Company Performance - FS Bancorp reported quarterly earnings of $1.29 per share, exceeding the Zacks Consensus Estimate of $1.15 per share, and up from $1.13 per share a year ago, representing an earnings surprise of 12.17% [1] - The company posted revenues of $37.21 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.30%, and an increase from $35.62 million year-over-year [1] - FS Bancorp has consistently surpassed consensus EPS and revenue estimates over the last four quarters [1] Stock Performance - FS Bancorp shares have increased approximately 15.6% since the beginning of the year, while the S&P 500 has gained 22.7% [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.17 on revenues of $37.2 million, and for the current fiscal year, it is $4.44 on revenues of $141.7 million [4] - The estimate revisions trend for FS Bancorp is mixed, and changes in estimates for the coming quarters are anticipated following the recent earnings report [4][3] Industry Context - The Banks - West industry, to which FS Bancorp belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, indicating potential challenges ahead [5] - Bank of Hawaii, another company in the same industry, is expected to report a quarterly earnings decline of 30.8% year-over-year, with a consensus EPS estimate of $0.81 [5]

Financial Performance - FS Bancorp, Inc. reported a net income of $10.3 million, or $1.29 per diluted share, for Q3 2024, an increase from $9.0 million, or $1.13 per diluted share, in Q3 2023[1]. - The company reported a 3% increase in retained earnings, reaching $251,843 thousand compared to the previous quarter, and a 13% increase year-over-year[42]. - Net income for Q3 2024 reached $27,642,000, reflecting a 5% increase compared to $26,281,000 in Q3 2023[45]. - Basic earnings per share for Q3 2024 were $3.54, a 5% increase from $3.38 in Q3 2023[45]. - Basic earnings per share increased to $1.32 for the three months ended September 30, 2024, compared to $1.15 for the same period in 2023, reflecting a growth of 14.78%[48]. Deposits and Assets - Total deposits increased by $44.5 million, or 1.9%, to $2.43 billion at September 30, 2024, driven by a rise in noninterest-bearing checking and certificates of deposit[3]. - Total assets increased by $28.8 million, or 1.0%, to $2.97 billion as of September 30, 2024, compared to $2.94 billion at June 30, 2024[15]. - Total deposits as of September 30, 2024, were $2,427,331 thousand, a slight increase of 1.9% from $2,382,803 thousand in June 30, 2024[22]. - Cash and cash equivalents totaled $40,340 thousand, a 22% increase from the previous quarter but a 50% decrease year-over-year[42]. - The company’s total stockholders' equity rose to $288,902 thousand, reflecting a 2% increase from the previous quarter and a 15% increase year-over-year[42]. Loans and Credit Quality - Loans receivable remained stable at $2.46 billion as of September 30, 2024, reflecting an increase of $88.1 million, or 3.7%, from the previous year[3]. - The provision for credit losses on loans was $1.5 million for the three months ended September 30, 2024, compared to $683,000 for the same period in 2023, reflecting increased charge-off activity[35]. - Nonperforming loans decreased by $634,000 to $10.8 million at September 30, 2024, compared to $11.4 million at June 30, 2024, but increased by $5.2 million from $5.6 million at September 30, 2023[29]. - The allowance for credit losses on loans was $31.2 million, or 1.25% of gross loans receivable, at September 30, 2024, remaining virtually static compared to the prior quarter[28]. - The total amount of construction loans was detailed, with a significant portion maturing within the next two years, totaling $149.3 million[19]. Interest Income and Expenses - Net interest income for the three months ended September 30, 2024, increased by $610,000 to $31.2 million compared to $30.6 million for the same period in 2023, driven by a $3.8 million increase in interest and dividend income[31]. - Total interest expense surged to $45,872,000, a 53% increase from $29,901,000 in Q3 2023[45]. - The average total cost of funds increased by 47 basis points to 2.39% for the three months ended September 30, 2024, from 1.92% for the same period in 2023[34]. - The average total cost of funds increased to 2.33% from 1.58% year-over-year, indicating a rise in funding costs[47]. Capital and Ratios - Regulatory capital ratios were 14.2% for total risk-based capital and 11.2% for Tier 1 leverage capital at September 30, 2024, compared to 13.9% and 10.9% respectively in the previous quarter[6]. - The Bank's total risk-based capital ratio was 14.4% at September 30, 2024, exceeding all regulatory capital requirements[27]. - The common equity ratio increased to 9.73% as of September 30, 2024, compared to 8.58% a year earlier[46]. - The common equity ratio (GAAP) improved to 9.73% as of September 30, 2024, compared to 8.58% a year earlier, indicating stronger capital position[52]. Other Key Metrics - The efficiency ratio for Q3 2024 was 69.42%, slightly higher than 66.22% in Q3 2023[46]. - Return on assets improved to 1.38% in Q3 2024, compared to 1.22% in both the previous quarter and the same quarter last year[46]. - Noninterest income increased by $985,000 to $6.0 million for the three months ended September 30, 2024, primarily due to a $648,000 increase in gain on sale of loans[37]. - The effective corporate income tax rate for the three months ended September 30, 2024, was (4.3)%, significantly reduced by energy tax credits, compared to 22.0% for the same period in 2023[39].

