FS Bancorp, Inc. Reports First Quarter Net Income of $8.0 Million or $1.01 Per Diluted Share and the Forty-Ninth Consecutive Quarterly Cash Dividend

Rhea-AI Summary

FS Bancorp (NASDAQ: FSBW) reported Q1 2025 net income of $8.0 million, or $1.01 per diluted share, compared to $8.4 million ($1.06/share) in Q1 2024. The company announced its 49th consecutive quarterly cash dividend of $0.28 per share, payable May 22, 2025.

Key highlights include:

• Total deposits increased 11.8% to $2.62 billion, primarily from $226.9 million growth in brokered deposits
• Loans receivable remained stable at $2.50 billion, up 3.5% year-over-year
• Consumer loans decreased 1.8% to $608.9 million, with 87.4% being home improvement loans
• Book value per share increased to $39.12
• The company repurchased 98,317 shares at average $39.06/share and authorized additional $5.0 million for future repurchases

Positive

• 49th consecutive quarterly dividend payment demonstrates consistent shareholder returns
• Strong deposit growth of 11.8% to $2.62 billion
• Book value per share increased by $0.86 to $39.12
• Quarter-over-quarter net income growth from $7.4M to $8.0M
• Strong regulatory capital ratios with 14.4% total risk-based capital

Negative

• Year-over-year decline in net income from $8.4M to $8.0M
• Consumer loans decreased 5.8% year-over-year
• Home improvement loans showing declining trend
• Earnings per share decreased from $1.06 to $1.01 year-over-year

Insights

Financial Analyst

FS Bancorp reports steady Q1 performance with mixed results: improved sequential earnings but year-over-year decline amid significant deposit growth.

FS Bancorp delivered Q1 2025 net income of $8.0 million ($1.01 per diluted share), showing sequential improvement from Q4 2024's $7.4 million but a decline from $8.4 million ($1.06 per share) in Q1 2024. The bank executed a notable balance sheet restructuring, with deposits increasing $275.7 million (11.8%) to $2.62 billion, primarily driven by $226.9 million in brokered deposits. This substantial deposit growth enabled the bank to reduce borrowings by $239.0 million (77.6%), significantly changing their funding mix.

Despite the liquidity influx, loans receivable remained essentially flat at $2.50 billion quarter-over-quarter, while growing 3.5% year-over-year. As noted by management, this positions the bank well for their loan pipeline entering Q2 2025. The consumer loan portfolio, consisting predominantly of home improvement loans (87.4%), decreased by 1.8% quarterly and 5.8% annually, with 79.9% of new home improvement loans originated with FICO scores above 720, indicating strong credit quality standards.

Capital management remained shareholder-friendly with the declaration of the 49th consecutive quarterly dividend of $0.28 per share and continued share repurchases (98,317 shares at $39.06 average price). Book value per share increased to $39.12, up 2.2% from the previous quarter and 8.5% year-over-year, demonstrating solid capital accretion despite ongoing shareholder returns. Segment performance improved with Home Lending turning profitable ($241,000) after posting a loss in Q4 2024.

Regulatory capital ratios remained strong at 14.4% for total risk-based capital and 11.3% for Tier 1 leverage capital, providing ample buffer and flexibility for future strategic initiatives.

MOUNTLAKE TERRACE, Wash., April 22, 2025 (GLOBE NEWSWIRE) -- FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”) today reported 2025 first quarter net income of $8.0 million, or $1.01 per diluted share, compared to $8.4 million, or $1.06 per diluted share, for the comparable quarter one year ago. 

“Deposit growth exceeded expectations in the first quarter of 2025, enabling the Bank to be well positioned for our loan pipeline going into the second quarter,” stated Matthew Mullet, President/CFO.

“We are also pleased that our Board of Directors approved our forty-ninth consecutive quarterly cash dividend of $0.28 per common share, demonstrating our continued commitment to returning value to shareholders.  The cash dividend will be paid on May 22, 2025, to shareholders of record as of May 8, 2025,” noted Joe Adams, CEO.

2025 First Quarter Highlights

• Net income was $8.0 million for the first quarter of 2025, compared to $7.4 million for the previous quarter, and $8.4 million for the comparable quarter one year ago;
• Total deposits increased $275.7 million, or 11.8%, to $2.62 billion at March 31, 2025, primarily due to an increase of $226.9 million in brokered deposits, compared to $2.34 billion at December 31, 2024, and increased $149.9 million, or 6.1%, from $2.47 billion at March 31, 2024.  Noninterest-bearing deposits were $676.7 million at March 31, 2025, $638.2 million at December 31, 2024, and $646.9 million at March 31, 2024, reflecting growth in core deposits; 
• Borrowings decreased $239.0 million, or 77.6% to $68.8 million at March 31, 2025, compared to $307.8 million at December 31, 2024, and decreased $61.1 million, or 47.0%, from $129.9 million at March 31, 2024, and were primarily repositioned into wholesale brokered CDs noted above; 
• Loans receivable, net was virtually unchanged at $2.50 billion at both March 31, 2025, and December 31, 2024, and increased $85.7 million, or 3.5%, from $2.42 billion at March 31, 2024;
• Consumer loans, of which 87.4% are home improvement loans, decreased $11.3 million, or 1.8%, to $608.9 million at March 31, 2025, compared to $620.2 million in the previous quarter, and decreased $37.2 million, or 5.8%, from $646.1 million in the comparable quarter one year ago. During the three months ended March 31, 2025, consumer loan originations included 79.9% of home improvement loans originated with a Fair Isaac Corporation (“FICO”) score above 720;
• Repurchased 98,317 shares of the Company's common stock in the first quarter of 2025 at an average price of $39.06 per share with $873,000 remaining for future purchases under the existing share repurchase plan. On April 4, 2025, the Board authorized an additional share repurchase program of up to $5.0 million of the Company's common stock;
• Book value per share increased $0.86 to $39.12 at March 31, 2025, compared to $38.26 at December 31, 2024, and increased $3.06 from $36.06 at March 31, 2024.  Tangible book value per share (non-GAAP financial measure) increased $0.94 to $36.96 at March 31, 2025, compared to $36.02 at December 31, 2024, and increased $3.49 from $33.47 at March 31, 2024. See, “Non-GAAP Financial Measures.”
• Segment reporting in the first quarter of 2025 reflected net income of $7.8 million for the Commercial and Consumer Banking segment and $241,000 for the Home Lending segment, compared to net income of $7.4 million and net loss of $39,000 in the prior quarter, and net income of $8.2 million and $246,000 in the first quarter of 2024, respectively; and
• Regulatory capital ratios at the Bank were 14.4% for total risk-based capital and 11.3% for Tier 1 leverage capital at March 31, 2025, compared to 14.2% for total risk-based capital and 11.2% for Tier 1 leverage capital at December 31, 2024.

