Form 8-K - Current report

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ​

FORM 8-K

 ​

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 ​

Date of Report (Date of earliest event reported): January 21, 2025

 ​

FS BANCORP, INC.

(Exact name of registrant as specified in its charter)

 ​

Washington	001-35589	45-4585178
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

 ​

 ​

6920 220th Street SW Mountlake Terrace, Washington	​98043
(Address of principal executive offices)	(Zip Code)

 ​

[phone]

​

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

​

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 ​

Securities registered pursuant to Section 12(b) of the Act:

 ​

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $.01 per share		FSBW		The NASDAQ Stock Market LLC

 ​

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 ​

 

---

 

 

Item 2.02 Results of Operations and Financial Condition

 ​

On January 21, 2025, FS Bancorp, Inc. (the Company), the parent corporation of 1st Security Bank of Washington, issued its earnings release for the quarter ended December 31, 2024.  A copy of the press release is furnished with this Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

 ​

Item 8.01 Other Events

 ​

On January 21, 2025, the Company announced that its Board of Directors declared a regular quarterly cash dividend on its common stock, increasing it from $0.27 per share to $0.28 per share.  The dividend is payable on February 20, 2025, to stockholders of record as of the close of business on February 6, 2025.

 ​

Item 9.01 Exhibits

 ​

(d)

Exhibits

 ​

	99.1	Press release of FS Bancorp, Inc. dated January 21, 2025
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 ​ 

 

---

 

​

SIGNATURES

 ​

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 ​

 ​

Date: January 21, 2025	FS BANCORP, INC.
​	​
​	/s/Matthew D. Mullet
​	Matthew D. Mullet
​	President and Chief Financial Officer
​

 ​

 

 

 

Exhibit 99.1

 

 

FS Bancorp, Inc. Reports $7.4 Million of Net Income or $0.92 Per Diluted Share for 2024 and 3.7% Increase in Its Quarterly Dividend

 

MOUNTLAKE TERRACE, WA – January 21, 2025 – FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”), today reported fourth quarter net income of $7.4 million, or $0.92 per diluted share, compared to $9.8 million, or $1.23 per diluted share, for the comparable quarter one year ago. The decrease in net income during the fourth quarter of 2024, compared to the preceding quarter, was primarily due to a $420,000 tax benefit recorded during the preceding quarter, compared to a $2.5 million tax provision recorded for the fourth quarter of 2024.  The tax benefit for the third quarter of 2024 was due to $28.4 million of energy tax credits purchased during the third quarter related to the Inflation Reduction Act of 2022.  Net income for the year ended December 31, 2024 was $35.0 million, or $4.36 per diluted share, compared to $36.1 million, or $4.56 per diluted share for 2023.

 

“Despite economic volatility that has impacted interest rates for loans and deposits these past few years, we are proud to have, primarily through organic loan growth, surpassed $3 billion in total assets,” stated Joe Adams, CEO. “We are also thankful to our Board of Directors for increasing our forty-eighth consecutive quarterly cash dividend by $0.01 to $0.28 per common share.  The quarterly dividend will be paid on February 20, 2025, to shareholders of record as of February 6, 2025,” concluded Adams.

 

“Tangible book value (non-GAAP) per share was $36.02 at December 31, 2024, compared to $31.64 at December 31, 2023, a 13.8% increase year over year.  The focus on risk adjusted returns and growing tangible book value remains a mainstay for the Company's shareholders,” noted Matthew Mullet, President and CFO.

 

2024 Fourth Quarter and Year End Highlights

 

●

Net income was $7.4 million for the fourth quarter of 2024, compared to $10.3 million in the previous quarter, and $9.8 million for the comparable quarter one year ago;

 

●

Net interest margin (“NIM”) was 4.31% for the fourth quarter of 2024, compared to 4.35% in the previous quarter, and 4.24% for the comparable quarter one year ago;

 

●

Total deposits decreased $87.9 million, or 3.6%, to $2.34 billion at December 31, 2024, primarily due to a $107.9 million decrease in brokered deposits, compared to $2.43 billion at September 30, 2024, and decreased $182.9 million, or 7.3%, from $2.52 billion at December 31, 2023. Noninterest-bearing deposits were $638.2 million at December 31, 2024, $657.8 million at September 30, 2024, and $670.8 million at December 31, 2023;

 

●

Loans receivable, net increased $38.3 million, or 1.6%, to $2.50 billion at December 31, 2024, compared to $2.46 billion at September 30, 2024, and increased $100.5 million, or 4.2%, from $2.40 billion at December 31, 2023;

 

●

Consumer loans, of which 87.4% are home improvement loans, decreased $12.2 million, or 1.9%, to $620.2 million at December 31, 2024, compared to $632.4 million in the previous quarter and decreased $26.6 million, or 4.1% from $646.8 million in the comparable quarter one year ago. During the three months ended December 31, 2024, 81.2% of consumer portfolio originations for home improvement loans had a Fair Isaac Corporation (“FICO”) score above 720 and 80.7% were secured with a UCC-2 filing;

 

●

Borrowings increased $144.0 million, or 87.9%, to $307.8 million at December 31, 2024, compared to $163.8 million at September 30, 2024, and increased $214.1 million, or 228.3%, from $93.7 million at December 31, 2023;

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 2

 

●

A $2.5 million provision for income taxes was recorded during the fourth quarter of 2024, compared to a $420,000 tax benefit during the third quarter of 2024, as a result of $28.4 million of energy tax credits purchased during the third quarter of 2024;

 

●

Repurchased 35,000 shares of the Company's common stock in the fourth quarter of 2024 at an average price of $48.47 per share with $4.7 million remaining for future purchases under the existing share repurchase plan;

 

●

Book value per share increased $0.81 to $38.26 at December 31, 2024, compared to $37.45 at September 30, 2024, and increased $3.91 from $34.36 December 31, 2023.  Tangible book value per share (non-GAAP financial measure) increased $0.92 to $36.02 at December 31, 2024, compared to $35.10 at September 30, 2024, and increased $6.62 from $31.64 at December 31, 2023.  See, “Non-GAAP Financial Measures.”

