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]

Financial Performance - Net income for the first quarter of 2025 was $8.0 million, or $1.01 per diluted share, compared to $8.4 million, or $1.06 per diluted share, in the same quarter last year[1]. - Net income for the quarter was $8,021, representing a 9% increase compared to $7,382 in the same quarter last year[38]. - Basic earnings per share increased to $1.02, up 9% from $0.94 in the prior year[39]. - Return on assets improved to 1.07% for the quarter, compared to 0.98% in the previous quarter[39]. - The efficiency ratio for the quarter was 69.39%, compared to 66.36% in the same quarter last year[39]. Deposits and Assets - Total deposits increased by $275.7 million, or 11.8%, to $2.62 billion at March 31, 2025, driven by a $226.9 million increase in brokered deposits[4]. - Total deposits increased to $2.62 billion at March 31, 2025, reflecting an 11.8% increase from $2.34 billion at December 31, 2024[16]. - Total assets increased by $36.9 million, or 1.2%, to $3.07 billion at March 31, 2025, compared to $3.03 billion at December 31, 2024[8]. - Total assets as of March 31, 2025, were $3,032,512, reflecting a $73,965 increase from the previous quarter[44]. - Interest-bearing accounts increased by 14% to $1,938,445 thousand as of March 31, 2025, compared to $1,701,260 thousand in the same period last year[36]. Loans and Credit Quality - Loans receivable, net remained virtually unchanged at $2.50 billion at March 31, 2025, but increased by $85.7 million, or 3.5%, from $2.42 billion at March 31, 2024[4]. - Consumer loans decreased by $11.3 million, or 1.8%, to $608.9 million at March 31, 2025, compared to $620.2 million in the previous quarter[4]. - Nonperforming loans increased to $14.5 million at March 31, 2025, up from $13.6 million at December 31, 2024[25]. - Nonperforming loans to total gross loans increased to 0.57%, up from 0.49% in the same quarter last year[39]. - The allowance for credit losses on loans was $31.7 million, or 1.25% of gross loans receivable, at March 31, 2025[25]. Capital and Equity - Total stockholders' equity increased to $298.8 million at March 31, 2025, from $295.8 million at December 31, 2024[22]. - The company maintained a total risk-based capital ratio of 14.4% at March 31, 2025, exceeding regulatory requirements[23]. - Tangible book value per share increased to $36.96, up from $36.02 in the previous quarter[48]. Income and Expenses - Net interest income increased by $636,000 to $31.0 million for Q1 2025, driven by a $1.9 million increase in total interest income[27]. - The net interest margin (NIM) increased to 4.32% for Q1 2025, up from 4.26% in the same period last year[28]. - Total noninterest income remained unchanged at $5.1 million for the three months ended March 31, 2025, while total noninterest expense rose to $25.0 million from $23.5 million in the same period last year, driven by a $976,000 increase in salaries and benefits[31]. - The company reported a total interest expense of $15,806, a 9% increase from $14,534 in the prior year[38]. Market and Economic Conditions - The company anticipates potential adverse impacts from economic conditions, including inflation and changes in interest rates, which could affect revenues and expenses[33]. - Management noted challenges in expanding into new geographic markets and the potential for increased competitive pressures affecting market position[33].

Core Viewpoint - FS Bancorp, Inc. reported a net income of $8.0 million for the first quarter of 2025, reflecting a slight decrease compared to the same quarter last year, while deposit growth exceeded expectations, positioning the bank well for future loan opportunities [1][2]. Financial Performance - Net income for Q1 2025 was $8.0 million, or $1.01 per diluted share, compared to $8.4 million, or $1.06 per diluted share, in Q1 2024 [1]. - Total deposits increased by $275.7 million, or 11.8%, reaching $2.62 billion as of March 31, 2025, driven primarily by a $226.9 million increase in brokered deposits [6][17]. - Borrowings decreased significantly by $239.0 million, or 77.6%, to $68.8 million at March 31, 2025, compared to $307.8 million at December 31, 2024 [6][22]. Segment Reporting - The Commercial and Consumer Banking segment generated a net income of $7.8 million, while the Home Lending segment contributed $241,000 in net income for Q1 2025 [6]. - The total average assets for the period ended March 31, 2025, were $3.03 billion, reflecting an increase from $2.97 billion at March 31, 2024 [10]. Loan Portfolio - Loans receivable, net remained stable at $2.50 billion as of March 31, 2025, with a slight increase of $85.7 million, or 3.5%, from $2.42 billion at March 31, 2024 [6][11]. - Consumer loans decreased by $11.3 million, or 1.8%, to $608.9 million at March 31, 2025, compared to $620.2 million in the previous quarter [6][11]. Shareholder Returns - The Board of Directors approved a cash dividend of $0.28 per common share, marking the forty-ninth consecutive quarterly dividend, to be paid on May 22, 2025 [3]. - The company repurchased 98,317 shares of common stock at an average price of $39.06 per share during Q1 2025, with an additional $5.0 million authorized for future repurchases [6][23]. Capital and Equity - Total stockholders' equity increased by $3.1 million to $298.8 million at March 31, 2025, compared to $295.8 million at December 31, 2024 [23]. - Book value per share rose to $39.12 at March 31, 2025, up from $38.26 at December 31, 2024, and $36.06 at March 31, 2024 [23].