Segment Reporting

The Company reports on two segments: Commercial and Consumer Banking and Home Lending. The Commercial and Consumer Banking segment provides diversified financial products and services to our commercial and consumer customers. These products and services include deposit products; residential, consumer, business and commercial real estate lending and cash management services. This segment is also responsible for managing the Bank's investment portfolio and other assets. The Home Lending segment originates one-to-four-family residential mortgage loans primarily for sale in the secondary markets as well as loans held for investment.

The tables below provide a summary of segment reporting at or for the three months ended March 31, 2025 and 2024 (dollars in thousands):

		At or For the Three Months Ended March 31, 2025
Condensed income statement:		Commercial and Consumer Banking				Home Lending				Total
Net interest income (1)		$	28,407			$	2,575			$	30,982
Provision for credit losses			(1,321	)			(271	)			(1,592	)
Noninterest income (2)			2,246				2,880				5,126
Noninterest expense (3)			(20,176	)			(4,879	)			(25,055	)
Income before provision for income taxes			9,156				305				9,461
Provision for income taxes			(1,376	)			(64	)			(1,440	)
Net income		$	7,780			$	241			$	8,021
Total average assets for period ended		$	2,414,100			$	618,412			$	3,032,512
Full-time employees (“FTEs”)			454				113				567

		At or For the Three Months Ended March 31, 2024
Condensed income statement:		Commercial and Consumer Banking				Home Lending				Total
Net interest income (1)		$	28,086			$	2,260			$	30,346
Provision for credit losses			(1,251	)			(148	)			(1,399	)
Noninterest income (2)			2,393				2,718				5,111
Noninterest expense (3)			(19,008	)			(4,521	)			(23,529	)
Income before provision for income taxes			10,220				309				10,529
Provision for income taxes			(2,069	)			(63	)			(2,132	)
Net income		$	8,151			$	246			$	8,397
Total average assets for period ended		$	2,401,864			$	556,683			$	2,958,547
FTEs			440				130				570

__________________________________

(1	)	Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to the other segment. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of assigned liabilities to fund segment assets.
(2	)	Noninterest income includes activity from certain residential mortgage loans that were initially originated for sale and measured at fair value and subsequently transferred to loans held for investment. Gains and losses from changes in fair value for these loans are reported in earnings as a component of noninterest income. For the three months ended March 31, 2025, the Company recorded a net increase in fair value of $263,000, compared to a net increase in fair value of $2,000 for the three months ended March 31, 2024. As of March 31, 2025 and 2024, there were $14.5 million and $15.0 million, respectively, in residential mortgage loans recorded at fair value as they were previously transferred from loans held for sale to loans held for investment.
(3	)	Noninterest expense includes allocated overhead expense from general corporate activities. Allocation is determined based on a combination of segment assets and FTEs. For the three months ended March 31, 2025 and 2024, the Home Lending segment included allocated overhead expenses of $1.8 million and $1.5 million, respectively.

Asset Summary

Total assets increased $36.9 million, or 1.2%, to $3.07 billion at March 31, 2025, compared to $3.03 billion at December 31, 2024, and increased $96.4 million, or 3.2%, from $2.97 billion at March 31, 2024.  The increase in total assets at March 31, 2025, compared to December 31, 2024, included increases of $31.1 million in total cash and cash equivalents, $10.0 million in securities available-for-sale, $3.4 million in other assets, $3.2 million in loans held for sale (“HFS”) and $2.0 million in securities held-to-maturity, partially offset by decreases in FHLB stock of $10.4 million, loans receivable, net of $834,000 and core deposit intangible (“CDI”), net of $831,000. The increase compared to March 31, 2024, was primarily due to increases in loans receivable, net of $85.7 million, other assets of $21.1 million, total cash and cash equivalents of $17.3 million, and securities available-for-sale of $11.5 million. These increases were partially offset by decreases in certificates of deposit at other financial institutions of $22.0 million, loans HFS of $18.9 million, and CDI, net of $3.5 million.

