FS Bancorp (FSBW) reported $40.01 million in revenue for the quarter ended December 2025, representing a year-over-year increase of 12%. EPS of $1.10 for the same period compares to $0.92 a year ago.The reported revenue represents a surprise of +3.52% over the Zacks Consensus Estimate of $38.65 million. With the consensus EPS estimate being $1.13, the EPS surprise was -2.37%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine ...

FS Bancorp (FSBW) came out with quarterly earnings of $1.1 per share, missing the Zacks Consensus Estimate of $1.13 per share. This compares to earnings of $0.92 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -2.37%. A quarter ago, it was expected that this bank holding company would post earnings of $1.08 per share when it actually produced earnings of $1.18, delivering a surprise of +9.26%.Over the last four quarters, the c ...

Financial Performance - FS Bancorp, Inc. reported net income of $8.4 million, or $1.10 per diluted share for Q4 2025, an increase from $7.4 million, or $0.92 per diluted share in Q4 2024[1] - Net income for the quarter ended December 31, 2025, was $8,420, down 8% from $9,177 in the same quarter last year[41] - Basic earnings per share for the quarter was $1.12, a decrease of 7% from $1.20 in the prior year[41] - Return on assets for Q4 2025 was 1.04%, up from 0.98% in Q4 2024[44] - Return on equity for Q4 2025 was 10.78, compared to 9.88 in Q4 2024[44] - Basic earnings per share for Q4 2025 was $1.12, an increase from $0.94 in Q4 2024[44] Dividends and Shareholder Returns - The company increased its quarterly dividend by 3.6% to $0.29 per common share, marking the fifty-second consecutive quarterly cash dividend[3] - The company repurchased 46,947 shares at an average price of $40.01 per share, with $4.3 million remaining for future purchases[7] Deposits and Assets - Total deposits reached $2.67 billion at December 31, 2025, a 14.3% increase from $2.34 billion at December 31, 2024[4] - As of December 31, 2025, total deposits amounted to $2,673,642,000, a decrease of $12,850,000 from the previous quarter, but an increase of $334,224,000 year-over-year[17] - Total assets decreased by $11.978 million to $3.196847 billion, a 0.4% decline from the previous quarter, but increased by $167.670 million, or 6%, year-over-year[12] - Total assets as of December 31, 2025, were $3,196,847, a 6% increase from $3,029,177 in the prior year[39] Loans and Credit - Loans receivable increased by $121.2 million, or 4.8%, to $2.62 billion at December 31, 2025, compared to $2.50 billion at December 31, 2024[4] - Total loans receivable, net increased by $23.571 million to $2.623172 billion, reflecting a 1% increase from the previous quarter and a 5% increase year-over-year[13] - Commercial and speculative construction and development loans rose by $27.446 million, contributing significantly to the overall loan growth[13] - Total commercial business loans increased by $3.005 million, maintaining a stable percentage of total loans at 12.4%[13] - The allowance for credit losses on loans increased by $1.881 million, reflecting a proactive approach to managing credit risk[13] - Nonperforming loans totaled $18,745,000, an increase of $370,000 from the previous quarter and an increase of $5,145,000 year-over-year[24] - The allowance for credit losses (ACL) on loans increased to $31,937,000, reflecting a provision of $3,882,000 for the quarter ended December 31, 2025[22] Interest Income and Expenses - Net interest income rose to $33,600,000 for the three months ended December 31, 2025, an increase of $2,500,000 compared to the same period last year[26] - Total interest income increased by $3,800,000 year-over-year, primarily due to a $3,200,000 increase in interest income on loans receivable[26] - Total interest expense for the quarter was $17,160, an increase of 8% compared to $15,860 in the prior year[41] - Interest income from loans receivable, including fees, was $46,876 for the quarter, a 7% increase from $43,654 in the same quarter last year[41] Capital and Ratios - 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[7] - The bank's stockholders' equity increased to $307,694,000, up by $7,183,000 from the previous quarter and $11,927,000 year-over-year[19] - The bank's total risk-based capital ratio was 13.96% as of December 31, 2025, exceeding the minimum capital requirements set by the FDIC[20] - The bank's capital ratios indicate it is "well capitalized" under regulatory standards, with a CET 1 capital ratio of 12.73%[20] Noninterest Income and Expenses - Noninterest income for Q4 2025 included an additional $1.0 million related to death benefits from bank-owned life insurance policies[7] - Total noninterest income for the year ended December 31, 2025, increased by $721,000 to $22.3 million, driven by a $2.4 million increase in other noninterest income[32] - Noninterest expense for the year ended December 31, 2025, increased by $4.4 million to $102.0 million, primarily due to increases in salaries and benefits and operations expense[33] Economic Outlook - The company anticipates potential impacts from economic conditions, interest rate changes, and competitive pressures on its future performance[36]

Core Viewpoint FS Bancorp, Inc. reported a net income increase for the fourth quarter of 2025, reflecting strong operational performance and a commitment to shareholder returns through increased dividends and growth in book value. Financial Performance - Net income for Q4 2025 was $8.4 million, or $1.10 per diluted share, up from $7.4 million, or $0.92 per diluted share in Q4 2024 [1] - Total 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 in 2024 [1] - The company declared a quarterly cash dividend of $0.29 per common share, marking the 52nd consecutive increase [3] Book Value and Tangible Book Value - Book value per share increased by 8.6% to $41.55 at December 31, 2025, from $40.43 at September 30, 2025 [2] - Tangible book value per share rose by 10.1% to $39.65 at December 31, 2025, compared to $36.02 at December 31, 2024 [2] Segment Reporting - The Commercial and Consumer Banking segment generated a net income of $7.8 million, while the Home Lending segment contributed $643,000 in Q4 2025 [6] - Total deposits reached $2.67 billion at December 31, 2025, a 14.3% increase from $2.34 billion at December 31, 2024 [6] - Loans receivable increased by $23.6 million, or 0.9%, to $2.62 billion at December 31, 2025, compared to $2.50 billion at December 31, 2024 [6] Asset Management - The company purchased a 122,000-square-foot building for $16.1 million to centralize its headquarters by the end of 2026 [6][14] - Regulatory capital ratios were reported at 14.0% for total risk-based capital and 11.0% for Tier 1 leverage capital at December 31, 2025 [6] Loan Portfolio - Total loans receivable increased to $2.66 billion, with significant growth in commercial and speculative construction loans [16] - Consumer loans, primarily home improvement loans, decreased by $3.8 million to $597.0 million at December 31, 2025 [6]

Core Insights - FS Bancorp, Inc. has appointed Omeed Salashoor as Senior Vice President and Director of Home Lending, bringing over 35 years of experience in mortgage banking [1][3]. Group 1: Appointment Details - Omeed Salashoor has a strong background in leading high-performing lending organizations across various markets, most recently serving as Producing Branch Sales Manager for CMG Home Loans in Bellevue, Washington [3]. - Donn Costa, Chief Home Lending Officer, expressed that Salashoor's community and customer focus makes him an ideal fit for 1st Security Bank [4]. Group 2: Personal Background and Values - Salashoor began his mortgage banking career by founding a company in Kirkland, Washington, and has a passion for helping individuals and families achieve homeownership and financial security [5]. - He values the commitment to community banking and responsible home lending that 1st Security Bank embodies, aligning with his professional ethos [5]. Group 3: Company Overview - 1st Security Bank of Washington operates twenty-seven branches across Washington and Oregon, providing loan and deposit services, including mortgage services at each branch [6].

