FS Bancorp, Inc.
For the period ended Mar 31, 2026. Filed May 8, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 8, 2026
FSBW$43.55-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-10.
0001437749-25-034119
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001437749-26-015942
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 87 current paragraphs.
19 unchanged; 54 reworded; 13 added; 23 removed; 6 previous and 1 current paragraphs rearranged.
Tables are not compared: 17 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Further, statements about the potential effects of the Company's proposed merger with Pacific West Bancorp, headquartered in West Linn, Oregon (“Pacific West”) on the Company's business, financial results, and condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in the forward-looking statements due to factors and future developments which are uncertain, unpredictable, and in many cases, beyond the Company's control, including the following:
Current report
***Assets.***Total assets remained virtually unchanged at $3.20 billion at March 31, 2026, compared to December 31, 2025. The most significant changes between these periods were a $17.7 million decrease in securities available-for-sale, a $12.6 million increase in loans held for sale, a $10.5 million increase in total cash and cash equivalents, and a $919,000 increase in loans receivable, net. Asset growth was primarily funded by brokered deposits.
Current report
Loans receivable, net, was $2.62 billion at both March 31, 2026, and December 31, 2025.
Current report
Loans held for sale, consisting of one-to-four-family loans, increased $12.6 million to $56.3 million at March 31, 2026, from $43.7 million at December 31, 2025, reflecting higher origination volume driven by increased refinance activity resulting from improved mortgage rates.
Current report
For the three months ended March 31, 2026, one-to-four-family loan originations and refinancing activity increased significantly compared to the prior period, driven by improved mortgage rates which resulted in a 175% increase in refinance volume. Purchase originations also increased $18.9 million. or 15.7%, reflecting continued demand in the Company's market areas.
Current report
Nonperforming loans, consisting solely of nonaccrual loans, decreased $477,000 to $18.3 million at March 31, 2026, from $18.7 million at December 31, 2025. The decrease was primarily attributable to nonperforming CRE loans, which decreased $762,000 to $10.5 million, and nonperforming C&I loans, which decreased $415,000 to $165,000, partially offset by nonperforming indirect home improvement loans, which increased $366,000 to $4.6 million and nonperforming residential loans, which increased $290,000 to $2.5 million. The ratio of nonperforming loans to total gross loans reduced slightly to 0.69% at March 31, 2026, from 0.71% at December 31, 2025.
Current report
Liabilities. Total liabilities were $2.89 billion at both March 31, 2026 and December 31, 2025. The loan-to-deposit ratio was approximately 102.9% at March 31, 2026, compared to approximately 100.9% at December 31, 2025.
Current report
***General.***Net income was $7.8 million for the three months ended March 31, 2026, compared to $8.0 million for the three months ended March 31, 2025. The decrease was primarily due to a $937,000, or 58.9%, increase in provision for credit losses, a $627,000, or 43.5%, increase in provision for income taxes, and a $465,000, or 1.9%, increase in total noninterest expense, partially offset by a $1.6 million, or 5.0%, increase in net interest income, and a $275,000, or 5.4%, increase in total noninterest income.
Current report
Net interest margin (“NIM”) (annualized) decreased one basis point to 4.31% for the three months ended March 31, 2026, from 4.32% for the same period the prior year. The change in NIM primarily reflects the repricing of the Company's subordinated notes to a floating rate on February 15, 2026, which resulted in an estimated two-basis point decline in NIM for the quarter, and higher funding costs associated with growth in interest-bearing checking balances, including brokered deposits. These effects were largely offset by a five-basis point improvement in average loan yields and a modest decline in CD rates.
Current report
***Interest Income.***Total interest income for the three months ended March 31, 2026, increased $2.5 million to $49.3 million, from $46.8 million for the three months ended March 31, 2025. The increase was primarily due to a $2.7 million increase in interest income on loans receivable, including fees, as a result of higher average loan balances and a five-basis point increase in average loan yields. Offsetting this growth were decreases in interest income on investment securities and FHLB stock, collectively totaling $190,000, reflecting yield compression on taxable investment securities from 4.34% to 3.99% and lower average FHLB stock balances.
Current report
The average cost of total interest-bearing deposits decreased three-basis points to 2.97% for the three months ended March 31, 2026, compared to 3.00% for the three months ended March 31, 2025, primarily reflecting lower rates paid on certificates of deposit, which more than offset higher rates on interest-bearing checking accounts. The average balance of total interest-bearing deposits increased $243.6 million to $2.0 billion for the three months ended March 31, 2026, compared to $1.77 billion for the three months ended March 31, 2025, driven primarily by an increase in interest-bearing checking balances, including brokered deposits.
Current report
Net loan charge-offs totaled $2.1 million for the three months ended March 31, 2026, compared to $1.7 million during the three months ended March 31, 2025. The increase was primarily due to a $624,000 increase in indirect home improvement loan net charge-offs, partially offset by a $281,000 decrease in commercial business loan net charge-offs, with the remainder attributable to slightly higher net charge-offs in marine and consumer loans. The rise in indirect home improvement and consumer loan net charge-offs reflects continued credit stress in those portfolios amid a challenging economic environment that could result in a material increase in the ACL on loans and adversely affect the Company’s financial condition and results of operations.
Current report
***Noninterest Expense.***Noninterest expense increased $465,000 to $25.5 million for the three months ended March 31, 2026, compared to $25.1 million for the three months ended March 31, 2025. The $465,000 increase was primarily due to the following increases: $334,000 in loan costs, due to higher origination activity, $321,000 in salaries and benefits, primarily due to competitive wage adjustments; $295,000 in acquisition cost related to the previously announced merger with Pacific West Bancorp; and $159,000 in occupancy expense related to branch renovations. These increases were partially offset by a $451,000 decrease in data processing expenses attributable to executed contract negotiations with the Company's data processing vendors, and a $172,000 decrease in professional and board fees.
