1ST SECURITY BANK 1 FS BANCORP, INC. INVESTOR PRESENTATION May2020 | --- | --- | --- | --- | |-------|-------|-------|----------------------------------------------------| | | | | | | | | | | | | | | | | | | | "…Build a truly great place to work and bank." | | | | | -FSBW Vision Statement | lST SECURITY BANK Forward Looking Statements When used in this presentation and in other documents filed with or furnished to the Securities and Exchange Commission (the "SEC"), in presentations or other public stockhold ...

Lending Focus and Portfolio Composition - The Company has shifted its lending focus to include non-mortgage commercial business loans and commercial real estate, while maintaining its strength in consumer lending[33]. - As of December 31, 2019, the total loan portfolio was $1,351.9 million, with real estate loans comprising 60.95% of the portfolio[36]. - The Company’s consumer loans increased to $326.2 million, representing 24.13% of the total loan portfolio, up from 20.77% in the previous year[36]. - The Company’s commercial and industrial loans totaled $140.5 million, accounting for 10.40% of the total loan portfolio[36]. - Total real estate loans reached $169.5 million, which is 12.53% of total loans, with a notable increase in commercial real estate loans to $344.7 million, or 25.5% of the gross loan portfolio[46]. - The commercial business loan portfolio totaled $201.6 million, accounting for 14.9% of the gross loan portfolio[76]. - The Company originated $891.4 million of one-to-four-family mortgages in 2019, with $785.4 million sold to investors, including $550.1 million to government-sponsored entities[62]. - The Company’s marine loan portfolio totaled $67.2 million, representing 20.6% of total consumer loans at December 31, 2019[68]. - The Company’s indirect home improvement loans totaled $210.7 million, or 15.6% of the gross loan portfolio, as of December 31, 2019[64]. - The Company had $115.6 million, or 64.3% of the outstanding construction and development loan portfolio, comprised of speculative one-to-four-family construction loans[52]. Loan Performance and Allowance for Losses - The allowance for loan losses was $13.2 million, compared to $12.3 million in the prior year[1]. - The provision for loan losses for the year ended December 31, 2019, was $2.9 million, reflecting ongoing assessments of credit losses in the loan portfolio[107]. - The allowance for loan losses was $13.2 million, or 0.98% of gross loans receivable, compared to $12.3 million, or 0.93% in the previous year, indicating an increase in the allowance coverage ratio[107]. - Non-accruing loans totaled $3.033 million as of December 31, 2019, down from $3.894 million in 2018, showing a decline of approximately 23.1%[96]. - The total loans delinquent for 60-89 days amounted to $343 thousand, while those delinquent for 90 days or more totaled $1,502 thousand[95]. - The total amount of loans due after December 31, 2019, with predetermined interest rates is $546.5 million, while those with floating rates total $805.4 million[41]. Deposits and Funding Sources - As of December 31, 2019, the Bank had $1,392.4 million in total deposits, reflecting a net increase of $118.2 million or 9.28% compared to the previous year[129]. - The composition of total deposits included 39.6% from certificates of deposit and 10.6% from brokered deposits, amounting to $147.6 million[126]. - The Bank's total certificates of deposit amounted to $551.5 million, with 53.87% maturing at rates of 0.00 - 1.99%[135]. - The Bank's reliance on FHLB borrowings for funding was highlighted, with advances used to fund loan originations to increase net interest income[140]. - As of December 31, 2019, the Bank had outstanding advances from the FHLB of Des Moines totaling $84.9 million, with a weighted average interest rate of 2.29%[146]. - The Bank maintained a committed credit facility with the FHLB of Des Moines providing for advances up to $477.2 million[146]. Capital Ratios and Regulatory Compliance - As of December 31, 2019, 1st Security Bank of Washington's total risk-based capital ratio was 14.64%, significantly above the required 8.00%[193]. - The Tier 1 risk-based capital ratio for 1st Security Bank of Washington was 13.70% as of December 31, 2019, exceeding the minimum requirement of 6.00%[193]. - The CET1 capital ratio was 13.70% at the end of 2019, well above the required 4.50%[193]. - The bank's leverage ratio stood at 11.56% as of December 31, 2019, surpassing the minimum requirement of 4.00%[193]. - 1st Security Bank of Washington is categorized as well capitalized under FDIC regulations, meeting all capital requirements[187]. - The bank's capital conservation buffer requirement was fully phased in as of December 31, 2019, ensuring compliance with regulatory guidelines[193]. Economic and Market Conditions - The unemployment rate in King County was 2.1% at December 31, 2019, significantly lower than the state average of 4.3%[31]. - The median household income for King County was $95,000 in 2018, compared to $74,000 for the State of Washington[30]. - The Puget Sound region has a population of approximately 4.2 million, representing a significant market base for potential business[24]. - The average home value in King County was $671,000, with a statewide average increase in home values of 11.5% in Q4 2019[32]. Employee and Operational Metrics - The Company had 452 full-time equivalent employees as of December 31, 2019[152]. - The Company operates 21 full-service bank branches and seven home loan production offices in the Puget Sound region[23]. Miscellaneous - The Company issued an unsecured subordinated term note of $10.0 million due October 1, 2025, with an annual interest rate of 6.50%[143]. - The Company earned gross mortgage servicing fees of $3.5 million for the year ended December 31, 2019, servicing $1.46 billion of one-to-four-family loans[82]. - The Company processed approximately 790 loans and funded about $323.8 million under its mortgage warehouse lending program during the year ended December 31, 2019[74].