Financial Position - Total assets increased by $179.6 million to $3.21 billion at September 30, 2025, from $3.03 billion at December 31, 2024[187]. - Total liabilities increased by $174.9 million to $2.91 billion at September 30, 2025, primarily due to a $347.1 million increase in deposits[199]. - Total stockholders' equity increased by $4.7 million to $300.5 million at September 30, 2025, primarily reflecting net income of $24.9 million[206]. - As of September 30, 2025, the Bank exceeded all minimum capital requirements set by the FDIC, maintaining a "well capitalized" status[254]. - The Bank's capital ratios at September 30, 2025, included Tier 1 leverage-based capital at 11.0%, Tier 1 risk-based capital at 12.6%, total risk-based capital at 13.8%, and common equity Tier 1 capital at 12.6%[254]. - FS Bancorp, as a bank holding company, also exceeded all regulatory capital requirements with Tier 1 leverage-based capital at 9.5%, Tier 1 risk-based capital at 11.0%, total risk-based capital at 13.9%, and CET 1 capital ratio at 11.0% as of September 30, 2025[255]. Loan Performance - Loans receivable, net, increased by $97.7 million to $2.60 billion at September 30, 2025, compared to $2.50 billion at December 31, 2024[188]. - One-to-four-family loan originations for the nine months ended September 30, 2025, totaled $520.3 million, a decrease of 7.1% compared to $560.3 million for the same period in 2024[193]. - The allowance for credit losses (ACL) on loans totaled $30.1 million, or 1.14% of gross loans receivable, at September 30, 2025, down from 1.26% at December 31, 2024[195]. - Nonperforming loans increased by $4.8 million to $18.4 million at September 30, 2025, from $13.6 million at December 31, 2024, with a nonperforming loans to total gross loans ratio rising to 0.70%[196]. - Classified loans totaled $27.1 million at September 30, 2025, compared to $22.9 million at December 31, 2024, with the coverage ratio of the allowance for credit losses on loans to nonperforming loans declining to 163.8%[197]. - The provision for credit losses increased by $1.9 million, or 48.5%, to $5.5 million for the nine months ended September 30, 2025, compared to $3.7 million for the same period in 2024[226]. - Net loan charge-offs totaled $4.0 million for the three months ended September 30, 2025, compared to $1.6 million for the same period in 2024[221]. Deposits and Funding - Total deposits rose by $347.1 million to $2.69 billion at September 30, 2025, with increases in all deposit categories, including a $50.7 million rise in transactional accounts[200]. - Certificates of deposit (CDs) increased by $270.9 million to $1.3 billion at September 30, 2025, with non-retail CDs representing 28.8% of total CDs[201]. - Total deposits increased by $347.1 million during the nine months ended September 30, 2025, with a net increase in brokered deposits of $143.0 million[249]. Income and Expenses - Net income for the three months ended September 30, 2025, was $9.2 million, a decrease from $10.3 million for the same period in 2024, primarily due to a $2.8 million increase in provision for income tax expense[208]. - Net interest income increased by $2.4 million to $33.7 million for the three months ended September 30, 2025, driven by a $3.9 million increase in total interest income[212]. - Total interest income for the three months ended September 30, 2025, increased by $3.9 million to $51.0 million, primarily due to an increase in interest income on loans receivable[214]. - Noninterest income decreased by $373,000 to $5.6 million for the three months ended September 30, 2025, from $6.0 million for the same period in 2024[222]. - Total interest expense increased by $1.5 million to $17.3 million for the three months ended September 30, 2025, from $15.8 million for the same period in 2024[217]. - Noninterest expense increased by $2.7 million to $75.9 million for the nine months ended September 30, 2025, mainly due to higher salaries and benefits[240]. - The efficiency ratio improved to 64.63% for the three months ended September 30, 2025, compared to 69.42% for the same period in 2024[224]. - The efficiency ratio weakened to 67.40% for the nine months ended September 30, 2025, compared to 67.21% in the prior year, due to rising noninterest expenses[241]. Interest Rates and Margins - Net interest margin (NIM) increased by two basis points to 4.37% for the three months ended September 30, 2025, reflecting higher yields on interest-earning assets[213]. - Net interest margin (NIM) increased three basis points to 4.33% for the nine months ended September 30, 2025, compared to 4.30% for the same period in the prior year[231]. - The average cost of total interest-bearing liabilities decreased three basis points to 3.15% for the three months ended September 30, 2025[219]. Market Risk - There have been no material changes in the market risk disclosures for FS Bancorp as reported in the 2024 Form 10-K[256].

Core Insights - FS Bancorp (FSBW) reported quarterly earnings of $1.18 per share, exceeding the Zacks Consensus Estimate of $1.08 per share, but down from $1.29 per share a year ago, representing an earnings surprise of +9.26% [1] - The company achieved revenues of $39.28 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.97% and up from $37.21 million year-over-year [2] - FS Bancorp has outperformed consensus EPS estimates three times in the last four quarters and has also topped revenue estimates three times during the same period [2] Earnings Outlook - The sustainability of FS Bancorp's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.06 on revenues of $38.65 million, while for the current fiscal year, the estimate is $4.16 on revenues of $150.2 million [7] Industry Context - The Zacks Industry Rank indicates that the Banks - West industry is currently in the bottom 31% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6] Competitor Insights - Bank of Marin (BMRC), another company in the same industry, is expected to report quarterly earnings of $0.42 per share, reflecting a year-over-year increase of +50%, with revenues anticipated to be $31.1 million, up 14.5% from the previous year [9][10]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section provides an overview of FS Bancorp, Inc.'s financial performance for the third quarter and nine months ended September 30, 2025, highlighting key operational metrics and dividend declarations [Third Quarter & Nine Months Ended Financial Performance](index=1&type=section&id=Third%20Quarter%20%26%20Nine%20Months%20Ended%20Financial%20Performance) FS Bancorp, Inc. reported a decrease in net income for both the third quarter and the nine months ended September 30, 2025, compared to the prior year. Diluted EPS also saw a corresponding decline Net Income and Diluted EPS Summary | Metric | Q3 2025 ($) | Q3 2024 ($) | YoY Change (%) | 9M 2025 ($) | 9M 2024 ($) | YoY Change (%) | | :----- | :---------- | :---------- | :------------- | :---------- | :---------- | :------------- | | Net