Removed paragraphs (23)
Previous report
***Assets.***Total assets increased $179.6 million to $3.21 billion at September 30, 2025, from $3.03 billion at December 31, 2024, primarily due to increases of $97.7 million in loans receivable, net, $30.5 million in securities available-for-sale, $29.6 million in total cash and cash equivalents, $22.9 million in securities held-to-maturity, and $10.7 million in loans held for sale, partially offset by decreases of $7.6 million in FHLB stock, $4.4 million in other assets, $2.4 million in core deposits intangible, net, and $1.7 million in certificates of deposit at other financial institutions. Asset growth was primarily funded by brokered deposits.
Previous report
Loans receivable, net, increased $97.7 million to $2.60 billion at September 30, 2025, compared to $2.50 billion at December 31, 2024.
Previous report
Loans held for sale, consisting of one-to-four-family loans, increased $10.7 million to $38.6 million at September 30, 2025, from $27.8 million at December 31, 2024. The Company continues to invest in its home lending operations and strategically manage production capacity in the markets we serve.
Previous report
One-to-four-family loan originations for the nine months ended September 30, 2025, included $354.2 million of loans originated for sale, $147.4 million of portfolio loans including first and second liens, and $18.7 million of loans brokered to other institutions.
Previous report
Nonperforming loans, consisting solely of nonaccrual loans, increased $4.8 million to $18.4 million at September 30, 2025, from $13.6 million at December 31, 2024. The increase was primarily due to construction and development CRE loans, which increased $4.2 million to $9.2 million, indirect home improvement loans, which increased $2.1 million to $3.8 million, and one-to-four-family residential loans, which increased $1.6 million to $1.8 million. These increases were partially offset by a decrease of $2.8 million in nonaccrual commercial business loans, to $599,000, and a decrease of $724,000 in nonaccrual CRE owner-occupied loans, to $2.0 million. The increase in nonperforming loans reflects continued elevated losses in certain consumer loans due to strained economic conditions and in construction and development loans due to a collateral deficiency on a commercial construction project. The deficiency had been fully reserved in previous periods, accordingly, no offsetting provisions were recorded. Consequently, the ratio of nonperforming loans to total gross loans rose to 0.70% at September 30, 2025, from 0.54% at December 31, 2024.
Previous report
Liabilities. Total liabilities increased $174.9 million to $2.91 billion at September 30, 2025, from $2.73 billion at December 31, 2024, primarily due to an increase of $347.1 million in deposits, offset by a decrease of $178.5 million in borrowings. The loan-to-deposit ratio was approximately 99.3% at September 30, 2025, compared to approximately 109.5% at December 31, 2024, reflecting the mix shift toward deposits, particularly brokered CDs, to fund asset growth and reduce wholesale borrowings.
Previous report
***General.***Net income was $9.2 million for the three months ended September 30, 2025, compared to $10.3 million for the three months ended September 30, 2024. The decrease was primarily due to a $2.8 million, or 673.8%, increase in provision for income tax expense, a $796,000, or 52.6%, increase in provision for loan losses, and a $373,000 decrease in total noninterest income, partially offset by a $2.4 million, or 7.8%, increase in net interest income and a $444,000, or 1.7%, reduction in total noninterest expense.
Previous report
Net interest margin (“NIM”) (annualized) increased two basis point to 4.37% for the three months ended September 30, 2025, from 4.35% for the same period the prior year. The change in NIM reflects the increase in yields earned on interest-earning assets, along with a slight improvement in funding cost.
Previous report
***Interest Income.***Total interest income for the three months ended September 30, 2025, increased $3.9 million to $51.0 million, from $47.0 million for the three months ended September 30, 2024. The $3.9 million increase in total interest income was primarily due to an increase of $2.9 million in interest income on loans receivable, including fees, primarily as a result of net loan growth and variable rate loans repricing higher.
Previous report
The average cost of total interest-bearing deposits decreased six basis points to 3.03%, for the three months ended September 30, 2025, compared to 3.09%, for the three months ended September 30, 2024. The average balance of total interest-bearing deposits increased $210.0 million to $1.95 billion for the three months ended September 30, 2025 and 2024, compared to $1.74 billion for the three months ended September 30, 2024. The decrease in the average cost of deposits primarily reflected lower rates paid on CDs, partially offset by higher rates paid on interest-bearing checking, savings, and money market accounts in the current rate environment. The shift in the deposit mix toward a higher proportion of CDs, which generally bear higher rates than transaction accounts but lower rates than borrowings, also contributed to the change in funding costs.
Previous report
Net loan charge-offs totaled $4.0 million for the three months ended September 30, 2025, compared to $1.6 million during the three months ended September 30, 2024. The increase was primarily due to a partial charge-off of $2.3 million on a commercial construction loan. A decline in national and local economic conditions, as a result of the effects of tariffs, inflation, or slowed economic growth, among other factors, could result in a material increase in the ACL on loans and may adversely affect the Company’s financial condition and result of operations.
Previous report
***Noninterest Expense.***Noninterest expense was $25.4 million for the three months ended September 30, 2025, compared to $25.8 million for the three months ended September 30, 2024. The $444,000 decrease was primarily due to a $6,000 recovery in MSRs, compared to the prior year's $506,000 impairment, driven primarily by higher market interest rates, which reduced prepayment risk and increased the estimated value of mortgage servicing rights, a $372,000 decrease in data processing, a $130,000 decrease in professional and board fees, a $118,000 decrease in marketing and advertising, and a $110,000 decrease in amortization of core deposit intangibles. These decreases were partially offset by a $430,000 increase in salaries and benefits, primarily due to competitive wage adjustments and a $147,000 increase in operations expense.