Acquisition and Growth - The Company completed the Anchor Acquisition, acquiring $361.6 million in loans and $357.9 million in deposits for a total consideration of $64.6 million[175]. - The Company funded $37.3 million in fixture secured loans during the quarter ended September 30, 2019, totaling approximately 2,000 loans[179]. - The Company originated $638.7 million of one-to-four-family loans during the nine months ended September 30, 2019, with $551.6 million sold to investors[179]. - One-to-four-family residential mortgage loans held for investment totaled $253.8 million, representing 19.1% of the total gross loan portfolio as of September 30, 2019[179]. - One-to-four-family loan originations increased by $83.4 million, or 15.0%, to $638.7 million during the nine months ended September 30, 2019[196]. Financial Performance - Net income for the three months ended September 30, 2019, increased by $3.1 million, or 76.3%, to $7.1 million, from $4.1 million for the same period in 2018[205]. - Net income for the nine months ended September 30, 2019, increased by $4.2 million, or 33.0%, to $16.8 million from $12.6 million for the same period in 2018[220]. - Net interest income increased by $4.9 million, or 37.9%, to $17.7 million for the three months ended September 30, 2019, compared to $12.9 million for the same period in 2018[209]. - Net interest income increased by $16.7 million, or 46.0%, to $53.0 million for the nine months ended September 30, 2019, compared to $36.3 million for the same period in 2018[222]. - Noninterest income increased by $1.9 million, or 40.4%, to $6.7 million for the three months ended September 30, 2019, from $4.8 million for the same period in 2018[216]. - Noninterest income increased by $1.9 million, or 12.6%, to $17.4 million for the nine months ended September 30, 2019, mainly due to higher service charges and fee income[229]. Asset and Liability Management - Total assets increased by $73.4 million, or 4.5%, to $1.69 billion at September 30, 2019, compared to $1.62 billion at December 31, 2018[192]. - Total liabilities increased by $59.1 million to $1.50 billion at September 30, 2019, from $1.44 billion at December 31, 2018[199]. - Total deposits increased to $1.39 billion at September 30, 2019, from $1.27 billion at December 31, 2018[200]. - Loans held for sale increased by $29.4 million, or 57.5%, to $80.6 million at September 30, 2019, from $51.2 million at December 31, 2018[195]. Capital and Liquidity - The Bank exceeded all regulatory capital requirements with Tier 1 leverage-based capital, Tier 1 risk-based capital, total risk-based capital, and common equity Tier 1 capital ratios of 11.6%, 13.6%, 14.5%, and 13.6%, respectively, as of September 30, 2019[241]. - FS Bancorp, Inc. regulatory capital ratios at September 30, 2019 were 11.3% for Tier 1 leverage-based capital, 13.3% for Tier 1 risk-based capital, 14.2% for total risk-based capital, and 13.3% for CET 1 capital ratio[242]. - The Bank is considered to be well capitalized based on its capital levels at September 30, 2019[241]. - FS Bancorp, Inc. had $3.5 million in unrestricted cash to meet liquidity needs as of September 30, 2019[239]. - At September 30, 2019, the Bank's total borrowing capacity was $451.5 million with unused borrowing capacity of $368.8 million[234]. Expense and Efficiency - Noninterest expense increased by $2.9 million, or 24.4%, to $14.7 million for the three months ended September 30, 2019, from $11.8 million for the same period in 2018[217]. - Noninterest expense rose by $11.6 million, or 33.0%, to $46.6 million for the nine months ended September 30, 2019, largely due to the Anchor Acquisition[230]. - The efficiency ratio improved to 60.1% for the three months ended September 30, 2019, compared to 67.0% for the same period in 2018[218]. - The efficiency ratio improved to 66.2% for the nine months ended September 30, 2019, compared to 67.7% for the same period in 2018[231]. Interest and Taxation - Interest income rose by $7.1 million, or 45.7%, to $22.7 million for the three months ended September 30, 2019, compared to $15.6 million for the same period in 2018[212]. - Interest income rose by $24.8 million, or 58.2%, to $67.4 million for the nine months ended September 30, 2019, driven by a $23.7 million increase in loans receivable interest income[225]. - Interest expense increased by $8.1 million, or 128.6%, to $14.4 million for the nine months ended September 30, 2019, primarily due to higher deposit costs[226]. - The effective corporate income tax rate decreased to 22.2% for the three months ended September 30, 2019, from 24.6% for the same period in 2018[219]. - The effective tax rate increased to 21.9% for the nine months ended September 30, 2019, from 18.3% for the same period in 2018[232]. Risk Management - The Company reviews its allowance for loan and lease losses quarterly, adjusting based on economic conditions and portfolio evaluations[186]. - The allowance for loan and lease losses (ALLL) was $12.8 million, or 0.96% of gross loans receivable, at September 30, 2019, compared to $12.3 million, or 0.93%, at December 31, 2018[197]. - Provision for loan losses was $573,000 for the three months ended September 30, 2019, compared to $450,000 for the same period in 2018[215]. - The provision for loan losses was $2.2 million for the nine months ended September 30, 2019, compared to $1.3 million for the same period in 2018[228]. - There have been no material changes in the market risk disclosures since the Annual Report on Form 10-K for the fiscal year ended December 31, 2018[243].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents For the quarterly period ended June 30, 2019 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001‑35589 FS BANCORP, INC. (Exact name of registrant as specified in its charter) Washington 45‑4585178 (State ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10‑Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) Washington 45‑4585178 (State or other jurisdiction of incorporation or organization) (IRS Employer Identificatio ...

FS BANCORP, INC. (Exact name of registrant as specified in its charter) Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10‑K (Mark one) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001‑35589 | Washington | 45‑4585178 | | --- | --- | | (State or other jurisd ...