Income | 9.2 million | 10.3 million | (10.7) | 24.9 million | 27.6 million | (9.8) | | Diluted EPS | 1.18 | 1.29 | (8.4) | 3.18 | 3.45 | (7.8) | [Key Financial & Operational Highlights](index=1&type=section&id=Key%20Financial%20%26%20Operational%20Highlights) The third quarter of 2025 saw net income of $9.2 million, significant growth in total deposits, a substantial decrease in borrowings, and a modest increase in net loans. Consumer loans experienced a slight decline, while book value and tangible book value per share improved. The company also engaged in share repurchases - **Net interest margins (NIM)** remain strong with expanding yields on earning assets and a stable, well-positioned mix of funding liabilities[2](index=2&type=chunk) Key Financial and Operational Metrics | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | QoQ Change | QoQ Change (%) | YoY Change | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :----------- | :--------- | :------------- | :--------- | :------------- | | Net Income (Q3) ($ million) | 9.2 | 7.7 | 10.3 | 1.5 | 19.5% | (1.1) | (10.7%) | | Total Deposits ($ billion) | 2.69 | 2.55 | 2.43 | 0.1331 | 5.2% | 0.2592 | 10.7% | | Noninterest-bearing deposits ($ million) | 665.9 | 654.1 | 657.8 | 11.8 | 1.8% | 8.1 | 1.2% | | Borrowings ($ million) | 129.3 | 234.3 | 163.8 | (105.0) | (44.8%) | (34.5) | (21.1%) | | Loans receivable, net ($ billion) | 2.60 | 2.58 | 2.46 | 0.0173 | 0.7% | 0.1359 | 5.5% | | Consumer loans ($ million) | 600.8 | 606.3 | 632.4 | (5.5) | (0.91%) | (31.6) | (5.0%) | | Book value per share ($) | 40.43 | 39.55 | 37.45 | 0.88 | 2.2% | 2.98 | 8.0% | | Tangible book value per share ($) | 38.43 | 37.46 | 35.10 | 0.97 | 2.6% | 3.33 | 9.5% | - Repurchased **134,413 shares** of the Company's common stock in the third quarter of 2025 at an average price of **$41.15 per share**[4](index=4&type=chunk) [Dividend Declaration](index=1&type=section&id=Dividend%20Declaration) The Board of Directors approved the 51st consecutive quarterly cash dividend of $0.28 per common share, demonstrating a commitment to long-term shareholders. The dividend is payable on November 20, 2025, to shareholders of record as of November 6, 2025 - Approved the **51st consecutive quarterly cash dividend** of **$0.28 per common share**[3](index=3&type=chunk) [Segment Reporting](index=2&type=section&id=Segment%20Reporting) This section details the financial performance and operational overview of the Company's Commercial and Consumer Banking and Home Lending segments [Segment Overview](index=2&type=section&id=Segment%20Overview) The Company operates through two primary reportable segments: Commercial and Consumer Banking, which offers diversified financial products and services, and Home Lending, which primarily originates residential mortgage loans for sale in secondary markets - Commercial and Consumer Banking segment provides diversified financial products and services, including deposit products, various lending, and cash management[5](index=5&type=chunk) - Home Lending segment originates one-to-four-family residential mortgage loans primarily for sale in the secondary markets[5](index=5&type=chunk) [Three Months Ended September 30, 2025 & 2024](index=2&type=section&id=Three%20Months%20Ended%20September%2030%2C%202025%20%26%202024) For the third quarter of 2025, the Commercial and Consumer Banking segment reported net income of $8.4 million, while the Home Lending segment reported $775,000. Both segments experienced a decrease in net income compared to the same period in 2024 Segment Performance for Three Months Ended September 30 | Metric (Q3) | Commercial and Consumer Banking (2025) ($ thousand) | Home Lending (2025) ($ thousand) | Total (2025) ($ thousand) | Commercial and Consumer Banking (2024) ($ thousand) | Home Lending (2024) ($ thousand) | Total (2024) ($ thousand) | | :-------------------------------- | :------------------------------------- | :------------------ | :----------- | :------------------------------------- | :------------------ | :----------- | | Net interest income | 30,810 | 2,880 | 33,690 | 28,612 | 2,632 | 31,244 | | Provision for credit losses | (2,150) | (159) | (2,309) | (1,331) | (182) | (1,513) | | Noninterest income | 2,079 | 3,515 | 5,594 | 2,257 | 3,710 | 5,967 | | Noninterest expense | (20,134) | (5,254) | (25,388) | (20,199) | (5,633) | (25,832) | | Net income | 8,402 | 775 | 9,177 | 9,268 | 1,018 | 10,286 | | Total average assets | 2,523,410 | 662,047 | 3,185,457 | 2,347,854 | 612,935 | 2,960,789 | | FTEs | 460 | 115 | 575 | 442 | 117 | 559 | - Regulatory capital ratios for the Bank at September 30, 2025, were **13.8% for total risk-based capital** and **11.0% for Tier 1 leverage capital**, slightly lower than June 30, 2025[7](index=7&type=chunk) [Nine Months Ended September 30, 2025 & 2024](index=3&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202025%20%26%202024) For the nine months ended September 30, 2025, total net income was $24.9 million, a decrease from $27.6 million in the comparable period of 2024. The Commercial and Consumer Banking segment contributed $23.6 million, while the Home Lending segment contributed $1.4 million Segment Performance for Nine Months Ended September 30 | Metric (9M) | Commercial and Consumer Banking (2025) ($ thousand) | Home Lending (2025) ($ thousand) | Total (2025) ($ thousand) | Commercial and Consumer Banking (2024) ($ thousand) | Home Lending (2024) ($ thousand) | Total (2024) ($ thousand) | | :-------------------------------- | :------------------------------------- | :------------------ | :----------- | :------------------------------------- | :------------------ | :----------- | | Net interest income | 88,397 | 8,387 | 96,784 | 84,749 | 7,242 | 91,991 | | Provision for credit losses | (5,320) | (602) | (5,922) | (3,796) | (193) | (3,989) | | Noninterest income | 6,621 | 9,269 | 15,890 | 6,919 | 10,027 | 16,946 | | Noninterest expense | (60,624) | (15,321) | (75,945) | (58,250) | (14,968) | (73,218) | | Net income | 23,557 | 1,369 | 24,926 | 25,369 | 2,273 | 27,642 | | Total average assets | 2,468,543 | 643,460 | 3,112,003 | 2,369,740 | 586,001 | 2,955,741 | | FTEs | 460 | 115 | 575 | 442 | 117 | 559 | [Balance Sheet Analysis](index=4&type=section&id=Balance%20Sheet%20Analysis) This section provides a detailed analysis of the Company's assets, liabilities, and equity, including loan portfolio composition and regulatory capital ratios [Asset Summary](index=4&type=section&id=Asset%20Summary) Total assets increased by 1% quarter-over-quarter and 8% year-over-year to $3.21 billion at September 30, 2025, driven by growth in the loan portfolio and selective investment activities. The loan portfolio saw increases in commercial and speculative construction and development loans, and C&I loans, while consumer loans decreased [Total Assets Overview](index=4&type=section&id=Total%20Assets%20Overview) Total