Previous report
***General.***Net income was $24.9 million for the nine months ended September 30, 2025, compared to $27.6 million for the nine months ended September 30, 2024. The decrease was primarily due to a $2.7 million, or 3.7%, increase in noninterest expense, a $1.9 million, or 48.5%, increase in provision for credit losses, a $1.8 million increase in the provision for income taxes, and a $1.1 million, or 6.2%, decrease in noninterest income, partially offset by a $4.8 million, or 5.2%, increase in net interest income.
Previous report
***Net Interest Income.***Net interest income increased $4.8 million to $96.8 million for the nine months ended September 30, 2025, from $92.0 million for the nine months ended September 30, 2024, primarily due to an increase in total interest income of $8.6 million, partially offset by an increase in total interest expense of $3.8 million. The increase in total interest income was primarily due to an increase of $7.8 million in interest income on loans receivable, including fees, driven primarily by a 13-basis point increase in the average yield earned on loans receivable as new loans were originated at higher rates and variable-rate loans repriced higher, and a higher average balance of loans outstanding. The $3.8 million increase in total interest expense was primarily the result of a shift in the funding mix toward brokered CDs, which were used to repay higher-cost borrowings in accordance with the Company's funding and liquidity strategy.
Previous report
Net interest margin (“NIM”) (annualized) increased three basis point to 4.33% for the nine months ended September 30, 2025, from 4.30% for the same period the prior year. The increase in NIM reflects higher yields on interest-earning assets, partially offset by the higher cost of funding and increased average capital relative to the prior period.
Previous report
***Interest Income.***Total interest income for the nine months ended September 30, 2025, increased $8.6 million to $146.5 million, from $137.9 million for the nine months ended September 30, 2024. This increase was primarily due to an increase of $7.8 million in interest income on loans receivable, including fees, resulting from both a higher average balance of loans outstanding and a 13-basis point increase in the average yield on loans as new loans were originated at higher rates and variable-rate loans repriced higher. Interest income also increased due to higher balances and yields on taxable investments securities and FHLB stock, partially offset by decreases in interest on tax-exempt securities and interest-bearing deposits at other financial institutions, which resulted from lower average balances and yields in those categories.
Previous report
***Interest Expense.***Total interest expense increased $3.8 million to $49.7 million for the nine months ended September 30, 2025, from $45.9 million for the same period in 2024. Interest expense on deposits increased $2.8 million, primarily reflecting higher average balances across deposit categories and higher rates on deposit accounts. The average balance of total interest-bearing deposits increased $91.7 million to $1.88 billion for the nine months ended September 30, 2025, compared to $1.79 billion for the nine months ended September 30, 2024. The average cost of total interest-bearing deposits increased six basis points to 3.02% from 2.96%. Interest expense on borrowings increased by $987,000, primarily due to higher average balances of borrowings. The average cost of borrowings declined slightly, reflecting changes in the mix of FHLB advances and other borrowings.
Previous report
The average cost of total interest-bearing liabilities increased six basis points to 3.15% for the nine months ended September 30, 2025, compared to 3.09% for the nine months ended September 30, 2024. The average cost of funds, which includes noninterest-bearing checking accounts, increased six basis points to 2.39% for the nine months ended September 30, 2025, from 2.33% for the nine months ended September 30, 2024.
Previous report
Provision for Credit Losses. For the nine months ended September 30, 2025, the provision for credit losses was $5.9 million, consisting of a $5.1 million provision for credit losses on loans, a $675,000 provision for credit losses on unfunded loan commitments, and a $175,000 provision for losses on held to maturity investment securities, compared to $4.0 million provision for the nine months ended September 30, 2024, which was entirely attributable to loans. The increase in the provision for credit losses on loans was primarily due to growth in the loan portfolio, an increase in nonperforming loans, and higher net charge-offs.
Previous report
Net loan charge-offs totaled $6.9 million, for the nine months ended September 30, 2025, compared to $4.3 million during the nine months ended September 30, 2024. The increase was primarily due to a partial charge-off of $2.3 million on a commercial construction loan as discussed above, and a $1.3 million increase in net charge-offs on indirect home improvement loans, partially offset by decreases of $695,000 and $312,000 in net charge-offs on commercial business loans and marine loans, respectively. A decline in national and local economic conditions, as a result of the effects of tariffs, inflation or slowed economic growth, among other factors, could result in a material increase in the ACL on loans and may adversely affect the Company’s financial condition and result of operations.
Previous report
***Noninterest Income.***Noninterest income decreased $1.1 million to $15.9 million for the nine months ended September 30, 2025, compared to $16.9 million for the same period in 2024. This decrease was primarily the result of a $713,000 decrease in gain on sale of loans, reflecting lower sales activity, a $619,000 decrease in service charges and fee income, primarily due to reduced transaction volumes, and a net decrease of $520,000 from no activity in gain on sale of MSRs and loss on sale of investment securities in 2025, compared to an $8.4 million net gain on sale of MSRs partially offset by a $7.8 million loss on sale of investment securities in the first half of 2024. These decreases were partially offset by a $757,000 increase in other noninterest income, primarily due to a $358,000 gain from sales of nonmarketable equity securities, $219,000 in bank owned life insurance proceeds, and a $152,000 increase in brokered loan fees.
Previous report
***Noninterest Expense.***Noninterest expense increased $2.7 million to $75.9 million for the nine months ended September 30, 2025, from $73.2 million for the nine months ended September 30, 2024. The increase was primarily due to increases of $2.1 million in salaries and benefits due to competitive wage adjustments, $889,000 in operations, primarily due to system upgrades, and $401,000 in professional and board fees, partially offset by a $522,000 decrease in the impairment of MSRs, driven primarily by higher market interest rates, which reduced prepayment risk and increased the estimated value of mortgage servicing rights..