LOAN PORTFOLIO
(Dollars in thousands)		March 31, 2025								December 31, 2024								March 31, 2024
COMMERCIAL REAL ESTATE ("CRE") LOANS		Amount						%		Amount						%		Amount						%		Linked Quarter $ Change				Prior Year Quarter $ Change
CRE owner occupied		$	164,911				6.5	%		$	170,396				6.7	%		$	174,946				7.2	%		$	(5,485	)		$	(10,035	)
CRE non-owner occupied			174,188				6.9				174,921				6.9				184,109				7.5				(733	)			(9,921	)
Commercial and speculative construction and development			288,978				11.4				280,798				11.1				244,217				10.0				8,180				44,761
Multi-family			244,940				9.7				245,222				9.7				222,410				9.1				(282	)			22,530
Total CRE loans			873,017				34.5				871,337				34.4				825,682				33.8				1,680				47,335
RESIDENTIAL REAL ESTATE LOANS
One-to-four-family (excludes HFS)			637,299				25.2				617,322				24.4				580,050				23.7				19,977				57,249
Home equity			73,846				2.9				75,147				3.0				73,323				3.0				(1,301	)			523
Residential custom construction			48,810				1.9				49,902				2.0				57,129				2.3				(1,092	)			(8,319	)
Total residential real estate loans			759,955				30.0				742,371				29.4				710,502				29.0				17,584				49,453
CONSUMER LOANS
Indirect home improvement			532,038				21.0				541,946				21.4				568,802				23.2				(9,908	)			(36,764	)
Marine			73,737				2.9				74,931				3.0				73,921				3.0				(1,194	)			(184	)
Other consumer			3,118				0.1				3,304				0.1				3,409				0.1				(186	)			(291	)
Total consumer loans			608,893				24.0				620,181				24.5				646,132				26.3				(11,288	)			(37,239	)
COMMERCIAL BUSINESS LOANS
Commercial and industrial (“C&I”)			274,956				10.9				287,014				11.3				256,429				10.6				(12,058	)			18,527
Warehouse lending			15,949				0.6				12,918				0.4				8,113				0.3				3,031				7,836
Total commercial business loans			290,905				11.5				299,932				11.7				264,542				10.9				(9,027	)			26,363
Total loans receivable, gross			2,532,770				100.0	%			2,533,821				100.0	%			2,446,858				100.0	%			(1,051	)			85,912
Allowance for credit losses on loans			(31,653	)							(31,870	)							(31,479	)							217				(174	)
Total loans receivable, net		$	2,501,117							$	2,501,951							$	2,415,379							$	(834	)		$	85,738

The composition of CRE loans at the dates indicated were as follows:

(Dollars in thousands)		Mar 31, 2025				Dec 31, 2024				Mar 31, 2024
CRE by Type:		Amount				Amount				Amount
CRE non-owner occupied:
Office		$	39,406			$	39,697			$	41,625
Retail			35,520				36,568				38,712
Hospitality/restaurant			27,377				27,562				24,751
Self-storage			19,092				19,111				21,383
Mixed use			18,868				17,721				19,186
Industrial			15,033				15,125				17,475
Senior housing/assisted living			7,506				7,565				8,446
Other (1)			6,579				6,631				6,785
Land			2,314				2,421				3,151
Education/worship			2,493				2,520				2,595
Total CRE non-owner occupied			174,188				174,921				184,109
CRE owner occupied:
Agriculture			3,990				3,834				3,744
Industrial			66,618				67,064				63,683
Office			40,447				42,223				41,652
Retail			20,535				20,718				21,836
Hospitality/restaurant			7,306				10,396				10,933
Other (2)			8,529				8,612				8,438
Car wash			—				—				7,713
Automobile related			7,266				7,325				7,479
Education/worship			4,641				4,608				4,604
Mixed use			5,579				5,616				4,864
Total CRE owner occupied			164,911				170,396				174,946
Total			339,099				345,317				359,055

__________________________________

(1	)	Primarily includes loans secured by mobile home parks totaling $758,000, $766,000, and $789,000, RV parks totaling $681,000, $685,000, and $696,000, automobile-related collateral totaling $584,000, $589,000, and $604,000, and other collateral totaling $4.6 million, $4.6 million, and $4.7 million at March 31, 2025, December 31, 2024, and March 31, 2024, respectively.
(2	)	Primarily includes loans secured by gas stations totaling $1.5 million, $1.5 million and $1.7 million, non-profit organization totaling $1.4 million, $1.5 million and $915,000, and other collateral totaling $5.6 million, $5.6 million and $5.8 million at March 31, 2025, December 31, 2024, and March 31, 2024, respectively.

The following table includes CRE loans repricing or maturing within the next two years, excluding loans that reprice simultaneously with changes to the prime rate:

(Dollars in thousands)			For the Quarter Ended
CRE by type:		Jun 30, 2025			Sep 30, 2025			Dec 31, 2025			Mar 31, 2026			Jun 30, 2026			Sep 30, 2026			Dec 31, 2026			Mar 31, 2027			Total			Current Weighted Average Rate
Agriculture		$	723		$	—		$	312		$	175		$	—		$	292		$	—		$	—		$	1,502		6.14	%
Apartment			4,510			1,701			18,573			1,268			13,868			9,763			8,241			27,900			85,824		5.65
Auto related			790			—			—			—			—			—			—			—			790		4.15
Hotel / hospitality			1,760			1,315			—			115			1,265			—			—			—			4,455		4.75
Industrial			—			161			10,122			981			590			1,594			—			13,481			26,929		5.13
Mixed use			3,469			244			313			2,119			—			—			382			—			6,527		5.74
Office			11,077			4,127			966			519			1,641			559			7,749			2,878			29,516		4.96
Other			1,309			1,147			241			890			—			2,493			1,497			283			7,860		5.05
Retail			1,738			63			—			436			3,474			—			3,423			3,059			12,193		4.11
Senior housing and assisted living			—			—			—			2,157			—			—			—			—			2,157		4.75	%
Total		$	25,376		$	8,758		$	30,527		$	8,660		$	20,838		$	14,701		$	21,292		$	47,601		$	177,753

A breakdown of construction loans at the dates indicated were as follows:

(Dollars in thousands)		March 31, 2025								December 31, 2024
Construction Types:		Amount				Percent				Amount				Percent
Commercial construction – retail		$	8,157				2.4	%		$	8,079				2.4	%
Commercial construction – office			6,487				1.9				4,979				1.5
Commercial construction – self storage			16,012				4.7				13,480				4.1
Commercial construction – hotel			402				0.1				—				—
Multi-family			31,275				9.3				30,945				9.4
Custom construction – single family residential and single family manufactured residential			41,143				12.2				42,040				12.7
Custom construction – land, lot and acquisition and development			7,667				2.3				7,862				2.4
Speculative residential construction – vertical			186,042				55.1				180,381				54.5
Speculative residential construction – land, lot and acquisition and development			40,603				12.0				42,934				13.0
Total		$	337,788				100.0	%		$	330,700				100.0	%