assets grew to $3.21 billion at September 30, 2025, reflecting the Company's strategy of balance sheet expansion through loan origination and investment, supported by on-balance sheet liquidity and borrowings Total Assets Summary | Asset Category | Sep 30, 2025 ($ thousand) | Jun 30, 2025 ($ thousand) | Sep 30, 2024 ($ thousand) | QoQ Change ($ thousand) | QoQ Change (%) | YoY Change ($ thousand) | YoY Change (%) | | :------------------------------------------ | :------------------ | :------------------ | :------------------ | :---------------- | :------------- | :---------------- | :------------- | | Total cash and cash equivalents | 61,280 | 33,195 | 40,340 | 28,085 | 85 | 20,940 | 52 | | Securities available-for-sale, at fair value | 311,695 | 302,692 | 228,199 | 9,003 | 3 | 83,496 | 37 | | Loans receivable, net | 2,599,601 | 2,582,272 | 2,463,697 | 17,329 | 1 | 135,904 | 6 | | TOTAL ASSETS | 3,208,825 | 3,176,013 | 2,970,208 | 32,812 | 1 | 238,617 | 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[11](index=11&type=chunk) [Loan Portfolio Composition](index=5&type=section&id=Loan%20Portfolio%20Composition) Total gross loans increased to $2.63 billion in Q3 2025, primarily driven by growth in commercial and speculative construction and development loans and C&I loans. Conversely, consumer loans experienced a decline Loan Portfolio Composition by Category | Loan Category | Sep 30, 2025 ($ thousand) | Sep 30, 2025 (%) | Jun 30, 2025 ($ thousand) | Jun 30, 2025 (%) | Sep 30, 2024 ($ thousand) | Sep 30, 2024 (%) | QoQ Change ($ thousand) | YoY Change ($ thousand) | | :------------------------------------ | :------------------ | :--------------- | :------------------ | :--------------- | :------------------ | :--------------- | :-------------- | :-------------- | | Total CRE loans | 932,689 | 35.5% | 916,137 | 35.0% | 832,013 | 33.4% | 16,552 | 100,676 | | Total residential real estate loans | 769,903 | 29.2% | 779,518 | 29.8% | 718,477 | 28.8% | (9,615) | 51,426 | | Total consumer loans | 600,779 | 22.9% | 606,291 | 23.2% | 632,417 | 25.3% | (5,512) | (31,638) | | Total commercial business loans | 326,286 | 12.4% | 312,515 | 12.0% | 312,022 | 12.5% | 13,771 | 14,264 | | Total loans receivable, gross | 2,629,657 | 100.0% | 2,614,461 | 100.0% | 2,494,929 | 100.0% | 15,196 | 134,728 | | Allowance for credit losses (ACL) on loans | (30,056) | | (32,189) | | (31,232) | | 2,133 | 1,176 | | Total loans receivable, net | 2,599,601 | | 2,582,272 | | 2,463,697 | | 17,329 | 135,904 | - Commercial and speculative construction and development loans increased **$26.0 million**, led by speculative residential vertical projects[12](index=12&type=chunk) - C&I loans increased **$16.6 million**[12](index=12&type=chunk) [Construction Loan Composition](index=7&type=section&id=Construction%20Loan%20Composition) Total construction loans reached $379.98 million at September 30, 2025, with speculative residential construction – vertical projects being the largest component and primary driver of growth Construction Loan Portfolio Breakdown | Construction Type | Sep 30, 2025 ($ thousand) | Sep 30, 2025 (%) | Jun 30, 2025 ($ thousand) | Jun 30, 2025 (%) | Sep 30, 2024 ($ thousand) | Sep 30, 2024 (%) | | :---------------------------------------------------- | :------------------ | :--------------- | :------------------ | :--------------- | :------------------ | :--------------- | | Speculative residential construction – vertical | 217,821 | 57.3% | 200,375 | 56.5% | 145,549 | 49.8% | | Multi-family | 29,751 | 7.8% | 23,119 | 6.5% | 30,931 | 10.6% | | Custom construction – single family residential | 44,299 | 11.7% | 45,570 | 12.8% | 43,528 | 14.9% | | Total | 379,980 | 100.0% | 354,747 | 100.0% | 292,366 | 100.0% | [One-to-Four-Family Loan Originations & Sales](index=7&type=section&id=One-to-Four-Family%20Loan%20Originations%20%26%20Sales) Originations of one-to-four-family loans decreased both quarter-over-quarter and year-over-year in Q3 2025, primarily due to a decline in purchase loans. However, loan sales volume increased QoQ, attributed to seasonal homebuying, and gross margins on home loan sales improved One-to-Four-Family Loan Originations and Sales | Origination Type (Q3) | Sep 30, 2025 ($ thousand) | Sep 30, 2025 (%) | Jun 30, 2025 ($ thousand) | Jun 30, 2025 (%) | Sep 30, 2024 ($ thousand) | Sep 30, 2024 (%) | QoQ Change ($ thousand) | QoQ Change (%) | YoY Change ($ thousand) | YoY Change (%) | | :-------------------- | :------------------ | :--------------- | :------------------ | :--------------- | :------------------ | :--------------- | :-------------- | :------------- | :-------------- | :------------- | | Purchase | 155,910 | 88.8% | 170,854 | 85.7% | 168,088 | 85.7% | (14,944) | (8.7%) | (12,178) | (7.2%) | | Refinance | 19,714 | 11.2% | 28,470 | 14.3% | 28,001 | 14.3% | (8,756) | (30.8%) | (8,287) | (29.6%) | | Total | 175,624 | 100.0% | 199,324 | 100.0% | 196,089 | 100.0% | (23,700) | (11.9%) | (20,465) | (10.4%) | - The Company sold **$156.4 million** of one-to-four-family loans in Q3 2025, an increase from **$127.1 million** in the previous quarter, primarily due to seasonal homebuying factors[14](index=14&type=chunk) - Gross margins on home loan sales increased to **3.14%** for the quarter ended September 30, 2025, up from **3.06%** in the previous quarter and **2.96%** in the same quarter one year ago[14](index=14&type=chunk) [Liabilities and Equity Summary](index=8&type=section&id=Liabilities%20and%20Equity%20Summary) Total deposits increased significantly, primarily driven by brokered CDs, while borrowings decreased substantially. Shareholders' equity saw a modest increase, influenced by net income and unrealized gains on securities, partially offset by share repurchases and dividends. The Bank remains well-capitalized, exceeding all regulatory requirements [Deposits](index=8&type=section&id=Deposits) Total deposits increased by 5.2% quarter-over-quarter and 10.7% year-over-year to $2.69 billion at September 30, 2025, mainly due to a rise in brokered certificates of deposit and other deposits. Noninterest-bearing deposits also saw a slight increase Deposit Composition by Category | Deposit Category | Sep 30, 2025 ($ thousand) | Sep 30, 2025 (%) | Jun 30, 2025 ($ thousand) | Jun 30, 2025 (%) | Sep 30, 2024 ($ thousand) | Sep 30, 2024 (%) | QoQ Change ($ thousand) | YoY Change ($ thousand) | | :----------------------- | :------------------ | :--------------- | :------------------ | :--------------- | :------------------ | :--------------- | :-------------- | :-------------- | | Noninterest-bearing checking | 648,661 | 24.1% | 643,573 | 25.2% | 641,270 | 26.4% | 5,088 | 7,391 | | Total interest-bearing checking | 199,527 | 7.4% | 211,260 | 8.3% | 165,944 | 6.8% | (11,733) | 33,583 | | Total money market | 354,333 | 13.2% | 350,799 | 13.7% | 340,049 | 14.0% | 3,534 | 14,284 | | Retail CDs | 924,925 | 34.4% | 891,355 | 34.9% | 849,302 | 35.0% | 