Previous report
Provision for Income Taxes.* *For the nine months ended September 30, 2025, the Company recorded a provision for income taxes of $5.9 million, compared to $4.1 million for the nine months ended September 30, 2024. The increase in the income taxes provision was primarily due to the absence of alternative energy tax credits in the current period, as compared to the same period last year. The effective corporate income tax rates for the nine months ended September 30, 2025 and 2024, were 19.1% and 12.9%, respectively.
Reworded paragraphs (54)
Previous wording
This report contains forward-looking statements, which can be identified by the use of words such as “believes,” “expects,” “anticipates,” “estimates,” or similar expressions. Forward-looking statements include, but are not limited to:
Current wording
This report contains forward-looking statements, which can be identified by the use of words such as “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “projects,” or similar expressions. Forward-looking statements include, but are not limited to:
Previous wording
These forward-looking statements are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:
Current wording
These forward-looking statements are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among other things, the following factors:
Previous wording
Any of the forward-looking statements made in this Form 10‑Q and in other public statements may turn out to be wrong because of inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. The Company undertakes no obligation to update or revise any forward-looking statement included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur and you should not put undue reliance on any forward-looking statements.
Current wording
Any forward-looking statements in this Form 10‑Q and in other public statements may prove to be inaccurate because of incorrect assumptions, the factors described above, or other factors that we cannot foresee. Forward-looking statements are based on management’s beliefs and assumptions as of the time they are made. The Company undertakes no obligation to update or revise any forward-looking statement included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements in this report might not occur and you should not place undue reliance on any forward-looking statements.
Previous wording
1st Security Bank has been serving the Puget Sound area since 1907, which includes when the predecessor to Anchor Bank, one of its banking acquisitions, was formed. On July 9, 2012, the Bank converted from mutual to stock ownership and became the wholly owned subsidiary of FS Bancorp.
Current wording
1st Security Bank including the predecessor to Anchor Bank, one of its banking acquisitions, has been serving the Puget Sound area since 1907. On July 9, 2012, the Bank converted from mutual to stock ownership, becoming the wholly owned subsidiary of FS Bancorp.
Previous wording
The Company is relationship-driven, delivering banking and financial services to local families, local and regional businesses and industry niches in suburban communities in the greater Puget Sound area, the Kennewick-Pasco-Richland metropolitan area of Washington, also known as the Tri-Cities, Goldendale, Vancouver, and White Salmon, Washington and Manzanita, Newport, Ontario, Tillamook and Waldport, Oregon.
Current wording
The Company is relationship-driven, delivering banking and financial services to families, businesses, and industry niches in suburban communities across the greater Puget Sound area, the Kennewick-Pasco-Richland metropolitan area (also known as the Tri-Cities), and the communities of Goldendale, Vancouver, and White Salmon, Washington, as well as Manzanita, Newport, Ontario, Tillamook and Waldport, Oregon.
Previous wording
The Company also maintains its long-standing indirect consumer lending platform which operates primarily throughout the Western United States. The Company emphasizes long-term relationships with families and businesses within the communities served, working with them to meet their financial needs. The Company is also actively involved in community activities and events within these market areas, which further strengthens our relationships within those markets.
Current wording
In addition to its community banking presence, the Company maintains a long-standing indirect consumer lending platform operating primarily throughout the Western United States. Through active community involvement and a broad array of products and services, the Company emphasizes long-term relationships with the families and businesses it serves, working alongside them to meet their evolving financial needs.
Previous wording
The Company's strategic focus involves diversifying revenues, expanding lending channels, and enhancing the banking franchise. Management is committed to establishing varied revenue streams considering credit, interest rate, and concentration risks. The business plan includes:
Current wording
The Company's strategic focus involves diversifying revenues, expanding lending channels, and enhancing the banking franchise. Management is committed to building varied revenue streams while thoughtfully managing credit, interest rate, and concentration risks. This commitment is reflected in the following priorities:
Previous wording
As a diversified lender, the Company specializes in originating one-to-four-family loans, commercial real estate (“CRE”) mortgages, second mortgages, consumer loans, marine lending, and commercial business loans.
Current wording
As a diversified lender, the Company specializes in originating one-to-four-family residential loans, CRE mortgages, second mortgages, consumer loans, marine lending, and commercial business loans.
Previous wording
At September 30, 2025, the Company's loan portfolio included commercial real estate loans, residential real estate loans, consumer loans, and commercial business loans representing 35.4%, 29.1%, 22.9%, and 12.4% of the portfolio, respectively.
Current wording
At March 31, 2026, the Company's loan portfolio consisted of the following major categories: CRE loans, residential real estate loans, consumer loans, and commercial business loans representing 37.2%, 28.8%, 21.9%, and 12.1% of the portfolio, respectively.
Previous wording
Indirect home improvement loans to finance window, gutter, siding replacement, solar panels, spas, and other improvement renovations are a large segment of the consumer loan portfolio. These indirect home improvement loans are dependent on the Company’s contractor/dealer network of 33 currently active fixture dealerships located throughout Washington, Oregon, California, Idaho, Colorado, Nevada, Arizona, Minnesota, Texas, Utah, Massachusetts, Montana, and New Hampshire. During the three months ended September 30, 2025, the Company originated 1,691 indirect home improvement loans with an aggregate total of $38.4 million. Five contractor/dealers accounted for 75.7% of the dollar volume funded in this category. In addition, four states represented nearly three-quarters of the loan originations: Washington, Oregon, California, and Idaho with 35.9%, 20.0%, 15.6%, and 4.9% of total loan volume, respectively.
Current wording
Indirect home improvement loans to finance window, gutter, siding replacement, solar panels, spas, and other improvement renovations represent a large segment of the consumer loan portfolio. These loans are sourced through a contractor/dealer network of 30 active fixture dealerships located throughout Washington, Oregon, California, Idaho, Colorado, Nevada, Arizona, Minnesota, Texas, Utah, Massachusetts, Montana, and New Hampshire. During the three months ended March 31, 2026, the Company originated 1,181 indirect home improvement loans with an aggregate total of $26.6 million. Five contractor/dealers accounted for 71.7% of the dollar volume funded in this category, and four states – Washington, Oregon, California, and Utah – represented nearly three-quarters of total loan originations at 36.4%, 21.0%, 15.3%, and 4.7%, respectively.
