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

MOUNTLAKE TERRACE, Wash., April 22, 2025 (GLOBE NEWSWIRE) -- FS Bancorp, Inc. (NASDAQ: FSBW) (the 鈥淐ompany鈥�), the holding company for 1st Security Bank of Washington (the 鈥淏ank鈥�) today reported听2025 first quarter net income of $8.0听尘颈濒濒颈辞苍, or $1.01听per diluted share, compared to $8.4听尘颈濒濒颈辞苍, or $1.06听per diluted share, for the comparable quarter one year ago.听

鈥淒eposit growth exceeded expectations in the first quarter of 2025, enabling听the Bank to be well positioned for our loan pipeline going into the second quarter,鈥� stated Matthew Mullet, President/CFO.

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

2025 First Quarter Highlights

• Net income was $8.0听尘颈濒濒颈辞苍 for the first quarter of 2025, compared to $7.4听尘颈濒濒颈辞苍 for the previous quarter, and $8.4 million for the comparable quarter one year ago;
• Total deposits increased $275.7听尘颈濒濒颈辞苍, or 11.8%, to $2.62听产颈濒濒颈辞苍 at听March 31, 2025, primarily due to an increase of $226.9听尘颈濒濒颈辞苍 in brokered deposits,听compared to $2.34听产颈濒濒颈辞苍 at December 31, 2024, and increased $149.9听尘颈濒濒颈辞苍, or 6.1%, from $2.47听产颈濒濒颈辞苍 at听March 31, 2024.听 Noninterest-bearing deposits were听$676.7听尘颈濒濒颈辞苍 at March 31, 2025, $638.2听尘颈濒濒颈辞苍 at December 31, 2024, and $646.9听尘颈濒濒颈辞苍 at March 31, 2024, reflecting growth in core deposits;听
• Borrowings decreased $239.0听尘颈濒濒颈辞苍,听辞谤 77.6% to $68.8听尘颈濒濒颈辞苍 at听March 31, 2025, compared to $307.8听尘颈濒濒颈辞苍 at December 31, 2024, and decreased $61.1听尘颈濒濒颈辞苍, or 47.0%, from $129.9 million at听March 31, 2024, and were primarily repositioned into wholesale brokered CDs noted above;听
• Loans receivable, net was virtually unchanged at $2.50听产颈濒濒颈辞苍 at both听March 31, 2025, and听December 31, 2024, and increased $85.7听尘颈濒濒颈辞苍, or 3.5%, from $2.42听产颈濒濒颈辞苍 at March 31, 2024;
• Consumer loans, of which 87.4% are home improvement loans, decreased $11.3听尘颈濒濒颈辞苍, or 1.8%, to $608.9听尘颈濒濒颈辞苍 at March 31, 2025, compared to $620.2听尘颈濒濒颈辞苍 in the previous quarter, and decreased $37.2听尘颈濒濒颈辞苍, or 5.8%, from $646.1听尘颈濒濒颈辞苍 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听(鈥淔ICO鈥�) score above 720;
• Repurchased 98,317 shares of the Company's common stock听in the first听quarter of 2025听at an average price of $39.06 per share with $873,000 remaining for future purchases under the existing share听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听迟o $39.12听at March 31, 2025, compared to $38.26听at December 31, 2024, and increased $3.06听蹿谤辞尘 $36.06听at March 31, 2024.听 Tangible book value per share (non-GAAP financial measure) increased $0.94听迟o $36.96听at听March 31, 2025, compared to $36.02听at December 31, 2024, and increased $3.49听蹿谤辞尘 $33.47听at March 31, 2024. See,听鈥淣on-GAAP Financial Measures.鈥�
• Segment reporting in the first quarter of 2025 reflected net income of $7.8听尘颈濒濒颈辞苍 for the Commercial and Consumer Banking segment and $241,000听for the Home Lending segment, compared to net income of $7.4听尘颈濒濒颈辞苍 and net loss of $39,000听in the prior quarter, and net income of $8.2听尘颈濒濒颈辞苍 and $246,000听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听and cash management services. This segment is also responsible for managing听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听three months ended March 31, 2025 and 2024 (dollars in thousands):

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Asset Summary

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

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

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

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

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

During the quarter ended March 31, 2025, the Company sold $91.9 million of one-to-four-family loans compared to $138.9听million during the previous quarter and $93.9听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听economic volatility. Gross margins on home loan sales increased to 3.26% for the听quarter听ended March 31, 2025, compared to 3.14% in the previous quarter and decreased听蹿谤辞尘 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:

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听

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

At March 31, 2025, the Bank had uninsured deposits of approximately $679.4 million, compared to approximately听$652.7听million at December 31, 2024, and $614.1听million at March 31, 2024.听 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听尘颈濒濒颈辞苍 to $68.8听尘颈濒濒颈辞苍 at March 31, 2025, from $307.8听尘颈濒濒颈辞苍 at December 31, 2024, and decreased $61.1听尘颈濒濒颈辞苍 from $129.9听million at March 31, 2024. These borrowings were comprised solely听of FHLB advances.

