Core Points - FS Bancorp, Inc. has announced the appointment of Matthew D. Mullet as President and CEO of 1st Security Bank, effective September 1, 2025, succeeding Joseph C. Adams, who will retire from the position after serving since 2004 [1][2] - Joe Adams will continue to serve as CEO of FS Bancorp, Inc., a role he has held since 2012, until May 2026 [1][2] - The succession plan has been carefully planned by the Board, with confidence expressed in Matt Mullet's leadership skills and extensive experience in the banking sector [3] Company Overview - FS Bancorp, Inc. is the holding company for 1st Security Bank of Washington, which provides a range of loan and deposit services primarily to small- and middle-market businesses and individuals in Washington and Oregon [4] - The Bank operates through 27 branches and offers services in various suburban communities, focusing on markets in the greater Puget Sound area, Tri-Cities, and Vancouver [4]

PART I FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents FS Bancorp, Inc.'s unaudited consolidated financial statements for the three and six-month periods ended June 30, 2025 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) - Total assets increased to **$3.18 billion** as of June 30, 2025, from **$3.03 billion** at December 31, 2024, driven by growth in loans and investment securities[10](index=10&type=chunk) Consolidated Balance Sheet Highlights (in thousands of dollars) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,176,013** | **$3,029,177** | | Total cash and cash equivalents | $33,195 | $31,635 | | Loans receivable, net | $2,582,272 | $2,501,951 | | **Total Liabilities** | **$2,878,810** | **$2,733,410** | | Total deposits | $2,553,375 | $2,339,418 | | Borrowings | $234,305 | $307,806 | | **Total Stockholders' Equity** | **$297,203** | **$295,767** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) - Net income for the second quarter of 2025 was **$7.7 million**, a decrease from **$9.0 million** in the second quarter of 2024. For the six-month period, net income was **$15.7 million** in 2025, down from **$17.4 million** in 2024[12](index=12&type=chunk) Key Income Statement Data (in thousands of dollars, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $32,112 | $30,401 | $63,093 | $60,747 | | Provision for Credit Losses | $2,021 | $1,077 | $3,613 | $2,476 | | Noninterest Income | $5,170 | $5,868 | $10,296 | $10,979 | | Noninterest Expense | $25,502 | $23,857 | $50,556 | $47,386 | | **Net Income** | **$7,728** | **$8,959** | **$15,749** | **$17,356** | | **Diluted EPS** | **$0.99** | **$1.13** | **$1.99** | **$2.20** | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) - Comprehensive income was **$4.9 million** for Q2 2025, significantly lower than **$9.8 million** in Q2 2024. The decrease was driven by net income decline and an other comprehensive loss of **$2.8 million**, primarily from unrealized losses on securities and derivative instruments[14](index=14&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) - For the six months ended June 30, 2025, stockholders' equity increased by **$1.4 million** to **$297.2 million**. The increase was driven by net income of **$15.7 million**, offset by common stock repurchases of **$9.0 million** and dividends paid of **$4.4 million**[17](index=17&type=chunk) Stock Repurchase and Dividend Activity (Six Months Ended June 30, in thousands of dollars) | Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Common stock repurchased | $(8,988) | $(2,361) | | Dividends paid | $(4,353) | $(4,059) | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net Cash Flow Summary (Six Months Ended June 30, in thousands of dollars) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $15,322 | $10,185 | | Net cash (used by) from investing activities | $(141,507) | $14,964 | | Net cash from (used by) financing activities | $127,745 | $(57,829) | | **Net increase (decrease) in cash** | **$1,560** | **$(32,680)** | - For the first six months of 2025, the company experienced a net cash outflow from investing activities of **$141.5 million**, primarily due to net portfolio loan originations and security purchases. This was funded by a net cash inflow from financing activities of **$127.7 million**, driven by a significant increase in deposits which more than offset repayments of borrowings and stock repurchases[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The Company operates in two business segments: commercial and consumer banking, and home lending. The Bank provides loan and deposit services