Previous wording
The Company originates one-to-four-family residential mortgage loans through referrals from real estate agents, financial planners, builders, and from existing customers. Retail banking customers are also an important source of the Company’s loan originations. The Company originated $166.9 million of one-to-four-family loans (which included loans held for sale, loans held for investment and fixed seconds) in addition to $8.7 million of loans brokered to other institutions through the home lending segment during the three months ended September 30, 2025, of which $156.4 million were sold to investors. Of the loans sold to investors, $53.8 million were sold to the FNMA, FHLMC, FHLB, and/or GNMA with servicing rights retained for the purpose of further developing these customer relationships.
Current wording
The Company originates one-to-four-family residential mortgage loans through referrals from real estate agents, financial planners, builders, and existing customers with retail banking customers also serving as an important source of loan originations. During the three months ended March 31, 2026, the Company originated $204.9 million of one-to-four-family loans (including loans held for sale, loans held for investment, and fixed seconds). In addition, $3.1 million of loans were brokered to other institutions through the home lending segment. Of the loans originated, $154.7 million were sold to investors, of which $73.6 million were sold to the FNMA and FHLMC with servicing rights retained to further develop these customer relationships.
Previous wording
For the three months ended September 30, 2025, one-to-four-family loan originations and refinancing activity decreased compared to the prior quarter as a result of economic volatility in the markets. Residential construction and development lending, while not as common as other loan origination options like one-to-four-family loans, continues to be an important element in our total loan portfolio, and we continue to take a disciplined approach by concentrating our efforts on loans to builders and developers in our market areas known to us. These short-term loans typically have a maturity period of six to 18 months, with disbursements not fully realized at origination, leading to a short-term reduction in net loans receivable.
Current wording
For the three months ended March 31, 2026, one-to-four-family loan originations and refinancing activity increased compared to the prior period, driven by changes in interest rates and economic conditions. Residential construction and development lending, while less common than other origination options, remains an important element of the total loan portfolio. The Company continues to take a disciplined approach concentrating its efforts on loans to builders and developers in its known market areas. These short-term loans typically carry a maturity of six to 18 months, with disbursements not fully realized at origination, resulting in a short-term reduction in net loans receivable.
Previous wording
● Commercial real estate (“CRE”) loans increased $61.4 million, primarily reflecting:
Current wording
● Commercial real estate (“CRE”) loans increased $17.4 million, primarily reflecting:
Previous wording
○ $318,000 in CRE owner occupied loans,
Current wording
○ $6.2 million in CRE owner occupied loans,
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○ partially offset by a $2.2 million decrease in CRE non–owner occupied loans.
Current wording
○ $5.5 million in CRE non-owner occupied loans,
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○ $45.9 million in commercial and speculative construction and development loans,
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○ $4.5 million in commercial and speculative construction and development loans, and
Previous wording
○ $17.4 million in multi-family loans, and
Current wording
○ $1.2 million in multi-family loans.
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● Residential real estate loans increased $27.5 million, driven by:
Current wording
● Residential real estate loans increased $4.2 million, driven by:
Previous wording
○ $12.4 million in one-to-four-family loans (excluding loans held for sale),
Current wording
○ $2.2 million in one-to-four-family loans (excluding loans held for sale),
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○ $3.4 million in residential custom construction loans.
Current wording
○ $1.8 million in residential custom construction loans, and
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○ $11.7 million in home equity loans, and
Current wording
○ $197,000 in home equity loans.
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● Total undisbursed construction and development loan commitments increased $86.0 million to $260.1 million at September 30, 2025, from $174.1 million at December 31, 2024.
Current wording
● Total undisbursed construction and development loan commitments decreased $16.9 million to $218.5 million at March 31, 2026, from $235.4 million at December 31, 2025.
Previous wording
● Commercial business loans increased $26.4 million, reflecting increases of $24.2 million in commercial and industrial (“C&I”) loans and $2.2 million in warehouse lending.
Current wording
● Commercial business loans decreased $6.7 million, reflecting a decrease of $10.0 million in warehouse lending, partially offset by an increase of $3.4 million in commercial and industrial (“C&I”) loans.
Previous wording
● Consumer loans decreased $19.4 million, primarily due to declines of $14.3 million in indirect home improvement loans and $4.7 million in marine loans.
Current wording
● Consumer loans decreased $13.5 million, primarily due to declines of $12.4 million in indirect home improvement loans and $989,000 in marine loans.
Previous wording
Overall, loan growth was concentrated in commercial construction and development, multi-family, and residential real estate segments, reflecting continued demand in those markets. Consumer balances, primarily indirect home improvement loans, declined presumably due to volatile economic conditions, as the Company continued to manage indirect exposures.
Current wording
Overall, loan growth was concentrated in CRE, including owner occupied, non-owner occupied, and construction and development loans, and to a lesser extent, multi-family and residential real estate segments. Consumer balances declined, driven primarily by a reduction in indirect home improvement loans, reflecting the impact of current economic conditions on consumer demand.
Previous wording
During the nine months ended September 30, 2025, the Company sold $375.4 million of one-to-four-family loans, compared to $426.0 million for the same period one year ago. The decrease in loan sales reflects a more competitive market environment and lower purchase volume, partially offset by higher refinance activity. The Company remains focused on managing loan production capacity and maintaining a pipeline consistent with market demand. Gross margin on home loan sales was 3.14% for the nine months ended September 30, 2025, compared to 3.06% for the nine months ended September 30, 2024. Gross margin is defined as the margin on loans sold without the impact of deferred loan costs.