 

●

Segment reporting in the fourth quarter of 2024 reflected net income of $7.4 million for the Commercial and Consumer Banking segment and a net loss of $39,000 for the Home Lending segment, compared to net income of $9.3 million and $1.0 million in the prior quarter, and net income of $10.0 million and net loss of $254,000 in the fourth quarter of 2023, respectively; and

 

●

Regulatory capital ratios at the Bank were 14.2% for total risk-based capital and 11.2% for Tier 1 leverage capital at December 31, 2024, compared to 13.4% for total risk-based capital and 10.4% for Tier 1 leverage capital at December 31, 2023.

 

Segment Reporting

 

The Company reports 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 portfolios and cash management services. This segment is also responsible for the management of the investment portfolio and other assets of the Bank. 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 and years ended December 31, 2024 and 2023 (dollars in thousands):

 

		At or For the Three Months Ended December 31, 2024
Condensed income statement:		Commercial and Consumer Banking				Home Lending				Total
Net interest income (1)		$	28,555			$	2,559			$	31,114
(Provision) recovery for credit losses			(1,597	)			75				(1,522	)
Noninterest income (2)			2,308				2,302				4,610
Noninterest expense (3)			(19,365	)			(4,986	)			(24,351	)
Income (loss) before (provision) benefit for income taxes			9,901				(50	)			9,851
(Provision) benefit for income taxes			(2,480	)			11				(2,469	)
Net income (loss)		$	7,421			$	(39	)		$	7,382
Total average assets for period ended		$	2,383,885			$	606,826			$	2,990,711
Full-time employees ("FTEs")			447				115				562

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 3

 

		At or For the Three Months Ended December 31, 2023
Condensed income statement:		Commercial and Consumer Banking				Home Lending				Total
Net interest income (1)		$	28,405			$	2,050			$	30,455
Provision for credit losses			(939	)			(463	)			(1,402	)
Noninterest income (2)			2,602				2,854				5,456
Noninterest expense (3)			(17,668	)			(4,765	)			(22,433	)
Income (loss) before (provision) benefit for income taxes			12,400				(324	)			12,076
(Provision) benefit for income taxes			(2,374	)			70				(2,304	)
Net income (loss)		$	10,026			$	(254	)		$	9,772
Total average assets for period ended		$	2,395,363			$	548,002			$	2,943,365
FTEs			447				123				570

 

		At or For the Year Ended December 31, 2024
Condensed income statement:		Commercial and Consumer Banking				Home Lending				Total
Net interest income (1)		$	113,304			$	9,801			$	123,105
Provision for credit losses			(5,393	)			(118	)			(5,511	)
Noninterest income (2)			9,227				12,329				21,556
Noninterest expense (3)			(77,615	)			(19,954	)			(97,569	)
Income before (provision) benefit for income taxes			39,523				2,058				41,581
(Provision) benefit for income taxes			(6,733	)			176				(6,557	)
Net income		$	32,790			$	2,234			$	35,024
Total average assets for period ended		$	2,373,295			$	591,236			$	2,964,531
FTEs			447				115				562

 

		At or For the Year Ended December 31, 2023
Condensed income statement:		Commercial and Consumer Banking				Home Lending				Total
Net interest income (1)		$	111,737			$	11,566			$	123,303
Provision for credit losses			(3,494	)			(1,280	)			(4,774	)
Noninterest income (2)			10,368				10,122				20,490
Noninterest expense (3)			(73,767	)			(19,980	)			(93,747	)
Income before provision for income taxes			44,844				428				45,272
Provision for income taxes			(9,132	)			(87	)			(9,219	)
Net income		$	35,712			$	341			$	36,053
Total average assets for period ended		$	2,315,806			$	527,442			$	2,843,248
FTEs			447				123				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 and year ended December 31, 2024, the Company recorded a net decrease in fair value of $396,000 and a net increase in fair value of $52,000, respectively, as compared to net increases in fair value of $733,000 and $447,000 for the three months and year ended December 31, 2023, respectively.  As of December 31, 2024 and 2023, there were $12.7 million and $15.1 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 and years ended December 31, 2024 and 2023, the Home Lending segment included allocated overhead expenses of $1.8 million and $6.6 million, compared to $1.4 million and $6.1 million, respectively.

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 4

 

Asset Summary

 

Total assets increased $59.0 million, or 2.0%, to $3.03 billion at December 31, 2024, compared to $2.97 billion at both September 30, 2024 and December 31, 2023. The increase in total assets at December 31, 2024, compared to September 30, 2024, was primarily due to increases of $53.0 million in securities available-for-sale (“AFS”), $38.3 million in loans receivable, net, and $6.1 million in FHLB stock, partially offset by decreases of $21.5 million in loans held for sale (“HFS”), $10.3 million in certificates of deposit (“CDs”) at other financial institutions, and $10.0 million in interest-bearing deposits at other financial institutions.  The increase in securities AFS was attributable to purchases of variable and shorter duration securities.  The increase in loans receivable, net was due to organic loan growth. The increase compared to December 31, 2023, was primarily due to increases in loans receivable, net of $100.5 million, other assets of $21.3 million, and FHLB stock of $13.5 million, partially offset by decreases in interest-bearing deposits at other financial institutions of $36.3 million, CDs at other financial institutions of $22.4 million, securities available-for-sale of $11.8 million, and mortgage servicing rights (“MSRs”) held for sale of $8.1 million.

 

LOAN PORTFOLIO
(Dollars in thousands)		December 31, 2024								September 30, 2024								December 31, 2023
		Amount				Percent				Amount				Percent				Amount				Percent
REAL ESTATE LOANS
Commercial		$	345,317				13.6	%		$	352,933				14.1	%		$	366,328				15.1	%
Construction and development			330,700				13.1				292,366				11.7				303,054				12.5
Home equity			75,147				3.0				75,063				3.0				69,488				2.9
One-to-four-family (excludes HFS)			617,322				24.4				591,666				23.7				567,742				23.3
Multi-family			245,222				9.7				238,462				9.6				223,769				9.2
Total real estate loans			1,613,708				63.8				1,550,490				62.1				1,530,381				63.0
CONSUMER LOANS
Indirect home improvement			541,946				21.4				552,226				22.2				569,903				23.4
Marine			74,931				3.0				76,845				3.1				73,310				3.0
Other consumer			3,304				0.1				3,346				0.1				3,540				0.1
Total consumer loans			620,181				24.5				632,417				25.4				646,753				26.5
COMMERCIAL BUSINESS LOANS
Commercial and industrial ("C&I")			287,014				11.3				296,773				11.9				238,301				9.8
Warehouse lending			12,918				0.4				15,249				0.6				17,580				0.7
Total commercial business loans			299,932				11.7				312,022				12.5				255,881				10.5
Total loans receivable, gross			2,533,821				100.0	%			2,494,929				100.0	%			2,433,015				100.0	%
Allowance for credit losses on loans			(31,870	)							(31,232	)							(31,534	)
Total loans receivable, net		$	2,501,951							$	2,463,697							$	2,401,481