Core Insights - FS Bancorp, Inc. has appointed Phillip Whittington as Chief Financial Officer effective May 1, 2025, while Matthew D. Mullet continues as President [1][2] - Joe Adams, the Bank's CEO, expressed confidence in Whittington's qualifications for the CFO role due to his extensive knowledge in accounting and financial reporting [2] Company Overview - 1st Security Bank of Washington provides a variety of loan and deposit services primarily targeting small- and middle-market businesses and individuals in Washington and Oregon [3] - The Bank operates through twenty-seven branches and one headquarters office, with additional loan production offices in suburban communities of the greater Puget Sound area, Tri-Cities, and Vancouver, Washington [3] - The Bank also services home mortgage customers throughout the Northwest, predominantly in Washington State [3]

Loan Portfolio and Lending Activities - As of December 31, 2024, the total loan portfolio amounted to $2.1 billion, with $1.27 billion in fixed-rate loans and $831.7 million in adjustable-rate loans[41]. - Commercial real estate (CRE) loans totaled $590.5 million, representing 23.3% of the gross loan portfolio, including $245.2 million in multi-family residential loans[47]. - The Company has a lending authority limit of $35 million, with the largest lending relationship at $42.6 million, secured by multi-family real estate property[45]. - The Company originated $715.7 million of one-to-four-family mortgages in 2024, with $564.8 million sold to investors[64]. - One-to-four-family residential mortgage loans represented 24.4% of the gross loan portfolio, totaling $617.3 million as of December 31, 2024[64]. - The commercial business loan portfolio totaled $299.9 million, or 11.7% of the gross loan portfolio, as of December 31, 2024[75]. - The total outstanding construction and development loans increased to $330.7 million in 2024, up from $303.1 million in 2023, representing an increase of 9.1%[53]. - The construction and development loan portfolio totaled $330.7 million, accounting for 13.1% of the total gross loan portfolio, with $223.3 million allocated to speculative residential projects[218]. - The Company processed approximately 162 loans and funded about $85.6 million under its mortgage warehouse lending program during the year ended December 31, 2024[77]. - The residential mortgage warehouse lending program had an outstanding balance of $2.2 million as of December 31, 2024, compared to $573,000 at the end of 2023[223]. Financial Performance and Credit Quality - Total loans originated in 2024 amounted to $1,304,785,000, an increase of 7.4% from $1,214,485,000 in 2023[85]. - The allowance for credit losses (ACL) on loans was $31.9 million, or 1.26% of gross loans receivable, as of December 31, 2024, compared to $31.5 million, or 1.30% in 2023[105]. - The provision for credit losses on loans for 2024 was $5.6 million, slightly down from $5.8 million in 2023, attributed to an increase in net charge-offs[105]. - Total net charge-offs for the year were $5,299 thousand, compared to $2,228 thousand in 2023, reflecting a 138.5% increase[108]. - Nonaccrual loans as a percentage of total loans outstanding increased to 0.54% in 2024 from 0.45% in 2023[108]. - The percentage of ACL on loans as a percentage of nonaccrual loans decreased to 234.32% in 2024 from 287.93% in 2023[108]. - The allocation of ACL for real estate loans was $14,441 thousand, accounting for 63.8% of total loans in 2024[109]. - The Company enhanced its stress testing to mitigate interest rate reset risk, focusing on borrowers' abilities to absorb higher interest rates[90]. Deposits and Funding Sources - Total deposits decreased by $182.9 million, or 7.25%, to $2.339 billion as of December 31, 2024, compared to $2.522 billion in 2023[119]. - Brokered deposits decreased by $288.2 million, with total brokered deposits accounting for 6.1% of total deposits at $143.4 million as of December 31, 2024[117][119]. - Approximately $652.7 million of the deposit portfolio was uninsured as of December 31, 2024, indicating a significant portion of deposits exceeding FDIC insurance limits[121]. - The company’s total transaction and savings deposits were $1.311 billion, representing 56.02% of total deposits as of December 31, 2024[119]. - The company’s interest credited on deposits increased to $53.2 million in 2024 from $36.8 million in 2023[119]. - The company plans to consider additional leverage strategies within regulatory requirements to fund loan originations and increase net interest income[124]. Regulatory Compliance and Capital Ratios - The Company is regulated by the Washington State Department of Financial Institutions and the Federal Deposit Insurance Corporation[29]. - At December 31, 2024, 1st Security Bank's total risk-based capital ratio was 14.18%, exceeding the required minimum of 8.00%[167]. - The Tier 1 risk-based capital ratio was 12.93%, above the required minimum of 6.00%[167]. - The CET1 capital ratio stood at 12.93%, surpassing the minimum requirement of 4.50%[167]. - 1st Security Bank was categorized as "well capitalized" under the prompt corrective action regulations of the FDIC as of December 31, 2024[171]. - The capital conservation buffer required for 1st Security Bank is an additional CET1 capital greater than 2.5% of risk-weighted assets[165]. - The Federal Reserve requires all depository institutions to maintain reserves at specified levels, and 1st Security Bank was in compliance with these requirements as of December 31, 2024[188]. Employee and Community Engagement - The company has hired 118 new employees in 2024, increasing the total employee count to 567 as of December 31, 2024[152]. - Employee health benefits have not increased in employee contribution costs since 2014, demonstrating a commitment to employee welfare[148]. - The company provided approximately 6,000 volunteer hours in both 2024 and 2023, reflecting its dedication to community engagement[153]. - The 401k plan matches up to the first 5% of contributions for up to 4% of total salary, enhancing employee retirement benefits[148]. - The average tenure for management positions is eight years and two months, indicating stability within the leadership team[151]. - The company emphasizes a flexible work schedule to support work-life balance for employees[149]. Market Position and Competition - The Company focuses on relationship lending and aims to capitalize on new lending opportunities arising from recent market consolidations[39]. - The company faces strong competition in real estate loans from various financial institutions and aims to differentiate through high-quality, personalized service[132]. - As of June 30, 2024, 1st Security Bank holds a 1% share of aggregate deposits in its market area across 12 counties[133]. Risk Management - Risks associated with commercial and multi-family loans include higher delinquency rates and the need for detailed collateral evaluations[215]. - The company’s construction loans often include interest reserves, allowing borrowers to defer payments, which increases repayment risk[219]. - The commercial and industrial business loans are primarily based on borrower cash flow, which may be unpredictable, increasing credit risk[217]. - FS Bancorp's loan portfolio is predominantly secured by real estate, which may be adversely affected by economic downturns, impacting borrowers' repayment capabilities[206].