33,570 | 75,623 | | Brokered CDs | 369,403 | 13.8% | 280,754 | 11.0% | 250,240 | 10.3% | 88,649 | 119,163 | | Total deposits | 2,686,492 | 100.0% | 2,553,375 | 100.0% | 2,427,331 | 100.0% | 133,117 | 259,161 | - Uninsured deposits were approximately **$694.4 million** at September 30, 2025, an increase from **$677.2 million** at June 30, 2025, and **$644.9 million** at September 30, 2024[17](index=17&type=chunk) [Borrowings & Shareholders' Equity](index=8&type=section&id=Borrowings%20%26%20Shareholders%27%20Equity) Borrowings decreased significantly by 44.8% QoQ and 21.1% YoY. Shareholders' equity increased QoQ due to net income and unrealized gains on available-for-sale securities, partially offset by share repurchases and cash dividends Borrowings and Shareholders' Equity Summary | Metric | Sep 30, 2025 ($ thousand) | Jun 30, 2025 ($ thousand) | Sep 30, 2024 ($ thousand) | QoQ Change ($ thousand) | YoY Change ($ thousand) | | :------------------ | :------------------ | :------------------ | :------------------ | :-------------- | :-------------- | | Borrowings | 129,305 | 234,305 | 163,806 | (105,000) | (34,501) | | Shareholders' equity | 300,511 | 297,203 | 288,902 | 3,308 | 11,609 | | Book value per share | 40.43 | 39.55 | 37.45 | 0.88 | 2.98 | - The increase in stockholders' equity was primarily due to net income of **$9.2 million** and an unrealized gain in fair value on securities available for sale of **$2.9 million** (net of tax), partially offset by share repurchases of **$5.5 million** and cash dividends paid of **$3.8 million**[18](index=18&type=chunk) [Regulatory Capital Ratios](index=9&type=section&id=Regulatory%20Capital%20Ratios) As of September 30, 2025, the Bank maintained strong regulatory capital ratios, exceeding all requirements and being classified as 'well capitalized' by the FDIC Bank and Company Regulatory Capital Ratios | Capital Ratio (Sep 30, 2025) | Bank | Company | | :----------------------------- | :----- | :------ | | Total risk-based capital | 13.81% | 13.93% | | Tier 1 leverage capital | 10.96% | 9.49% | | CET 1 capital | 12.64% | 10.95% | [Credit Quality](index=9&type=section&id=Credit%20Quality) This section analyzes the Company's credit quality, focusing on the Allowance for Credit Losses, nonperforming loans, and classified loans [Allowance for Credit Losses (ACL)](index=9&type=section&id=Allowance%20for%20Credit%20Losses%20(ACL)) The ending ACL balance decreased quarter-over-quarter and year-over-year to $30.06 million at September 30, 2025. This was primarily influenced by increased charge-offs, notably a $2.3 million partial charge-off for a commercial construction loan, which had been fully reserved in prior periods Allowance for Credit Losses Activity | ACL Metric ($ thousand) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | QoQ Change | YoY Change | | :-------------------- | :----------- | :----------- | :----------- | :--------- | :--------- | | Beginning ACL balance | 32,189 | 31,653 | 31,238 | 536 | 951 | | Provision | 1,851 | 1,715 | 1,591 | 136 | 260 | | Total Charge-offs | (4,344) | (1,640) | (1,964) | (2,704) | (2,380) | | Total Recoveries | 360 | 461 | 367 | (101) | (7) | | Ending ACL balance | 30,056 | 32,189 | 31,232 | (2,133) | (1,176) | - A **$2.3 million charge-off** for a commercial construction - office project was recognized in Q3 2025, which was fully reserved in previous periods, resulting in no income statement impact from increased provisions[21](index=21&type=chunk) [Nonperforming Loans](index=10&type=section&id=Nonperforming%20Loans) Total nonperforming loans decreased quarter-over-quarter but increased significantly year-over-year to $18.38 million at September 30, 2025. This rise was primarily driven by two commercial construction loans and increased delinquencies in consumer and mortgage loans, partially offset by a decrease in C&I nonaccrual loans Nonperforming Loans by Category | Nonperforming Loan Category ($ thousand) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | QoQ Change | YoY Change | | :------------------------------- | :----------- | :----------- | :----------- | :--------- | :--------- | | Total CRE loans | 11,197 | 11,129 | 5,867 | 68 | 5,330 | | Total residential real estate loans | 2,116 | 2,060 | 322 | 56 | 1,794 | | Total consumer loans | 4,462 | 3,945 | 2,008 | 517 | 2,454 | | C&I | 600 | 1,862 | 2,575 | (1,262) | (1,975) | | Total nonperforming loans | 18,375 | 18,996 | 10,772 | (621) | 7,603 | - The year-over-year increase in nonaccrual loans was partly driven by two commercial construction loans, which remain in active development, contributing a **$4.4 million net increase**[22](index=22&type=chunk) - Increases in consumer loan and mortgage loan delinquencies also contributed to the overall rise in nonaccrual loans[22](index=22&type=chunk) [Classified Loans](index=10&type=section&id=Classified%20Loans) Total classified loans increased both quarter-over-quarter and year-over-year to $27.05 million at September 30, 2025. This increase was primarily due to higher classified CRE, residential real estate, and consumer loans, partially offset by a decrease in C&I classified loans Classified Loans by Category | Classified Loan Category ($ thousand) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | QoQ Change | YoY Change | | :---------------------------- | :----------- | :----------- | :----------- | :--------- | :--------- | | Total CRE loans | 14,665 | 11,129 | 8,340 | 3,536 | 6,325 | | Total residential real estate loans | 3,963 | 4,634 | 2,952 | (671) | 1,011 | | Total consumer loans | 4,462 | 3,945 | 2,007 | 517 | 2,455 | | C&I | 3,963 | 5,220 | 9,880 | (1,257) | (5,917) | | Total classified loans | 27,053 | 24,928 | 23,179 | 2,125 | 3,874 | [Operating Results](index=11&type=section&id=Operating%20Results) This section reviews the Company's operating performance, including net interest income, provision for credit losses, noninterest income, and noninterest expense [Net Interest Income & Net Interest Margin (NIM)](index=11&type=section&id=Net%20Interest%20Income%20%26%20Net%20Interest%20Margin%20(NIM)) Net interest income increased for both the three and nine months ended September 30, 2025, driven by higher interest income on loans and investment securities, partially offset by increased interest expense. Net Interest Margin (NIM) also saw slight improvements Net Interest Income and Margin Trends | Metric | Q3 2025 ($ thousand) | Q3 2024 ($ thousand) | YoY Change ($ thousand) | YoY Change (%) | 9M 2025 ($ thousand) | 9M 2024 ($ thousand) | YoY Change ($ thousand) | YoY Change (%) | | :-------------------- | :----------- | :----------- | :-------------- | :------------- | :----------- | :----------- | :-------------- | :------------- | | Net interest income | 33,690 | 31,244 | 2,446 | 7.8% | 96,784 | 91,991 | 4,793 | 5.2% | | Total interest income | 50,973 | 47,043 | 3,930 | 8.4% | 146,463 | 137,863 | 8,600 | 6.2% | | Total interest expense | 