(Dollars in thousands)		March 31, 2025								March 31, 2024
Construction Types:		Amount				Percent				Amount				Percent
Commercial construction – retail		$	8,157				2.4	%		$	8,290				2.8	%
Commercial construction – office			6,487				1.9				4,737				1.6
Commercial construction – self storage			16,012				4.7				10,000				3.3
Commercial construction – hotel			402				0.1				7,807				2.6
Multi-family			31,275				9.3				53,288				17.7
Custom construction – single family residential and single family manufactured residential			41,143				12.2				50,674				16.8
Custom construction – land, lot and acquisition and development			7,667				2.3				6,455				2.1
Speculative residential construction – vertical			186,042				55.1				134,047				44.5
Speculative residential construction – land, lot and acquisition and development			40,603				12.0				26,048				8.6
Total		$	337,788				100.0	%		$	301,346				100.0	%

Originations of one-to-four-family loans to purchase and refinance a home for the periods indicated were as follows:

(Dollars in thousands)		For the Three Months Ended
		March 31, 2025								December 31, 2024
		Amount				Percent				Amount				Percent				$ Change				% Change
Purchase		$	120,719				83.0	%		$	129,232				83.2	%		$	(8,513	)			(6.6	)%
Refinance			24,677				17.0				26,116				16.8				(1,439	)			(5.5	)%
Total		$	145,396				100.0	%		$	155,348				100.0	%		$	(9,952	)			(6.4	)%

(Dollars in thousands)		For the Three Months Ended March 31,
		2025								2024
		Amount				Percent				Amount				Percent				$ Change				% Change
Purchase		$	120,719				83.0	%		$	135,577				88.1	%		$	(14,858	)			(11.0	)%
Refinance			24,677				17.0				18,371				11.9				6,306				34.3	%
Total		$	145,396				100.0	%		$	153,948				100.0	%		$	(8,552	)			(5.6	)%

During the quarter ended March 31, 2025, the Company sold $91.9 million of one-to-four-family loans compared to $138.9 million during the previous quarter and $93.9 million during the same quarter one year ago. The decrease in the volume of loans sold during the current quarter compared to the prior quarter was primarily due to seasonal factors combined with economic volatility. Gross margins on home loan sales increased to 3.26% for the quarter ended March 31, 2025, compared to 3.14% in the previous quarter and decreased from 3.43% in the same quarter one year ago. Gross margins are defined as the margin on loans sold (cash sales) without the impact of deferred costs.

Liabilities and Equity Summary

Changes in deposits at the dates indicated were as follows:

(Dollars in thousands)
		March 31, 2025								December 31, 2024
Transactional deposits:		Amount				Percent				Amount				Percent				$ Change				% Change
Noninterest-bearing checking		$	659,417				25.2	%		$	627,679				26.8	%		$	31,738				5.1	%
Interest-bearing checking (1)			201,469				7.7				176,561				7.5				24,908				14.1
Escrow accounts related to mortgages serviced (2)			17,289				0.7				10,479				0.5				6,810				65.0
Subtotal			878,175				33.6				814,719				34.8				63,456				7.8
Savings			160,332				6.1				154,188				6.6				6,144				4.0
Money market (3)			343,349				13.1				341,615				14.6				1,734				0.5
Subtotal			503,681				19.2				495,803				21.2				7,878				1.6
Certificates of deposit less than $100,000 (4)			639,947				24.5				440,257				18.8				199,690				45.4
Certificates of deposit of $100,000 through $250,000			450,836				17.2				455,594				19.5				(4,758	)			(1.0	)
Certificates of deposit greater than $250,000			142,512				5.5				133,045				5.7				9,467				7.1
Subtotal			1,233,295				47.2				1,028,896				44.0				204,399				19.9
Total		$	2,615,151				100.0	%		$	2,339,418				100.0	%		$	275,733				11.8	%

(Dollars in thousands)
		March 31, 2025								March 31, 2024
Transactional deposits:		Amount				Percent				Amount				Percent				$ Change				% Change
Noninterest-bearing checking		$	659,417				25.2	%		$	618,526				25.1	%		$	40,891				6.6	%
Interest-bearing checking (1)			201,469				7.7				188,050				7.6				13,419				7.1
Escrow accounts related to mortgages serviced (2)			17,289				0.7				28,373				1.2				(11,084	)			(39.1	)
Subtotal			878,175				33.6				834,949				33.9				43,226				5.2
Savings			160,332				6.1				153,025				6.2				7,307				4.8
Money market (3)			343,349				13.1				364,944				14.8				(21,595	)			(5.9	)
Subtotal			503,681				19.2				517,969				21.0				(14,288	)			(2.8	)
Certificates of deposit less than $100,000 (4)			639,947				24.5				579,153				23.5				60,794				10.5
Certificates of deposit of $100,000 through $250,000			450,836				17.2				424,463				17.2				26,373				6.2
Certificates of deposit greater than $250,000			142,512				5.5				108,763				4.4				33,749				31.0
Subtotal			1,233,295				47.2				1,112,379				45.1				120,916				10.9
Total		$	2,615,151				100.0	%		$	2,465,297				100.0	%		$	149,854				6.1	%

__________________________________

 

(1	)	Includes $30.1 million of brokered deposits at March 31, 2025, and no brokered deposits at December 31, 2024, and at March 31, 2024.
(2	)	Primarily noninterest-bearing accounts based on applicable state law.
(3	)	Includes $251,000, $279,000 and $8.0 million of brokered deposits at March 31, 2025, December 31, 2024 and March 31, 2024, respectively.
(4	)	Includes $339.9 million, $143.1 million, and $331.3 million of brokered deposits at March 31, 2025, December 31, 2024 and March 31, 2024, respectively.