 

Loans receivable, net increased $38.3 million to $2.50 billion at December 31, 2024, from $2.46 billion at September 30, 2024, and increased $100.5 million from $2.40 billion at December 31, 2023. The increase in total real estate loans at December 31, 2024, compared to the prior quarter reflects increases in construction and development loans of $38.3 million, one-to-four-family loans (excluding loans HFS) of $25.7 million, and multi-family loans of $6.8 million.  These increases were partially offset by a $7.6 million decrease in commercial real estate loans. Consumer loans decreased $12.2 million primarily due to a $10.3 million decrease in indirect home improvement loans and $1.9 million decrease in marine loans.  Commercial business loans decreased $12.1 million, primarily as a result of a $9.8 million decrease in commercial and industrial (“C&I”) loans and $2.3 million decrease in warehouse lending.

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 5

 

A breakdown of commercial real estate (“CRE”) loans at the dates indicated were as follows:

 

(Dollars in thousands)		December 31, 2024				September 30, 2024				December 31, 2023
CRE by Type:		Amount				Amount				Amount
Agriculture		$	3,834			$	3,610			$	3,799
CRE Non-owner occupied:
Office			39,697				40,672				42,739
Retail			36,568				36,070				38,691
Hospitality/restaurant			27,562				27,743				28,007
Self storage			19,111				19,130				21,381
Mixed use			17,721				17,881				19,331
Industrial			15,125				15,402				16,978
Senior housing/assisted living			7,565				7,621				8,505
Other (1)			6,631				6,684				8,365
Land			2,421				2,523				3,936
Education/worship			2,520				2,545				2,620
Total CRE non-owner occupied			174,921				176,271				190,553
CRE owner occupied:
Industrial			67,064				63,577				66,048
Office			42,223				42,156				41,495
Retail			20,718				19,968				22,020
Hospitality/restaurant			10,396				10,528				11,065
Other (2)			8,612				8,116				8,522
Car wash			—				9,575				7,767
Automobile related			7,325				8,874				7,530
Education/worship			4,608				4,609				4,606
Mixed use			5,616				5,649				2,923
Total CRE owner occupied			166,562				173,052				171,976
Total		$	345,317			$	352,933			$	366,328

________________________

(1)

Primarily includes loans secured by mobile home parks totaling $766,000, $774,000, and $2.3 million, RV parks totaling $685,000, $689,000, and $699,000, automobile-related collateral totaling $589,000, $594,000, and $608,000, and other collateral totaling $4.6 million, $4.6 million, and $4.4 million at December 31, 2024, September 30, 2024, and December 31, 2023, respectively.

(2)

Primarily includes loans secured by gas stations totaling $1.5 million, $1.5 million, and $1.7 million, non-profit organization totaling $1.5 million, $901,000, and $922,000, and other collateral totaling $5.6 million, $5.7 million, and $5.5 million at December 31, 2024, September 30, 2024, and December 31, 2023, 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																										Current Weighted
		Mar 31,			Jun 30,			Sep 30,			Dec 31,			Mar 31,			Jun 30,			Sep 30,			Dec 31,						Average
CRE by type:		2025			2025			2025			2025			2026			2026			2026			2026			Total			Rate
Agriculture		$	840		$	424		$	—		$	312		$	181		$	—		$	300		$	—		$	2,057		6.22%
Apartment			9,177			6,167			1,826			18,617			1,893			13,951			9,780			7,163			68,574		4.98%
Auto related			—			2,075			—			—			—			—			—			—			2,075		4.18%
Hotel / hospitality			572			1,203			1,326			—			116			1,286			—			—			4,503		4.39%
Industrial			891			583			—			10,243			581			173			1,615			—			14,086		4.26%
Mixed use			1,738			3,479			247			315			—			—			—			385			6,164		5.29%
Office			10,448			453			4,172			977			523			1,654			562			7,805			26,594		4.89%
Other			1,146			115			1,158			243			897			—			2,520			1,509			7,588		5.05%
Retail			1,883			984			72			—			451			3,261			—			3,448			10,099		4.25%
Senior housing and assisted living			—			—			—			—			2,172			—			—			—			2,172		4.75%
Total		$	26,695		$	15,483		$	8,801		$	30,707		$	6,814		$	20,325		$	14,777		$	20,310		$	143,912		4.84%

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 6

 

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

 

(Dollars in thousands)
		December 31, 2024								September 30, 2024
Construction Types:		Amount				Percent				Amount				Percent
Commercial construction – retail		$	8,079				2.4	%		$	8,710				3.0	%
Commercial construction – office			4,979				1.5				4,737				1.6
Commercial construction – self storage			13,480				4.1				10,408				3.5
Commercial construction – car wash			—				—				7,807				2.7
Multi-family			30,945				9.4				30,931				10.6
Custom construction – single family residential and single family manufactured residential			42,040				12.7				43,528				14.9
Custom construction – land, lot and acquisition and development			7,862				2.4				8,220				2.8
Speculative residential construction – vertical			180,381				54.5				145,549				49.8
Speculative residential construction – land, lot and acquisition and development			42,934				13.0				32,476				11.1
Total		$	330,700				100.0	%		$	292,366				100.0	%

 

(Dollars in thousands)
		December 31, 2024								December 31, 2023
Construction Types:		Amount				Percent				Amount				Percent
Commercial construction – retail		$	8,079				2.4	%		$	—				—	%
Commercial construction – office			4,979				1.5				4,699				1.5
Commercial construction – self storage			13,480				4.1				17,445				5.8
Commercial construction – car wash			—				—				7,742				2.5
Multi-family			30,945				9.4				56,065				18.5
Custom construction – single family residential and single family manufactured residential			42,040				12.7				47,230				15.7
Custom construction – land, lot and acquisition and development			7,862				2.4				6,377				2.1
Speculative residential construction – vertical			180,381				54.5				131,336				43.3
Speculative residential construction – land, lot and acquisition and development			42,934				13.0				32,160				10.6
Total		$	330,700				100.0	%		$	303,054				100.0	%