17,283 | 15,799 | 1,484 | 9.4% | 49,679 | 45,872 | 3,807 | 8.3% | | NIM (annualized) | 4.37% | 4.35% | +2 bps | | 4.33% | 4.30% | +3 bps | | | Average total cost of funds | 2.41% | 2.39% | +2 bps | | 2.39% | 2.33% | +6 bps | | - The **$3.9 million increase** in total interest income for Q3 was primarily due to a **$2.9 million increase** in interest income on loans receivable, driven by net loan growth and higher loan yields[24](index=24&type=chunk) - The **$1.5 million increase** in total interest expense for Q3 was primarily the result of higher average deposit balances used to fund asset growth[24](index=24&type=chunk) [Provision for Credit Losses & Net Charge-offs](index=11&type=section&id=Provision%20for%20Credit%20Losses%20%26%20Net%20Charge-offs) The provision for credit losses on loans increased significantly for both the three and nine months ended September 30, 2025, reflecting net loan growth and a rise in net charge-off activity, largely due to a commercial construction loan Provision for Credit Losses and Net Charge-offs | Metric | Q3 2025 ($ thousand) | Q3 2024 ($ thousand) | YoY Change ($ thousand) | YoY Change (%) | 9M 2025 ($ thousand) | 9M 2024 ($ thousand) | YoY Change ($ thousand) | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :-------------- | :------------- | :----------- | :----------- | :-------------- | :------------- | | Provision for credit losses | 2,309 | 1,513 | 796 | 52.6% | 5,922 | 3,989 | 1,933 | 48.5% | | Net charge-offs (Q3) | 4,000 | 1,600 | 2,400 | 150.0% | | | | | | Net charge-offs (9M) | | | | | 6,900 | 4,300 | 2,600 | 60.5% | - The increase in Q3 net charge-offs was primarily due to a **$2.3 million partial charge-off** of a commercial construction loan[29](index=29&type=chunk) - For the nine months, net charge-offs increased due to the commercial construction loan charge-off and a **$1.3 million increase** in net charge-offs on indirect home improvement loans, partially offset by decreases in commercial business and marine loan charge-offs[29](index=29&type=chunk) [Noninterest Income](index=11&type=section&id=Noninterest%20Income) Total noninterest income decreased for both the three and nine months ended September 30, 2025. This decline was mainly attributed to lower service charges and fees, no gain on sale of MSRs in the current quarter, and a decrease in gain on sale of loans Noninterest Income Breakdown | Metric | Q3 2025 ($ thousand) | Q3 2024 ($ thousand) | YoY Change ($ thousand) | YoY Change (%) | 9M 2025 ($ thousand) | 9M 2024 ($ thousand) | YoY Change ($ thousand) | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :-------------- | :------------- | :----------- | :----------- | :-------------- | :------------- | | Total noninterest income | 5,594 | 5,967 | (373) | (6.2%) | 15,890 | 16,946 | (1,056) | (6.2%) | | Service charges and fee income | 2,326 | 2,482 | (156) | (6.3%) | 6,894 | 7,513 | (619) | (8.2%) | | Gain on sale of MSRs | — | 141 | (141) | NM | — | 8,356 | NM | NM | | Gain on sale of loans | 2,439 | 2,523 | (84) | (3.3%) | 6,111 | 6,824 | (713) | (10.4%) | | Other noninterest income | 560 | 558 | 2 | 0.4% | 2,112 | 1,355 | 757 | 55.9% | - The decrease in 9M noninterest income was partially offset by a **$757,000 increase** in other noninterest income, primarily due to a **$358,000 gain** on sales of nonmarketable equity securities, **$219,000** in bank owned life insurance proceeds, and a **$152,000 increase** in brokered loans fees[30](index=30&type=chunk) [Noninterest Expense](index=12&type=section&id=Noninterest%20Expense) Total noninterest expense slightly decreased quarter-over-quarter but increased year-over-year for the nine months ended September 30, 2025. The Q3 decrease was mainly due to a recovery in MSRs and lower data processing costs, while the 9M increase was driven by higher salaries and benefits and operations expense Noninterest Expense Breakdown | Metric | Q3 2025 ($ thousand) | Q3 2024 ($ thousand) | YoY Change ($ thousand) | YoY Change (%) | 9M 2025 ($ thousand) | 9M 2024 ($ thousand) | YoY Change ($ thousand) | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :-------------- | :------------- | :----------- | :----------- | :-------------- | :------------- | | Total noninterest expense | 25,388 | 25,832 | (444) | (1.7%) | 75,945 | 73,218 | 2,727 | 3.7% | | Salaries and benefits | 14,415 | 13,985 | 430 | 3.1% | 43,037 | 40,920 | 2,117 | 5.2% | | Data processing | 1,784 | 2,156 | (372) | (17.3%) | 5,966 | 6,172 | (206) | (3.3%) | | (Recovery) impairment of servicing rights | (6) | 506 | (512) | (116.0%) | 23 | 545 | (522) | (95.8%) | - The Q3 decrease in noninterest expense was primarily due to a **$6,000 recovery** in MSRs (compared to the prior year's **$506,000 impairment**) and a **$372,000 decrease** in data processing[31](index=31&type=chunk) - The 9M increase was mainly due to a **$2.1 million increase** in salaries and benefits (primarily due to competitive wage adjustments) and an **$889,000 increase** in operations expense[31](index=31&type=chunk) [Company Information](index=12&type=section&id=Company%20Information) Contact information for key executives of FS Bancorp, Inc. is provided for inquiries [About FS Bancorp, Inc.](index=12&type=section&id=About%20FS%20Bancorp%2C%20Inc.) FS Bancorp, Inc. is the holding company for 1st Security Bank of Washington, providing a range of loan and deposit services to small- and middle-market businesses and individuals in Washington and Oregon through its extensive branch network and loan production offices - FS Bancorp, Inc. is the holding company for **1st Security Bank of Washington**[32](index=32&type=chunk) - The Bank offers a range of loan and deposit services primarily to small- and middle-market businesses and individuals in Washington and Oregon[32](index=32&type=chunk) - Operates through **27 bank branches**, one headquarters office, and loan production offices in various suburban communities in the greater Puget Sound area, the Tri-Cities, and Vancouver, Washington[32](index=32&type=chunk) [Forward-Looking Statements](index=13&type=section&id=Forward-Looking%20Statements) This section identifies forward-looking statements and cautions that actual results may differ materially from current expectations due to various inherent uncertainties and external factors. These factors include adverse economic conditions, changes in interest rates, competitive pressures, and regulatory changes. The Company explicitly disclaims any obligation to revise these statements - Forward-looking statements are identified by specific phrases such as 'believe,' 'will,' 'are expected to,' 'estimate,' and 'project'[33](index=33&type=chunk) - Actual results may differ materially due to factors including adverse economic conditions, changes in interest rates, inflation, geopolitical developments, competitive pressures, and regulatory changes[33](index=33&type=chunk) - The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements[34](index=34&type=chunk) [Consolidated