At March 31, 2025, CDs, which include retail and non-retail CDs, totaled $1.23 billion, compared to $1.03 billion at December 31, 2024 and $1.11 billion at March 31, 2024, with non-retail CDs representing 28.5%, 15.0% and 31.0% of total CDs at such dates, respectively. At March 31, 2025, non-retail CDs, which include brokered CDs, online CDs and public funds CDs, increased $196.9 million to $351.7 million, compared to $154.8 million at December 31, 2024, primarily due to an increase of $196.8 million in brokered CDs.  The increase in brokered CDs provided funds to pay down higher cost borrowings. Non-retail CDs totaled $351.7 million at March 31, 2025, compared to $344.5 million at March 31, 2024.

At March 31, 2025, the Bank had uninsured deposits of approximately $679.4 million, compared to approximately $652.7 million at December 31, 2024, and $614.1 million at March 31, 2024.  The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

At March 31, 2025, borrowings decreased $239.0 million to $68.8 million at March 31, 2025, from $307.8 million at December 31, 2024, and decreased $61.1 million from $129.9 million at March 31, 2024. These borrowings were comprised solely of FHLB advances.

Total stockholders’ equity increased $3.1 million to $298.8 million at March 31, 2025, from $295.8 million at December 31, 2024, and increased $20.9 million, from $277.9 million at March 31, 2024. The increase in stockholders’ equity at March 31, 2025, compared to December 31, 2024, was primarily due to net income of $8.0 million and $513,000 in equity award compensation, partially offset by share repurchases of $3.8 million and cash dividends paid of $2.2 million. Stockholders’ equity was also impacted by decreases in unrealized net losses on securities available for sale of $2.7 million, net of tax, and decreases in unrealized net gains on fair value and cash flow hedges of $2.6 million, net of tax, reflecting changes in market interest rates during the quarter, resulting in a $151,000 decrease in accumulated other comprehensive loss, net of tax. Book value per common share was $39.12 at March 31, 2025, compared to $38.26 at December 31, 2024, and $36.06 at March 31, 2024.

The Bank is considered “well capitalized” under the capital requirements established by the Federal Deposit Insurance Corporation (“FDIC”) with a total risk-based capital ratio of 14.4%, a Tier 1 leverage capital ratio of 11.3%, and a common equity Tier 1 (“CET1”) capital ratio of 13.2% at March 31, 2025.

The Company exceeded all regulatory capital requirements with a total risk-based capital ratio of 14.7%, a Tier 1 leverage capital ratio of 9.9%, and a CET1 ratio of 11.5% at March 31, 2025.

Credit Quality

The allowance for credit losses on loans (“ACLL”) was $31.7 million, or 1.25% of gross loans receivable (excluding loans HFS) at March 31, 2025, compared to $31.9 million, or 1.26% of gross loans receivable (excluding loans HFS), at December 31, 2024, and $31.5 million, or 1.29% of gross loans receivable (excluding loans HFS), at March 31, 2024. The slight decrease in the ACLL at March 31, 2025, compared to the prior quarter was primarily due to a decrease in the balance of higher risk consumer loans.  The increase of $174,000 in the ACLL from the same quarter the prior year was primarily due to increases in CRE loans. The allowance for credit losses on unfunded loan commitments increased $66,000 to $1.5 million at March 31, 2025, compared to $1.4 million at December 31, 2024, and decreased $35,000 from $1.5 million at March 31, 2024, primarily due to an increase in the volume of unfunded commitments on construction loans

Nonperforming loans increased $870,000 to $14.5 million at March 31, 2025, compared to $13.6 million at December 31, 2024, and increased $2.4 million from $12.1 million at March 31, 2024. The increase in nonperforming loans compared to the prior quarter was primarily due to increases in nonperforming CRE construction and development loans of $1.5 million, nonperforming indirect home improvement loans of $1.1 million, and nonperforming one-to-four-family loans of $970,000, partially offset by decreases in nonperforming CRE loans of $1.6 million and nonperforming commercial business loans of $1.5 million. The increase in nonperforming loans compared to the same quarter the prior year was primarily due to increases in nonperforming construction and development loans of $1.8 million, nonperforming one-to-four-family loans of $961,000, and nonperforming indirect home improvement loans of $626,000, partially offset by a decrease in nonperforming commercial business loans of $1.4 million.

Loans classified as substandard increased $602,000 to $23.5 million at March 31, 2025, compared to $22.9 million at December 31, 2024, and decreased $1.4 million from $24.9 million at March 31, 2024.  The increase in substandard loans compared to the prior quarter was primarily due to an increase of $1.5 million in CRE construction and development loans, $1.1 million in indirect home improvement loans, and $953,000 in one-to-four-family loans, partially offset by decreases in commercial business loans of $1.8 million and CRE of $1.6 million.  The decrease in substandard loans compared to the prior year was primarily due to decreases of $3.1 million in C&I loans and $1.9 million in CRE loans, partially offset by increases of $1.8 million in CRE construction and development loans, $794,000 in one-to-four-family loans, and $626,000 in indirect home improvement loans. 

Operating Results

Net interest income increased $636,000 to $31.0 million for the three months ended March 31, 2025, from $30.3 million for the three months ended March 31, 2024, primarily due to an increase in total interest income of $1.9 million, partially offset by an increase in interest expense of $1.3 million. The $1.9 million increase in total interest income was primarily due to an increase of $2.3 million in interest income on loans receivable, including fees, primarily as a result of net loan growth and variable rate loans repricing higher. The $1.3 million increase in total interest expense was primarily the result of higher market interest rates and a net increase in interest bearing liabilities.

