MOUNTLAKE TERRACE, Wash., Jan. 21, 2026 (GLOBE NEWSWIRE) -- FS Bancorp, Inc. (NASDAQ: FSBW) (the "Company"), the holding company for 1st Security Bank of Washington (the "Bank"), today reported net income of $8.4 million, or $1.10 per diluted share for the quarter ended December 31, 2025, compared to $7.4 million, or $0.92 per diluted share, for the comparable quarter one year ago. Net income for 2025 was $33.3 million, or $4.29 per diluted share, compared to $35.0 million, or $4.36 per diluted share, for 2024.
"The Company remains focused on growing both book value and tangible book value, which increased 8.6% and 10.1%, respectively, during 2025. Tangible book value per share (non-GAAP) was $39.65 at December 31, 2025, compared to $36.02 at December 31, 2024," stated Matthew Mullet, CEO and President of 1st Security Bank.
"Our consistent operating performance and strong capital position continue to support meaningful returns to our shareholders," stated Joe Adams, CEO of FS Bancorp, Inc. "We are also thankful to our Board of Directors for increasing our fifty-second consecutive quarterly cash dividend by $0.01 to $0.29 per common share. The quarterly dividend will be paid on February 19, 2026, to shareholders of record as of February 6, 2026," concluded Adams.
2025 Fourth Quarter and Year End Highlights
- Net income was $8.4 million for the fourth quarter of 2025, compared to $9.2 million in the previous quarter, and increased from $7.4 million for the comparable quarter one year ago;
- Net interest margin ("NIM") was 4.35% for the fourth quarter of 2025, compared to 4.37% in the previous quarter, and 4.31% for the comparable quarter one year ago;
- Total deposits were $2.67 billion at December 31, 2025, compared to $2.69 billion at September 30, 2025, and increased by $334.2 million, or 14.3%, from $2.34 billion at December 31, 2024. Noninterest-bearing deposits totaled $658.1 million at December 31, 2025, compared to $665.9 million at September 30, 2025, and $638.2 million at December 31, 2024;
- Loans receivable, net increased $23.6 million, or 0.9%, to $2.62 billion at December 31, 2025, compared to $2.60 billion at September 30, 2025, and increased $121.2 million, or 4.8%, from $2.50 billion at December 31, 2024;
- Consumer loans, of which 88.1% are home improvement loans, decreased $3.8 million, or 0.6%, to $597.0 million at December 31, 2025, compared to $600.8 million in the previous quarter and decreased $23.2 million, or 3.7% from $620.2 million in the comparable quarter one year ago. During the three months ended December 31, 2025, 84.3% of consumer portfolio originations for home improvement loans had a Fair Isaac Corporation ("FICO") score above 720;
- Purchased a 122,000-square-foot building for $16.1 million and intends to sell the Bank's current administrative office as part of a broader effort to centralize headquarters by year-end 2026. Prior to the purchase, the Bank leased 22,000 square feet of the building;
- Repurchased 46,947 shares of the Company's common stock in the fourth quarter of 2025 at an average price of $40.01 per share with $4.3 million remaining for future purchases under the existing share repurchase plan;
- Book value per share increased $1.12 to $41.55 at December 31, 2025, compared to $40.43 at September 30, 2025, and increased $3.29 from $38.26 December 31, 2024. Tangible book value per share (non-GAAP financial measure) increased $1.22 to $39.65 at December 31, 2025, compared to $38.43 at September 30, 2025, and increased $3.63 from $36.02 at December 31, 2024. See, "Non-GAAP Financial Measures;"
- Segment reporting in the fourth quarter of 2025, reflected net income of $7.8 million for the Commercial and Consumer Banking segment and $643,000 for the Home Lending segment, compared to $8.4 million and $775,000 in the prior quarter, and $7.4 million and net loss of $39,000 in the fourth quarter of 2024, respectively;
- Regulatory capital ratios at the Bank were 14.0% for total risk-based capital and 11.0% for Tier 1 leverage capital at December 31, 2025, compared to 14.2% for total risk-based capital and 11.2% for Tier 1 leverage capital at December 31, 2024.
- Recorded an additional $1.0 million in noninterest income related to death benefits received on bank owned life insurance policies for the fourth quarter of 2025; and
- Recognized an additional $1.0 million in credit provision related to a single commercial construction relationship during the fourth quarter of 2025.
Segment Reporting
The Company reports two 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 portfolios and cash management services. This segment is also responsible for the management of the investment portfolio and other assets of the Bank. 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 months and years ended December 31, 2025 and 2024 (dollars in thousands):
| At or For the Three Months Ended December 31, 2025 | |||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | ||||||||
| Net interest income (1) | - | 30,737 | - | 2,885 | - | 33,622 | |||||
| (Provision for) recovery of credit losses | (3,681 | - | 57 | (3,624 | - | ||||||
| Noninterest income (2) | 3,386 | 3,001 | 6,387 | ||||||||
| Noninterest expense (3) | (20,878 | - | (5,195 | - | (26,073 | - | |||||
| Income before provision for income taxes | 9,564 | 748 | 10,312 | ||||||||
| Provision for income taxes | (1,787 | - | (105 | - | (1,892 | - | |||||
| Net income | - | 7,777 | - | 643 | - | 8,420 | |||||
| Total average assets for period ended | - | 2,552,509 | - | 649,443 | - | 3,201,952 | |||||
| Full-time employees ("FTEs") | 462 | 118 | 580 | ||||||||
| At or For the Three Months Ended December 31, 2024 | |||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | ||||||||
| Net interest income (1) | - | 28,555 | - | 2,559 | - | 31,114 | |||||
| (Provision for) recovery of credit losses | (1,597 | - | 75 | (1,522 | - | ||||||
| Noninterest income (2) | 2,308 | 2,302 | 4,610 | ||||||||
| Noninterest expense (3) | (19,365 | - | (4,986 | - | (24,351 | - | |||||
| Income (loss) before provision for income taxes | 9,901 | (50 | - | 9,851 | |||||||
| (Provision) benefit for income taxes | (2,480 | - | 11 | (2,469 | - | ||||||
| Net income (loss) | - | 7,421 | - | (39 | - | - | 7,382 | ||||
| Total average assets for period ended | - | 2,383,885 | - | 606,826 | - | 2,990,711 | |||||
| FTEs | 447 | 115 | 562 | ||||||||
| At or For the Year Ended December 31, 2025 | |||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | ||||||||
| Net interest income (1) | - | 119,134 | - | 11,272 | - | 130,406 | |||||
| Provision for credit losses | (9,001 | - | (545 | - | (9,546 | - | |||||
| Noninterest income (2) | 10,007 | 12,270 | 22,277 | ||||||||
| Noninterest expense (3) | (81,501 | - | (20,516 | - | (102,017 | - | |||||
| Income before provision for income taxes | 38,639 | 2,481 | 41,120 | ||||||||
| Provision for income taxes | (7,305 | - | (469 | - | (7,774 | - | |||||
| Net income | - | 31,334 | - | 2,012 | - | 33,346 | |||||
| Total average assets for period ended | - | 2,487,033 | - | 647,642 | - | 3,134,675 | |||||
| FTEs | 462 | 118 | 580 | ||||||||
| At or For the Year Ended December 31, 2024 | |||||||||||
| Condensed income statement: | Commercial and Consumer Banking | Home Lending | Total | ||||||||
| Net interest income (1) | - | 113,304 | - | 9,801 | - | 123,105 | |||||
| Provision for credit losses | (5,393 | - | (118 | - | (5,511 | - | |||||
| Noninterest income (2) | 9,227 | 12,329 | 21,556 | ||||||||