Financial Statements](index=14&type=section&id=Consolidated%20Financial%20Statements) This section presents the Company's consolidated balance sheets and statements of income for the reported periods [Consolidated Balance Sheets](index=14&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets for FS Bancorp, Inc. and Subsidiary show total assets of $3.21 billion at September 30, 2025, an increase of 1% QoQ and 8% YoY. Total deposits increased by 5% QoQ and 11% YoY, while borrowings decreased significantly Consolidated Balance Sheet Highlights | Metric ($ thousand) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | QoQ Change (%) | YoY Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | | TOTAL ASSETS | 3,208,825 | 3,176,013 | 2,970,208 | 1 | 8 | | Total deposits | 2,686,492 | 2,553,375 | 2,427,331 | 5 | 11 | | Borrowings | 129,305 | 234,305 | 163,806 | (45) | (21) | | Total liabilities | 2,908,314 | 2,878,810 | 2,681,306 | 1 | 8 | | Total stockholders' equity | 300,511 | 297,203 | 288,902 | 1 | 4 | [Consolidated Statements of Income (Three Months)](index=16&type=section&id=Consolidated%20Statements%20of%20Income%20(Three%20Months)) For the three months ended September 30, 2025, net income was $9.18 million, an increase of 19% QoQ but a decrease of 11% YoY. Net interest income increased by 5% QoQ and 8% YoY, while provision for credit losses increased significantly Consolidated Statements of Income (Three Months Ended September 30) | Metric ($ thousand) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | QoQ Change (%) | YoY Change (%) | | :------------------------------------------ | :----------- | :----------- | :----------- | :------------- | :------------- | | Total interest and dividend income | 50,973 | 48,703 | 47,043 | 5 | 8 | | Total interest expense | 17,283 | 16,591 | 15,799 | 4 | 9 | | NET INTEREST INCOME | 33,690 | 32,112 | 31,244 | 5 | 8 | | PROVISION FOR CREDIT LOSSES | 2,309 | 2,021 | 1,513 | 14 | 53 | | Total noninterest income | 5,594 | 5,170 | 5,967 | 8 | (6) | | Total noninterest expense | 25,388 | 25,502 | 25,832 | (0) | (2) | | INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES | 11,587 | 9,759 | 9,866 | 19 | 17 | | PROVISION (BENEFIT) FOR INCOME TAXES | 2,410 | 2,031 | (420) | 19 | (674) | | NET INCOME | 9,177 | 7,728 | 10,286 | 19 | (11) | | Diluted earnings per share | 1.18 | 0.99 | 1.29 | 19 | (9) | [Consolidated Statements of Income (Nine Months)](index=17&type=section&id=Consolidated%20Statements%20of%20Income%20(Nine%20Months)) For the nine months ended September 30, 2025, net income was $24.93 million, a decrease of 10% YoY. Net interest income increased by 5% YoY, but this was offset by a 48% increase in provision for credit losses and a 6% decrease in total noninterest income Consolidated Statements of Income (Nine Months Ended September 30) | Metric ($ thousand) | Sep 30, 2025 | Sep 30, 2024 | YoY Change (%) | | :------------------------------------------ | :----------- | :----------- | :------------- | | Total interest and dividend income | 146,463 | 137,863 | 6 | | Total interest expense | 49,679 | 45,872 | 8 | | NET INTEREST INCOME | 96,784 | 91,991 | 5 | | PROVISION FOR CREDIT LOSSES | 5,922 | 3,989 | 48 | | Total noninterest income | 15,890 | 16,946 | (6) | | Total noninterest expense | 75,945 | 73,218 | 4 | | INCOME BEFORE PROVISION FOR INCOME TAXES | 30,807 | 31,730 | (3) | | PROVISION FOR INCOME TAXES | 5,881 | 4,088 | 44 | | NET INCOME | 24,926 | 27,642 | (10) | | Diluted earnings per share | 3.18 | 3.45 | (8) | [Key Financial Ratios and Data](index=18&type=section&id=Key%20Financial%20Ratios%20and%20Data) This section provides key financial performance, asset quality, average balance, and per common share data for the Company [Performance Ratios](index=18&type=section&id=Performance%20Ratios) Performance ratios for Q3 and 9M 2025 show an increase in Return on Assets and Return on Equity QoQ, but a decrease YoY. Yield on average interest-earning assets and net interest margin increased, while the efficiency ratio improved QoQ but slightly worsened YoY for 9M Key Performance Ratios | Performance Ratio | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :-------------------------------------------------- | :------ | :------ | :------ | :------ | | Return on assets | 1.14% | 1.38% | 1.07% | 1.25% | | Return on equity | 11.97% | 14.08% | 11.03% | 13.05% | | Yield on average interest-earning assets | 6.61% | 6.56% | 6.55% | 6.44% | | Average total cost of funds | 2.41% | 2.39% | 2.39% | 2.33% | | Net interest margin | 4.37% | 4.35% | 4.33% | 4.30% | | Efficiency ratio | 64.63% | 69.42% | 67.40% | 67.21% | | Common equity ratio | 9.37% | 9.73% | | | | Tangible common equity ratio | 8.94% | 9.17% | | | [Asset Quality Ratios and Data](index=18&type=section&id=Asset%20Quality%20Ratios%20and%20Data) Asset quality ratios at September 30, 2025, indicate an increase in nonperforming assets and loans relative to total assets and gross loans year-over-year. The ratio of ACL to nonperforming loans significantly decreased YoY, suggesting a lower coverage of nonperforming loans by the allowance Asset Quality Ratios | Asset Quality Ratio | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------------------------------------ | :----------- | :----------- | :----------- | | Nonperforming assets to total assets at end of period | 0.57% | 0.60% | 0.36% | | Nonperforming loans to total gross loans | 0.70% | 0.73% | 0.43% | | ACL – loans to nonperforming loans | 163.77% | 168.89% | 290.07% | | ACL – loans to total gross loans | 1.14% | 1.23% | 1.25% | [Average Balances](index=19&type=section&id=Average%20Balances) Average total assets increased by $224.7 million QoQ and $156.3 million YoY for the three and nine months ended September 30, 2025, respectively. Average loans receivable, net, and interest-bearing deposit accounts also showed increases Average Balance Sheet Metrics | Average Balance Metric ($ thousand) | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | Q3 YoY Change ($ thousand) | 9M YoY Change ($ thousand) | | :---------------------------------------------------- | :-------- | :-------- | :-------- | :-------- | :----------------- | :----------------- | | Loans receivable, net | 2,651,111 | 2,536,106 | 2,608,338 | 2,504,129 | 115,005 | 104,209 | | Total interest-earning assets | 3,060,502 | 2,854,848 | 2,988,218 | 2,857,642 | 205,654 | 130,576 | | Total assets | 3,185,457 | 2,960,789 | 3,112,003 | 2,955,741 | 224,668 | 156,262 | | Interest-bearing deposit accounts | 1,947,830 | 1,737,793 | 1,880,007 | 1,788,324 | 210,037 | 91,683 | | Total liabilities | 2,881,351 | 2,670,097 | 2,809,874 | 2,672,819 | 211,254 | 137,055 | [Per Common Share Data](index=19&type=section&id=Per%20Common%20Share%20Data) Diluted earnings per share decreased year-over-year for both the third quarter and nine months ended September 30, 2025. However, book value per share and