NIM (annualized) increased six basis points to 4.32% for the three months ended March 31, 2025, from 4.26% for the same period in the prior year. The increase in NIM for the three months ended March 31, 2025, compared to the same period in 2024, reflects the increased yields on interest-earning assets. 

The average total cost of funds, including noninterest-bearing checking, increased 17 basis points to 2.38% for the three months ended March 31, 2025, from 2.21% for the three months ended March 31, 2024. This increase was predominantly due to higher market rates for borrowings. 

For the three months ended March 31, 2025, the provision for credit losses on loans was $1.5 million, compared to $1.4 million for the three months ended March 31, 2024. The provision for credit losses on loans reflects an increase in charge-off activity. During the three months ended March 31, 2025, net charge-offs increased $247,000 to $1.7 million, compared to $1.5 million for the same period last year. This increase was the result of increased net charge-offs of $487,000 in indirect home improvement loans and $25,000 in commercial business loans, partially offset by a net reduction of net charge-offs of $213,000 in marine loans and $46,000 in other consumer loans. Management attributes the increase in net charge-offs over the year primarily to volatile economic conditions.

Total noninterest income was unchanged at $5.1 million for the three months ended March 31, 2025 and 2024. Total noninterest expense was $25.0 million for the three months ended March 31, 2025, compared to $23.5 million for the three months ended March 31, 2024.  The $1.5 million increase was primarily due to a $976,000 increase in salaries and benefits and a $437,000 increase in operations expense.

About FS Bancorp

FS Bancorp, Inc., a Washington corporation, is the holding company for 1st Security Bank of Washington. The Bank offers a range of loan and deposit services primarily to small- and middle-market businesses and individuals in Washington and Oregon.  It operates through 27 bank branches, one headquarters office that provides loans and deposit services, and loan production offices in various suburban communities in the greater Puget Sound area, the Kennewick-Pasco-Richland metropolitan area of Washington, also known as the Tri-Cities, and in Vancouver, Washington. Additionally, the Bank services home mortgage customers across the Northwest, focusing on markets in Washington State including the Puget Sound, Tri-Cities, and Vancouver.

Forward-Looking Statements

When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially from those currently expected or projected in these forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: adverse impacts to economic conditions in the Company’s local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels; labor shortages, the effects of inflation, a recession or slowed economic growth; changes in the interest rate environment, including the increases and decrease in the Federal Reserve benchmark rate and duration at which such interest rate levels are maintained, which could adversely affect our revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity; the impact of inflation and the current and future monetary policies of the Federal Reserve in response thereto; the effects of any federal government shutdown;  increased competitive pressures, including repricing and competitors' pricing initiatives, and their impact on our market position, loan, and deposit products; adverse changes in the securities markets, the Company’s ability to execute its plans to grow its residential construction lending, mortgage banking, and warehouse lending operations, and the geographic expansion of its indirect home improvement lending; challenges arising from expanding into new geographic markets, products, or services; secondary market conditions for loans and the Company’s ability to originate loans for sale and sell loans in the secondary market; volatility in the mortgage industry; fluctuations in deposits; liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; legislative and regulatory changes, including changes in banking, securities and tax law, in regulatory policies and principles, or the interpretation of regulatory capital or other rules; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform critical processing functions for us; the potential for new or increased tariffs, trade restrictions or geopolitical tensions that could affect economic activity or specific industry sectors; environmental, social and governance goals; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, civil unrest and other external events on our business; and other factors described in the Company’s latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other reports filed with or furnished to the SEC which are available on its website at www.fsbwa.com and on the SEC's website at www.sec.gov. 

Any of the forward-looking statements that the Company makes in this press release and in the other public statements are based upon management's beliefs and assumptions at the time they are made and may turn out to be incorrect because of the inaccurate assumptions the Company might make, because of the factors illustrated above or because of other factors that cannot be foreseen by the Company. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. 

FS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)
														Linked				Prior Year
		March 31,				December 31,				March 31,				Quarter				Quarter
		2025				2024				2024				% Change				% Change
ASSETS
Cash and due from banks		$	18,657			$	19,280			$	17,149				(3	)			9
Interest-bearing deposits at other financial institutions			44,084				12,355				28,257				257				56
Total cash and cash equivalents			62,741				31,635				45,406				98				38
Certificates of deposit at other financial institutions			1,234				1,727				23,222				(29	)			(95	)
Securities available-for-sale, at fair value			291,133				281,175				279,643				4				4
Securities held-to-maturity, net			10,434				8,455				8,455				23				23
Loans held for sale, at fair value			31,038				27,835				49,957				12				(38	)
Loans receivable, net			2,501,117				2,501,951				2,415,379				—				4
Accrued interest receivable			14,406				13,881				14,455				4				—
Premises and equipment, net			29,451				29,756				30,326				(1	)			(3	)
Operating lease right-of-use			4,979				5,378				6,202				(7	)			(20	)
Federal Home Loan Bank stock, at cost			5,256				15,621				2,909				(66	)			81
Deferred tax asset, net			7,009				7,059				4,832				(1	)			45
Bank owned life insurance (“BOLI”), net			38,778				38,528				37,958				1				2
MSRs, held at the lower of cost or fair value			8,926				9,204				9,009				(3	)			(1	)
Goodwill			3,592				3,592				3,592				—				—
Core deposit intangible, net			12,879				13,710				16,402				(6	)			(21	)
Other assets			43,105				39,670				21,958				9				96
TOTAL ASSETS		$	3,066,078			$	3,029,177			$	2,969,705				1				3
LIABILITIES
Deposits:
Noninterest-bearing accounts		$	676,706			$	638,158			$	646,899				6				5
Interest-bearing accounts			1,938,445				1,701,260				1,818,398				14				7
Total deposits			2,615,151				2,339,418				2,465,297				12				6
Borrowings			68,805				307,806				129,940				(78	)			(47	)
Subordinated notes:
Principal amount			50,000				50,000				50,000				—				—
Unamortized debt issuance costs			(389	)			(406	)			(456	)			(4	)			(15	)
Total subordinated notes less unamortized debt issuance costs			49,611				49,594				49,544				—				—
Operating lease liability			5,149				5,556				6,410				(7	)			(20	)
Other liabilities			28,522				31,036				40,582				(8	)			(30	)
Total liabilities			2,767,238				2,733,410				2,691,773				1				3
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued or outstanding			—				—				—				—				—
Common stock, $.01 par value; 45,000,000 shares authorized; 7,742,907 shares issued and outstanding at March 31, 2025, 7,833,014 at December 31, 2024, and 7,805,795 at March 31, 2024			77				78				78				(1	)			(1	)
Additional paid-in capital			52,806				55,716				57,552				(5	)			(8	)
Retained earnings			262,945				257,113				236,720				2				11
Accumulated other comprehensive loss, net of tax			(16,988	)			(17,140	)			(16,418	)			(1	)			3
Total stockholders’ equity			298,840				295,767				277,932				1				8
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	3,066,078			$	3,029,177			$	2,969,705				1				3