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

The Bank is considered 鈥渨ell capitalized鈥� under the capital requirements established by the Federal Deposit Insurance Corporation (鈥淔DIC鈥�) 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 (鈥淐ET1鈥�) 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 (鈥淎CLL鈥�) was $31.7听million, or 1.25% of gross loans receivable (excluding loans HFS) at March 31, 2025, compared to $31.9听million, or 1.26% of gross loans receivable听(excluding loans HFS), at December 31, 2024, and $31.5听million, or 1.29% of gross loans receivable (excluding loans HFS), at March 31, 2024. The slight decrease听in the ACLL at March 31, 2025,听compared to the prior quarter was primarily due to a decrease in the balance of higher risk consumer听loans.听 The increase of $174,000听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听$66,000听to $1.5听million听at March 31, 2025, compared to $1.4听million at听December 31, 2024, and decreased $35,000听蹿谤辞尘 $1.5听million at March 31, 2024, primarily due to an increase in the volume of unfunded commitments on construction loans

Nonperforming loans increased听$870,000听to $14.5听million at March 31, 2025, compared to $13.6听million at December 31, 2024, and increased $2.4听million from $12.1听million at March 31, 2024. The increase in nonperforming loans compared to听the prior quarter听was primarily due to increases in nonperforming CRE construction and development听loans of $1.5 million, nonperforming听indirect home improvement听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听was primarily due to increases in nonperforming construction and development听loans of $1.8听million,听nonperforming one-to-four-family听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听to $23.5听million听at听March 31, 2025, compared to听$22.9听million at December 31, 2024, and decreased $1.4听million from $24.9听million at March 31, 2024.听 The increase in substandard loans compared to听the prior quarter was primarily due to an increase听of $1.5听million听in CRE construction and development loans,听$1.1 million in indirect home improvement loans, and $953,000听in one-to-four-family loans, partially offset by decreases in commercial business loans of $1.8 million and CRE of $1.6 million.听 The decrease in substandard loans compared to the prior year听was primarily due to decreases听of听$3.1 million听in C&I听loans and听$1.9 million听in CRE听loans, partially offset by increases of $1.8听million in CRE construction and development loans, $794,000听in one-to-four-family听loans, and $626,000听in indirect home improvement loans.听

Operating Results

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

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

The average total cost of funds, including noninterest-bearing checking, increased 17听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听market rates for borrowings.听

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

Total noninterest income was unchanged at $5.1 million for the three months ended听March 31, 2025 and 2024. Total noninterest expense听was $25.0 million for the three months ended听March 31, 2025, compared to $23.5 million听for the three months ended听March 31, 2024.听 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听loan and deposit services primarily to small- and middle-market businesses and individuals in Washington and Oregon.听 It operates through听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听the Northwest, focusing on markets听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 鈥淪EC鈥�), 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 鈥渂elieve,鈥� 鈥渨ill,鈥� 鈥渨ill likely result,鈥� 鈥渁re expected to,鈥� 鈥渨ill continue,鈥� 鈥渋s anticipated,鈥� 鈥渆stimate,鈥� 鈥減roject,鈥� 鈥減lans,鈥� or similar expressions are intended to identify 鈥渇orward-looking statements鈥� 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鈥檚 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鈥檚 local market areas, other markets where the Company has lending relationships, or other aspects of the Company鈥檚 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;听changes in the interest rate environment, including the increases and decrease听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; 听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鈥檚 ability to听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鈥檚 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;听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听that could affect economic activity or specific industry sectors;听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;听and other factors described in the Company鈥檚 latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other reports filed with or听furnished to the SEC which are available on its website at 听and on the SEC's website at .听

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.听

KEY FINANCIAL RATIOS AND DATA (Unaudited)

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Non-GAAP Financial Measures:

In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States (鈥淕AAP鈥�), 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鈥檚 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.

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Contacts:
Joseph C. Adams,
Chief Executive Officer

Matthew D. Mullet,
President/Chief Financial Officer

(425) 771-5299