primarily to small- and middle-market businesses and individuals in the greater Puget Sound area and other parts of Washington and Oregon[23](index=23&type=chunk)[28](index=28&type=chunk) Loan Portfolio Composition (in thousands of dollars) | Loan Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial Real Estate (CRE) | $916,137 | $871,337 | | Residential Real Estate | $779,518 | $742,371 | | Consumer Loans | $606,291 | $620,181 | | Commercial Business Loans | $312,515 | $299,932 | | **Total loans receivable, gross** | **$2,614,461** | **$2,533,821** | - The Allowance for Credit Losses (ACL) on loans was **$32.2 million** at June 30, 2025, up from **$31.9 million** at year-end 2024. The increase in provision for credit losses was mainly due to loan growth and elevated net charge-offs in the consumer loan portfolio, particularly indirect home improvement loans[62](index=62&type=chunk) - Nonaccrual loans increased to **$19.0 million** at June 30, 2025, from **$13.6 million** at December 31, 2024. The increase was primarily in CRE construction and development loans, and consumer loans[68](index=68&type=chunk)[69](index=69&type=chunk)[82](index=82&type=chunk) - The Bank was categorized as 'well capitalized' under regulatory requirements as of June 30, 2025, with a Total risk-based capital ratio of **14.06%** and a Tier 1 leverage capital ratio of **11.18%**[144](index=144&type=chunk)[145](index=145&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, highlighting decreased net income for Q2 and H1 2025 due to higher expenses and credit provisions, despite asset and deposit growth [Comparison of Financial Condition](index=55&type=section&id=Comparison%20of%20Financial%20Condition) - Total assets grew by **$146.8 million** to **$3.18 billion** at June 30, 2025, from year-end 2024, primarily due to an **$80.3 million** increase in net loans receivable and a **$44.6 million** increase in total securities[183](index=183&type=chunk) - Total deposits increased by **$214.0 million**, largely driven by a **$148.8 million** increase in CDs, including a **$137.7 million** rise in brokered CDs. This influx of deposits allowed the company to reduce borrowings by **$73.5 million**[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - Asset quality weakened, with nonperforming loans increasing to **$19.0 million** (**0.73%** of total loans) from **$13.6 million** (**0.54%** of total loans) at year-end 2024. The increase was concentrated in commercial construction and indirect home improvement loans[189](index=189&type=chunk) - Stockholders' equity increased by **$1.4 million** to **$297.2 million**, as net income of **$15.7 million** was largely offset by **$9.0 million** in share repurchases and **$4.3 million** in dividends[198](index=198&type=chunk) [Comparison of Results of Operations](index=57&type=section&id=Comparison%20of%20Results%20of%20Operations) Q2 2025 vs Q2 2024 Performance Summary (in thousands of dollars) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $32,112 | $30,401 | $1,711 | | Provision for Credit Losses | $2,021 | $1,077 | $944 | | Noninterest Income | $5,170 | $5,868 | $(698) | | Noninterest Expense | $25,502 | $23,857 | $1,645 | | **Net Income** | **$7,728** | **$8,959** | **$(1,231)** | - Net interest margin (NIM) for Q2 2025 was **4.30%**, a slight increase of **one basis point** from **4.29%** in Q2 2024, as higher yields on interest-earning assets were largely offset by increased funding costs[206](index=206&type=chunk) - The provision for credit losses increased by **$944,000** in Q2 2025 compared to Q2 2024, reflecting loan portfolio growth, an increase in nonperforming loans, and higher net charge-offs, particularly in the consumer loan portfolio[213](index=213&type=chunk)[214](index=214&type=chunk) - Noninterest expense rose by **$1.6 million** year-over-year for the quarter, primarily due to a **$710,000** increase in salaries and benefits from competitive wage adjustments and higher benefit costs[216](index=216&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) - The Bank maintains multiple liquidity sources, including deposit growth, FHLB borrowings, and the sale of securities and loans. As of June 30, 2025, the Bank had **$438.2 million** in unused borrowing capacity with the FHLB of Des Moines[237](index=237&type=chunk)[238](index=238&type=chunk) - The Bank also has a **$262.8 million** borrowing line with the Federal Reserve Bank and **$101.0 million** in federal funds lines with correspondent banks. At quarter-end, **$25.0 million** was outstanding with