 

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

 

(Dollars in thousands)		For the Three Months Ended
		December 31, 2024								September 30, 2024
		Amount				Percent				Amount				Percent				$ Change				% Change
Purchase		$	129,232				83.2	%		$	168,088				85.7	%		$	(38,856	)			(23.1	)%
Refinance			26,116				16.8				28,001				14.3				(1,885	)			(6.7	)%
Total		$	155,348				100.0	%		$	196,089				100.0	%		$	(40,741	)			(20.7	)%

 

(Dollars in thousands)		For the Three Months Ended December 31,
		2024								2023
		Amount				Percent				Amount				Percent				$ Change				% Change
Purchase		$	129,232				83.2	%		$	110,458				90.7	%		$	18,774				17.0	%
Refinance			26,116				16.8				11,290				9.3				14,826				131.3	%
Total		$	155,348				100.0	%		$	121,748				100.0	%		$	33,600				27.6	%

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 7

 

(Dollars in thousands)		For the Year Ended December 31,
		2024								2023
		Amount				Percent				Amount				Percent				$ Change				% Change
Purchase		$	626,937				87.6	%		$	497,669				91.6	%		$	129,268				26.0	%
Refinance			88,662				12.4				45,925				8.4				42,737				93.1	%
Total		$	715,599				100.0	%		$	543,594				100.0	%		$	172,005				31.6	%

 

During the quarter ended December 31, 2024, the Company sold $138.9 million of one-to-four-family loans compared to $167.6 million during the previous quarter and $87.5 million during the same quarter one year ago. Gross margins on home loan sales increased to 3.14% for the quarter ended December 31, 2024, compared to 2.96% in the previous quarter and 3.09% 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)
		December 31, 2024								September 30, 2024
Transactional deposits:		Amount				Percent				Amount				Percent				$ Change				% Change
Noninterest-bearing checking		$	627,679				26.8	%		$	641,270				26.4	%		$	(13,591	)			(2.1	)%
Interest-bearing checking (1)			176,561				7.5				165,944				6.8				10,617				6.4
Escrow accounts related to mortgages serviced (2)			10,479				0.5				16,483				0.7				(6,004	)			(36.4	)
Subtotal			814,719				34.8				823,697				33.9				(8,978	)			(1.1	)
Savings			154,188				6.6				151,364				6.2				2,824				1.9
Money market (3)			341,615				14.6				340,049				14.0				1,566				0.5
Subtotal			495,803				21.2				491,413				20.2				4,390				0.9
Certificates of deposit less than $100,000 (4)			440,257				18.8				533,441				22.0				(93,184	)			(17.5	)
Certificates of deposit of $100,000 through $250,000			455,594				19.5				452,705				18.7				2,889				0.6
Certificates of deposit greater than $250,000			133,045				5.7				126,075				5.2				6,970				5.5
Subtotal			1,028,896				44.0				1,112,221				45.9				(83,325	)			(7.5	)
Total		$	2,339,418				100.0	%		$	2,427,331				100.0	%		$	(87,913	)			(3.6	)%

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 8

 

(Dollars in thousands)
		December 31, 2024								December 31, 2023
Transactional deposits:		Amount				Percent				Amount				Percent				$ Change				% Change
Noninterest-bearing checking		$	627,679				26.8	%		$	654,048				25.9	%		$	(26,369	)			(4.0	)%
Interest-bearing checking (1)			176,561				7.5				244,028				9.7				(67,467	)			(27.6	)
Escrow accounts related to mortgages serviced (2)			10,479				0.5				16,783				0.7				(6,304	)			(37.6	)
Subtotal			814,719				34.8				914,859				36.3				(100,140	)			(10.9	)
Savings			154,188				6.6				151,630				6.0				2,558				1.7
Money market (3)			341,615				14.6				359,063				14.2				(17,448	)			(4.9	)
Subtotal			495,803				21.2				510,693				20.2				(14,890	)			(2.9	)
Certificates of deposit less than $100,000 (4)			440,257				18.8				587,858				23.3				(147,601	)			(25.1	)
Certificates of deposit of $100,000 through $250,000			455,594				19.5				429,373				17.0				26,221				6.1
Certificates of deposit greater than $250,000			133,045				5.7				79,540				3.2				53,505				67.3
Subtotal			1,028,896				44.0				1,096,771				43.5				(67,875	)			(6.2	)
Total		$	2,339,418				100.0	%		$	2,522,323				100.0	%		$	(182,905	)			(7.3	)%

_______________________

(1)	There were no brokered deposits at December 31, 2024 and September 30, 2024, and $70.2 million of brokered deposits at December 31, 2023.
(2)	Noninterest-bearing accounts.
(3)	Includes $279,000, $1.0 million, and $1,000 of brokered deposits at December 31, 2024, September 30, 2024 and December 31, 2023, respectively.
(4)	Includes $143.1 million, $250.2 million, and $361.3 million of brokered deposits at December 31, 2024, September 30, 2024 and December 31, 2023, respectively.

 

At December 31, 2024, CDs, which include retail and nonretail CDs, totaled $1.03 billion, compared to $1.11 billion at September 30, 2024, and $1.10 billion at December 31, 2023, with nonretail CDs representing 15.0%, 22.5% and 34.2% of total CDs at such dates, respectively.  At December 31, 2024, nonretail CDs, which include brokered CDs, online CDs, and public funds CDs, decreased $108.1 million to $154.8 million, compared to $262.9 million at September 30, 2024, primarily due to a decrease of $107.2 million in brokered CDs. Nonretail CDs totaled $154.8 million at December 31, 2024, compared to $374.5 million at December 31, 2023. The decrease in brokered CDs was primarily due to more favorable rates in FHLB borrowings at maturity.

