FS Bancorp, Inc. Reports Net Income for the Third Quarter of $12.7 Million or $2.94 Per Diluted Share, and Thirty-First Consecutive Quarterly Dividend

Rhea-AI Summary

FS Bancorp reported a strong third quarter for 2020, with net income increasing to $12.7 million or $2.94 per diluted share, up from $7.1 million a year earlier. The company's loan portfolio grew by $50.5 million to $1.52 billion, and they approved a $0.21 cash dividend, payable on November 19, 2020. Notably, the allowance for loan losses rose to 1.63% of gross loans. FS Bancorp funded 471 PPP loans totaling $74.1 million. Total assets reached $2.05 billion, reflecting a strong performance despite the pandemic.

Positive

• Net income increased to $12.7 million for Q3 2020, up from $7.1 million year-over-year.
• Loan portfolio increased by $50.5 million to $1.52 billion.
• Cash dividend of $0.21 approved, reinforcing shareholder income confidence.
• 471 PPP loans funded, totaling $74.1 million, supporting community businesses.
• Total assets grew to $2.05 billion, up 21.2% year-over-year.

Negative

• Allowance for loan losses increased to 1.63% of gross loans, indicating potential credit risks.

MOUNTLAKE TERRACE, Wash., Oct. 26, 2020 (GLOBE NEWSWIRE) -- FS Bancorp, Inc. (NASDAQ:FSBW)  (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”) today reported 2020 third quarter net income of $12.7 million, or $2.94 per diluted share, compared to $7.1 million, or $1.58 per diluted share for the same period last year.

“Operating within the backdrop of the global COVID-19 pandemic, we focused on our established community banking business plan to achieve robust loan growth and strong profitability,” stated Joe Adams, CEO. “We are also pleased to announce that our Board of Directors has approved our thirty-first consecutive quarterly cash dividend. The quarterly dividend of $0.21 will be paid on November 19, 2020, to shareholders of record as of November 6, 2020.”

Updated response to the novel coronavirus of 2019 (“COVID-19”) pandemic: 

The Company is following the Federal Housing Finance Agency guidelines for forbearance, foreclosure relief, and late payment reporting for the COVID-19 pandemic on all serviced loans and a modified format for portfolio loans.  For portfolio loans, the primary method of relief is to allow the borrower up to 90-days of interest only payments and/or loan payment deferments, and, on a more limited basis, waived interest, late fees, or interest only loan payments and suspended foreclosure proceedings. As of September 30, 2020, the amount of portfolio loans remaining under payment/relief agreements includes commercial real estate loans of $23.8 million, commercial business loans of $7.6 million, portfolio one-to-four-family loans of $3.3 million, and consumer loans of $280,000. Additional detail is provided below in the “Credit Quality” discussion.

The Company participated in the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) through its conclusion on August 8, 2020. For borrowers in the communities we serve, the Company has funded 471 PPP loans totaling $74.1 million as of September 30, 2020.

All of our branches are open and we continue to remain flexible as to branch operations based on the guidance provided for the communities in which we operate. The majority of our employees continue to work remotely, where feasible.

2020 Third Quarter Highlights

• Net income was $12.7 million for the third quarter of 2020, compared to $10.0 million in the previous quarter, and $7.1 million for the same quarter one year ago;
  
  
• In response to the COVID-19 pandemic and its continued adverse economic impact and due to additional loan growth, the provision for loan losses was $3.1 million this quarter and $4.6 million in the previous quarter, compared to $573,000 for the same quarter one year ago;
  
  
• Total gross loans increased $50.5 million during the quarter to $1.52 billion at September 30, 2020, compared to $1.47 billion at June 30, 2020, and $1.33 billion at September 30, 2019;
  
  
• The allowance for loan and lease losses (“ALLL”) to gross loans receivable (excluding loans held for sale (“HFS”)) for the third quarter of 2020 was 1.63%, up from 1.47% in the previous quarter and 0.96% for the same quarter one year ago. The  adjusted ALLL to gross loans receivable, excluding loans HFS and PPP loans, was 1.72% (See “Non-GAAP Financial Measures”);
  
  
• The Company closed a record $589.9 million of one-to-four family loans in the third quarter, an increase of $111.5 million from the second quarter and $301.0 million from the third quarter of 2019;
  
  
• Total deposits increased $6.3 million during the quarter, including an increase of $20.7 million in relationship-based transactional deposits (noninterest-bearing checking, interest-bearing checking, and escrow accounts), partially offset by a reduction of $21.9 million in wholesale deposits; and
  
  
• Our Board of Directors approved a share repurchase plan which includes up to $5.0 million of shares to be repurchased over the next 12 months, depending on market conditions and other factors including the Company’s liquidity requirements. The Company repurchased 11,010 shares of its common stock during the quarter ended September 30, 2020, at an average price per share of $40.61.

Asset Summary

Total assets increased $45.9 million, or 2.3%, to $2.05 billion at September 30, 2020, compared to $2.01 billion at June 30, 2020, and increased $359.6 million, or 21.2%, from $1.69 billion at September 30, 2019.  The quarter over linked quarter increase in total assets was primarily due to increases in loans HFS of $75.7 million, loans receivable, net of $47.1 million, other assets of $6.3 million, securities held-to-maturity of $5.5 million, securities available-for-sale of $4.4 million, and servicing rights of $1.1 million, partially offset by a decrease in total cash and cash equivalents of $90.1 million, certificates of deposit (“CDs”) at other financial institutions of $3.7 million, and Federal Home Loan Bank (“FHLB”) stock of $1.1 million. Year over year increases in total assets included increases in loans receivable, net of $180.2 million, loans HFS of $134.5 million, securities available-for-sale of $67.1 million, other assets of $9.6 million, and securities held-to-maturity of $5.5 million, partially offset by decreases in total cash and cash equivalents of $26.8 million and CDs at other financial institutions of $10.0 million.

(Dollars in thousands)

September 30, 2020

June 30, 2020

September 30, 2019

FAQ

What was the net income for FS Bancorp in Q3 2020?

FS Bancorp reported a net income of $12.7 million for Q3 2020.

When is the dividend payment date for FS Bancorp?

The cash dividend of $0.21 will be paid on November 19, 2020.

What is the total amount of PPP loans funded by FS Bancorp?

FS Bancorp funded 471 PPP loans totaling $74.1 million.

How much did FS Bancorp's loan portfolio grow in Q3 2020?

The loan portfolio grew by $50.5 million to $1.52 billion.

What was the allowance for loan losses for FS Bancorp in Q3 2020?

The allowance for loan losses was 1.63% of gross loans.