the FRB[239](index=239&type=chunk) - The Bank is considered 'well capitalized' and exceeded all regulatory capital requirements as of June 30, 2025. The holding company, FS Bancorp, Inc., also exceeded all applicable regulatory capital requirements[248](index=248&type=chunk)[249](index=249&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in market risk disclosures from its 2024 Annual Report on Form 10-K - There have been no material changes in the market risk disclosures contained in FS Bancorp's 2024 Form 10-K[250](index=250&type=chunk) [Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the Company's disclosure controls and procedures were effective[252](index=252&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[253](index=253&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, with management expecting no material adverse effect on financial condition - In the opinion of management, any liability from legal proceedings in the normal course of business would not have a material adverse effect on the Company's financial condition[255](index=255&type=chunk) [Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - There have been no material changes in the Risk Factors previously disclosed in FS Bancorp's 2024 Form 10-K[256](index=256&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased common shares in Q2 2025, with remaining repurchase capacity and a new **$5.0 million** program approved Common Stock Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 34,921 | $37.90 | | May 2025 | 49,623 | $39.99 | | June 2025 | 47,738 | $38.55 | | **Total for Quarter** | **132,282** | **$38.92** | - As of June 30, 2025, **$724,772** remained available for repurchase under existing plans[257](index=257&type=chunk) - On July 9, 2025, the Board of Directors approved an additional stock repurchase program, authorizing the repurchase of up to **$5.0 million** of common stock[259](index=259&type=chunk) [Defaults Upon Senior Securities](index=67&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - Not applicable[261](index=261&type=chunk) [Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[262](index=262&type=chunk) [Other Information](index=67&type=section&id=Item%205.%20Other%20Information) The company reports no other material information, with no director or officer trading arrangement changes during Q2 2025 - During the three months ended June 30, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[263](index=263&type=chunk) [Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate documents and certifications

Core Viewpoint - FS Bancorp reported quarterly earnings of $0.99 per share, exceeding the Zacks Consensus Estimate of $0.97 per share, but down from $1.13 per share a year ago, indicating a +2.06% earnings surprise [1][2] Financial Performance - The company achieved revenues of $37.28 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.14% and up from $36.27 million year-over-year [2] - Over the last four quarters, FS Bancorp has exceeded consensus EPS estimates three times and has topped consensus revenue estimates three times as well [2] Stock Performance and Outlook - FS Bancorp shares have increased approximately 1.5% since the beginning of the year, while the S&P 500 has gained 7.2% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $1.03 for the coming quarter and $4.05 for the current fiscal year [7] Industry Context - The Zacks Industry Rank for Banks - West places it in the top 28% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]

[Financial Performance](index=1&type=section&id=Financial%20Performance) [Q2 2025 Earnings Overview](index=1&type=section&id=Q2%202025%20Earnings%20Overview) FS Bancorp's Q2 2025 net income decreased to $7.7 million ($0.99 diluted EPS) from $9.0 million ($1.13 diluted EPS) in Q2 2024, impacted by lower noninterest income and higher expenses Quarterly and YTD Earnings Summary | Period | Net Income | Diluted EPS | | :--- | :--- | :--- | | **Q2 2025** | $7.7 million | $0.99 | | **Q2 2024** | $9.0 million | $1.13 | | **YTD 2025** | $15.7 million | $1.99 | | **YTD 2024** | $17.4 million | $2.20 | [Key Highlights](index=1&type=section&id=Key%20Highlights) Q2 2025 saw strong loan growth (3.2% to $2.58 billion) offset by a 2.4% deposit decrease to $2.55 billion, while the company managed capital through repurchases and maintained strong regulatory ratios Key Balance Sheet Changes (Q2 2025 vs Q1 2025) | Metric | Q2 2025 Value | QoQ Change | QoQ % Change | | :--- | :--- | :--- | :--- | | Loans receivable, net | $2.58 billion | +$81.2 million | +3.2% | | Total deposits | $2.55 billion | -$61.8 million | -2.4% | | Borrowings | $234.3 million | +$165.5 million | +240.5% | - Book value per share increased to **$39.55** at June 30, 2025, up from $39.12 at March 31, 2025, and $37.15 a year prior[4](index=4&type=chunk) - The Bank's regulatory capital ratios remained strong, with total risk-based capital at **14.1%** and Tier 1 leverage capital at **11.2%** as of June 30, 2025[5](index=5&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) Commercial and Consumer Banking remained the primary earnings driver with $7.4 million net income in Q2 2025, while Home Lending's contribution significantly decreased to $0.4 million due to lower noninterest income - The company operates through two reportable segments: Commercial and Consumer Banking, and Home Lending[6](index=6&type=chunk) Segment Net Income (Q2 2025 vs Q2 2024) | Segment | Q2 2025 Net Income | Q2 2024 Net Income | Change | | :--- | :--- | :--- | :--- | | Commercial & Consumer Banking | $7.4 million | $8.0 million | -$0.6 million | | Home Lending | $0.4 million | $1.0 million | -$0.6 million | Segment Net Income (YTD 2025 vs YTD 2024) | Segment | YTD 2025 Net Income | YTD 2024 Net Income | Change | | :--- | :--- | :--- | :--- | | Commercial & Consumer Banking | $15.2 million | $16.1 million | -$0.9 million | | Home Lending | $0.6 million | $1.3 million | -$0.7 million | [Operating Results](index=12&type=section&id=Operating%20Results) Net interest income increased to $32.1 million in Q2 2025 with a stable 4.30% NIM, but noninterest income declined by $0.7 million and noninterest expense rose by $1.6 million - Net interest income increased by **$1.7 million** YoY to **$32.1 million** for Q2 2025, primarily due to a **$2.6 million** increase in interest income from loans[23](index=23&type=chunk) - Net interest margin (NIM) was **4.30%** for Q2 2025, a slight increase from 4.29% in Q2 2024, reflecting higher yields on interest-earning assets[25](index=25&type=chunk) - The provision for credit losses was **$2.0 million** for Q2 2025, an increase from $1.1 million in Q2 2024, reflecting net loan growth and higher net charge-offs[27](index=27&type=chunk) - Total noninterest income decreased by **$698,000** YoY to **$5.2 million**, mainly due to a **$491,000** decrease in gain on sale of loans[29](index=29&type=chunk) - Total noninterest expense increased by **$1.6 million** YoY to **$25.5 million**, driven by higher salaries and benefits, operations expense, and professional fees[30](index=30&type=chunk) [Financial Position](index=5&type=section&id=Financial%20Position) [Asset Summary](index=5&type=section&id=Asset%20Summary) Total assets grew to $3.18 billion by June 30, 2025, up 4% QoQ and 8% YoY, primarily driven by increases in net loans receivable and available-for-sale securities Total Assets Growth | Date | Total Assets | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | **June 30, 2025** | $3,176.0 million | +4% | +8% | | **March 31, 2025** | $3,066.1 million | - | - | | **June 30, 2024** | $2,941.4 million | - | - | - The growth in assets was funded by a combination of on-balance sheet liquidity and a significant increase in borrowings[10](index=10&type=chunk) [Loan Portfolio Analysis](index=6&type=section&id=Loan%20Portfolio%20Analysis) The gross loan portfolio grew 5.1% YoY to $2.61 billion, led by Commercial Real Estate and Residential Real Estate, while the Consumer loan portfolio decreased [Overall Loan Portfolio Composition](index=6&type=section&id=Overall%20Loan%20Portfolio%20Composition) As of Q2 2025, the loan portfolio was led by Commercial Real Estate (35.0%) and Residential Real Estate (29.8%) Loan Portfolio Composition (June 30, 2025) | Loan Category | Amount | Percent of Total | | :--- | :--- | :--- | | Total CRE loans | $916.1 million | 35.0% | | Total residential real estate loans | $779.5 million | 29.8% | | Total consumer loans | $606.3 million | 23.2% | | Total commercial business loans | $312.5 million | 12.0% | | **Total gross loans receivable** | **$2,614.5 million** | **100.0%** | [Commercial Real Estate (CRE) & Construction Loans](index=7&type=section&id=Commercial%20Real%20Estate%20(CRE)%20%26%20Construction%20Loans) CRE portfolio growth was driven by a $79.9 million increase in construction loans, with total construction loans reaching $354.7 million, primarily from speculative residential construction - The CRE non-owner occupied portfolio's largest exposures are to Office (**$39.1M**) and Retail (**$38.7M**) properties[12](index=12&type=chunk) - Total