 

At December 31, 2024, the Bank had uninsured deposits of approximately $652.7 million, compared to approximately $644.9 million in September 30, 2024, and approximately $606.5 million at December 31, 2023.  The uninsured amounts are estimated based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

 

At December 31, 2024, borrowings increased $144.0 million to $307.8 million from $163.8 million at September 30, 2024, and increased $214.1 million, from $93.7 million at December 31, 2023. These increases coincide primarily with the decreases in brokered CDs mentioned above due to more favorable rates in FHLB borrowings. The borrowings were comprised of FHLB advances of $258.8 million and overnight borrowings of $49.0 million.

 

Total stockholders’ equity increased $6.9 million, to $295.8 million at December 31, 2024, from $288.9 million at September 30, 2024, and increased $31.3 million from $264.5 million at December 31, 2023. The increase in stockholders’ equity at December 31, 2024, compared to September 30, 2024, reflects net income of $7.4 million, partially offset by dividends paid of $2.1 million. Stockholders’ equity was also positively impacted by a $1.1 million net decrease in accumulated other comprehensive loss, net of tax, reflecting changes in market interest rates during the quarter. Book value per common share was $38.26 at December 31, 2024, compared to $37.45 at September 30, 2024, and $34.36 at December 31, 2023.

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 9

 

The Bank is considered well capitalized under the minimum capital requirements established by the Federal Deposit Insurance Corporation (“FDIC”) with a total risk-based capital ratio of 14.2%, a Tier 1 leverage capital ratio of 11.2%, and a common equity Tier 1 (“CET1”) capital ratio of 12.9% at December 31, 2024.

 

The Company exceeded all regulatory capital requirements with a total risk-based capital ratio of 14.5%, a Tier 1 leverage capital ratio of 9.9%, and a CET1 ratio of 11.4% at December 31, 2024.

 

Credit Quality

 

The allowance for credit losses for loans (“ACLL”) was $31.9 million, or 1.26% of gross loans receivable (excluding loans HFS), at December 31, 2024, compared to $31.2 million, or 1.25% of gross loans receivable (excluding loans HFS), at September 30, 2024, and $31.5 million, or 1.30% of gross loans receivable (excluding loans HFS), at December 31, 2023. The increases in the ACLL at December 31, 2024, compared to the prior quarter and the same quarter a year ago was primarily due to loan growth, increases in nonperforming loans, and an increase in charge-offs. The allowance for credit losses on unfunded loan commitments decreased $98,000 to $1.4 million at December 31, 2024, compared to $1.5 million at both September 30, 2024, and December 31, 2023. 

 

Nonperforming loans increased $2.8 million to $13.6 million at December 31, 2024, from $10.8 million at September 30, 2024, and from $11.0 million at December 31, 2023. The increase in nonperforming loans at December 31, 2024, from the prior quarter was primarily due to increases in commercial real estate loans of $1.6 million, commercial business loans of $871,000, and construction and development loans of $242,000.  The increase in nonperforming loans compared to the prior year was primarily due to increases in commercial real estate loans of $1.7 million, commercial business loans of $763,000, and construction and development loans of $280,000, partially offset by a decrease in indirect home improvement loans of $186,000 and marine loans of $53,000.   

 

Loans classified as substandard decreased $280,000 to $22.9 million at December 31, 2024, compared to $23.2 million at September 30, 2024, and decreased $1.6 million from $24.5 million at December 31, 2023. The decrease in substandard loans at December 31, 2024, compared to the prior quarter was primarily attributable to decreases of $592,000 in commercial and industrial loans and $93,000 in indirect home improvement loans, partially offset by an increase of $243,000 in construction and development loans. Compared to the prior year, the decrease in substandard loans was primarily due to decreases of $1.3 million in commercial and industrial loans, $318,000 in commercial real estate loans, and $186,000 in indirect home improvement loans, partially offset by an increase of $281,000 million in construction and development loans. There was no other real estate owned (“OREO”) property at December 31, 2024, September 30, 2024, and December 31, 2023.

 

Operating Results

 

Net interest income increased $659,000 to $31.1 million for the three months ended December 31, 2024, from $30.5 million for the three months ended December 31, 2023, primarily as a result of an increase in interest income on loans receivable, including fees, partially offset by an increase in interest expense. Total interest income for the three months ended December 31, 2024, increased $2.5 million compared to the same period last year, primarily due to an increase of $2.8 million in interest income on loans receivable, including fees. This growth was primarily attributable to new loans being originated at higher rates and variable rate loans repricing higher following increases in market interest rates. Total interest expense increased $1.9 million to $15.9 million for the three months ended December 31, 2024, compared to the same period last year, primarily the result of higher market interest rates on brokered deposits and borrowings.

 

For the year ended December 31, 2024, net interest income decreased $198,000 to $123.1 million, from $123.3 million for the year ended December 31, 2023, as a $17.6 million increase in interest income was more than offset by a $17.8 million increase in interest expense.

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 10

 

NIM increased seven basis points to 4.31% for the three months ended December 31, 2024, compared to 4.24% for the same period in the prior year.  However, for the year ended December 31, 2024, NIM decreased 18 basis points to 4.30% from 4.48% for the year ended December 31, 2023. The increase in NIM for the three months ended December 31, 2024, compared to the same period in 2023, was due to higher net interest income, partially offset by a slight increase in average interest-earning assets.  In contrast, the decrease in NIM for the year ended December 31, 2024, compared to the prior year, was primarily the result of higher average interest-earning assets and a slight decrease in net interest income between the periods.

 

The average total cost of funds, including noninterest-bearing checking, increased 28 basis points to 2.38% for the three months ended December 31, 2024, from 2.10% for the three months ended December 31, 2023. This increase was predominantly due to higher market rates for deposits and increased utilization of higher cost borrowings. The average cost of funds increased 71 basis points to 2.43% for the year ended December 31, 2024, from 1.72% for the year ended December 31, 2023, also reflecting increases in market interest rates over last year and increased utilization of borrowings. Management remains focused on matching deposit/liability duration with the duration of loans/assets where feasible.

 

For the three months and year ended December 31, 2024, the provision for credit losses on loans was $1.6 million and $5.6 million, compared to $1.7 million and $5.8 million, for the three months and year ended December 31, 2023, respectively.  The provision for credit losses on loans reflects consumer charge-offs and organic loan growth during the periods.