Core Viewpoint - FS Bancorp reported a decline in revenue and earnings per share (EPS) for the quarter ended December 2024, missing both revenue and EPS estimates [1][3]. Financial Performance - Revenue for the quarter was $35.72 million, down 0.5% year-over-year, and below the Zacks Consensus Estimate of $36.95 million, resulting in a surprise of -3.32% [1]. - EPS was reported at $0.92, a decrease from $1.23 in the same quarter last year, and also below the consensus estimate of $1.04, leading to an EPS surprise of -11.54% [1]. - Net Interest Margin was 4.3%, slightly below the average estimate of 4.4% from two analysts [4]. - The Efficiency Ratio was reported at 68.2%, higher than the average estimate of 65.6% from two analysts [4]. - Total Non-Interest Income was $4.61 million, compared to the average estimate of $5.45 million [4]. - Net Interest Income was $31.11 million, slightly below the average estimate of $31.50 million [4]. Stock Performance - Over the past month, shares of FS Bancorp have returned -2.4%, contrasting with the Zacks S&P 500 composite's increase of +1.2% [3]. - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3].

Group 1 - FS Bancorp reported quarterly earnings of $0.92 per share, missing the Zacks Consensus Estimate of $1.04 per share, and down from $1.23 per share a year ago, representing an earnings surprise of -11.54% [1] - The company posted revenues of $35.72 million for the quarter, missing the Zacks Consensus Estimate by 3.32%, and down from $35.91 million year-over-year [2] - FS Bancorp has surpassed consensus EPS estimates three times over the last four quarters, indicating some volatility in earnings performance [2] Group 2 - The stock has underperformed the market, losing about 0.8% since the beginning of the year compared to the S&P 500's gain of 2% [3] - The current consensus EPS estimate for the coming quarter is $1.02 on revenues of $37 million, and for the current fiscal year, it is $4.45 on revenues of $154.1 million [7] - The Zacks Industry Rank for Banks - West is in the top 28% of over 250 Zacks industries, suggesting a favorable outlook for the industry [8]