| Noninterest expense (3) | (77,615 | - | (19,954 | - | (97,569 | - | |||||
| Income before provision for income taxes | 39,523 | 2,058 | 41,581 | ||||||||
| (Provision) benefit for income taxes | (6,733 | - | 176 | (6,557 | - | ||||||
| Net income | - | 32,790 | - | 2,234 | - | 35,024 | |||||
| Total average assets for period ended | - | 2,373,295 | - | 591,236 | - | 2,964,531 | |||||
| FTEs | 447 | 115 | 562 | ||||||||
________________________
| (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 months and year ended December 31, 2025, the Company recorded a net increase in fair value of $65,000 and $534,000, respectively, as compared to a net decrease in fair value of $396,000 and a net increase in fair value of $52,000 for the three months and year ended December 31, 2024, respectively. As of December 31, 2025 and 2024, there were $13.2 million and $12.7 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 months and years ended December 31, 2025 and 2024, the Home Lending segment included allocated overhead expenses of $1.9 million and $7.4 million, compared to $1.8 million and $6.6 million for the same periods in 2024, 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) | Dec 31, | Sep 30, | Dec 31, | Change | Quarter Change | ||||||||||||||||||||
| 2025 | 2025 | 2024 | - | - | - | - | |||||||||||||||||||
| Cash and due from banks | - | 13,504 | - | 12,391 | - | 19,280 | - | 1,113 | 9 | - | - | (5,776 | - | (30 | )% | ||||||||||
| Interest-bearing deposits at other financial institutions | 14,715 | 48,889 | 12,355 | (34,174 | - | (70 | - | 2,360 | 19 | ||||||||||||||||
| Total cash and cash equivalents | 28,219 | 61,280 | 31,635 | (33,061 | - | (54 | - | (3,416 | - | (11 | - | ||||||||||||||
| Certificates of deposit at other financial institutions | - | - | 1,727 | - | - | (1,727 | - | NM | |||||||||||||||||
| Securities available-for-sale, at fair value | 288,667 | 311,695 | 281,175 | (23,028 | - | (7 | - | 7,492 | 3 | ||||||||||||||||
| Securities held-to-maturity, net | 33,224 | 31,386 | 8,455 | 1,838 | 6 | 24,769 | 293 | ||||||||||||||||||
| Loans held for sale, at fair value | 43,705 | 38,579 | 27,835 | 5,126 | 13 | 15,870 | 57 | ||||||||||||||||||
| Loans receivable, net | 2,623,172 | 2,599,601 | 2,501,951 | 23,571 | 1 | 121,221 | 5 | ||||||||||||||||||
| Accrued interest receivable | 14,614 | 15,122 | 13,881 | (508 | - | (3 | - | 733 | 5 | ||||||||||||||||
| Premises and equipment, net | 44,065 | 32,444 | 29,756 | 11,621 | 36 | 14,309 | 48 | ||||||||||||||||||
| Long-lived assets held for sale | 3,258 | - | - | 3,258 | - | 3,258 | - | ||||||||||||||||||
| Operating lease right-of-use | 5,789 | 6,832 | 5,378 | (1,043 | - | (15 | - | 411 | 8 | ||||||||||||||||
| Federal Home Loan Bank stock, at cost | 7,971 | 7,975 | 15,621 | (4 | - | - | (7,650 | - | (49 | - | |||||||||||||||
| Deferred tax asset, net | 6,993 | 6,767 | 7,059 | 226 | 3 | (66 | - | (1 | - | ||||||||||||||||
| Bank owned life insurance ("BOLI"), net | 36,249 | 38,531 | 38,528 | (2,282 | - | (6 | - | (2,279 | - | (6 | - | ||||||||||||||
| MSRs, held at the lower of cost or fair value | 8,608 | 8,506 | 9,204 | 102 | 1 | (596 | - | (6 | - | ||||||||||||||||
| Goodwill | 3,592 | 3,592 | 3,592 | - | - | - | - | ||||||||||||||||||
| Core deposit intangible, net | 10,518 | 11,284 | 13,710 | (766 | - | (7 | - | (3,192 | - | (23 | - | ||||||||||||||
| Other assets | 38,203 | 35,231 | 39,670 | 2,972 | 8 | (1,467 | - | (4 | - | ||||||||||||||||
| TOTAL ASSETS | - | 3,196,847 | - | 3,208,825 | - | 3,029,177 | - | (11,978 | - | - | - | - | 167,670 | 6 | - | ||||||||||
During the three months ended December 31, 2025, the Company purchased an office building for $16.1 million. The Company's existing headquarters building was reclassified from premises and equipment, net, to long-lived assets held for sale, at $3.3 million, representing the lower of its carrying value or fair value. No impairment was recorded upon transfer to the held for sale classification. The Company plans to centralize all corporate departments into the new office building by the end of 2026. The costs of the centralization, including potential renovations, furniture, and IT infrastructure, are expected to be funded from cash on hand, and are not anticipated to materially impact the Company's capital position.
| LOAN PORTFOLIO | Prior | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | Linked | Year | |||||||||||||||||||||||||||||
| COMMERCIAL | Quarter | Quarter | |||||||||||||||||||||||||||||
| REAL ESTATE | December 31, 2025 | September 30, 2025 | December 31, 2024 | - | - | ||||||||||||||||||||||||||
| ("CRE") LOANS | Amount | Percent | Amount | Percent | Amount | Percent | Change | Change | |||||||||||||||||||||||
| CRE owner occupied | - | 176,078 | 6.6 | - | - | 170,714 | 6.5 | - | - | 170,396 | 6.7 | - | - | 5,364 | - | 5,682 | |||||||||||||||
| CRE non-owner occupied | 177,113 | 6.7 | 172,713 | 6.6 | 174,921 | 6.9 | 4,400 | 2,192 | |||||||||||||||||||||||
| Commercial and speculative construction and development | 354,130 | 13.3 | 326,684 | 12.4 | 280,798 | 11.1 | 27,446 | 73,332 | |||||||||||||||||||||||
| Multi-family | 262,150 | 9.9 | 262,578 | 10.0 | 245,222 | 9.7 | (428 | - | 16,928 | ||||||||||||||||||||||
| Total CRE loans | 969,471 | 36.5 | 932,689 | 35.5 | 871,337 | 34.4 | 36,782 | 98,134 | |||||||||||||||||||||||
| RESIDENTIAL REAL ESTATE LOANS | |||||||||||||||||||||||||||||||
| One-to-four-family (excludes HFS) | 628,761 | 23.7 | 629,712 | 23.9 | 617,322 | 24.4 | (951 | - | 11,439 | ||||||||||||||||||||||
| Home equity | 88,271 | 3.3 | 86,895 | 3.3 | 75,147 | 3.0 | 1,376 | 13,124 | |||||||||||||||||||||||
| Residential custom construction | 42,329 | 1.6 | 53,296 | 2.0 | 49,902 | 2.0 | (10,967 | - | (7,573 | - | |||||||||||||||||||||
| Total residential real estate loans | 759,361 | 28.6 | 769,903 | 29.2 | 742,371 | 29.4 | (10,542 | - | 16,990 | ||||||||||||||||||||||
| CONSUMER LOANS | |||||||||||||||||||||||||||||||
| Indirect home improvement | 525,842 | 19.8 | 527,597 | 20.1 | 541,946 | 21.4 | (1,755 | - | (16,104 | - | |||||||||||||||||||||
| Marine | 68,115 | 2.6 | 70,220 | 2.7 | 74,931 | 2.9 | (2,105 | - | (6,816 | - | |||||||||||||||||||||
| Other consumer | 3,029 | 0.1 | 2,962 | 0.1 | 3,304 | 0.1 | 67 | (275 | - | ||||||||||||||||||||||
| Total consumer loans | 596,986 | 22.5 | 600,779 | 22.9 | 620,181 | 24.4 | (3,793 | - | (23,195 | - | |||||||||||||||||||||
| COMMERCIAL BUSINESS LOANS | |||||||||||||||||||||||||||||||
| Commercial and industrial ("C&I") | 301,111 | 11.3 | 311,173 | 11.8 | 287,014 | 11.3 | (10,062 | - | 14,097 | ||||||||||||||||||||||
| Warehouse lending | 28,180 | 1.1 | 15,113 | 0.6 | 12,918 | 0.5 | 13,067 | 15,262 | |||||||||||||||||||||||
| Total commercial business loans | 329,291 | 12.4 | 326,286 | 12.4 | 299,932 | 11.8 | 3,005 | 29,359 | |||||||||||||||||||||||
| Total loans receivable, gross | 2,655,109 | 100.0 | - | 2,629,657 | 100.0 | - | 2,533,821 | 100.0 | - | 25,452 | 121,288 | ||||||||||||||||||||
| Allowance for credit losses ("ACL") on loans | (31,937 | - | (30,056 | - | (31,870 | - | (1,881 | - | (67 | - | |||||||||||||||||||||
| Total loans receivable, net | - | 2,623,172 | - | 2,599,601 | - | 2,501,951 | - | 23,571 | - | 121,221 | |||||||||||||||||||||
Total loans receivable, gross increased $25.5 million to $2.66 billion during the fourth quarter of 2025, primarily as a result of a $27.4 million increase in commercial and speculative construction and development loans, led by speculative residential projects.