Group 1 - FS Bancorp has a strong history of beating earnings estimates, with an average surprise of 8.94% over the last two quarters [1] - In the last reported quarter, FS Bancorp achieved earnings of $1.13 per share, exceeding the Zacks Consensus Estimate of $1.03 per share by 9.71% [1] - For the previous quarter, the company reported earnings of $1.06 per share against an expected $0.98 per share, resulting in an 8.16% surprise [1] Group 2 - Recent estimates for FS Bancorp have been increasing, indicating a positive outlook for future earnings [2] - The Zacks Earnings ESP for FS Bancorp is currently positive at +0.29%, suggesting analysts are optimistic about the company's earnings prospects [3] - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [2] Group 3 - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [3] - A negative Earnings ESP can reduce the predictive power of the metric, but it does not necessarily indicate an earnings miss [3] - It is important to check a company's Earnings ESP before quarterly releases to improve the likelihood of successful investment decisions [4]

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks. Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics t ...

Acquisition and Expansion - The Company completed the acquisition of seven retail bank branches from Columbia State Bank, gaining approximately $425.5 million in deposits and $66.1 million in loans[179]. - The Company is committed to expanding into new markets and enhancing its community banking presence[180]. - The Company’s strategic focus includes diversifying revenues, expanding lending channels, and enhancing the banking franchise[180]. Loan Portfolio and Originations - As of June 30, 2024, the Company's loan portfolio consisted of real estate loans (61.7%), consumer loans (25.8%), and commercial business loans (12.5%)[181]. - The Company funded $32.6 million in fixture-secured consumer loans during the quarter ended June 30, 2024, with approximately 1,500 loans originated[182]. - One-to-four-family loan originations totaled $206.1 million for the three months ended June 30, 2024, including $164.5 million sold to investors[182]. - One-to-four-family loan originations for the six months ended June 30, 2024, totaled $363.8 million, a 34.5% increase from $270.5 million in the same period of 2023[210]. - The Company originated $67.6 million in fixture-secured loans for the six months ended June 30, 2024, representing 100% of the total[182]. Financial Performance - Net income for the three months ended June 30, 2024, was $9.0 million, a slight decrease from $9.1 million for the same period in 2023, primarily due to a 3.6% decrease in net interest income[221]. - Net income for the six months ended June 30, 2024, was $17.4 million, a slight increase from $17.3 million for the same period in 2023[236]. - Noninterest income increased by $1.0 million to $5.9 million for the three months ended June 30, 2024, driven by a $516,000 increase in gain on sale of loans[233]. - Noninterest income increased by $927,000 to $11.0 million for the six months ended June 30, 2024, primarily due to an $8.2 million increase in gain on sale of MSRs[248]. Interest Income and Expenses - The Company’s earnings are primarily dependent on net interest income, which is influenced by the balances of loans and investments outstanding[186]. - Net interest income decreased by $1.2 million to $30.4 million for the three months ended June 30, 2024, compared to $31.6 million for the same period in 2023, due to rising interest expenses[226]. - Interest income increased by $5.1 million to $45.9 million for the three months ended June 30, 2024, primarily due to a $138.7 million increase in average interest-earning assets[227]. - Interest expense rose by $6.2 million to $15.5 million for the three months ended June 30, 2024, driven by a $5.6 million increase in deposit interest expense[228]. - Total interest income increased by $11.3 million to $90.8 million for the six months ended June 30, 2024, primarily due to a $9.2 million increase in interest income on loans receivable[241]. - Interest expense