Acquisition and Growth - The Company completed the acquisition of seven retail bank branches from Columbia State Bank, adding approximately $425.5 million in deposits and $66.1 million in loans[26]. - Total deposits increased by $334,224 thousand, or 14.29%, to $2,673,642 thousand at December 31, 2025, from $2,339,418 thousand in 2024[114]. - The company reported a net increase in brokered deposits of $219,137 thousand in 2025, compared to a decrease of $288,225 thousand in 2024[114]. Loan Portfolio - As of December 31, 2025, the total loans amounted to $2.131 billion, with $1.298 billion in fixed interest rate loans and $832.9 million in adjustable rate loans[39]. - The Company’s commercial real estate (CRE) loans totaled $969.5 million, representing 36.5% of the gross loan portfolio[45]. - The largest lending relationship at December 31, 2025, totaled $37.2 million, consisting of two multi-family real estate loans[43]. - The Company has a diversified lending strategy, focusing on various types of loans including commercial real estate, multi-family, and consumer loans[37]. - The Company’s internal lending limit is set at $35 million, with any loans exceeding this amount requiring Board approval[43]. - As of December 31, 2025, total outstanding construction and development loans amounted to $396.5 million, representing 14.9% of the gross loan portfolio, an increase from $330.7 million in 2024[50][51]. - The largest single commercial or multi-family real estate loan at December 31, 2025, was a performing $20.1 million loan secured by a 159-unit apartment building in Tacoma, Washington[48]. - The Company originated $739.5 million of one-to-four-family mortgages in 2025, with $555.2 million sold to investors, including $209.1 million sold to government-sponsored entities[61]. - Total outstanding second lien mortgage and home equity loans reached $88.3 million, or 3.3% of the gross loan portfolio, at December 31, 2025[60]. - The Company's residential speculative construction lending program includes loans for both speculative and pre-sold one-to-four-family residences, with a maximum loan amount of 95% of cost or 75% of appraised value[52]. - Indirect home improvement loans totaled $525.8 million, or 19.8% of gross loans, and 88.1% of total consumer loans at December 31, 2025[64]. - The commercial business loan portfolio totaled $329.3 million, representing 12.4% of the gross loan portfolio as of December 31, 2025[72]. Credit Quality and Risk Management - The allowance for credit losses (ACL) on loans was $31.9 million, or 1.20% of gross loans receivable, as of December 31, 2025, compared to 1.26% in 2024[101]. - The provision for credit losses on loans for the year ended December 31, 2025, was $9.0 million, an increase from $5.6 million in 2024[100]. - Nonaccrual loans as a percentage of total loans outstanding increased to 0.71% in 2025 from 0.54% in 2024[104]. - The Company experienced net charge-offs of $8.9 million for the year ended December 31, 2025, compared to $5.3 million in 2024[104]. - The ACL on loans as a percentage of nonaccrual loans at year end was 170.59% in 2025, down from 234.55% in 2024[104]. - The most significant qualitative adjustment in 2025 was related to elevated reserves for commercial construction and consumer lending due to higher levels of past due and nonperforming loans[101]. - The Company classified an additional $10.5 million of assets as special mention as of December 31, 2025[93]. - Management remains vigilant regarding the adequacy of the ACL, recognizing potential increases due to declining economic conditions[102]. Market and Economic Conditions - The unemployment rate in Washington was estimated at 4.7% as of December 31, 2025, slightly above the national average of 4.4%[35]. - The primary market area for the Company includes the Seattle-Tacoma-Bellevue MSA, which has a diverse economy supported by major industries such as aerospace and technology[30]. Capital and Regulatory Compliance - As of December 31, 2025, 1st Security Bank's total risk-based capital ratio was 13.96%, exceeding the required minimum of 8.00%[163]. - The Tier 1 risk-based capital ratio was 12.73%, above the minimum requirement of 6.00%[163]. - The Common Equity Tier 1 (CET1) capital ratio stood at 12.73%, surpassing the minimum of 4.50%[163]. - The Bank was categorized as "well capitalized" under FDIC regulations as of December 31, 2025[163]. - The capital conservation buffer required is an additional 2.5% of risk-weighted assets above the minimum capital ratios[161]. - The Bank paid $24.0 million in dividends to the holding company in 2025[174]. Employee and Workplace Culture - The company hired 95 new employees in 2025, increasing the total employee count to 581 as of December 31, 2025[147]. - Volunteer hours increased to approximately 9,500 hours in 2025, up from about 6,000 hours in 2024[148]. - The employee turnover rate decreased to 17.5% in 2025 from 19% in 2024[150]. - Employee health benefits have not increased in contribution costs since 2014, and the company offers a 401k match of up to 5% of contributions[149]. - The company provides education reimbursement of up to $5,000 per year for accredited programs[149]. - The workforce composition shows 68% female representation among individual contributors and managers[146]. - The average tenure for management positions is eight years and two months[146]. - 91.4% of employees reside in Washington State, with the remaining in Oregon, Arizona, Idaho, Colorado, and Texas[150]. - The company has a commitment to a balanced work/life schedule and offers flexible working arrangements[144]. - The company emphasizes a diverse workplace, with 1% Alaska Native or American Indian, 12% Asian, 2% Black, 11% Hispanic/Latino, and 69% White employees[146]. Regulatory Environment - FS Bancorp is subject to comprehensive regulation by the Federal Reserve and must file quarterly and annual reports, ensuring it operates in a safe and sound manner[187]. - The Federal Reserve has established minimum regulatory capital requirements for bank holding companies with consolidated assets exceeding $3.0 billion[191]. - The Gramm-Leach-Bliley Act requires 1st Security Bank to disclose its privacy policy and inform consumers of their rights regarding information sharing[180]. - The SEC adopted rules in July 2023 requiring registrants to disclose material cybersecurity incidents and annual information on cybersecurity risk management[182]. - The Dodd-Frank Act established the CFPB, which oversees consumer protection regulations applicable to 1st Security Bank, although its enforcement activities have been significantly scaled back[185]. - Noncompliance with federal or state privacy and cybersecurity laws could lead to substantial regulatory fines and reputational harm for 1st Security Bank[181].