FS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts) (Unaudited)
		Three Months Ended												Linked				Prior Year
		Mar 31,				Dec 31,				Mar 31,				Quarter				Quarter
		2025				2024				2024				% Change				% Change
INTEREST INCOME
Loans receivable, including fees		$	43,303			$	43,654			$	40,997				(1	)			6
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions			3,485				3,320				3,883				5				(10	)
Total interest and dividend income			46,788				46,974				44,880				—				4
INTEREST EXPENSE
Deposits			13,058				13,543				12,882				(4	)			1
Borrowings			2,263				1,831				1,167				24				94
Subordinated notes			485				486				485				—				—
Total interest expense			15,806				15,860				14,534				—				9
NET INTEREST INCOME			30,982				31,114				30,346				—				2
PROVISION FOR CREDIT LOSSES			1,592				1,522				1,399				5				14
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			29,390				29,592				28,947				(1	)			2
NONINTEREST INCOME
Service charges and fee income			2,244				2,513				2,552				(11	)			(12	)
Gain on sale of loans			1,700				1,733				1,838				(2	)			(8	)
Gain on sale of MSRs			—				—				8,215				—				NM
Loss on sale of investment securities, net			—				—				(7,998	)			—				NM
Earnings on cash surrender value of BOLI			250				256				240				(2	)			4
Other noninterest income			932				108				264				763				253
Total noninterest income			5,126				4,610				5,111				11				—
NONINTEREST EXPENSE
Salaries and benefits			14,533				14,172				13,557				3				7
Operations			3,445				3,175				3,008				9				15
Occupancy			1,717				1,821				1,705				(6	)			1
Data processing			2,045				2,252				1,958				(9	)			4
Loan costs			548				781				585				(30	)			(6	)
Professional and board fees			1,186				1,038				923				14				28
FDIC insurance			538				490				532				10				1
Marketing and advertising			221				329				227				(33	)			(3	)
Amortization of core deposit intangible			831				876				941				(5	)			(12	)
(Recovery) impairment of servicing rights			(9	)			(583	)			93				(98	)			(110	)
Total noninterest expense			25,055				24,351				23,529				3				6
INCOME BEFORE PROVISION FOR INCOME TAXES			9,461				9,851				10,529				(4	)			(10	)
PROVISION FOR INCOME TAXES			1,440				2,469				2,132				(42	)			(32	)
NET INCOME		$	8,021			$	7,382			$	8,397				9				(4	)
Basic earnings per share		$	1.02			$	0.94			$	1.07				9				(5	)
Diluted earnings per share		$	1.01			$	0.92			$	1.06				10				(5	)

KEY FINANCIAL RATIOS AND DATA (Unaudited)

		At or For the Three Months Ended
		March 31,				December 31,				March 31,
PERFORMANCE RATIOS:		2025				2024				2024
Return on assets (ratio of net income to average total assets) (1)			1.07	%			0.98	%			1.14	%
Return on equity (ratio of net income to average total stockholders' equity) (1)			10.80				9.88				12.29
Yield on average interest-earning assets (1)			6.53				6.51				6.30
Average total cost of funds (1)			2.38				2.38				2.21
Interest rate spread information – average during period			4.15				4.13				4.09
Net interest margin (1)			4.32				4.31				4.26
Operating expense to average total assets (1)			3.35				3.24				3.20
Average interest-earning assets to average interest-bearing liabilities (1)			142.94				143.27				144.51
Efficiency ratio (2)			69.39				68.16				66.36
Common equity ratio (ratio of stockholders' equity to total assets)			9.75				9.76				9.36
Tangible common equity ratio (3)			9.26				9.25				8.74

		March 31,				December 31,				March 31,
ASSET QUALITY RATIOS AND DATA:		2025				2024				2024
Nonperforming assets to total assets at end of period (4)			0.47	%			0.45	%			0.41	%
Nonperforming loans to total gross loans (excluding loans HFS) (5)			0.57				0.54				0.49
Allowance for credit losses – loans to nonperforming loans (5)			219.08				234.55				260.24
Allowance for credit losses – loans to total gross loans (excluding loans HFS)			1.25				1.26				1.29