A breakdown of CRE loans, excluding multi-family and construction and development loans, at the dates indicated were as follows:
| (Dollars in thousands) | |||||||||||
| CRE by Type: | December 31, 2025 | September 30, 2025 | December 31, 2024 | ||||||||
| CRE non-owner occupied: | |||||||||||
| Office | - | 44,429 | - | 42,537 | - | 39,697 | |||||
| Retail | 36,387 | 36,827 | 36,568 | ||||||||
| Hospitality/restaurant | 24,848 | 25,798 | 27,562 | ||||||||
| Self-storage | 18,924 | 19,001 | 19,111 | ||||||||
| Mixed use | 18,903 | 18,663 | 17,721 | ||||||||
| Industrial | 14,263 | 14,352 | 15,125 | ||||||||
| Senior housing/assisted living | 7,329 | 7,390 | 7,565 | ||||||||
| Other | 7,729 | 3,632 | 6,631 | ||||||||
| Land | 1,887 | 2,072 | 2,421 | ||||||||
| Education/worship | 2,414 | 2,441 | 2,520 | ||||||||
| Total CRE non-owner occupied | 177,113 | 172,713 | 174,921 | ||||||||
| CRE owner occupied: | |||||||||||
| Industrial | 75,347 | 77,059 | 67,064 | ||||||||
| Office | 30,311 | 31,981 | 42,223 | ||||||||
| Retail | 24,248 | 17,399 | 20,718 | ||||||||
| Hospitality/restaurant | 7,583 | 7,675 | 10,396 | ||||||||
| Other | 10,492 | 10,521 | 8,612 | ||||||||
| Car wash | 4,412 | 4,430 | - | ||||||||
| Automobile related | 7,111 | 7,164 | 7,325 | ||||||||
| Mixed use | 7,831 | 4,622 | 5,616 | ||||||||
| Agriculture | 4,136 | 4,347 | 3,834 | ||||||||
| Education/worship | 4,607 | 5,516 | 4,608 | ||||||||
| Total CRE owner occupied | 176,078 | 170,714 | 170,396 | ||||||||
| Total | - | 353,191 | - | 343,427 | - | 345,317 | |||||
The following table includes CRE loans, presented in the table above, repricing or maturing within the next two years, excluding loans that reprice simultaneously with changes to the prime rate:
| (Dollars in | Current | ||||||||||||||||||||||||||||
| thousands) | For the Quarter Ended | Weighted | |||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | Jun 30, | Sep 30, | Dec 31, | Average | |||||||||||||||||||||
| CRE by type: | 2026 | 2026 | 2026 | 2026 | 2027 | 2027 | 2027 | 2027 | Total | Rate | |||||||||||||||||||
| Agriculture | - | 805 | - | - | - | 266 | - | - | - | - | - | - | - | - | - | - | - | 1,071 | 6.20 | - | |||||||||
| Apartment | 959 | 14,534 | 7,988 | 16,133 | 27,768 | 18,056 | 4,136 | 12,405 | 101,979 | 5.91 | |||||||||||||||||||
| Auto-related | 202 | - | - | - | - | - | - | - | 202 | 5.75 | |||||||||||||||||||
| Hotel / hospitality | - | 415 | 110 | - | 102 | - | - | - | 627 | 4.88 | |||||||||||||||||||
| Industrial | 394 | 577 | 1,532 | - | 13,266 | 3,312 | 5,717 | 5,261 | 30,059 | 5.72 | |||||||||||||||||||
| Mixed use | 2,107 | - | - | 374 | - | - | - | 3,246 | 5,727 | 6.88 | |||||||||||||||||||
| Office | - | 1,603 | 546 | 7,583 | 2,812 | - | 7,499 | 3,887 | 23,930 | 5.25 | |||||||||||||||||||
| Other | 476 | 1,205 | 2,414 | 2,333 | - | 1,991 | 328 | - | 8,747 | 5.35 | |||||||||||||||||||
| Retail | 218 | 3,394 | - | 3,349 | 2,966 | 2,352 | 7,457 | - | 19,736 | 4.67 | |||||||||||||||||||
| Senior housing and assisted living | 2,113 | - | - | - | - | 1,354 | - | - | 3,467 | 4.76 | - | ||||||||||||||||||
| Total | - | 7,274 | - | 21,728 | - | 12,856 | - | 29,772 | - | 46,914 | - | 27,065 | - | 25,137 | - | 24,799 | - | 195,545 | |||||||||||
A breakdown of construction and development loans at the dates indicated were as follows:
| (Dollars in thousands) | December 31, 2025 | September 30, 2025 | December 31, 2024 | ||||||||||||||||||
| CRE Construction Types: | Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||
| Commercial construction - retail | - | 8,452 | 2.1 | - | - | 8,445 | 2.2 | - | - | 8,079 | 2.4 | - | |||||||||
| Commercial construction - office | 9,236 | 2.3 | 9,150 | 2.4 | 4,979 | 1.5 | |||||||||||||||
| Commercial construction - self storage | 22,437 | 5.7 | 18,701 | 4.9 | 13,480 | 4.1 | |||||||||||||||
| Commercial construction - hotel | 9,404 | 2.4 | 6,147 | 1.6 | - | - | |||||||||||||||
| Multi-family | 37,403 | 9.4 | 29,751 | 7.8 | 30,945 | 9.4 | |||||||||||||||
| Custom construction - single family residential and single family manufactured residential | 32,451 | 8.2 | 44,298 | 11.7 | 42,040 | 12.7 | |||||||||||||||
| Custom construction - land, lot and acquisition and development | 9,878 | 2.5 | 8,998 | 2.4 | 7,862 | 2.4 | |||||||||||||||
| Speculative residential construction - land, lot and acquisition and development | 42,000 | 10.6 | 36,668 | 9.6 | 42,934 | 13.0 | |||||||||||||||
| Speculative residential construction - vertical | 225,198 | 56.8 | 217,822 | 57.4 | 180,381 | 54.5 | |||||||||||||||
| Total | - | 396,459 | 100.0 | - | - | 379,980 | 100.0 | - | - | 330,700 | 100.0 | - | |||||||||
Originations of one-to-four-family loans to purchase and to refinance a home for the periods indicated were as follows:
| (Dollars in | Prior Year | ||||||||||||||||||||||||||||||||||||||
| thousands) | For the Three Months Ended | Linked Quarter | Quarter | ||||||||||||||||||||||||||||||||||||
| December 31, 2025 | September 30, 2025 | December 31, 2024 | - | - | - | - | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | Change | Change | Change | Change | ||||||||||||||||||||||||||||||
| Purchase | - | 158,992 | 72.6 | - | - | 155,910 | 88.8 | - | - | 129,232 | 83.2 | - | - | 3,082 | 2.0 | - | - | 29,760 | 23.0 | - | |||||||||||||||||||
| Refinance | 60,153 | 27.4 | 19,714 | 11.2 | 26,116 | 16.8 | 40,439 | 205.1 | 34,037 | 130.3 | |||||||||||||||||||||||||||||
| Total | - | 219,145 | 100.0 | - | - | 175,624 | 100.0 | - | - | 155,348 | 100.0 | - | - | 43,521 | 24.8 | - | - | 63,797 | 41.1 | - | |||||||||||||||||||
| (Dollars in thousands) | For the Year Ended December 31, | ||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||
| Amount | Percent | Amount | Percent | $ Change | % Change | ||||||||||||||
| Purchase | - | 604,842 | 81.8 | - | - | 626,937 | 87.6 | - | - | (22,095 | - | (3.5 | - | - | |||||
| Refinance | 134,150 | 18.2 | 88,662 | 12.4 | 45,488 | 51.3 | |||||||||||||
| Total | - | 738,992 | 100.0 | - | - | 715,599 | 100.0 | - | - | 23,393 | 3.3 | - | |||||||
During the quarter ended December 31, 2025, the Company sold $180.1 million of one-to-four-family loans compared to $156.4 million during the previous quarter and $138.9 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 decreases in market rates between periods. Gross margins on home loan sales decreased to 3.08% for the quarter ended December 31, 2025, compared to 3.14% in both the previous quarter and 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, stockholders' equity, and book value per common share at the dates indicated.
