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].
FS Bancorp(FSBW) - 2024 Q2 - Quarterly Report