Current wording
During the three months ended March 31, 2026, the Company sold $154.7 million of one-to-four-family loans, compared to $91.9 million for the same period one year ago. The increase in loan sales reflects improved mortgage rates which is also driving higher refinance activity. The Company remains focused on managing loan production capacity and maintaining a pipeline consistent with market demand. Gross margin on home loan sales was 3.03% for the three months ended March 31, 2026, compared to 3.26% for the three months ended March 31, 2025. The compression in gross margin reflects competitive pricing pressures in the current mortgage market environment as the Company maintained production volume consistent with market demand. Gross margin is defined as the margin on loans sold without the impact of deferred loan costs.
Previous wording
The ACL on loans totaled $30.1 million, or 1.14%, of gross loans receivable (excluding loans held for sale), at September 30, 2025, compared to $31.9 million, or 1.26%, at December 31, 2024. The ACL on unfunded loan commitments increased $675,000 to $2.1 million at September 30, 2025, from $1.4 million at December 31, 2024, primarily reflecting growth in commercial and speculative construction and development loan commitments. Total loans 30 days or more past due decreased to $18.5 million, or 0.70% of total loans, from $22.2 million, or 0.88%, over the same period, reflecting continued repayment performance in the broader loan portfolio.
Current wording
The ACL on loans totaled $32.4 million, or 1.22%, of gross loans receivable (excluding loans held for sale), at March 31, 2026, compared to $31.9 million, or 1.20%, at December 31, 2025. The ACL on unfunded loan commitments decreased $121,000 to $1.6 million at March 31, 2026, from $1.8 million at December 31, 2025. Total loans 30 days or more past due increased to $23.2 million, or 0.87% of total loans, from $22.2 million, or 0.84%, at December 31, 2025, reflecting softening credit performance across the broader loan portfolio, driven by current economic conditions and their impact on borrower cash flows.
Previous wording
Classified loans, all of which were classified as substandard, totaled $27.1 million at September 30, 2025, compared to $22.9 million at December 31, 2024. The coverage ratio of the ACL on loans to nonperforming loans was 163.8% at September 30, 2025, compared to 234.3% at December 31, 2024. The decline in the coverage ratio primarily reflects the $2.3 million partial charge-off on a CRE loan that was previously reserved combined with the increase in nonperforming loans.
Current wording
Classified loans totaled $26.1 million at March 31, 2026, compared to $27.3 million at December 31, 2025. The coverage ratio of the ACL on loans to nonperforming loans was 177.7% at March 31, 2026, compared to 170.6% at December 31, 2025. The increase in the coverage ratio primarily reflects increased provision for nonperforming loans.
Previous wording
Asset quality trends reflect growth in construction, multi-family, and residential loan segments, ongoing elevated losses in certain consumer loan portfolios, and the Company’s continued risk management and monitoring of nonperforming and substandard exposures.
Current wording
Overall, asset quality trends reflect growth in CRE, construction, multi-family, and residential loan segments, ongoing elevated losses in certain consumer loan portfolios, and continued risk management and monitoring of nonperforming and substandard exposures.
Previous wording
Total deposits increased $347.1 million to $2.69 billion at September 30, 2025, from $2.34 billion at December 31, 2024, reflecting increases in all deposit categories. Transactional accounts (noninterest-bearing checking, interest-bearing checking and escrow accounts) increased $50.7 million to $865.4 million at September 30, 2025, from $814.7 million at December 31, 2024 This increase was due to increases of $23.0 million in interest-bearing checking, $21.0 million in noninterest-bearing checking and $6.7 million in escrow accounts related to mortgages serviced, reflecting higher customer balances and increased activity in mortgage servicing. Money market and savings accounts increased $25.5 million to $521.3 million at September 30, 2025, from $495.8 million at December 31, 2024, due to customer preference for liquidity and slightly higher balances in retail and business savings accounts.
Current wording
Total deposits decreased $36.1 million to $2.64 billion at March 31, 2026, from $2.67 billion at December 31, 2025, reflecting decreases in all deposit categories other than escrow accounts. Transactional accounts (noninterest-bearing checking, interest-bearing checking and escrow accounts) decreased $13.7 million to $980.0 million at March 31, 2026, from $993.6 million at December 31, 2025, primarily due to decreases of $12.4 million in noninterest-bearing checking, and $9.2 million in interest-bearing checking, partially offset by an $8.0 million increase in escrow accounts related to mortgages serviced, reflecting higher customer balances and increased activity in mortgage servicing. Money market and savings accounts decreased $2.5 million to $547.1 million at March 31, 2026, from $549.7 million at December 31, 2025, primarily reflecting a decline in money market balances, partially offset by an increase in retail and business savings accounts.
Previous wording
CDs, which include both retail and non-retail CDs, increased $270.9 million to $1.3 billion at September 30, 2025, from $1.03 billion at December 31, 2024. Retail CDs increased $50.8 million to $924.9 million at September 30, 2025, from $874.1 million at December 31, 2024. Non-retail CDs, which include brokered CDs, online CDs and public funds CDs increased $220.0 million to $374.8 million, compared to $154.8 million at December 31, 2024, was primarily due to an increase of $226.4 million in brokered CDs. Non-retail CDs represented 28.8% and 15.0% of total CDs at September 30, 2025 and December 31, 2024, respectively. The increase in non-retail CDs aligns with the Company's strategy to manage interest rate risk and liquidity by accessing larger and more diversified funding sources at competitive rates that were only slightly higher than local market rates, and to reduce reliance on higher cost borrowings.