| (Dollars in thousands) | Linked | Prior Year | |||||||||||||||||||||||||||||
| DEPOSITS | December 31, 2025 | September 30, 2025 | December 31, 2024 | Quarter | Quarter | ||||||||||||||||||||||||||
| Transactional deposits: | Amount | Percent | Amount | Percent | Amount | Percent | $ Change | $ Change | |||||||||||||||||||||||
| Noninterest-bearing checking | - | 647,197 | 24.3 | - | - | 648,661 | 24.1 | - | - | 627,679 | 26.8 | - | - | (1,464 | - | - | 19,518 | ||||||||||||||
| Interest-bearing checking: | |||||||||||||||||||||||||||||||
| Retail deposits | 195,275 | 7.3 | 199,527 | 7.4 | 176,561 | 7.5 | (4,252 | - | 18,714 | ||||||||||||||||||||||
| Brokered deposits | 140,174 | 5.2 | - | - | - | - | 140,174 | 140,174 | |||||||||||||||||||||||
| Total interest-bearing checking | 335,449 | 12.5 | 199,527 | 7.4 | 176,561 | 7.5 | 135,922 | 158,888 | |||||||||||||||||||||||
| Escrow accounts related to mortgages serviced (1) | 10,926 | 0.4 | 17,191 | 0.6 | 10,479 | 0.4 | (6,265 | - | 447 | ||||||||||||||||||||||
| Subtotal | 993,572 | 37.2 | 865,379 | 32.2 | 814,719 | 34.8 | 128,193 | 178,853 | |||||||||||||||||||||||
| Savings and money market: | |||||||||||||||||||||||||||||||
| Savings | 164,056 | 6.1 | 167,006 | 6.2 | 154,188 | 6.6 | (2,950 | - | 9,868 | ||||||||||||||||||||||
| Money market: | |||||||||||||||||||||||||||||||
| Retail deposits | 365,322 | 13.6 | 354,082 | 13.2 | 341,336 | 14.6 | 11,240 | 23,986 | |||||||||||||||||||||||
| Brokered deposits | 20,296 | 0.8 | 251 | - | 279 | - | 20,045 | 20,017 | |||||||||||||||||||||||
| Total money market | 385,618 | 14.4 | 354,333 | 13.2 | 341,615 | 14.6 | 31,285 | 44,003 | |||||||||||||||||||||||
| Subtotal | 549,674 | 20.5 | 521,339 | 19.4 | 495,803 | 21.2 | 28,335 | 53,871 | |||||||||||||||||||||||
| Certificates of deposit: | |||||||||||||||||||||||||||||||
| Retail CDs | 921,669 | 34.5 | 924,925 | 34.4 | 874,024 | 37.4 | (3,256 | - | 47,645 | ||||||||||||||||||||||
| Nonretail CDs: | |||||||||||||||||||||||||||||||
| Online CDs | 3,423 | 0.1 | 3,423 | 0.1 | 9,354 | 0.4 | - | (5,931 | - | ||||||||||||||||||||||
| Public CDs | 3,234 | 0.1 | 2,023 | 0.1 | 2,394 | 0.1 | 1,211 | 840 | |||||||||||||||||||||||
| Brokered CDs | 202,070 | 7.6 | 369,403 | 13.8 | 143,124 | 6.1 | (167,333 | - | 58,946 | ||||||||||||||||||||||
| Total nonretail CDs | 208,727 | 7.8 | 374,849 | 14.0 | 154,872 | 6.6 | (166,122 | - | 53,855 | ||||||||||||||||||||||
| Subtotal | 1,130,396 | 42.3 | 1,299,774 | 48.4 | 1,028,896 | 44.0 | (169,378 | - | 101,500 | ||||||||||||||||||||||
| Total deposits | - | 2,673,642 | 100.0 | - | - | 2,686,492 | 100.0 | - | - | 2,339,418 | 100.0 | - | - | (12,850 | - | - | 334,224 | ||||||||||||||
| Borrowings (2) | - | 129,305 | - | 129,305 | - | 307,806 | - | - | - | (178,501 | - | ||||||||||||||||||||
| Stockholders' equity | - | 307,694 | - | 300,511 | - | 295,767 | - | 7,183 | - | 11,927 | |||||||||||||||||||||
| Book value per common share | - | 41.55 | - | 40.43 | - | 38.26 | - | 1.12 | - | 3.29 | |||||||||||||||||||||
_______________________
| (1) | Primarily noninterest-bearing accounts based on applicable state law. | |
| (2) | Comprised of FHLB advances and Federal Reserve Bank borrowings. | |
At December 31, 2025, the Bank had uninsured deposits of approximately $718.1 million, compared to approximately $694.4 million in September 30, 2025, and approximately $652.7 million at December 31, 2024. The uninsured amounts are estimated based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.
In the table above, the linked quarter increase in stockholders' equity at December 31, 2025, compared to September 30, 2025, was primarily due to net income of $8.4 million and unrealized gain in fair value on securities available for sale of $1.6 million, net of tax, partially offset by dividends paid of $2.1 million. Gains and losses in fair value reflect changes in market interest rates during the period.
The Bank is considered "well capitalized" under the minimum capital requirements established by the Federal Deposit Insurance Corporation ("FDIC") and the Company exceeded all regulatory capital requirements. At December 31, 2025, capital ratios presented for the Bank and the Company were as follows:
| At December 31, 2025 | ||||||
| Bank | Company | |||||
| Total risk-based capital (to risk-weighted assets) | 13.96 | - | 14.25 | - | ||
| Tier 1 leverage capital (to average assets) | 10.96 | - | 9.66 | - | ||
| CET 1 capital (to risk-weighted assets) | 12.73 | - | 11.21 | - | ||
Credit Quality
The following tables summarize the changes in the ACL on loans, nonperforming loans, and classified loans at the dates indicated.