construction loans increased to **$354.7 million** at June 30, 2025, up from $274.2 million at June 30, 2024, with speculative residential construction accounting for **56.5%** of the portfolio[13](index=13&type=chunk) [Residential Mortgage Originations](index=8&type=section&id=Residential%20Mortgage%20Originations) Q2 2025 one-to-four-family loan originations totaled $199.3 million (85.7% purchase activity), with $127.1 million sold, though gross margins on sales decreased One-to-Four-Family Loan Originations (Q2 2025) | Origination Type | Amount | % of Total | | :--- | :--- | :--- | | Purchase | $170.9 million | 85.7% | | Refinance | $28.5 million | 14.3% | | **Total** | **$199.3 million** | **100.0%** | - Loan sales volume increased to **$127.1 million** in Q2 2025 from $91.9 million in Q1 2025, attributed to seasonal homebuying activity[13](index=13&type=chunk) [Liabilities and Equity Summary](index=9&type=section&id=Liabilities%20and%20Equity%20Summary) Total deposits decreased by $61.8 million QoQ to $2.55 billion due to brokered CD reductions, while borrowings significantly increased by $165.5 million to fund asset growth, and equity slightly declined due to repurchases and dividends Deposit Composition (June 30, 2025) | Deposit Type | Amount | % of Total | | :--- | :--- | :--- | | Noninterest-bearing | $643.6 million | 25.2% | | Transactional & Savings | $721.7 million | 28.3% | | Certificates of deposit (CDs) | $1,177.6 million | 46.1% | | **Total Deposits** | **$2,553.4 million** | **100.0%** | - Uninsured deposits were estimated at **$677.2 million** at June 30, 2025, slightly down from $679.4 million at March 31, 2025[16](index=16&type=chunk) - The linked-quarter decrease in stockholders' equity was primarily due to **$5.1 million** in share repurchases and **$2.1 million** in cash dividends, partially offset by **$7.7 million** in net income[17](index=17&type=chunk) [Capital Adequacy](index=3&type=section&id=Capital%20Adequacy) Both the company and the bank remain 'well capitalized,' with the Bank's total risk-based capital ratio at 14.07% and Tier 1 leverage ratio at 11.18% as of June 30, 2025 Regulatory Capital Ratios (June 30, 2025) | Ratio | Bank | Company | | :--- | :--- | :--- | | Total risk-based capital | 14.07% | 14.16% | | Tier 1 leverage capital | 11.18% | 9.65% | | CET 1 capital | 12.82% | 11.07% | [Credit Quality](index=10&type=section&id=Credit%20Quality) [Allowance for Credit Losses (ACL)](index=10&type=section&id=Allowance%20for%20Credit%20Losses%20(ACL)) The Allowance for Credit Losses (ACL) on loans increased to $32.2 million in Q2 2025 due to a $1.7 million provision, partially offset by $1.2 million in net charge-offs, primarily from indirect consumer loans ACL on Loans to Total Gross Loans | Date | ACL to Gross Loans Ratio | | :--- | :--- | | **June 30, 2025** | 1.23% | | **March 31, 2025** | 1.25% | | **June 30, 2024** | 1.26% | - The ending ACL balance on loans was **$32.2 million**, with a provision of **$1.7 million** and net charge-offs (charge-offs less recoveries) of **$1.2 million** for Q2 2025[20](index=20&type=chunk) [Nonperforming and Criticized Loans](index=11&type=section&id=Nonperforming%20and%20Criticized%20Loans) Credit quality deteriorated as total nonperforming loans increased to $19.0 million, driven by a commercial construction loan and consumer delinquencies, with total criticized loans also rising to $24.9 million Trend in Nonperforming Loans (NPLs) | Date | Total NPLs | NPLs to Total Gross Loans | | :--- | :--- | :--- | | **June 30, 2025** | $19.0 million | 0.73% | | **March 31, 2025** | $14.5 million | 0.57% | | **June 30, 2024** | $11.4 million | 0.46% | - The increase in nonaccrual loans was partly driven by a single commercial construction loan, which contributed to a **$2.6 million** increase from the prior quarter[21](index=21&type=chunk) - Total criticized loans increased to **$24.9 million** at June 30, 2025, up from $23.5 million in the prior quarter and $24.3 million in the prior year[22](index=22&type=chunk) [Shareholder Information](index=1&type=section&id=Shareholder%20Information) [Dividends and Share Repurchases](index=1&type=section&id=Dividends%20and%20Share%20Repurchases) The company declared its 50th consecutive quarterly dividend of $0.28 per share plus a $0.22 special dividend, while repurchasing 132,282 shares and approving a new $5.0 million repurchase plan - The Board of Directors approved the **50th consecutive quarterly cash dividend** of **$0.28** per common share[3](index=3&type=chunk) - A special dividend