tangible book value per share both increased quarter-over-quarter and year-over-year Per Common Share Data | Per Share Data | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | | Basic earnings per share | 1.20 | 1.00 | 1.32 | | Diluted earnings per share | 1.18 | 0.99 | 1.29 | | Book value per share using common shares outstanding | 40.43 | 39.55 | 37.45 | | Tangible book value per share using common shares outstanding | 38.43 | 37.46 | 35.10 | [Non-GAAP Financial Measures](index=20&type=section&id=Non-GAAP%20Financial%20Measures) This section explains and reconciles non-GAAP financial measures used by the Company to provide additional insights into its financial performance and capital structure [Explanation of Non-GAAP Measures](index=20&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The report includes non-GAAP financial measures such as tangible book value per share and tangible common equity ratio. Management believes these measures are valuable for comparing capital quality and composition over time and against competitors, as they exclude intangible assets from capital ratio calculations. However, these measures have inherent limitations and should not replace GAAP results - Non-GAAP financial measures presented include **tangible book value per share** and **tangible common equity ratio**[47](index=47&type=chunk) - Management believes these measures are consistent with the capital treatment utilized by the investment community and facilitate comparison of capital quality and composition[47](index=47&type=chunk) - These non-GAAP measures have inherent limitations, are not uniformly applied, and should not be considered in isolation or as a substitute for GAAP results[48](index=48&type=chunk) [Reconciliation of Tangible Book Value Per Share and Tangible Common Equity Ratio](index=20&type=section&id=Reconciliation%20of%20Tangible%20Book%20Value%20Per%20Share%20and%20Tangible%20Common%20Equity%20Ratio) A reconciliation is provided to bridge GAAP book value per share and common equity ratio to their non-GAAP tangible counterparts. This reconciliation highlights the impact of excluding goodwill and core deposit intangibles from the calculations, offering a clearer view of tangible equity Reconciliation of Non-GAAP Tangible Measures | Metric ($ thousand, except per share) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | | Stockholders' equity (GAAP) | 300,511 | 297,203 | 288,902 | | Less: goodwill and core deposit intangible, net | (14,876) | (15,663) | (18,178) | | Tangible common stockholders' equity (non-GAAP) | 285,635 | 281,540 | 270,724 | | Book value per share (GAAP) | 40.43 | 39.55 | 37.45 | | Tangible book value per share (non-GAAP) | 38.43 | 37.46 | 35.10 | | Total assets (GAAP) | 3,208,825 | 3,176,013 | 2,970,208 | | Less: goodwill and core deposit intangible assets | (14,876) | (15,663) | (18,178) | | Tangible assets (non-GAAP) | 3,193,949 | 3,160,350 | 2,952,030 | | Common equity ratio (GAAP) | 9.37% | 9.36% | 9.73% | | Tangible common equity ratio (non-GAAP) | 8.94% | 8.91% | 9.17% | [Contacts](index=20&type=section&id=Contacts) Contact information for key executives of FS Bancorp, Inc. is provided for inquiries - Contact information for **Matthew D. Mullet**, President and Chief Executive Officer, and **Phillip D. Whittington**, Chief Financial Officer, is provided[52](index=52&type=chunk) - Contact number: **(425) 771-5299**; Website: **www.FSBWA.com**[52](index=52&type=chunk)

Core Viewpoint - FS Bancorp, Inc. reported a decrease in net income for the third quarter of 2025, with net income of $9.2 million compared to $10.3 million in the same quarter last year, reflecting challenges in maintaining profitability amidst changing market conditions [1][7]. Financial Performance - The net income for the third quarter of 2025 was $9.2 million, or $1.18 per diluted share, down from $10.3 million, or $1.29 per diluted share, in the same quarter of 2024 [1]. - For the nine months ended September 30, 2025, net income was $24.9 million, or $3.18 per diluted share, compared to $27.6 million, or $3.45 per diluted share, for the same period in 2024 [1]. - Total deposits increased by $133.1 million, or 5.2%, to $2.69 billion at September 30, 2025, compared to $2.55 billion at June 30, 2025, and increased by $259.2 million, or 10.7%, from $2.43 billion at September 30, 2024 [7]. - Loans receivable, net increased by $17.3 million, or 0.7%, to $2.60 billion at September 30, 2025, compared to $2.58 billion at June 30, 2025, and increased by $135.9 million, or 5.5%, from $2.46 billion at September 30, 2024 [7]. Shareholder Returns - The company balanced shareholder returns in the third quarter through share repurchases, a paid special dividend, and the payment of its 50th quarterly dividend [3]. - The Board of Directors approved a cash dividend of $0.28 per common share, marking the 51st consecutive quarterly cash dividend, to be paid on November 20, 2025 [3]. Segment Reporting - The company operates through two segments: Commercial and Consumer Banking, and Home Lending [5]. - In the third quarter of 2025, the Commercial and Consumer Banking segment reported net income of $8.4 million, while the Home Lending segment reported net income of $775,000 [7]. Asset and Liability Management - Total assets increased by $32.8 million, or 1%, to $3.21 billion at September 30, 2025, compared to $3.18 billion at June 30, 2025, and increased by $238.6 million, or 8%, from $2.97 billion at September 30, 2024 [13]. - Borrowings decreased by $105.0 million, or 44.8%, to $129.3 million at September 30, 2025, compared to $234.3 million at June 30, 2025 [7]. Loan Portfolio - Total loans receivable increased to $2.63 billion during the third quarter of 2025, primarily due to growth in commercial and speculative construction and development loans [16]. - The composition of commercial real estate (CRE) loans showed an increase in total CRE loans to $932.7 million, up from $916.1 million in the previous quarter [17].

Core Viewpoint - The article emphasizes the importance of value investing and highlights FS Bancorp (FSBW) as a strong candidate for value investors due to its favorable valuation metrics and earnings outlook [2][8]. Valuation Metrics - FSBW has a P/E ratio of 9.51, which is lower than the industry average of 10.84, indicating potential undervaluation [4]. - The P/B ratio for FSBW is 1.08, compared to the industry average of 1.34, suggesting solid valuation relative to book value [5]. - FSBW's P/S ratio stands at 1.51, significantly lower than the industry's average of 2.35, reinforcing its attractiveness as a value stock [6]. - The P/CF ratio for FSBW is 7.25, which is appealing compared to the industry average of 10.97, indicating a strong cash flow outlook [7]. Investment Outlook - Given the combination of favorable valuation metrics and a strong earnings outlook, FS Bancorp is positioned as a compelling value stock at the current time [8].