Core Viewpoint - FS Bancorp and Pacific West Bancorp have signed a definitive merger agreement valued at approximately $34.6 million, which will enhance FS Bancorp's presence in the Pacific Northwest and expand its customer base [1][3]. Company Overview - FS Bancorp, Inc. is the holding company for 1st Security Bank of Washington, offering a range of loan and deposit services primarily to small- and middle-market businesses and individuals in Washington and Oregon, operating through 27 branches [7]. - Pacific West Bancorp is the holding company for Pacific West Bank, which serves the Greater Portland metropolitan area with approximately $386 million in assets and four branch locations [2][8]. Merger Details - The merger will involve an aggregate consideration of 430,176 shares of FS Bancorp common stock and $16,832,742 in cash, with a total value of $34.6 million, equating to approximately $12.52 per share for Pacific West shareholders [3][4]. - Upon completion, Pacific West shareholders will hold about 5.4% of FS Bancorp's outstanding common stock [3]. Financial Impact - The transaction is expected to be immediately accretive to FS Bancorp's earnings per share, with a projected EPS accretion of 7.4% for 2027 [4]. - The merger is anticipated to be dilutive to FS Bancorp's tangible book value, with a projected TBV dilution of 2.2% and an earnback period of approximately 2.4 years [4]. Approval and Timeline - The boards of directors of both companies have unanimously approved the merger, which is expected to close in the third quarter of 2026, pending approval from Pacific West's shareholders and bank regulatory authorities [5].

Core Insights - FS Bancorp, Inc. announced the appointment of Matthew Mullet, CEO of 1st Security Bank, to the Seattle Branch Board of Directors for the Federal Reserve Bank of San Francisco [1][3] Group 1: Company Overview - 1st Security Bank of Washington provides loan and deposit services through its twenty-seven branches located in Washington and Oregon, offering mortgage services, commercial lending, and treasury management services [6] Group 2: Leadership Appointment - Matthew Mullet expressed honor in being appointed to the SF Fed's Seattle Branch Board, emphasizing the importance of influencing monetary policy for community banks and their customers [5] - Mullet has been with 1st Security Bank since 2011, previously serving as Chief Financial Officer before becoming CEO in 2025 [5]

Financial Performance - FS Bancorp reported revenue of $40.01 million for the quarter ended December 2025, marking a year-over-year increase of 12% [1] - The earnings per share (EPS) for the same period was $1.10, compared to $0.92 a year ago, indicating growth [1] - The reported revenue exceeded the Zacks Consensus Estimate of $38.65 million by 3.52%, while the EPS fell short of the consensus estimate of $1.13 by 2.37% [1] Key Metrics - The net interest margin was reported at 4.4%, matching the average estimate from two analysts [4] - The efficiency ratio was 65.1%, slightly better than the average estimate of 65.6% from two analysts [4] - Total non-interest income was $6.39 million, surpassing the average estimate of $4.85 million based on two analysts [4] - Net interest income was reported at $33.62 million, slightly below the average estimate of $33.85 million from two analysts [4] Stock Performance - FS Bancorp shares have returned +3% over the past month, outperforming the Zacks S&P 500 composite, which saw a change of +0.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - FS Bancorp reported quarterly earnings of $1.1 per share, missing the Zacks Consensus Estimate of $1.13 per share, but showing an increase from $0.92 per share a year ago, indicating a -2.37% earnings surprise [1] Group 1: Earnings Performance - FS Bancorp surpassed consensus EPS estimates three times over the last four quarters [2] - The company posted revenues of $40.01 million for the quarter ended December 2025, exceeding the Zacks Consensus Estimate by 3.52%, compared to $35.72 million in the same quarter last year [2] - FS Bancorp has topped consensus revenue estimates four times over the last four quarters [2] Group 2: Stock Performance and Outlook - FS Bancorp shares have increased about 1% since the beginning of the year, while the S&P 500 has declined by 0.7% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $1.02 for the coming quarter and $4.54 for the current fiscal year [4][7] - The Zacks Rank for FS Bancorp is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Group 3: Industry Context - The Banks - West industry, to which FS Bancorp belongs, is currently in the top 31% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact FS Bancorp's stock performance [5]

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]