of **$0.22** per common share was also approved, both payable on August 21, 2025, to shareholders of record as of August 7, 2025[3](index=3&type=chunk) Q2 2025 Share Repurchase Activity | Metric | Value | | :--- | :--- | | Shares Repurchased | 132,282 | | Average Price | $38.92 | | Remaining Authorization (Existing Plan) | $725,000 | | New Repurchase Plan Authorization | $5.0 million | [Per Share Data](index=1&type=section&id=Per%20Share%20Data) Diluted EPS for Q2 2025 was $0.99, a decrease from prior periods, while book value per share grew to $39.55 and tangible book value per share reached $37.46 Per Share Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Diluted EPS | $0.99 | $1.01 | $1.13 | | Book Value Per Share | $39.55 | $39.12 | $37.15 | | Tangible Book Value Per Share | $37.46 | $36.96 | $34.66 | [Appendix](index=15&type=section&id=Appendix) [Consolidated Financial Statements](index=15&type=section&id=Consolidated%20Financial%20Statements) The appendix contains unaudited Consolidated Balance Sheets, Statements of Income, Key Financial Ratios, and Average Balance data for relevant periods - The appendix contains the Consolidated Balance Sheets[34](index=34&type=chunk)[35](index=35&type=chunk) - The appendix contains the Consolidated Statements of Income[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The appendix includes Key Financial Ratios and Average Balance data[40](index=40&type=chunk)[45](index=45&type=chunk) [Non-GAAP Financial Measures](index=20&type=section&id=Non-GAAP%20Financial%20Measures) The company presents non-GAAP financial measures like tangible book value per share and tangible common equity ratio, excluding intangible assets, with full reconciliation to GAAP measures - The company uses non-GAAP measures such as tangible book value per share and tangible common equity ratio, which exclude goodwill and other intangible assets[46](index=46&type=chunk) Reconciliation of GAAP to Non-GAAP Equity (June 30, 2025) | Metric | Amount | | :--- | :--- | | Stockholders' equity (GAAP) | $297.2 million | | Less: goodwill and core deposit intangible | ($15.7 million) | | **Tangible common stockholders' equity (non-GAAP)** | **$281.5 million** |

Core Viewpoint - FS Bancorp, Inc. reported a decline in net income for the second quarter of 2025, reflecting challenges in the banking sector while maintaining a commitment to shareholder value through dividends and share repurchase activities [1][3]. Financial Performance - The company reported a net income of $7.7 million, or $0.99 per diluted share, for Q2 2025, down from $9.0 million, or $1.13 per diluted share, in Q2 2024 [1]. - For the first half of 2025, net income was $15.7 million, or $1.99 per diluted share, compared to $17.4 million, or $2.20 per diluted share, in the same period of 2024 [1]. Balance Sheet and Asset Growth - Total assets increased by $109.9 million, or 4%, to $3.176 billion as of June 30, 2025, compared to $3.066 billion at March 31, 2025, and $2.941 billion at June 30, 2024 [12]. - Loans receivable, net increased by $81.2 million, or 3.2%, to $2.58 billion at June 30, 2025, compared to $2.50 billion at March 31, 2025, and $2.46 billion at June 30, 2024 [7]. Segment Reporting - The Commercial and Consumer Banking segment generated a net income of $7.4 million, while the Home Lending segment contributed $351,000 for Q2 2025 [7]. - Net interest income for the Commercial and Consumer Banking segment was $29.2 million, and for Home Lending, it was $2.9 million for Q2 2025 [6]. Dividends and Share Repurchase - The Board of Directors approved a cash dividend of $0.28 per common share and a special dividend of $0.22 per common share, marking the 50th consecutive quarterly cash dividend [3]. - The company repurchased 132,282 shares at an average price of $38.92 per share during Q2 2025, with a remaining authorization of $725,000 for future purchases [7]. Deposits and Borrowings - Total deposits decreased by $61.8 million, or 2.4%, to $2.55 billion at June 30, 2025, primarily due to a decrease in brokered deposits [7]. - Borrowings increased significantly by $165.5 million, or 240.5%, to $234.3 million at June 30, 2025, compared to $68.8 million at March 31, 2025 [7]. Loan Composition - The total loan portfolio reached $2.614 billion, with commercial and industrial loans accounting for $312.5 million, and residential real estate loans totaling $779.5 million as of June 30, 2025 [14][15]. - Consumer loans decreased by $2.6 million, or 0.4%, to $606.3 million at June 30, 2025, compared to the previous quarter [7].

Core Points - FS Bancorp, Inc. reported a net income of $7.7 million for Q2 2025, a decrease from $9.0 million in Q2 2024, and a net income of $15.7 million for the first half of 2025, down from $17.4 million in the same period last year [1][7][9] - The company experienced a decrease in total deposits by $61.8 million, or 2.4%, to $2.55 billion compared to the previous quarter, but an increase of $170.6 million, or 7.2%, from the same quarter last year [7] - The company’s loan receivable, net increased by $81.2 million, or 3.2%, to $2.58 billion compared to the previous quarter, and increased by $125.1 million, or 5.1%, from the same quarter last year [7] - The company repurchased 132,282 shares of common stock at an average price of $38.92 per share, with a remaining authorization of $725,000 for future purchases [7] - The Board of Directors approved a cash dividend of $0.28 per common share and a special dividend of $0.22 per common share, marking the 50th consecutive quarterly cash dividend [3] Financial Performance - Net interest income for the Commercial and Consumer Banking segment was $29.2 million, while the Home Lending segment reported $2.9 million for Q2 2025 [8] - The provision for credit losses was $(1.8) million for the Commercial and Consumer Banking segment and $(0.2) million for the Home Lending segment [8] - Noninterest income totaled $5.2 million, with noninterest expenses at $25.5 million for the quarter [8] Segment Reporting - The Commercial and Consumer Banking segment generated a net income of $7.4 million, while the Home Lending segment contributed $351,000 for Q2 2025 [7][8] - Total average assets for the Commercial and Consumer Banking segment were $2.47 billion, and for the Home Lending segment, $649.4 million [8] - The company operates through two segments: Commercial and Consumer Banking, and Home Lending, providing a range of financial products and services [5] Asset Summary - Total assets increased by $109.9 million, or 4%, to $3.18 billion compared to the previous quarter, and by $234.6 million, or 8%, from the same period last year [14] - Loans receivable, net increased to $2.58 billion, reflecting a focus on balance sheet growth through loan origination [14][16] - The company’s regulatory capital ratios were 14.1% for total risk-based capital and 11.2% for Tier 1 leverage capital as of June 30, 2025 [7]

Core Viewpoint - FS Bancorp, Inc. has promoted May-Ling Sowell to Chief Compliance Officer, SVP, reflecting the company's commitment to regulatory compliance and internal governance [1]. Company Overview - 1st Security Bank of Washington operates twenty-seven branches across Washington and Oregon, providing loan and deposit services, as well as mortgage services at each branch and lending offices in the Pacific Northwest [5]. Leadership Background - May-Ling Sowell has over three decades of experience in banking, having served as Compliance Officer at 1st Security Bank since November 2006 and previously worked as a private consultant [3][4]. - She obtained her Certified Regulatory Compliance Manager designation in 2012, indicating her expertise in regulatory compliance [3]. Responsibilities in New Role - In her new position, May-Ling Sowell will lead a team focused on the Bank's regulatory compliance system, security, and internal compliance training [4].

Company Overview - FS Bancorp (FSBW) is anticipated to report a year-over-year decline in earnings of 14.2%, with expected earnings of $0.97 per share for the quarter ended June 2025 [3][11] - Revenue is projected to be $36.5 million, reflecting a slight increase of 0.6% from the previous year [3] Earnings Expectations - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4] - The Most Accurate Estimate for FS Bancorp is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +3.45%, suggesting a likelihood of beating the consensus EPS estimate [11] Historical Performance - In the last reported quarter, FS Bancorp exceeded the expected earnings of $0.93 per share by delivering $1.01, resulting in a surprise of +8.60% [12] - Over the past four quarters, the company has surpassed consensus EPS estimates three times [13] Industry Comparison - Preferred Bank (PFBC), another player in the Zacks Banks - West industry, is expected to report earnings of $2.43 per share, indicating a year-over-year decline of 2% [17] - Preferred Bank's revenue is projected at $70.15 million, up 0.9% from the previous year [17] - The consensus EPS estimate for Preferred Bank has been revised up by 1.9% over the last 30 days, but it currently has a negative Earnings ESP of -1.03%, making it challenging to predict an earnings beat [18]