increased by $12.8 million to $30.1 million for the six months ended June 30, 2024, primarily due to an increase in interest expense on deposits of $11.9 million[244]. Asset Quality and Credit Losses - The allowance for credit losses (ACL) on loans totaled $31.2 million or 1.26% of gross loans receivable at June 30, 2024, compared to $31.5 million or 1.30% at December 31, 2023[211]. - Nonperforming loans increased by $454,000 to $11.4 million at June 30, 2024, with a ratio of nonperforming loans to total gross loans at 0.46%[213]. - The provision for loan losses increased by $361,000, or 50.4%, for the three months ended June 30, 2024, compared to the same period in 2023[221]. - Provision for credit losses was $1.1 million for the three months ended June 30, 2024, compared to $716,000 for the same period in 2023, reflecting an increase in nonperforming loans[231]. - Net loan charge-offs totaled $1.2 million for the three months ended June 30, 2024, up from $650,000 in the same period in 2023[232]. Deposits and Borrowings - Total deposits decreased by $139.5 million to $2.38 billion at June 30, 2024, from $2.52 billion at December 31, 2023[214]. - Total deposits decreased to $2,382.8 million at June 30, 2024, from $2,522.3 million at December 31, 2023[218]. - Borrowings increased by $88.1 million to $181.9 million at June 30, 2024, from $93.7 million at December 31, 2023, primarily due to a decrease in total brokered deposits[216]. - Uninsured deposits were approximately $586.6 million, or 24.6% of total deposits, at June 30, 2024, compared to $606.5 million, or 24.0% of total deposits, at December 31, 2023[216]. Equity and Capital - Total stockholders' equity increased by $19.5 million to $284.0 million at June 30, 2024, from $264.5 million at December 31, 2023, driven by net income of $17.4 million[217]. - The book value per common share increased to $37.15 at June 30, 2024, from $34.36 at December 31, 2023[220]. - At June 30, 2024, the Bank's Tier 1 leverage-based capital ratio was 10.9%, exceeding all regulatory capital requirements[261]. Efficiency and Expenses - Noninterest expense decreased by $347,000 to $23.9 million for the three months ended June 30, 2024, primarily due to reductions in loan costs and FDIC insurance[234]. - The efficiency ratio improved to 65.78% for the three months ended June 30, 2024, compared to 66.52% for the same period in 2023[234]. - The efficiency ratio remained relatively unchanged at 66.07% for the six months ended June 30, 2024, compared to 66.04% for the same period in 2023[249]. Dividends and Stock Repurchases - The current quarterly common stock dividend rate is $0.27 per share, with total dividends paid each quarter expected to be approximately $2.1 million based on outstanding shares as of June 30, 2024[259]. - The Company has approximately $630,000 remaining available for future stock repurchases as of June 30, 2024, with an additional program authorized for up to $5.0 million[260].

Core Viewpoint - FS Bancorp (FSBW) is currently identified as a strong value stock with a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is potentially undervalued in the market [4][8]. Valuation Metrics - FSBW has a P/E ratio of 10.43, which is lower than the industry average of 11.53. Over the past 52 weeks, its Forward P/E has fluctuated between 6.37 and 10.60, with a median of 7.61 [4]. - The company has a P/B ratio of 1.25, compared to the industry average of 1.38. Its P/B ratio has ranged from 0.87 to 1.25 over the past year, with a median of 0.95 [5]. - FSBW's P/S ratio stands at 1.72, which is lower than the industry average of 2.11. This ratio is considered a reliable performance indicator due to the difficulty of manipulating sales figures [6]. - The P/CF ratio for FSBW is 7.22, significantly lower than the industry average of 10.72. Its P/CF has varied from 4.71 to 7.22 over the past year, with a median of 5.31 [7]. Investment Outlook - The combination of these valuation metrics suggests that FS Bancorp is likely undervalued, making it an attractive option for value investors, especially given its strong earnings outlook [8].