 

During the three months ended December 31, 2024, net charge-offs increased $348,000 to $983,000, compared to $635,000 for the same period last year, reflecting increased net charge-offs of $330,000 in indirect home improvement loans and $167,000 in marine loans, partially offset by decreases of $144,000 in commercial business loans and $10,000 in deposits and overdrafts. Net charge-offs increased $3.1 million to $5.3 million during the year ended December 31, 2024, compared to $2.2 million during the year ended December 31, 2023, reflecting increased net charge-off increases of $1.8 million in indirect home improvement loans, $905,000 in C&I loans, $313,000 in marine loans, and $71,000 in other consumer loans. Management attributes the increase in net charge-offs over the year primarily to volatile economic conditions.

 

Noninterest income decreased $846,000 to $4.6 million, for the three months ended December 31, 2024, from $5.5 million for the three months ended December 31, 2023. The decrease reflects a $910,000 decrease in other noninterest income, primarily as a result of a reduction in fair value on loans held under the fair value option, and a decrease of $273,000 in service charges and fee income, primarily due to the sale of MSRs in the first quarter of 2024. These decreases were partially offset by a $320,000 increase in gain on sale of loans.  Noninterest income increased $1.1 million to $21.6 million for the year ended December 31, 2024, from $20.5 million for the year ended December 31, 2023. This increase was primarily the result of an $8.4 million gain on sale of MSRs mentioned above with no similar transaction occurring in the same period in 2023, and a $1.8 million increase in gain on sale of loans, partially offset by a $7.8 million loss on sale of investment securities resulting from management's strategic decision to increase the yields and reduce the duration of the securities portfolio, and a $1.1 million decrease in service charges and fee income due to a reduction in loan servicing fees due to the sale of MSRs in the first quarter of 2024.

 

Noninterest expense increased $1.9 million to $24.4 million for the three months ended December 31, 2024, from $22.4 million for the three months ended December 31, 2023. The increase in noninterest expense was primarily the result of an increase of $1.4 million in salaries and benefits, primarily driven by increased commissions for organic loan growth, $492,000 in data processing, reflecting loan growth, $455,000 in professional (consulting) and board fees, primarily related to the purchase of tax credits recorded in the third quarter. In addition, a $583,000 fair value recovery on servicing rights was recorded during the fourth quarter of 2024, compared to a $48,000 fair value impairment on servicing rights during the same period in 2023. Noninterest expense increased $3.8 million, to $97.6 million for the year ended December 31, 2024, from $93.7 million for the year ended December 31, 2023. This increase was primarily due to increases of $1.8 million in data processing, $1.5 million in professional (consulting) and board fees, $1.5 million in salaries and benefits, and $479,000 in occupancy, partially offset by a decrease of $1.6 million in acquisition costs as a result of no acquisition costs during the fourth quarter of 2024.  

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 11

 

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 decreases 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 imposition of new tariffs or changes to existing trade policies 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 Q4 Earnings

January 21, 2025

 

Page 12

FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share amounts) (Unaudited)

 

														Linked				Prior Year
		December 31,				September 30,				December 31,				Quarter				Quarter
		2024				2024				2023				% Change				% Change
ASSETS
Cash and due from banks		$	19,280			$	17,950			$	17,083				7				13
Interest-bearing deposits at other financial institutions			12,355				22,390				48,608				(45	)			(75	)
Total cash and cash equivalents			31,635				40,340				65,691				(22	)			(52	)
Certificates of deposit at other financial institutions			1,727				12,001				24,167				(86	)			(93	)
Securities available-for-sale, at fair value			281,175				228,199				292,933				23				(4	)
Securities held-to-maturity, net			8,455				8,455				8,455				—				—
Loans held for sale, at fair value			27,835				49,373				25,668				(44	)			8
Loans receivable, net			2,501,951				2,463,697				2,401,481				2				4
Accrued interest receivable			13,881				14,014				14,005				(1	)			(1	)
Premises and equipment, net			29,756				30,026				30,578				(1	)			(3	)
Operating lease right-of-use			5,378				5,365				6,627				—				(19	)
Federal Home Loan Bank stock, at cost			15,621				9,504				2,114				64				639
Deferred tax asset, net			7,059				4,222				6,725				67				5
Bank owned life insurance (“BOLI”), net			38,528				38,453				37,719				—				2
MSRs, held at the lower of cost or fair value			9,204				8,739				9,090				5				1
MSRs, held for sale, held at the lower of cost or fair value			—				—				8,086				—				(100	)
Goodwill			3,592				3,592				3,592				—				—
Core deposit intangible, net			13,710				14,586				17,343				(6	)			(21	)
Other assets			39,670				39,642				18,395				—				116
TOTAL ASSETS		$	3,029,177			$	2,970,208			$	2,972,669				2				2
LIABILITIES
Deposits:
Noninterest-bearing accounts		$	638,158			$	657,753			$	670,831				(3	)			(5	)
Interest-bearing accounts			1,701,260				1,769,578				1,851,492				(4	)			(8	)
Total deposits			2,339,418				2,427,331				2,522,323				(4	)			(7	)
Borrowings			307,806				163,806				93,746				88				228
Subordinated notes:
Principal amount			50,000				50,000				50,000				—				—
Unamortized debt issuance costs			(406	)			(423	)			(473	)			(4	)			(14	)
Total subordinated notes less unamortized debt issuance costs			49,594				49,577				49,527				—				—
Operating lease liability			5,556				5,548				6,848				—				(19	)
Other liabilities			31,036				35,044				35,737				(11	)			(13	)
Total liabilities			2,733,410				2,681,306				2,708,181				2				1
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; 7,833,014 shares issued and outstanding at December 31, 2024, 7,817,172 at September 30, 2024, and 7,800,545 at December 31, 2023			78				78				78				—				—
Additional paid-in capital			55,716				55,264				57,362				1				(3	)
Retained earnings			257,113				251,843				230,354				2				12
Accumulated other comprehensive loss, net of tax			(17,140	)			(18,283	)			(23,306	)			(6	)			(26	)
Total stockholders’ equity			295,767				288,902				264,488				2				12
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	3,029,177			$	2,970,208			$	2,972,669				2				2

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 13

 

FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts) (Unaudited)

 