Financial Position - Total assets increased by $36.9 million to $3.07 billion at March 31, 2025, from $3.03 billion at December 31, 2024[185]. - Total liabilities increased by $33.8 million to $2.77 billion at March 31, 2025, primarily due to a $275.7 million increase in deposits[192]. - Total deposits rose to $2.62 billion at March 31, 2025, up from $2.34 billion at December 31, 2024, reflecting increases across all deposit categories[193]. - Certificates of deposit (CDs) increased by $204.4 million to $1.23 billion at March 31, 2025, with non-retail CDs representing 28.5% of total CDs[194]. - Uninsured deposits were approximately $679.4 million or 26.0% of total deposits at March 31, 2025, down from $652.7 million or 27.9% at December 31, 2024[197]. - Book value per common share was $39.12 at March 31, 2025, compared to $38.26 at December 31, 2024[200]. Loan Portfolio - The loan portfolio composition at March 31, 2025, included commercial real estate loans (34.5%), residential real estate loans (30.0%), consumer loans (24.0%), and commercial business loans (11.5%)[177]. - The Company funded $26.9 million in fixture-secured consumer loans during the quarter ended March 31, 2025, consisting of 1,232 loans[178]. - One-to-four-family loan originations for the three months ended March 31, 2025, totaled $145.4 million, a decrease of 5.6% compared to $153.9 million for the same period in 2024[189]. - The Company originated $141.4 million of one-to-four-family loans during the three months ended March 31, 2025, with $91.9 million sold to investors[179]. - Total undisbursed construction and development loan commitments increased by $11.3 million to $185.4 million at March 31, 2025[186]. - Loans held for sale increased by $3.2 million to $31.0 million at March 31, 2025, from $27.8 million at December 31, 2024[187]. - The allowance for credit losses (ACL) on loans was $31.7 million or 1.25% of gross loans receivable at March 31, 2025, compared to $31.9 million or 1.26% at December 31, 2024[190]. - Classified loans totaled $23.5 million at March 31, 2025, an increase from $22.9 million at December 31, 2024, with nonperforming loans rising to $14.5 million from $13.6 million[191]. Income and Expenses - Net income for the three months ended March 31, 2025, was $8.0 million, a decrease from $8.4 million for the same period in 2024, primarily due to a $1.5 million increase in noninterest expense[201]. - Net interest income increased by $636,000 to $31.0 million for the three months ended March 31, 2025, driven by a $1.9 million increase in interest income[206]. - Interest income for Q1 2025 increased by $1.9 million to $46.8 million, driven by a $2.3 million rise in interest income on loans receivable[208]. - Interest expense rose by $1.3 million to $15.8 million in Q1 2025, primarily due to a $1.1 million increase in borrowing costs[211]. - Noninterest expense increased by $1.5 million to $25.1 million in Q1 2025, mainly due to higher salaries and benefits[217]. - The efficiency ratio weakened to 69.39% in Q1 2025 from 66.36% in Q1 2024, indicating that noninterest expense growth outpaced revenue growth[218]. Capital and Regulatory Compliance - The Bank maintained a Tier 1 leverage-based capital ratio of 11.3% and was considered "well capitalized" as of March 31, 2025[232]. - FS Bancorp has exceeded all applicable regulatory capital requirements as of March 31, 2025[233]. - The regulatory capital ratios for FS Bancorp at March 31, 2025 are 9.9% for Tier 1 leverage-based capital, 11.5% for Tier 1 risk-based capital, 14.7% for total risk-based capital, and 11.5% for CET 1 capital ratio[233]. Market Risk and Strategic Focus - The Company’s strategic focus includes growing and diversifying the loan portfolio and expanding into new markets[176]. - There have been no material changes in the market risk disclosures contained in FS Bancorp's 2024 Form 10-K[234].

Core Insights - FS Bancorp (FSBW) reported revenue of $36.11 million for the quarter ended March 2025, marking a year-over-year increase of 1.8% and exceeding the Zacks Consensus Estimate of $35 million by 3.17% [1] - The company's EPS for the same period was $1.01, down from $1.06 a year ago, but it surpassed the consensus EPS estimate of $0.93 by 8.60% [1] Financial Performance Metrics - Net Interest Margin was reported at 4.3%, matching the average estimate from two analysts [4] - Efficiency Ratio stood at 69.4%, slightly above the estimated 69% by two analysts [4] - Total Non-Interest Income was $5.13 million, exceeding the average estimate of $4.95 million from two analysts [4] - Net Interest Income was reported at $30.98 million, slightly below the average estimate of $31.05 million from two analysts [4] Stock Performance - FS Bancorp's shares have returned -0.9% over the past month, compared to a -8.9% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]