| For the Quarter Ended | Linked | Prior Year | ||||||||||||||||||
| ACL ON LOANS | Dec 31, | Sep 30, | Dec 31, | Quarter | Quarter | |||||||||||||||
| (Dollars in thousands) | 2025 | 2025 | 2024 | $ Change | $ Change | |||||||||||||||
| Beginning ACL balance | - | 30,056 | - | 32,189 | - | 31,232 | - | (2,133 | - | - | (1,176 | - | ||||||||
| Provision | 3,882 | 1,851 | 1,621 | 2,031 | 2,261 | |||||||||||||||
| Charge-offs | ||||||||||||||||||||
| Indirect | (2,258 | - | (1,941 | - | (1,417 | - | (317 | - | (841 | - | ||||||||||
| Marine | (99 | - | (55 | - | (86 | - | (44 | - | (13 | - | ||||||||||
| Other consumer | (53 | - | (49 | - | (25 | - | (4 | - | (28 | - | ||||||||||
| Commercial construction - office | - | (2,299 | - | - | 2,299 | - | ||||||||||||||
| Subtotal | (2,410 | - | (4,344 | - | (1,528 | - | 1,934 | (882 | - | |||||||||||
| Recoveries | ||||||||||||||||||||
| CRE | 2 | - | - | 2 | 2 | |||||||||||||||
| Indirect | 403 | 323 | 387 | 80 | 16 | |||||||||||||||
| Marine | 1 | 16 | 8 | (15 | - | (7 | - | |||||||||||||
| Other | 3 | 12 | 6 | (9 | - | (3 | - | |||||||||||||
| C&I | - | 9 | 144 | (9 | - | (144 | - | |||||||||||||
| Subtotal | 409 | 360 | 545 | 49 | (136 | - | ||||||||||||||
| Ending ACL balance | - | 31,937 | - | 30,056 | - | 31,870 | - | 1,881 | - | 67 | ||||||||||
| NONPERFORMING LOANS | For the Quarter Ended | Linked | Prior Year | ||||||||||||||
| (Dollars in thousands) | Dec 31, | Sep 30, | Dec 31, | Quarter | Quarter | ||||||||||||
| CRE LOANS | 2025 | 2025 | 2024 | $ Change | $ Change | ||||||||||||
| CRE | - | 2,049 | - | 2,047 | - | 2,771 | - | 2 | - | (722 | - | ||||||
| Commercial and speculative construction and development | 9,236 | 9,150 | 4,979 | 86 | 4,257 | ||||||||||||
| Total CRE loans | 11,285 | 11,197 | 7,750 | 88 | 3,535 | ||||||||||||
| RESIDENTIAL REAL ESTATE LOANS | |||||||||||||||||
| One-to-four-family (excludes HFS) | 1,778 | 1,799 | 164 | (21 | - | 1,614 | |||||||||||
| Home equity | 390 | 317 | 261 | 73 | 129 | ||||||||||||
| Total residential real estate loans | 2,168 | 2,116 | 425 | 52 | 1,743 | ||||||||||||
| CONSUMER LOANS | |||||||||||||||||
| Indirect home improvement | 4,256 | 3,802 | 1,677 | 454 | 2,579 | ||||||||||||
| Marine | 454 | 620 | 289 | (166 | - | 165 | |||||||||||
| Other consumer | 2 | 40 | 14 | (38 | - | (12 | - | ||||||||||
| Total consumer loans | 4,712 | 4,462 | 1,980 | 250 | 2,732 | ||||||||||||
| COMMERCIAL BUSINESS LOANS | |||||||||||||||||
| C&I | 580 | 600 | 3,445 | (20 | - | (2,865 | - | ||||||||||
| Total nonperforming loans | - | 18,745 | - | 18,375 | - | 13,600 | - | 370 | - | 5,145 | |||||||
The increase in nonaccrual loans year-over-year was partly driven by one commercial construction relationship, which remains in active development. Disbursements on this relationship, net of partial charge-offs of $2.3 million, contributed to a $5.1 million net increase in the nonaccrual balance of these loans compared to the same period last year. These funds were provided for the completion of the projects in order to improve the probability of protecting the collateral value. Increases in consumer loans and mortgage loan delinquencies also contributed to the rise in nonaccrual loans between the periods.
| CLASSIFIED LOANS | For the Quarter Ended | Linked | Prior Year | ||||||||||||||
| (Dollars in thousands) | Dec 31, | Sep 30, | Dec 31, | Quarter | Quarter | ||||||||||||
| CRE LOANS | 2025 | 2025 | 2024 | $ Change | $ Change | ||||||||||||
| CRE | - | 5,496 | - | 5,515 | - | 3,615 | - | (19 | - | - | 1,881 | ||||||
| Commercial and speculative construction and development | 9,236 | 9,150 | 4,979 | 86 | 4,257 | ||||||||||||
| Total CRE loans | 14,732 | 14,665 | 8,594 | 67 | 6,138 | ||||||||||||
| RESIDENTIAL REAL ESTATE LOANS | |||||||||||||||||
| One-to-four-family (excludes HFS) | 3,616 | 3,646 | 2,776 | (30 | - | 840 | |||||||||||
| Home equity | 390 | 317 | 261 | 73 | 129 | ||||||||||||
| Total residential real estate loans | 4,006 | 3,963 | 3,037 | 43 | 969 | ||||||||||||
| CONSUMER LOANS | |||||||||||||||||
| Indirect home improvement | 4,256 | 3,802 | 1,677 | 454 | 2,579 | ||||||||||||
| Marine | 454 | 620 | 289 | (166 | - | 165 | |||||||||||
| Other consumer | 2 | 40 | 14 | (38 | - | (12 | - | ||||||||||
| Total consumer loans | 4,712 | 4,462 | 1,980 | 250 | 2,732 | ||||||||||||
| COMMERCIAL BUSINESS LOANS | |||||||||||||||||
| C&I | 3,872 | 3,963 | 9,288 | (91 | - | (5,416 | - | ||||||||||
| Total classified loans | - | 27,322 | - | 27,053 | - | 22,899 | - | 269 | - | 4,423 | |||||||
Operating Results
Net interest income increased $2.5 million to $33.6 million for the three months ended December 31, 2025, from $31.1 million for the three months ended December 31, 2024, primarily as a result of an increase in interest income on loans receivable, including fees, partially offset by an increase in interest expense. Total interest income for the three months ended December 31, 2025, increased $3.8 million compared to the same period last year, primarily due to an increase of $3.2 million in interest income on loans receivable, including fees. This growth was primarily attributable to new loan growth and variable rate loans repricing higher following increases in market interest rates. Total interest expense increased $1.3 million to $17.2 million for the three months ended December 31, 2025, compared to the same period last year, primarily as a result of growth in interest bearing deposits.
For the year ended December 31, 2025, net interest income increased $7.3 million to $130.4 million, from $123.1 million for the year ended December 31, 2024, as a $12.4 million increase in interest income was partially offset by a $5.1 million increase in interest expense.
NIM increased four basis points to 4.35% for the three months ended December 31, 2025, compared to 4.31% for the same period in the prior year. For the year ended December 31, 2025, NIM increased three basis points to 4.33% from 4.30% for the year ended December 31, 2024. The increases in NIM for the three months ended and year ended December 31, 2025, compared to the same periods in 2024, were due to higher net interest income as a result of an increase in average interest-earning assets, particularly due to growth in commercial and speculative construction and development loans.
The average total cost of funds, including noninterest-bearing checking, was 2.38% for both the fourth quarter of 2025, and the same quarter of 2024. The unchanged rate reflects a shift in deposit mix, with a higher relative mix of CDs, offset by favorable CD repricing throughout 2025. For the full year, the average cost of funds decreased four basis points to 2.39%, primarily due to growth in noninterest-bearing deposits and favorable deposit repricing on CDs and other interest-bearing deposits. Management remains focused on aligning deposit and liability durations with loan and asset durations where possible.
For the three months and year ended December 31, 2025, the provision for credit losses on loans was $3.9 million and $9.0 million, compared to $1.6 million and $5.6 million, for the three months and year ended December 31, 2024, respectively. The increase in provision for credit losses on loans reflects a specific credit provision of $1.0 million on a single commercial construction relationship for the three months ended December 31, 2025, and relatively higher consumer loan charge-offs and organic loan growth between the periods.