Dividend Increases - Several companies are set to increase their dividends, with the average increase being 7.1% and a median of 5.9% [23] - The companies listed include Source Corporation (SRCE) with a 5.88% increase, NextEra Energy Partners (NEP) with a 1.40% increase, and Orrstown Financial Services (ORRF) with a notable 15.00% increase [28] Company Performance Metrics - SRCE has a current price of $63.06, a P/E ratio of 12.6, and is 57% off its 52-week low [4] - NEP's current price is $26, with a P/E ratio of 0 and is 42% off its 52-week low [4] - FSBW has a current price of $42.85, a P/E ratio of 7.19, and is 57% off its 52-week low [4] - ORRF's current price is $34.27, with a P/E ratio of 8.81, and is 82% off its 52-week low [4] Dividend Yield and Growth Rates - ORRF has a yield of 2.68% with a 1-year dividend growth rate of 2.6% [15] - FSBW has a yield of 2.52% and a 5-year dividend growth rate of 28.6% [15] - SRCE has a yield of 2.28% and a 10-year growth rate of 7.9% [15] - NEP stands out with a yield of 14% and a 5-year growth rate of 13.8% [15] Historical Returns - FSBW has shown a total return of 50% over the past decade, translating to a 19.7% CAGR [18] - SRCE and ODC have also outperformed the benchmark SCHD, with total returns of 220% and 200%, respectively [7] Ex-Dividend Dates - The ex-dividend date for SRCE is August 5, 2024, for NEP is August 6, 2024, and for FSBW is August 7, 2024 [28]

Core Insights - FS Bancorp reported revenue of $36.27 million for the quarter ended June 2024, reflecting a year-over-year decline of 0.3% and an EPS of $1.13 compared to $1.25 a year ago [1] Financial Performance Metrics - The reported revenue exceeded the Zacks Consensus Estimate of $35.4 million by 2.46%, while the EPS surprise was 9.71% against a consensus estimate of $1.03 [3] - Net Interest Margin was reported at 4.3%, matching the average estimate, while the Efficiency Ratio was 65.8%, slightly above the estimated 65% [4] - Total Non-Interest Income was $5.87 million, surpassing the average estimate of $4.60 million, while Net Interest Income was $30.40 million, slightly below the average estimate of $30.80 million [4] Stock Performance - FS Bancorp shares have returned +21.1% over the past month, significantly outperforming the Zacks S&P 500 composite's +2% change [6] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [6]

Company Performance - FS Bancorp (FSBW) reported quarterly earnings of $1.13 per share, exceeding the Zacks Consensus Estimate of $1.03 per share, but down from $1.25 per share a year ago [1] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] - FS Bancorp's revenues for the quarter ended June 2024 were $36.27 million, surpassing the Zacks Consensus Estimate by 2.46%, but down from $36.39 million year-over-year [9] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.09 on revenues of $36.05 million, and for the current fiscal year, it is $3.93 on revenues of $139.15 million [12] - The estimate revisions trend for FS Bancorp is currently unfavorable, leading to a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [5] Industry Context - FS Bancorp operates within the Zacks Banks - West industry, which is currently ranked in the bottom 34% of over 250 Zacks industries [6] - The performance of FS Bancorp's stock may be influenced by the overall outlook of the banking industry [6] Stock Performance - FS Bancorp shares have increased approximately 9.8% since the beginning of the year, compared to a 16.7% gain for the S&P 500 [10] - Despite the year-to-date increase, FS Bancorp has underperformed the market [11]

Exhibit 99.1 FS Bancorp, Inc. Reports Second Quarter Net Income of $9.0 Million or $1.13 Per Diluted Share and Previously Announced Share Repurchase Plan and 3.8% Increase in its Quarterly Dividend MOUNTLAKE TERRACE, WA – July 23, 2024 – FS Bancorp, Inc. (NASDAQ: FSBW) (the "Company"), the holding company for 1st Security Bank of Washington (the "Bank" or "1st Security Bank") today reported 2024 second quarter net income of $9.0 million, or $1.13 per diluted share, compared to $9.1 million, or $1.16 per dil ...