Acquisitions and Expansions - The Company acquired approximately $425.5 million in deposits and $65.8 million in loans from Columbia State Bank as part of the Columbia Branch Purchase completed on February 24, 2023[25]. - The Company completed the acquisition of Anchor Bancorp in 2018, which added $357.9 million in deposits and $361.6 million in loans, enhancing its retail footprint in the Puget Sound region[27]. - The Company operates 20 full-service bank branches and 10 loan production offices in the Puget Sound region, serving a population of approximately 4.4 million[30][31]. Loan Portfolio and Lending Strategy - The Company has a total loan portfolio of $1.858 billion, with $1.218 billion in fixed-rate loans and $640.3 million in adjustable-rate loans as of December 31, 2022[39]. - The Company has expanded its loan offerings to include residential mortgage and commercial construction warehouse lending, diversifying its revenue streams[37]. - The Company’s lending strategy focuses on commercial real estate and business loans, alongside its historical strength in consumer loans[37]. - The Company has a lending authority of up to $20 million for the Chief Credit Officer, with loans exceeding this amount requiring additional approvals[43]. - The Company has reintroduced in-house originations of residential mortgage loans primarily for sale in the secondary market since 2012[37]. Economic and Market Conditions - The estimated unemployment rate in Washington was 4.2% as of December 31, 2022, with King County at 2.8%[36]. - The Company’s market area includes key economic sectors such as aerospace, military, clean technology, and international trade, contributing to a robust regional economy[32]. Construction and Development Loans - As of December 31, 2022, the company's total outstanding construction and development loans amounted to $342.6 million, representing 15.4% of the gross loan portfolio, an increase from $240.6 million in the previous year[52]. - The company had $60.0 million in approved commercial construction warehouse lending lines, with $31.2 million outstanding at the same date[45]. - The Company processed approximately 232 loans and funded about $108.0 million under its mortgage warehouse lending program during the year ended December 31, 2022[77]. Consumer Loans - The Company’s consumer loans totaled $569.6 million, or 25.6% of the gross loan portfolio as of December 31, 2022[64]. - Indirect home improvement loans totaled $495.9 million, representing 22.3% of the gross loan portfolio and 87.1% of total consumer loans as of December 31, 2022[65]. - Home equity lines of credit totaled $55.4 million, or 2.5% of the gross loan portfolio, with $39.1 million being adjustable-rate[61]. - At December 31, 2022, 80.8% of the consumer loan portfolio was originated with borrowers having a FICO score over 720, while only 1.3% was associated with borrowers having a FICO score below 660[71]. Financial Performance and Credit Losses - Total loans originated decreased to $1,847,939 thousand in 2022 from $2,438,582 thousand in 2021, representing a decline of approximately 24%[86]. - The allowance for credit losses on loans was $28,000 thousand, or 1.26% of gross loans receivable, as of December 31, 2022, compared to $25,600 thousand, or 1.46% in 2021[102]. - The provision for credit losses on loans increased to $6,600 thousand in 2022 from $500 thousand in 2021, reflecting a significant rise due to increased total loans receivable[102]. - Total net charge-offs for the year were $1,407 thousand, compared to $1,037 thousand in 2021 and $93 thousand in 2020[105]. Deposits and Funding - Total deposits increased by $211.997 million, representing an 11.07% growth from 2021[118]. - The ending balance of total deposits as of December 31, 2022, was $2,127.741 million, compared to $1,915.744 million in 2021[120]. - The company had approximately $560.0 million in uninsured deposits as of December 31, 2022[120]. - The Company had $393.9 million in brokered deposits, representing 18.5% of total deposits as of December 31, 2022[116]. Capital and Regulatory Compliance - As of December 31, 2022, 1st Security Bank's total risk-based capital ratio was 13.70%, exceeding the required minimum of 8.00%[177]. - The Tier 1 risk-based capital ratio was 12.45%, above the minimum requirement of 6.00%[177]. - 1st Security Bank was categorized as well capitalized under the prompt corrective action regulations of the FDIC as of December 31, 2022[177]. - The bank must comply with privacy and cybersecurity regulations, including new notification requirements for significant cybersecurity incidents, effective May 1, 2022[197]. Employee and Workforce Information - As of December 31, 2022, the company had 537 employees, with 97.64% being full-time employees and a turnover rate of 19.29%, up from 17.14% in 2021[158]. - The workforce composition as of December 31, 2022, was 69% female and 31% male, with women holding 58% of management roles[152]. - The company has a commitment to diversity, with 50% of independent directors being women and 44% of executives reporting to the CEO being women[152]. Community Engagement and Corporate Responsibility - Volunteer hours increased from 4,000 in 2021 to approximately 5,100 in 2022[157]. - The company’s vision statement emphasizes building a great workplace to foster a great banking experience[150].
FS Bancorp(FSBW) - 2022 Q4 - Annual Report