During the three months ended December 31, 2025, net charge-offs increased $1.0 million to $2.0 million, compared to $983,000 in the same period last year. The increase primarily reflected higher net charge-offs of $824,000 in indirect home improvement loans, $144,000 in commercial business loans and $33,000 in other loans. For the year ended December 31, 2025, net charge-offs increased $3.6 million to $8.9 million, compared to $5.3 million in 2024. The year-over-year increase was primarily due to a $2.3 million partial charge-off of a commercial construction loan reflecting the expected loss on the project, along with $2.1 million in increased net charge-offs in indirect home improvement loans. These increases were partially offset by decreases in charge-offs of C&I loans of $551,000 and marine loans of $292,000. Management attributes the increase in net charge-offs over the year primarily to economic volatility, as well as a single commercial construction charge-off driven by project-specific factors. Management recorded an additional $1.0 million in credit provision on the same project for the three months ended December 31, 2025.
Total noninterest income increased $1.8 million to $6.4 million, for the three months ended December 31, 2025, from $4.6 million for the three months ended December 31, 2024. The increase was primarily due to mortality proceeds on bank owned life insurance policies, which contributed $1.0 million, along with other miscellaneous noninterest income. Total noninterest income increased $721,000 to $22.3 million for the year ended December 31, 2025, from $21.6 million for the year ended December 31, 2024. This increase was primarily the result of a $2.4 million increase in other noninterest income, primarily due to the $1.2 million bank owned life insurance mortality income and a $473,000 increase from increases in fair value on retained loans, partially offset by a $900,000 decrease in service charges and fee income, a $277,000 decrease in gain on sale of loans, and a net decrease of $520,000 from no activity in gains on sale of MSRs and investment securities, compared to an $8.4 million net gain on sale of MSRs, partially offset by a $7.8 million loss on sale of investment securities in 2024.
Noninterest expense increased $1.7 million to $26.1 million for the three months ended December 31, 2025, from $24.4 million for the three months ended December 31, 2024. The increase in noninterest expense was primarily the result of a $614,000 change in the fair value of MSRs, from a $583,000 recovery in the prior year quarter to a $31,000 impairment, a $572,000 increase in salaries and benefits, primarily driven by increases in salaries and benefits, and a $505,000 increase in operations expense primarily due to increased Washington State business and occupation tax. Noninterest expense increased $4.4 million, to $102.0 million for the year ended December 31, 2025, from $97.6 million for the year ended December 31, 2024. This increase was primarily due to increases of $2.7 million in salaries and benefits and $1.4 million in operations expense, as well as the aforementioned change in the fair value and related impairment of MSRs between periods.
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 rate levels and volatility, and the timing and pace of such changes, including actions by the Federal Reserve, which could adversely affect the Company's revenues and expenses, the values of it's 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, South America, and Asia, or the imposition of new or increased tariffs and trade restrictions, which may disrupt financial markets, global supply chains, commodity 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 the Company's 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 the Company's ability to borrow funds or raise additional capital, if necessary; the impact of bank failures or adverse developments at other banks and related negative publicity 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 platforms, 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 the Company's 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 expressly 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, except as required by law.
| FS BANCORP, INC. AND SUBSIDIARY | |||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||
| (Dollars in thousands, except share amounts) (Unaudited) | |||||||||||||||||
| Linked | Prior Year | ||||||||||||||||
| Dec 31, | Sep 30, | Dec 31, | Quarter | Quarter | |||||||||||||
| ASSETS | 2025 | 2025 | 2024 | % Change | % Change | ||||||||||||
| Unaudited | Unaudited | Unaudited | |||||||||||||||
| Cash and due from banks | - | 13,504 | - | 12,391 | - | 19,280 | 9 | (30 | - | ||||||||
| Interest-bearing deposits at other financial institutions | 14,715 | 48,889 | 12,355 | (70 | - | 19 | |||||||||||
| Total cash and cash equivalents | 28,219 | 61,280 | 31,635 | (54 | - | (11 | - | ||||||||||
| Certificates of deposit at other financial institutions | - | - | 1,727 | - | NM | ||||||||||||
| Securities available-for-sale, at fair value | 288,667 | 311,695 | 281,175 | (7 | - | 3 | |||||||||||
| Securities held-to-maturity, net | 33,224 | 31,386 | 8,455 | 6 | 293 | ||||||||||||
| Loans held for sale, at fair value | 43,705 | 38,579 | 27,835 | 13 | 57 | ||||||||||||
| Loans receivable, net | 2,623,172 | 2,599,601 | 2,501,951 | 1 | 5 | ||||||||||||
| Accrued interest receivable | 14,614 | 15,122 | 13,881 | (3 | - | 5 | |||||||||||
| Premises and equipment, net | 44,065 | 32,444 | 29,756 | 36 | 48 | ||||||||||||
| Long-lived assets held for sale | 3,258 | - | - | - | - | ||||||||||||
| Operating lease right-of-use | 5,789 | 6,832 | 5,378 | (15 | - | 8 | |||||||||||
| Federal Home Loan Bank stock, at cost | 7,971 | 7,975 | 15,621 | - | (49 | - | |||||||||||
| Deferred tax asset, net | 6,993 | 6,767 | 7,059 | 3 | (1 | - | |||||||||||
| Bank owned life insurance ("BOLI"), net | 36,249 | 38,531 | 38,528 | (6 | - | (6 | - | ||||||||||
| MSRs, held at the lower of cost or fair value | 8,608 | 8,506 | 9,204 | 1 | (6 | - | |||||||||||
| Goodwill | 3,592 | 3,592 | 3,592 | - | - | ||||||||||||
| Core deposit intangible, net | 10,518 | 11,284 | 13,710 | (7 | - | (23 | - | ||||||||||
| Other assets | 38,203 | 35,231 | 39,670 | 8 | (4 | - | |||||||||||
| TOTAL ASSETS | - | 3,196,847 | - | 3,208,825 | - | 3,029,177 | - | 6 | |||||||||
| LIABILITIES | |||||||||||||||||
| Deposits: | |||||||||||||||||
| Noninterest-bearing accounts | - | 658,123 | - | 665,852 | - | 638,158 | (1 | - | 3 | ||||||||
| Interest-bearing accounts | 2,015,519 | 2,020,640 | 1,701,260 | - | 18 | ||||||||||||
| Total deposits | 2,673,642 | 2,686,492 | 2,339,418 | - | 14 | ||||||||||||
| Borrowings | 129,305 | 129,305 | 307,806 | - | (58 | - | |||||||||||
| Subordinated notes: | |||||||||||||||||
| Principal amount | 50,000 | 50,000 | 50,000 | - | - | ||||||||||||
| Unamortized debt issuance costs | (339 | - | (356 | - | (406 | - | (5 | - | (17 | - | |||||||
| Total subordinated notes less unamortized debt issuance costs | 49,661 | 49,644 | 49,594 | - | - | ||||||||||||
