 1.99 | $ | 2.20 | (10 | ) | ||||||
KEY FINANCIAL RATIOS AND DATA (Unaudited)
| At or For the Three Months Ended | ||||||||||||
| June 30, | March 31, | June 30, | ||||||||||
| PERFORMANCE RATIOS: | 2025 | 2025 | 2024 | |||||||||
| Return on assets (ratio of net income to average total assets)(1) | 0.99 | % | 1.07 | % | 1.22 | % | ||||||
| Return on equity (ratio of net income to average total stockholders' equity)(1) | 10.29 | 10.80 | 12.72 | |||||||||
| Yield on average interest-earning assets(1) | 6.52 | 6.53 | 6.48 | |||||||||
| Average total cost of funds(1) | 2.39 | 2.38 | 2.38 | |||||||||
| Interest rate spread information - average during period | 4.13 | 4.15 | 4.10 | |||||||||
| Net interest margin(1) | 4.30 | 4.32 | 4.29 | |||||||||
| Operating expense to average total assets(1) | 3.28 | 3.35 | 3.26 | |||||||||
| Average interest-earning assets to average interest-bearing liabilities(1) | 140.98 | 142.94 | 143.64 | |||||||||
| Efficiency ratio(2) | 68.40 | 69.39 | 65.78 | |||||||||
| Common equity ratio (ratio of stockholders' equity to total assets) | 9.36 | 9.75 | 9.66 | |||||||||
| Tangible common equity ratio(3) | 8.91 | 9.26 | 9.07 | |||||||||
| For the Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| PERFORMANCE RATIOS: | 2025 | 2024 | ||||||
| Return on assets (ratio of net income to average total assets) | 1.03 | % | 1.18 | % | ||||
| Return on equity (ratio of net income to average total stockholders' equity) | 10.55 | 12.51 | ||||||
| Yield on average interest-earning assets | 6.52 | 6.39 | ||||||
| Average total cost of funds | 2.38 | 2.30 | ||||||
| Interest rate spread information - average during period | 4.14 | 4.09 | ||||||
| Net interest margin | 4.31 | 4.27 | ||||||
| Operating expense to average total assets | 3.32 | 3.23 | ||||||
| Average interest-earning assets to average interest-bearing liabilities | 141.93 | 144.07 | ||||||
| Efficiency ratio(2) | 68.89 | 66.07 | ||||||
| June 30, | March 31, | June 30, | ||||||||||
| ASSET QUALITY RATIOS AND DATA: | 2025 | 2025 | 2024 | |||||||||
| Nonperforming assets to total assets at end of period(4) | 0.60 | % | 0.47 | % | 0.39 | % | ||||||
| Nonperforming loans to total gross loans (excluding loans HFS)(5) | 0.73 | 0.57 | 0.46 | |||||||||
| Allowance for credit losses - loans to nonperforming loans(5) | 168.89 | 219.08 | 273.95 | |||||||||
| Allowance for credit losses - loans to total gross loans (excluding loans HFS) | 1.23 | 1.25 | 1.26 | |||||||||
| At or For the Three Months Ended | |||||||||||||||
| June 30, | March 31, | June 30, | |||||||||||||
| PER COMMON SHARE DATA: | 2025 | 2025 | 2024 | ||||||||||||
| Basic earnings per share | $ | 1.00 | $ | 1.02 | $ | 1.15 | |||||||||
| Diluted earnings per share | $ | 0.99 | $ | 1.01 | $ | 1.13 | |||||||||
| Weighted average basic shares outstanding | 7,580,576 | 7,695,320 | 7,688,246 | ||||||||||||
| Weighted average diluted shares outstanding | 7,698,173 | 7,805,728 | 7,796,253 | ||||||||||||
| Common shares outstanding at end of period | 7,515,480 | (6) | 7,639,844 | (7) | 7,644,463 | (8) | |||||||||
| Book value per share using common shares outstanding | $ | 39.55 | $ | 39.12 | $ | 37.15 | |||||||||
| Tangible book value per share using common shares outstanding(9) | $ | 37.46 | $ | 36.96 | $ | 34.66 | |||||||||
__________________________
| (1) | Annualized. | |
| (2) | Total noninterest expense as a percentage of net interest income and total noninterest income. | |
| (3) | Represents a non-GAAP financial measure. For a reconciliation to the most comparable GAAP financial measure, see "Non-GAAP Financial Measures" below. | |
| (4) | Nonperforming assets consist of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), foreclosed real estate and other repossessed assets. | |
| (5) | Nonperforming loans consist of nonaccruing loans and accruing loans 90 days or more past due. | |
| (6) | Common shares were calculated using shares outstanding of 7,618,543 at June 30, 2025, less 103,063 unvested restricted stock shares. | |
| (7) | Common shares were calculated using shares outstanding of 7,742,907 at March 31, 2025, less 103,063 unvested restricted stock shares. | |
| (8) | Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares. | |
| (9) | Tangible book value per share using outstanding common shares excludes intangible assets. This ratio represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" below. | |
| (Dollars in thousands) | For the Three Months Ended June 30, | For the Six Months Ended June 30, | QTR Over QTR | YTD Over YTD | ||||||||||||||||||||
| Average Balances | 2025 | 2024 | 2025 | 2024 | $ Change | $ Change | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Loans receivable, net(1) | $ | 2,612,959 | $ | 2,511,326 | $ | 2,586,598 | $ | 2,487,964 | $ | 101,633 | $ | 98,634 | ||||||||||||
| Securities available-for-sale, at amortized cost | 332,705 | 283,422 | 321,622 | 307,417 | 49,283 | 14,205 | ||||||||||||||||||
| Securities held-to-maturity | 21,401 | 8,500 | 15,063 | 8,500 | 12,901 | 6,563 | ||||||||||||||||||
| Interest-bearing deposits and certificates of deposit at other financial institutions | 8,775 | 41,613 | 10,353 | 50,563 | (32,838 | ) | (40,210 | ) | ||||||||||||||||
| FHLB stock, at cost | 19,502 | 7,040 | 17,840 | 4,607 | 12,462 | 13,233 | ||||||||||||||||||
| Total interest-earning assets | 2,995,342 | 2,851,901 | 2,951,476 | 2,859,051 | 143,441 | 92,425 | ||||||||||||||||||
| Noninterest-earning assets | 121,018 | 95,930 | 123,191 | 94,138 | 25,088 | 29,053 | ||||||||||||||||||
| Total assets | $ | 3,116,360 | $ | 2,947,831 | $ | 3,074,667 | $ | 2,953,189 | $ | 168,529 | $ | 121,478 | ||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Interest-bearing deposit accounts | $ | 1,924,586 | $ | 1,794,966 | $ | 1,845,534 | $ | 1,813,865 | $ | 129,620 | $ | 31,669 | ||||||||||||
| Borrowings | 150,492 | 140,964 | 184,377 | 121,057 | 9,528 | 63,320 | ||||||||||||||||||
| Subordinated notes | 49,617 | 49,550 | 49,608 | 49,542 | 67 | 66 | ||||||||||||||||||
| Total interest-bearing liabilities | 2,124,695 | 1,985,480 | 2,079,519 | 1,984,464 | 139,215 | 95,055 | ||||||||||||||||||
| Noninterest-bearing deposit accounts | 657,820 | 637,345 | 660,805 | 647,214 | 20,475 | 13,591 | ||||||||||||||||||
| Other noninterest-bearing liabilities | 32,700 | 41,785 | 33,218 | 42,516 | (9,085 | ) | (9,298 | ) | ||||||||||||||||
| Total liabilities | $ | 2,815,215 | $ | 2,664,610 | $ | 2,773,542 | $ | 2,674,194 | $ | 150,605 | $ | 99,348 | ||||||||||||
__________________________
| (1) | Includes loans HFS. | |
Non-GAAP Financial Measures:
In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release presents non-GAAP financial measures that include tangible book value per share, and tangible common equity ratio. Management believes that providing the Company's tangible book value per share and tangible common equity ratio is consistent with the capital treatment utilized by the investment community, which excludes intangible assets from the calculation of risk-based capital ratios and facilitates comparison of the quality and composition of the Company's capital over time and to its competitors. Where applicable, the Company has also presented comparable GAAP information.
These non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. They should not be considered in isolation or as a substitute for total stockholders' equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
Reconciliation of the GAAP book value per share and common equity ratio and the non-GAAP tangible book value per share and tangible common equity ratio is presented below.
| (Dollars in thousands, except share and per share amounts) | June 30, | March 31, | June 30, | ||||||||||
| Tangible Book Value Per Share: | 2025 | 2025 | 2024 | ||||||||||
| Stockholders' equity (GAAP) | $ | 297,203 | $ | 298,840 | $ | 284,026 | |||||||
| Less: goodwill and core deposit intangible, net | (15,663 | ) | (16,471 | ) | (19,075 | ) | |||||||
| Tangible common stockholders' equity (non-GAAP) | $ | 281,540 | $ | 282,369 | $ | 264,951 | |||||||
| Common shares outstanding at end of period | 7,515,480 | (1) | 7,639,844 | (2) | 7,644,463 | (3) | |||||||
| Book value per share (GAAP) | $ | 39.55 | $ | 39.12 | $ | 37.15 | |||||||
| Tangible book value per share (non-GAAP) | $ | 37.46 | $ | 36.96 | $ | 34.66 | |||||||
| Tangible Common Equity Ratio: | |||||||||||||
| Total assets (GAAP) | $ | 3,176,013 | $ | 3,066,078 | $ | 2,941,377 | |||||||
| Less: goodwill and core deposit intangible assets | (15,663 | ) | (16,471 | ) | (19,075 | ) | |||||||
| Tangible assets (non-GAAP) | $ | 3,160,350 | $ | 3,049,607 | $ | 2,922,302 | |||||||
| Common equity ratio (GAAP) | 9.36 | % | 9.75 | % | 9.66 | % | |||||||
| Tangible common equity ratio (non-GAAP) | 8.91 | 9.26 | 9.07 | ||||||||||
_________________________
| (1) | Common shares were calculated using shares outstanding of 7,618,543 at June 30, 2025, less 103,063 unvested restricted stock shares. | |
| (2) | Common shares were calculated using shares outstanding of 7,742,907 at March 31, 2025, less 103,063 unvested restricted stock shares. | |
| (3) | Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares. | |
Contacts:
Joseph C. Adams,
Chief Executive Officer
Matthew D. Mullet,
President
Phillip D. Whittington,
Chief Financial Officer
(425) 771-5299
www.FSBWA.com