		Three Months Ended												Linked				Prior Year
		December 31,				September 30,				December 31,				Quarter				Quarter
		2024				2024				2023				% Change				% Change
INTEREST INCOME
Loans receivable, including fees		$	43,654			$	43,800			$	40,863				—				7
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions			3,320				3,243				3,580				2				(7	)
Total interest and dividend income			46,974				47,043				44,443				—				6
INTEREST EXPENSE
Deposits			13,543				13,486				12,055				—				12
Borrowings			1,831				1,828				1,447				—				27
Subordinated notes			486				485				486				—				—
Total interest expense			15,860				15,799				13,988				—				13
NET INTEREST INCOME			31,114				31,244				30,455				—				2
PROVISION FOR CREDIT LOSSES			1,522				1,513				1,402				1				9
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			29,592				29,731				29,053				—				2
NONINTEREST INCOME
Service charges and fee income			2,513				2,482				2,786				—				(10	)
Gain on sale of loans			1,733				2,523				1,413				(31	)			23
Gain on sale of MSRs			—				141				—				(100	)			NM
Gain on sale of investment securities, net			—				11				—				(100	)			NM
Earnings on cash surrender value of BOLI			256				252				239				2				7
Other noninterest income			108				558				1,018				(81	)			(89	)
Total noninterest income			4,610				5,967				5,456				(23	)			(16	)
NONINTEREST EXPENSE
Salaries and benefits			14,172				13,985				12,742				1				11
Operations			3,175				3,827				3,326				(17	)			(5	)
Occupancy			1,821				1,662				1,708				10				7
Data processing			2,252				2,156				1,760				4				28
Gain on sale of OREO			—				—				(148	)			—				(100	)
Loan costs			781				666				497				17				57
Professional and board fees			1,038				1,223				583				(15	)			78
FDIC insurance			490				533				660				(8	)			(26	)
Marketing and advertising			329				377				277				(13	)			19
Amortization of core deposit intangible			876				897				980				(2	)			(11	)
(Recovery) impairment of servicing rights			(583	)			506				48				NM				NM
Total noninterest expense			24,351				25,832				22,433				(6	)			9
INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES			9,851				9,866				12,076				—				(18	)
PROVISION (BENEFIT) FOR INCOME TAXES			2,469				(420	)			2,304				NM				7
NET INCOME		$	7,382			$	10,286			$	9,772				(28	)			(24	)
Basic earnings per share		$	0.94			$	1.32			$	1.25				(29	)			(25	)
Diluted earnings per share		$	0.92			$	1.29			$	1.23				(29	)			(25	)

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 14

FS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts) (Unaudited)

 

		Year Ended								Year
		December 31,				December 31,				Over Year
		2024				2023				% Change
INTEREST INCOME
Loans receivable, including fees		$	170,857			$	154,945				10
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions			13,980				12,247				14
Total interest and dividend income			184,837				167,192				11
INTEREST EXPENSE
Deposits			53,163				36,751				45
Borrowings			6,627				5,196				28
Subordinated note			1,942				1,942				—
Total interest expense			61,732				43,889				41
NET INTEREST INCOME			123,105				123,303				—
PROVISION FOR CREDIT LOSSES			5,511				4,774				15
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			117,594				118,529				(1	)
NONINTEREST INCOME
Service charges and fee income			10,026				11,138				(10	)
Gain on sale of loans			8,557				6,711				28
Gain on sale of MSRs			8,356				—				NM
Loss on sale of investment securities, net			(7,836	)			—				NM
Earnings on cash surrender value of BOLI			990				920				8
Other noninterest income			1,463				1,721				(15	)
Total noninterest income			21,556				20,490				5
NONINTEREST EXPENSE
Salaries and benefits			55,092				53,622				3
Operations			13,529				13,070				4
Occupancy			6,857				6,378				8
Data processing			8,424				6,852				23
Gain on sale of OREO			—				(148	)			(100	)
Loan costs			2,685				2,574				4
Professional and board fees			4,072				2,584				58
FDIC insurance			2,005				2,392				(16	)
Marketing and advertising			1,310				1,349				(3	)
Acquisition costs			—				1,562				(100	)
Amortization of core deposit intangible			3,633				3,464				5
(Impairment) recovery of servicing rights			(38	)			48				NM
Total noninterest expense			97,569				93,747				4
INCOME BEFORE PROVISION FOR INCOME TAXES			41,581				45,272				(8	)
PROVISION FOR INCOME TAXES			6,557				9,219				(29	)
NET INCOME		$	35,024			$	36,053				(3	)
Basic earnings per share		$	4.48			$	4.63				(3	)
Diluted earnings per share		$	4.36			$	4.56				(4	)

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 15

 

KEY FINANCIAL RATIOS AND DATA (Unaudited)

 

		At or For the Three Months Ended
		December 31,			September 30,			December 31,
PERFORMANCE RATIOS:		2024			2024			2023
Return on assets (ratio of net income to average total assets) (1)		0.98	%		1.38	%		1.32	%
Return on equity (ratio of net income to average total stockholders' equity) (1)		9.88			14.08			15.01
Yield on average interest-earning assets (1)		6.51			6.56			6.19
Average total cost of funds (1)		2.38			2.39			2.10
Interest rate spread information – average during period		4.13			4.17			4.09
Net interest margin (1)		4.31			4.35			4.24
Operating expense to average total assets (1)		3.24			3.47			3.02
Average interest-earning assets to average interest-bearing liabilities (1)		143.27			144.28			143.45
Efficiency ratio (2)		68.16			69.42			62.47
Common equity ratio (ratio of stockholders' equity to total assets)		9.76			9.73			8.90
Tangible common equity ratio (3)		9.25			9.17			8.25

 

 

		For the Year Ended
		December 31,			December 31,
PERFORMANCE RATIOS:		2024			2023
Return on assets (ratio of net income to average total assets)		1.18	%		1.27	%
Return on equity (ratio of net income to average total stockholders' equity)		12.22			14.36
Yield on average interest-earning assets		6.46			6.07
Average total cost of funds		2.43			1.72
Interest rate spread information – average during period		4.03			4.36
Net interest margin		4.30			4.48
Operating expense to average total assets		3.29			3.30
Average interest-earning assets to average interest-bearing liabilities		143.92			145.50
Efficiency ratio (2)		67.45			65.20

 

 

		December 31,			September 30,			December 31,
ASSET QUALITY RATIOS AND DATA:		2024			2024			2023
Nonperforming assets to total assets at end of period (4)		0.45	%		0.36	%		0.37	%
Nonperforming loans to total gross loans (excluding loans HFS) (5)		0.54			0.43			0.45
Allowance for credit losses – loans to nonperforming loans (5)		234.55			290.07			288.11
Allowance for credit losses – loans to total gross loans (excluding loans HFS)		1.26			1.25			1.30

 

 

		At or For the Three Months Ended
		December 31,					September 30,					December 31,
PER COMMON SHARE DATA:		2024					2024					2023
Basic earnings per share		$	0.94				$	1.32				$	1.25
Diluted earnings per share		$	0.92				$	1.29				$	1.23
Weighted average basic shares outstanding			7,723,250					7,676,102					7,696,429
Weighted average diluted shares outstanding			7,897,099					7,854,389					7,795,383
Common shares outstanding at end of period			7,729,951		(6)			7,713,359		(7)			7,698,401		(8)
Book value per share using common shares outstanding		$	38.26				$	37.45				$	34.36
Tangible book value per share using common shares outstanding (9)		$	36.02				$	35.10				$	31.64

 ____________________________

(1)	Annualized.

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 16

 

(2)	Total noninterest expense as a percentage of net interest income and total noninterest income.
(3)	Tangible common equity ratio excludes intangible assets.  This ratio represents a non-GAAP financial measure.  See “Non-GAAP Financial Measures” below.
(4)	Nonperforming assets consist of nonperforming loans (which include nonaccruing loans and accruing loans 90 days or more 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 7,833,014 at December 31, 2024, less 103,063 unvested restricted stock shares.
(7)	Common shares were calculated using shares outstanding of 7,817,172 at September 30, 2024, less 103,813 unvested restricted stock shares.
(8)	Common shares were calculated using shares outstanding of 7,800,545 at December 31, 2023, less 102,144 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 December 31,								For the Year Ended December 31,								Linked Qtr.				Prior Year Qtr.
Average Balances		2024				2023				2024				2023				$ Change				$ Change
Assets
Loans receivable, net (1)		$	2,533,664			$	2,448,946			$	2,511,553			$	2,384,577			$	84,718			$	126,976
Securities available-for-sale, at amortized cost			265,483				321,735				282,684				288,152				(56,252	)			(5,468	)
Securities held-to-maturity			8,500				8,500				8,500				8,500				-				-
Interest-bearing deposits and certificates of deposit at other financial institutions			53,286				66,769				50,741				67,063				(13,483	)			(16,322	)
FHLB stock, at cost			10,300				3,403				7,579				4,740				6,897				2,839
Total interest-earning assets			2,871,233				2,849,353				2,861,057				2,753,032				21,880				108,025
Noninterest-earning assets			119,478				94,012				103,474				90,216				25,466				13,258
Total assets		$	2,990,711			$	2,943,365			$	2,964,531			$	2,843,248			$	47,346			$	121,283
Liabilities
Interest-bearing deposit accounts		$	1,772,887			$	1,817,369			$	1,784,443			$	1,732,342			$	(44,482	)		$	52,101
Borrowings			181,599				119,451				153,926				110,328				62,148				43,598
Subordinated notes			49,584				49,517				49,559				49,492				67				67
Total interest-bearing liabilities			2,004,070				1,986,337				1,987,928				1,892,162				17,733				95,766
Noninterest-bearing deposit accounts			652,564				659,080				549,405				662,998				(6,516	)			(113,593	)
Other noninterest-bearing liabilities			36,722				39,651				140,648				36,992				(2,929	)			103,656
Total liabilities		$	2,693,356			$	2,685,068			$	2,677,981			$	2,592,152			$	8,288			$	85,829

 

 ____________________________

(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.

 

 

 

---

FS Bancorp Q4 Earnings

January 21, 2025

 

Page 17

 

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)	December 31,			September 30,			December 31,
Tangible Book Value Per Share:	2024			2024			2023
Stockholders' equity (GAAP)	$	295,767		$	288,902		$	264,488
Less: goodwill and core deposit intangible, net		(17,302)			(18,178)			(20,935)
Tangible common stockholders' equity (non-GAAP)	$	278,465		$	270,724		$	243,553
Common shares outstanding at end of period		7,729,951	(1)		7,713,359	(2)		7,698,401	(3)
Book value per share (GAAP)	$	38.26		$	37.45		$	34.36
Tangible book value per share (non-GAAP)	$	36.02		$	35.10		$	31.64
Tangible Common Equity Ratio:
Total assets (GAAP)	$	3,029,177		$	2,970,208		$	2,972,669
Less: goodwill and core deposit intangible assets		(17,302)			(18,178)			(20,935)
Tangible assets (non-GAAP)	$	3,011,875		$	2,952,030		$	2,951,734
Common equity ratio (GAAP)		9.76	%		9.73	%		8.90	%
Tangible common equity ratio (non-GAAP)		9.25			9.17			8.25

_______________________

(1)	Common shares were calculated using shares outstanding of 7,833,014 at December 31, 2024, less 103,063 unvested restricted stock shares.
(2)	Common shares were calculated using shares outstanding of 7,817,172 at September 30, 2024, less 103,813 unvested restricted stock shares.
(3)	Common shares were calculated using shares outstanding of 7,800,545 at December 31, 2024, less 102,144 unvested restricted stock shares.

 

 

Contacts:

Joseph C. Adams,

Chief Executive Officer

Matthew D. Mullet,

President and Chief Financial Officer

[phone]

www.FSBWA.com

 

 

Document And Entity Information	Jan. 21, 2025
Document Information [Line Items]
Entity, Registrant Name	FS BANCORP, INC.
Document, Type	8-K
Document, Period End Date	Jan. 21, 2025
Entity, Incorporation, State or Country Code	WA
Entity, File Number	001-35589
Entity, Tax Identification Number	45-4585178
Entity, Address, Address Line One	6920 220th Street SW
Entity, Address, City or Town	Mountlake Terrace
Entity, Address, State or Province	WA
Entity, Address, Postal Zip Code	​98043
City Area Code	425
Local Phone Number	771-5299
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	FSBW
Security Exchange Name	NASDAQ
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0001530249

---