FS Bancorp Inc

As of December 31, 2023, the Company conducted operations, including loan and/or deposit services from its headquarters, 13 loan production offices (seven of which stand-alone), 27 full-service bank branches in the Puget Sound region of Washington, and various locations in Oregon.

The primary market area for business operations is the Seattle-Tacoma-Bellevue, Washington Metropolitan Statistical Area (the “Seattle MSA”). Kitsap, Clallam, Jefferson, Thurston, and Grays Harbor counties, though not in the Seattle MSA, are also part of the Company’s market area. This overall region is typically known as the Puget Sound region.

The Puget Sound region is the largest business center in both the State of Washington and the Pacific Northwest, with a well-developed urban area in the western portion along Puget Sound and a mix of developed residential and commercial neighborhoods and undeveloped rural areas in the north, central, and eastern portions.

The Puget Sound region's economy is characterized by key sectors such as aerospace, military bases, clean technology, biotechnology, education, information technology, logistics, international trade, and tourism. Major industry leaders like The Boeing Corporation, Microsoft, and Amazon.com contribute to the region's economic prominence. The workforce is well-educated and strong in technology, and the region's location and deep-water port facilitate significant international trade. Tourism is also a major industry due to the scenic beauty, temperate climate, and easy accessibility.

King County, which includes the city of Seattle, hosts the largest employment base and economic activity, with major employers like Microsoft, University of Washington, Amazon.com, King County Government, Starbucks, and Costco. Pierce County, the second most populous county features diversified industries, including military-related government employment (Joint Base Lewis-McChord), health care (the MultiCare Health System and the Franciscan Health System), shipping (Port of Tacoma) and aerospace (Boeing). Snohomish County's economy is based on aerospace (Boeing), health care (Providence Regional Medical Center), military (the Everett Naval Station), biotechnology, electronics/computers, and wood products.

Kitsap County's economy is significantly influenced by the United States Navy, being the largest employer in the county with installations at Puget Sound Naval Shipyard, Naval Undersea Warfare Center Keyport and Naval Base Kitsap (which comprises former Naval Submarine Base Bangor, and Naval Station Bremerton). The largest private employers in the county are the St. Michael Medical Center/Franciscan Medical Group and Port Madison Enterprises. Clallam County relies on agriculture, forestry, fishing, outdoor recreation and tourism, with Olympic Medical Center as the largest employer. Jefferson County's largest private employer is Port Townsend Paper Mill and Thurston County, home to Olympia (Washington State’s capital), is driven by state government related employment.

As of December 31, 2023, the unemployment rate in Washington was an estimated 4.2%, slightly exceeding the national average of 3.7%, according to data from the U.S. Bureau of Labor Statistics. Within specific counties, King County reported an estimated unemployment rate of 3.5%, marking an increase from 2.8% in the preceding year. Snohomish County experienced a rise in its unemployment rate to 3.6% at the close of 2023, up from 3.2% at the end of 2022. Kitsap County noted a 4.7% unemployment rate at December 31, 2023, compared to 4.3% at December 31, 2022. Pierce County recorded a 5.5% unemployment rate as of December 31, 2023, compared to 5.3% at December 31, 2022. Grays Harbor County and Thurston County reported estimated unemployment rates of 7.4% and 4.7%, respectively at the end of 2023, with slight changes from 7.6% and 4.7%, at the close of 2022.

Beyond the Puget Sound area, the Tri-Cities market encompassing Benton and Franklin counties, exhibited a 5.4% unemployment rate in Benton County at year-end 2023, down from 5.6% at year-end 2022. Franklin County saw a decrease in its unemployment rate to 7.1% at December 31, 2023, from 7.7% at December 31, 2022. In Clallam and Jefferson counties, the estimated unemployment rates rose to 6.3% and 5.8%, respectively, at the end of 2023, compared to 6.1% and 5.4% at the end of 2022. Clark County experienced an increase in its unemployment rate to 4.8% at the end of 2023, up from 4.6% at the end of 2022. Klickitat County reported a 6.1% unemployment rate at December 31, 2023, compared to an estimated 4.4% at the end of 2022.

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For a discussion regarding the competition in the Company’s primary market area, see “Competition.”