		At or For the Three Months Ended
		March 31,					December 31,					March 31,
PER COMMON SHARE DATA:		2025					2024					2024
Basic earnings per share		$	1.02				$	0.94				$	1.07
Diluted earnings per share		$	1.01				$	0.92				$	1.06
Weighted average basic shares outstanding			7,695,320					7,723,250					7,703,789
Weighted average diluted shares outstanding			7,805,728					7,897,099					7,824,460
Common shares outstanding at end of period			7,639,844		(6)			7,729,951		(7)			7,707,651		(8)
Book value per share using common shares outstanding		$	39.12				$	38.26				$	36.06
Tangible book value per share using common shares outstanding (9)		$	36.96				$	36.02				$	33.47

__________________________________

(1	)	Annualized.
(2	)	Total noninterest expense as a percentage of net interest income and total noninterest income.
(3	)	Represents a non-GAAP financial measure.  For a reconciliation to the most comparable GAAP financial measure, see “Non-GAAP Financial Measures” below.
(4	)	Nonperforming assets consist of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), foreclosed real estate and other repossessed assets.
(5	)	Nonperforming loans consist of nonaccruing loans and accruing loans 90 days or more past due.
(6	)	Common shares were calculated using shares outstanding of 7,742,907 at March 31, 2025, less 103,063 unvested restricted stock shares.
(7	)	Common shares were calculated using shares outstanding of 7,833,014 at December 31, 2024, less 103,063 unvested restricted stock shares.
(8	)	Common shares were calculated using shares outstanding of 7,805,795 at March 31, 2024, less 98,144 unvested restricted stock shares.
(9	)	Tangible book value per share using outstanding common shares excludes intangible assets. This ratio represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” below.

(Dollars in thousands)		For the Three Months Ended Mar 31,								Qtr. Over Qtr.
Average Balances		2025				2024				$ Change
Assets
Loans receivable, net (1)		$	2,559,944			$	2,464,602			$	95,342
Securities available-for-sale, at amortized cost			310,417				331,413				(20,996	)
Securities held-to-maturity			8,656				8,500				156
Interest-bearing deposits and certificates of deposit at other financial institutions			16,161				59,514				(43,353	)
FHLB stock, at cost			11,948				2,174				9,774
Total interest-earning assets			2,907,126				2,866,203				40,923
Noninterest-earning assets			125,386				92,344				33,042
Total assets		$	3,032,512			$	2,958,547			$	73,965
Liabilities
Interest-bearing deposit accounts		$	1,765,605			$	1,832,767			$	(67,162	)
Borrowings			218,639				101,150				117,489
Subordinated notes			49,600				49,533				67
Total interest-bearing liabilities			2,033,844				1,983,450				50,394
Noninterest-bearing deposit accounts			663,824				657,083				6,741
Other noninterest-bearing liabilities			33,739				43,246				(9,507	)
Total liabilities		$	2,731,407			$	2,683,779			$	47,628

__________________________________

(1	)	Includes loans HFS.

Non-GAAP Financial Measures:

In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States (“GAAP”), this earnings release presents non-GAAP financial measures that include tangible book value per share, and tangible common equity ratio. Management believes that providing the Company’s tangible book value per share and tangible common equity ratio is consistent with the capital treatment utilized by the investment community, which excludes intangible assets from the calculation of risk-based capital ratios and facilitates comparison of the quality and composition of the Company's capital over time and to its competitors. Where applicable, the Company has also presented comparable GAAP information.

These non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. They should not be considered in isolation or as a substitute for total stockholders' equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Reconciliation of the GAAP book value per share and common equity ratio and the non-GAAP tangible book value per share and tangible common equity ratio is presented below.

(Dollars in thousands, except share and per share amounts)		March 31,				December 31,				March 31,
Tangible Book Value Per Share:		2025				2024				2024
Stockholders' equity (GAAP)		$	298,840			$	295,767			$	277,932
Less: goodwill and core deposit intangible, net			(16,471	)			(17,302	)			(19,994	)
Tangible common stockholders' equity (non-GAAP)		$	282,369			$	278,465			$	257,938
Common shares outstanding at end of period			7,639,844		(1)		7,729,951		(2)		7,707,651		(3)
Book value per share (GAAP)		$	39.12			$	38.26			$	36.06
Tangible book value per share (non-GAAP)		$	36.96			$	36.02			$	33.47
Tangible Common Equity Ratio:
Total assets (GAAP)		$	3,066,078			$	3,029,177			$	2,969,705
Less: goodwill and core deposit intangible assets			(16,471	)			(17,302	)			(19,994	)
Tangible assets (non-GAAP)		$	3,049,607			$	3,011,875			$	2,949,711
Common equity ratio (GAAP)			9.75	%			9.76	%			9.36	%
Tangible common equity ratio (non-GAAP)			9.26				9.25				8.74

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(1	)	Common shares were calculated using shares outstanding of 7,742,907 at March 31, 2025, less 103,063 unvested restricted stock shares.
(2	)	Common shares were calculated using shares outstanding of 7,833,014 at December 31, 2024, less 103,063 unvested restricted stock shares.
(3	)	Common shares were calculated using shares outstanding of 7,805,795 at March 31, 2024, less 98,144 unvested restricted stock shares.

Contacts:
Joseph C. Adams,
Chief Executive Officer

Matthew D. Mullet,
President/Chief Financial Officer

(425) 771-5299
www.FSBWA.com

FAQ

What was FSBW's earnings per share in Q1 2025?

FS Bancorp reported earnings of $1.01 per diluted share in Q1 2025, compared to $1.06 per diluted share in Q1 2024.

How much is FSBW's quarterly dividend payment in 2025?

FSBW declared a quarterly cash dividend of $0.28 per share, payable May 22, 2025, to shareholders of record as of May 8, 2025.

What was FSBW's deposit growth in Q1 2025?

Total deposits increased by $275.7 million (11.8%) to $2.62 billion, primarily driven by $226.9 million growth in brokered deposits.

How many shares did FSBW repurchase in Q1 2025?

FSBW repurchased 98,317 shares at an average price of $39.06 per share and authorized an additional $5.0 million for future share repurchases.