Current wording
CDs, which include both retail and non-retail CDs, decreased $19.8 million to $1.11 billion at March 31, 2026, from $1.13 billion at December 31, 2025. Retail CDs decreased $5.0 million to $916.7 million at March 31, 2026, from $921.7 million at December 31, 2025. Non-retail CDs, which include brokered CDs, online CDs and public funds CDs decreased $14.9 million to $193.8 million, compared to $208.7 million at December 31, 2025, primarily due to a decrease of $15.3 million in brokered CDs. Non-retail CDs represented 17.5% and 18.5% of total CDs at March 31, 2026 and December 31, 2025, respectively. The decrease in non-retail CDs aligns with the Company's strategy to manage interest rate risk and liquidity by accessing larger and more diversified funding sources at competitive rates that were only slightly higher than local market rates, while reducing reliance on higher cost borrowings.
Previous wording
The Bank had uninsured deposits of approximately $694.4 million or 25.8% of total deposits, at September 30, 2025, compared to approximately $652.7 million or 27.9% of total deposits at December 31, 2024. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.
Current wording
The Bank had uninsured deposits of approximately $704.2 million or 26.7% of total deposits, at March 31, 2026, compared to approximately $718.1 million or 26.9% of total deposits at December 31, 2025. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.
Previous wording
Borrowings decreased $178.5 million to $129.3 million at September 30, 2025, from $307.8 million at December 31, 2024. The decrease reflects the repayment of higher-cost borrowings using lower-cost brokered deposits, consistent with the Company’s funding and liquidity strategy. At September 30, 2025, borrowings were solely comprised of FHLB advances.
Current wording
Borrowings increased $38.0 million to $167.3 million at March 31, 2026, from $129.3 million at December 31, 2025. The increase reflects competitive rates on borrowings, compared to brokered deposits, consistent with the Company's funding strategy. At March 31, 2026, borrowings were comprised of FHLB and FRB advances.
Previous wording
Stockholders’*** Equity.*** Total stockholders’ equity increased $4.7 million to $300.5 million at September 30, 2025, from $295.8 million at December 31, 2024. The increase primarily reflects net income of $24.9 million, partially offset by share repurchases of $13.9 million, cash dividends paid totaling $8.2 million, and $1.6 million in equity award compensation. Additionally, the issuance of common stock under the employee stock purchase plan contributed $937,000, reflecting the issuance of 23,456 shares of Company common stock. Stockholders' equity was also impacted by the increase in accumulated other comprehensive loss, net of tax of $213,000, primarily due to decreases in unrealized net gains on fair value and cash flow hedges of $4.6 million, net of tax, reflecting changes in market interest rates during the quarter, partially offset by an improvement in unrealized net losses on securities available-for-sale of $4.4 million, net of tax.
Current wording
Stockholders’*** Equity.*** Total stockholders’ equity increased $6.2 million to $313.9 million at March 31, 2026, from $307.7 million at December 31, 2025. The increase primarily reflects net income of $7.8 million. Declines in the fair value of available-for-sale securities recorded in accumulated other comprehensive income (“AOCI”) were largely offset by improvements in the fair value of interest rate swap cash flow hedges, resulting in a net improvement of $83,000, net of tax. Gains and losses in fair value reflect changes in market interest rates during the periods. The increase in shareholders’ equity was partially offset by cash dividends paid totaling $2.2 million, and share repurchases of $620,000.
Previous wording
Book value per common share was $40.43 at September 30, 2025, compared to $38.26 at December 31, 2024. The calculation of book value per share at September 30, 2025, was based on 7,432,359 common shares, derived by subtracting the 102,971 unvested restricted stock shares from the 7,535,330 reported common shares outstanding as of that date. Similarly, the book value per share at December 31, 2024, was calculated based on 7,729,951 common shares, after deducting 103,063 unvested restricted stock shares from the 7,833,014 reported common shares outstanding as of that date.
Current wording
Book value per common share was $42.42 at March 31, 2026, compared to $41.55 at December 31, 2025. The calculation of book value per share at March 31, 2026, was based on 7,398,571 common shares, derived by subtracting the 102,971 unvested restricted stock shares from the 7,501,542 reported common shares outstanding as of that date. Similarly, the book value per share at December 31, 2025, was calculated based on 7,404,548 common shares, after deducting 102,971 unvested restricted stock shares from the 7,507,519 reported common shares outstanding as of that date.
Previous wording
***Net Interest Income.***Net interest income increased $2.4 million to $33.7 million for the three months ended September 30, 2025, from $31.2 million for the three months ended September 30, 2024, primarily due to an increase in total interest income of $3.9 million, partially offset by an increase in total interest expense of $1.5 million. The $3.9 million increase in total interest income was primarily due to an increase of $2.9 million in interest income on loans receivable, including fees, driven primarily by an 11-basis point increase in the average yield earned on loans receivable as new loans were originated at higher rates and variable-rate loans repriced higher, and a higher average balance of loans outstanding. The $1.5 million increase in total interest expense was primarily the result of a shift in the funding mix toward brokered CDs, which were used to repay higher-cost borrowings in accordance with the Company's funding and liquidity strategy.
Current wording
***Net Interest Income.***Net interest income increased $1.6 million to $32.5 million for the three months ended March 31, 2026, from $31.0 million for the three months ended March 31, 2025, primarily due to an increase in total interest income of $2.5 million, partially offset by an increase in total interest expense of $982,000. The increase in total interest income was primarily due to an increase of $2.7 million in interest income on loans receivable, including fees, driven primarily by a five-basis point increase in the average yield earned on loans receivable as new loans were originated at higher rates and variable-rate loans repriced higher, and a higher average balance of loans outstanding. The increase in total interest expense was primarily the result of a $1.7 million increase in deposit interest expense, reflecting significantly higher average balances in interest-bearing checking accounts, including brokered deposits, and a 108 basis point increase in the rate paid on those accounts. Additionally, the repricing of the Company's subordinated notes to a floating rate on February 15, 2026, contributed $206,000 of incremental interest expense. These increases were partially offset by an $879,000 decrease in borrowing costs, as the Company reduced average borrowings by $86.4 million in accordance with its funding and liquidity strategy.