| Operating lease liability | 5,889 | 6,993 | 5,556 | (16 | - | 6 | |||||||||||
| Other liabilities | 30,656 | 35,880 | 31,036 | (15 | - | (1 | - | ||||||||||
| Total liabilities | 2,889,153 | 2,908,314 | 2,733,410 | (1 | - | 6 | |||||||||||
| 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; 7,507,519 shares issued and outstanding at December 31, 2025, 7,535,330 at September 30, 2025, and 7,833,014 at December 31, 2024 | 75 | 75 | 78 | - | (4 | - | |||||||||||
| Additional paid-in capital | 43,251 | 43,907 | 55,716 | (1 | - | (22 | - | ||||||||||
| Retained earnings | 280,197 | 273,882 | 257,113 | 2 | 9 | ||||||||||||
| Accumulated other comprehensive loss, net of tax | (15,829 | - | (17,353 | - | (17,140 | - | (9 | - | (8 | - | |||||||
| Total stockholders' equity | 307,694 | 300,511 | 295,767 | 2 | 4 | ||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | - | 3,196,847 | - | 3,208,825 | - | 3,029,177 | - | 6 | |||||||||
| FS BANCORP, INC. AND SUBSIDIARY | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
| (Dollars in thousands, except per share amounts) (Unaudited) | |||||||||||||||||
| Three Months Ended | Linked | Prior Year | |||||||||||||||
| December 31, | September 30, | December 31, | Quarter | Quarter | |||||||||||||
| INTEREST INCOME | 2025 | 2025 | 2024 | % Change | % Change | ||||||||||||
| Loans receivable, including fees | - | 46,876 | - | 46,664 | - | 43,654 | - | 7 | |||||||||
| Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions | 3,906 | 4,309 | 3,320 | (9 | - | 18 | |||||||||||
| Total interest and dividend income | 50,782 | 50,973 | 46,974 | - | 8 | ||||||||||||
| INTEREST EXPENSE | |||||||||||||||||
| Deposits | 15,228 | 14,862 | 13,543 | 2 | 12 | ||||||||||||
| Borrowings | 1,446 | 1,935 | 1,831 | (25 | - | (21 | - | ||||||||||
| Subordinated notes | 486 | 486 | 486 | - | - | ||||||||||||
| Total interest expense | 17,160 | 17,283 | 15,860 | (1 | - | 8 | |||||||||||
| NET INTEREST INCOME | 33,622 | 33,690 | 31,114 | - | 8 | ||||||||||||
| PROVISION FOR CREDIT LOSSES | 3,624 | 2,309 | 1,522 | 57 | 138 | ||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 29,998 | 31,381 | 29,592 | (4 | - | 1 | |||||||||||
| NONINTEREST INCOME | |||||||||||||||||
| Service charges and fee income | 2,233 | 2,326 | 2,513 | (4 | - | (11 | - | ||||||||||
| Gain on sale of loans | 2,169 | 2,439 | 1,733 | (11 | - | 25 | |||||||||||
| Earnings on cash surrender value of BOLI | 261 | 269 | 256 | (3 | - | 2 | |||||||||||
| Other noninterest income | 1,724 | 560 | 108 | 208 | 1,496 | ||||||||||||
| Total noninterest income | 6,387 | 5,594 | 4,610 | 14 | 39 | ||||||||||||
| NONINTEREST EXPENSE | |||||||||||||||||
| Salaries and benefits | 14,744 | 14,415 | 14,172 | 2 | 4 | ||||||||||||
| Operations | 3,680 | 3,974 | 3,175 | (7 | - | 16 | |||||||||||
| Occupancy | 1,889 | 1,744 | 1,821 | 8 | 4 | ||||||||||||
| Data processing | 1,847 | 1,784 | 2,252 | 4 | (18 | - | |||||||||||
| Loan costs | 905 | 746 | 781 | 21 | 16 | ||||||||||||
| Professional and board fees | 1,213 | 1,093 | 1,038 | 11 | 17 | ||||||||||||
| FDIC insurance | 626 | 592 | 490 | 6 | 28 | ||||||||||||
| Marketing and advertising | 372 | 259 | 329 | 44 | 13 | ||||||||||||
| Amortization of core deposit intangible | 766 | 787 | 876 | (3 | - | (13 | - | ||||||||||
| Impairment (recovery) of servicing rights | 31 | (6 | - | (583 | - | (617 | - | (105 | - | ||||||||
| Total noninterest expense | 26,073 | 25,388 | 24,351 | 3 | 7 | ||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 10,312 | 11,587 | 9,851 | (11 | - | 5 | |||||||||||
| PROVISION FOR INCOME TAXES | 1,892 | 2,410 | 2,469 | (21 | - | (23 | - | ||||||||||
| NET INCOME | - | 8,420 | - | 9,177 | - | 7,382 | (8 | - | 14 | ||||||||
| Basic earnings per share | - | 1.12 | - | 1.20 | - | 0.94 | (7 | - | 19 | ||||||||
| Diluted earnings per share | - | 1.10 | - | 1.18 | - | 0.92 | (7 | - | 20 | ||||||||
| FS BANCORP, INC. AND SUBSIDIARY | ||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| (Dollars in thousands, except per share amounts) (Unaudited) | ||||||||||
| Year | ||||||||||
| Year Ended December 31, | Over Year | |||||||||
| INTEREST INCOME | 2025 | 2024 | % Change | |||||||
| Loans receivable, including fees | - | 181,881 | - | 170,857 | 6 | |||||
| Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions | 15,365 | 13,980 | 10 | |||||||
| Total interest and dividend income | 197,246 | 184,837 | 7 | |||||||
| INTEREST EXPENSE | ||||||||||
| Deposits | 57,669 | 53,163 | 8 | |||||||
| Borrowings | 7,229 | 6,627 | 9 | |||||||
| Subordinated note | 1,942 | 1,942 | - | |||||||
| Total interest expense | 66,840 | 61,732 | 8 | |||||||
| NET INTEREST INCOME | 130,406 | 123,105 | 6 | |||||||
| PROVISION FOR CREDIT LOSSES | 9,546 | 5,511 | 73 | |||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 120,860 | 117,594 | 3 | |||||||
| NONINTEREST INCOME | ||||||||||
| Service charges and fee income | 9,126 | 10,026 | (9 | - | ||||||
| Gain on sale of loans | 8,280 | 8,557 | (3 | - | ||||||
| Gain on sale of MSRs | - | 8,356 | NM | |||||||
| Loss on sale of investment securities, net | - | (7,836 | - | NM | ||||||
| Earnings on cash surrender value of BOLI | 1,035 | 990 | 5 | |||||||
| Other noninterest income | 3,836 | 1,463 | 162 | |||||||
| Total noninterest income | 22,277 | 21,556 | 3 | |||||||
| NONINTEREST EXPENSE | ||||||||||
| Salaries and benefits | 57,781 | 55,092 | 5 | |||||||
| Operations | 14,923 | 13,529 | 10 | |||||||
| Occupancy | 7,129 | 6,857 | 4 | |||||||
| Data processing | 7,812 | 8,424 | (7 | - | ||||||
| Loan costs | 2,918 | 2,685 | 9 | |||||||
| Professional and board fees | 4,648 | 4,072 | 14 | |||||||
| FDIC insurance | 2,310 | 2,005 | 15 | |||||||
| Marketing and advertising | 1,250 | 1,310 | (5 | - | ||||||
| Amortization of core deposit intangible | 3,192 | 3,633 | (12 | - | ||||||
| Impairment (recovery) of MSRs | 54 | (38 | - | (242 | - | |||||
| Total noninterest expense | 102,017 | 97,569 | 5 | |||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 41,120 | 41,581 | (1 | - | ||||||
| PROVISION FOR INCOME TAXES | 7,774 | 6,557 | 19 | |||||||
| NET INCOME | - | 33,346 | - | 35,024 | (5 | - | ||||
| Basic earnings per share | - | 4.35 | - | 4.48 | (3 | - | ||||
| Diluted earnings per share | - | 4.29 | - | 4.36 | (2 | - | ||||
KEY FINANCIAL RATIOS AND DATA (Unaudited)
| For the Three Months Ended | ||||||||
| December 31, | September 30, | December 31, | ||||||
| PERFORMANCE RATIOS: | 2025 | 2025 | 2024 | |||||
| Return on assets (ratio of net income to average total assets) (1) | 1.04 | - | 1.14 | - | 0.98 | - | ||
| Return on equity (ratio of net income to average total stockholders' equity) (1) | 10.78 | 11.97 | 9.88 | |||||
| Yield on average interest-earning assets (1) | 6.56 | 6.61 | 6.51 | |||||
| Average total cost of funds (1) | 2.38 | 2.41 | 2.38 | |||||
| Interest rate spread information - average during period | 4.18 | 4.20 | 4.13 | |||||
| Net interest margin (1) | 4.35 | 4.37 | 4.31 | |||||
| Operating expense to average total assets (1) | 3.23 | 3.16 | 3.24 | |||||
| Average interest-earning assets to average interest-bearing liabilities (1) | 140.03 | 140.80 | 143.27 | |||||
| Efficiency ratio (2) | 65.13 | 64.63 | 68.16 | |||||
| Common equity ratio (ratio of stockholders' equity to total assets) | 9.62 | 9.37 | 9.76 | |||||
| Tangible common equity ratio (3) | 9.22 | 8.94 | 9.25 | |||||
| For the Year Ended | |||||
| December 31, | December 31, | ||||
| PERFORMANCE RATIOS: | 2025 | 2024 | |||
| Return on assets (ratio of net income to average total assets) | 1.06 | - | 1.18 | - | |
| Return on equity (ratio of net income to average total stockholders' equity) | 10.96 | 12.22 | |||
| Yield on average interest-earning assets | 6.56 | 6.46 | |||
| Average total cost of funds | 2.39 | 2.43 | |||
| Interest rate spread information - average during period | 4.16 | 4.03 | |||
| Net interest margin | 4.33 | 4.30 | |||
| Operating expense to average total assets | 3.25 | 3.29 | |||
| Average interest-earning assets to average interest-bearing liabilities | 141.15 | 143.92 | |||
| Efficiency ratio (2) | 66.81 | 67.45 | |||
| December 31, | September 30, | December 31, | ||||||
| ASSET QUALITY RATIOS AND DATA: | 2025 | 2025 | 2024 | |||||
| Nonperforming assets to total assets at end of period (4) | 0.59 | - | 0.57 | - | 0.45 | - | ||
| Nonperforming loans to total gross loans (excluding loans HFS) (5) | 0.71 | 0.70 | 0.54 | |||||
| ACL - loans to nonperforming loans (5) | 170.59 | 163.77 | 234.55 | |||||
| ACL - loans to total gross loans (excluding loans HFS) | 1.20 | 1.14 | 1.26 |
| At or For the Three Months Ended | ||||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||
| PER COMMON SHARE DATA: | 2025 | 2025 | 2024 | |||||||||||
| Basic earnings per share | - | 1.12 | - | 1.20 | - | 0.94 | ||||||||
| Diluted earnings per share | - | 1.10 | - | 1.18 | - | 0.92 | ||||||||
| Weighted average basic shares outstanding | 7,414,419 | 7,488,139 | 7,723,250 | |||||||||||
| Weighted average diluted shares outstanding | 7,529,471 | 7,623,243 | 7,897,099 | |||||||||||
| Common shares outstanding at end of period | 7,404,548 | (6) | 7,432,359 | (7) | 7,729,951 | (8) | ||||||||
| Book value per share using common shares outstanding | - | 41.55 | - | 40.43 | - | 38.26 | ||||||||
| Tangible book value per share using common shares outstanding (9) | - | 39.65 | - | 38.43 | - | 36.02 | ||||||||
____________________________
| (1) | Annualized. |
| (2) | Total noninterest expense as a percentage of net interest income and total noninterest income. |
| (3) | Tangible common equity ratio excludes intangible assets. This ratio represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" below. |
| (4) | Nonperforming assets consist of nonperforming loans (which include nonaccruing loans and accruing loans 90 days or more 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 7,507,519 at December 31, 2025, less 102,971 unvested restricted stock shares. |
| (7) | Common shares were calculated using shares outstanding of 7,535,330 at September 30, 2025, less 102,971 unvested restricted stock shares. |
| (8) | Common shares were calculated using shares outstanding of 7,833,014 at December 31, 2024, less 103,063 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 December 31, | For the Year Ended December 31, | QTR Over QTR | YTD Over YTD | ||||||||||||||||||||
| Average Balances | 2025 | 2024 | 2025 | 2024 | $ Change | $ Change | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Loans receivable, net (1) | - | 2,677,230 | - | 2,533,664 | - | 2,625,703 | - | 2,511,553 | - | 143,566 | - | 114,150 | ||||||||||||
| Investment securities - taxable | 275,947 | 196,058 | 269,747 | 201,852 | 79,889 | 67,895 | ||||||||||||||||||
| Investment securities - nontaxable | 78,835 | 77,925 | 78,499 | 89,332 | 910 | (10,833 | - | |||||||||||||||||
| Interest-bearing deposits and certificates of deposit at other financial institutions | 29,045 | 53,286 | 24,954 | 50,741 | (24,241 | - | (25,787 | - | ||||||||||||||||
| FHLB stock, at cost | 7,984 | 10,300 | 9,687 | 7,579 | (2,316 | - | 2,108 | |||||||||||||||||
| Total interest-earning assets | 3,069,041 | 2,871,233 | 3,008,590 | 2,861,057 | 197,808 | 147,533 | ||||||||||||||||||
| Noninterest-earning assets | 132,903 | 119,478 | 126,083 | 103,474 | 13,425 | 22,609 | ||||||||||||||||||
| Total assets | - | 3,201,944 | - | 2,990,711 | - | 3,134,673 | - | 2,964,531 | - | 211,233 | - | 170,142 | ||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Interest-bearing deposit accounts | - | 2,007,487 | - | 1,772,887 | - | 1,912,139 | - | 1,784,443 | - | 234,600 | - | 127,696 | ||||||||||||
| Borrowings | 134,637 | 181,599 | 169,788 | 153,926 | (46,962 | - | 15,862 | |||||||||||||||||
| Subordinated notes | 49,650 | 49,584 | 49,625 | 49,559 | 66 | 66 | ||||||||||||||||||
| Total interest-bearing liabilities | 2,191,774 | 2,004,070 | 2,131,552 | 1,987,928 | 187,704 | 143,624 | ||||||||||||||||||
| Noninterest-bearing deposit accounts | 663,413 | 652,564 | 663,505 | 649,405 | 10,849 | 14,100 | ||||||||||||||||||
| Other noninterest-bearing liabilities | 36,723 | 36,722 | 35,494 | 40,648 | 1 | (5,154 | - | |||||||||||||||||
| Total liabilities | - | 2,891,910 | - | 2,693,356 | - | 2,830,551 | - | 2,677,981 | - | 198,554 | - | 152,570 | ||||||||||||
____________________________
(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) | December 31, | September 30, | December 31, | |||||||||
| Tangible Book Value Per Share: | 2025 | 2025 | 2024 | |||||||||
| Stockholders' equity (GAAP) | - | 307,694 | - | 300,511 | - | 295,767 | ||||||
| Less: goodwill and core deposit intangible, net | (14,110 | - | (14,876 | - | (17,302 | - | ||||||
| Tangible common stockholders' equity (non-GAAP) | - | 293,584 | - | 285,635 | - | 278,465 | ||||||
| Common shares outstanding at end of period | 7,404,548 | (1) | 7,432,359 | (2) | 7,729,951 | (3) | ||||||
| Book value per share (GAAP) | - | 41.55 | - | 40.43 | - | 38.26 | ||||||
| Tangible book value per share (non-GAAP) | - | 39.65 | - | 38.43 | - | 36.02 | ||||||
| Tangible Common Equity Ratio: | ||||||||||||
| Total assets (GAAP) | - | 3,196,847 | - | 3,208,825 | - | 3,029,177 | ||||||
| Less: goodwill and core deposit intangible assets | (14,110 | - | (14,876 | - | (17,302 | - | ||||||
| Tangible assets (non-GAAP) | - | 3,182,737 | - | 3,193,949 | - | 3,011,875 | ||||||
| Common equity ratio (GAAP) | 9.62 | - | 9.37 | - | 9.76 | - | ||||||
| Tangible common equity ratio (non-GAAP) | 9.22 | 8.94 | 9.25 | |||||||||
_______________________
| (1) | Common shares were calculated using shares outstanding of 7,507,519 at December 31, 2025, less 102,971 unvested restricted stock shares. |
| (2) | Common shares were calculated using shares outstanding of 7,535,330 at September 30, 2025, less 102,971 unvested restricted stock shares. |
| (3) | Common shares were calculated using shares outstanding of 7,833,014 at December 31, 2024, less 103,063 unvested restricted stock shares. |
Contacts:
Matthew D. Mullet,
President and Chief Executive Officer
Phillip D. Whittington,
Chief Financial Officer
(425) 771-5299
www.FSBWA.com