Previous wording
***Interest Expense.***Total interest expense increased $1.5 million to $17.3 million for the three months ended September 30, 2025, from $15.8 million for the comparable quarter in 2024, primarily due to an increase of interest expense on deposits of $1.4 million. The higher deposit costs were a result of an increase in the average balance of deposits, partially offset by a decrease in the average interest paid. The increase in interest expense also reflects a strategic shift in deposit mix towards a higher proportion of CDs and interest-bearing checking accounts, which generally carry higher interest rates in the current market environment.
Current wording
***Interest Expense.***Total interest expense increased $982,000 to $16.8 million for the three months ended March 31, 2026, from $15.8 million for the comparable quarter in 2025, primarily due to an increase of interest expense on deposits of $1.7 million, partially offset by a decrease of $879,000 of interest expense on borrowings. The higher deposit costs were the result of an increase in interest-bearing checking balances, including brokered deposits, combined with a 108-basis point increase in the rate paid on those accounts, partially offset by a $332,000 decrease in interest expense on CDs due to a 19-basis point decline in CD rates. Additionally, the repricing of the Company's subordinated notes to a floating rate on February 15, 2026, contributed $206,000 of incremental interest expense.
Previous wording
The average cost of total interest-bearing liabilities decreased three basis points to 3.15% for the three months ended September 30, 2025, from 3.18% for the three months ended September 30, 2024. The average cost of funds, which includes noninterest-bearing checking, increased two basis points to 2.41% for the three months ended September 30, 2025, from 2.39% for the three months ended September 30, 2024, primarily reflecting a lower proportion of noninterest-bearing deposits in the overall funding mix.
Current wording
The average cost of total interest-bearing liabilities similarly decreased four basis points to 3.11%, reflecting the benefit of lower borrowing costs as average borrowings declined $86.4 million. The average cost of funds, which includes noninterest-bearing checking, increased one basis point to 2.39%, primarily reflecting a lower proportion of noninterest-bearing deposits in the overall funding mix.
Previous wording
Provision for Credit Losses. For the three months ended September 30, 2025, the provision for credit losses was $2.3 million, consisting of a $1.9 million provision for credit losses on loans and a $457,000 provision for credit losses on unfunded loan commitments, compared to $1.5 million provision for the three months ended September 30, 2024, consisting of a $1.6 million provision for credit losses on loans, partially offset by a $79,000 reversal of the ACL on unfunded loan commitments. The increase in the provision for credit losses on loans primarily reflects growth in the loan portfolio, an increase in nonperforming loans, and higher net charge-offs.
Current wording
Provision for Credit Losses. For the three months ended March 31, 2026, the provision for credit losses was $2.5 million, consisting of a $2.6 million provision for credit losses on loans and a $121,000 recovery of credit losses on unfunded loan commitments. This compares to a $1.6 million provision for credit losses for the three months ended March 31, 2025. which consisted of a $1.5 million provision for credit losses on loans, a $21,000 provision for credit losses on held‑to‑maturity securities, and a $66,000 provision for credit losses on unfunded loan commitments. The increase in the provision for credit losses on loans primarily reflects an increase in nonperforming loans and higher net charge‑offs.
Previous wording
***Noninterest Income.***Noninterest income decreased $373,000 to $5.6 million for the three months ended September 30, 2025, from $6.0 million for the three months ended September 30, 2024. The decrease primarily reflects a $156,000 decrease in service charges and fee income and a $141,000 decrease in gain on sale of MSRs as there were no MSR sales in the current quarter compared to sales of $8.4 million during the same period last year.
Current wording
***Noninterest Income.***Noninterest income increased $275,000 to $5.4 million for the three months ended March 31, 2026, from $5.1 million for the three months ended March 31, 2025. The increase primarily reflects a $684,000 increase in gain on sale of loans, partially offset by a $246,000 decrease in other noninterest income, and a $171,000 decrease in service charges and fee income.
Showing the first 40 of 54 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
FS Bancorp is subject to these regulatory capital guidelines as of March 31, 2026, and has exceeded all applicable minimum capital requirements. The regulatory capital ratios calculated for FS Bancorp at March 31, 2026 were as follows: Tier 1 leverage-based capital ratio, 9.9%; Tier 1 risk-based capital ratio, 11.2%; total risk-based capital ratio, 13.8%; and CET 1 capital ratio, 11.2%. For additional information regarding regulatory capital compliance and regulatory minimums, see “Note 12 – Regulatory Capital” of the Notes to Consolidated Financial Statements included in Part I. Item 1 of this report.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
The efficiency ratio, which is calculated by dividing noninterest expense by total net interest income and noninterest income, improved to 64.63% for the three months ended September 30, 2025, compared to 69.42% for the three months ended September 30, 2024, due to an increase in net interest income and a slight decrease in noninterest expense.
Previous report — wording carried elsewhere
Comparison of Results of Operations for the Nine Months Ended September 30, 2025 and 2024
Previous report — wording carried elsewhere
Average Balances, Interest and Average Yields/Cost
Previous report — wording carried elsewhere
The following table sets forth for the periods indicated, information regarding average balances of assets and liabilities, as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities. Also presented is the weighted average yield on interest-earning assets, rates paid on interest-bearing liabilities and the resultant spread at for the periods presented. Average balances are daily average balances. The yields on tax-exempt municipal bonds have not been computed on a tax equivalent basis.
Previous report — wording carried elsewhere
The following table compares average interest-earning asset balances, associated yields, and resulting changes in interest income for the nine months ended September 30, 2025 and 2024:
Previous report — wording carried elsewhere
The following table details average balances of interest-bearing liabilities, associated rates, and resulting change in interest expense for the nine months ended September 30, 2025 and 2024: