FS Bancorp, Inc.
For the period ended Sep 30, 2026. Filed Nov 9, 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.
Sep 30, 2026 · Filed Nov 9, 2026
FSBW$43.67+0.3%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001437749-26-026740
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-09.
0001437749-26-035931
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 103 previous paragraphs and 105 current paragraphs.
28 unchanged; 66 reworded; 11 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 18 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 (11)
Current report
As a result of the Pacific West Acquisition, which was completed on August 19, 2026, the Company identified a new critical accounting estimate related to the fair value measurement of assets acquired and liabilities assumed. Management believes the estimates and assumptions used in determining these fair values, particularly for loans and intangible assets, are significant to understanding the Company's financial condition and results of operations. These estimates require complex and subjective judgments, and accordingly, management considers them to be critical accounting estimates.
Current report
○ $35.8 million in multi-family loans.
Current report
● Consumer loans decreased $12.9 million, primarily as a result of the decline of $32.3 million in indirect home improvement loans, partially offset by an increase of $18.7 million in other consumer loans, reflecting $18.8 million of loans acquired in the Pacific West Acquisition.
Current report
***General.***Net income was $4.9 million for the three months ended September 30, 2026, compared to $9.2 million for the three months ended September 30, 2025. The decrease was primarily due to a $6.9 million, or 27.3%, increase in noninterest expense, driven largely by $2.5 million of acquisition costs and a $2.8 million increase in salaries and benefits, and a $1.2 million or 49.9%, increase in the provision for credit losses, primarily due to increased nonaccrual loans acquired in the Pacific West Acquisition. These decreases were partially offset by a $2.0 million, or 5.9%, increase in net interest income, a $582,000, or 10.4%, increase in noninterest income, which included a $1.7 million bargain purchase gain related to the Pacific West Acquisition, and a $1.3 million decrease in the provision for income taxes.
Current report
Net interest margin (“NIM”) (annualized) decreased one basis point to 4.36% for the three months ended September 30, 2026, compared to 4.37% for the same period in the prior year. The slight decrease in NIM reflects a lower ratio of average interest-earning assets to average interest-bearing liabilities in the current period.
Current report
The average cost of total interest-bearing liabilities decreased 12-basis points to 3.03%, reflecting the benefit of the lower cost of deposits, partially offset by the higher cost of the subordinated notes following their repricing. The average cost of funds, which includes noninterest-bearing checking, decreased nine- basis points to 2.32%, from 2.41% for the three months ended September 30, 2025. The decrease primarily reflected the shift in deposit mix away from CDs and lower rates on CDs, as well as the addition of slightly lower-cost funding from the Pacific West Acquisition.
Current report
Net loan charge-offs totaled $1.6 million for the three months ended September 30, 2026, compared to $4.0 million for the three months ended September 30, 2025. The decrease was primarily attributable to a $2.3 million charge-off on a commercial construction loan relationship recognized during the three months ended September 30, 2025.
Current report
***Noninterest Expense.***Noninterest expense increased $6.9 million to $32.3 million for the three months ended September 30, 2026, compared to $25.4 million for the three months ended September 30, 2025. The $6.9 million increase was largely comprised of a $2.8 million increase in salaries and benefits expense reflecting additional employees from the Pacific West Acquisition, as well as higher benefit costs, and $2.5 million in acquisition-related costs associated with the transaction, compared to no acquisition costs in the prior year period. Operations, data processing, occupancy, and marketing expenses also increased a combined $1.6 million, partially reflecting the addition of Pacific West's operations.
Current report
***Net Interest Income.***Net interest income increased $4.1 million to $100.9 million for the nine months ended September 30, 2026, from $96.8 million for the nine months ended September 30, 2025, with a $6.0 million increase in total interest income, partially offset by a $1.9 million increase in total interest expense. The $6.0 million increase in total interest income was primarily due to an increase of $6.6 million in interest income on loans receivable, including fees, resulting from net loan growth, including loans acquired in the Pacific West Acquisition. The $1.9 million increase in total interest expense was primarily due to a $1.1 million increase in interest expense on the subordinated notes following their repricing to a higher interest rate in 2026, as well as a $576,000 increase in interest expense on borrowings, and a $214,000 increase in interest expense on deposits.
Current report
NIM (annualized) decreased one- basis point to 4.32% for the nine months ended September 30, 2026, from 4.33% for the same period the prior year. The slight decrease in NIM primarily reflects a lower ratio of average interest-earning assets to average interest-bearing liabilities in the current period.
Current report
The efficiency ratio weakened to 70.77% for the nine months ended September 30, 2026, compared to 67.40% for the nine months ended September 30, 2025, primarily due to increases in salaries and benefits and acquisition-related costs noted above.
Removed paragraphs (9)
Previous report
● Consumer loans decreased $23.8 million, primarily due to the decline of $23.7 million in indirect home improvement loans.
Previous report
Net interest margin (“NIM”) (annualized) was unchanged at 4.30% for the three months ended June 30, 2026, compared to the same period in the prior year. NIM remained relatively stable during the periods.
Previous report
Net loan charge-offs totaled $3.8 million for the three months ended June 30, 2026, compared to $1.2 million during the three months ended June 30, 2025. The increase was primarily attributable to a further charge-off on an existing commercial construction loan relationship that was previously partially charged off in 2024, as well as higher net charge-offs within the indirect home improvement portfolio. The additional charge-off reflects leasing uncertainty and updated appraised values for the underlying property, as well as continued pressure on commercial real estate values in the surrounding market. Management expects final resolution of the relationship during the second half of 2026. The increase in indirect home improvement loan net charge-offs primarily reflects elevated delinquency levels within portions of the portfolio.
Previous report
***Noninterest Expense.***Noninterest expense increased $602,000 to $26.1 million for the three months ended June 30, 2026, compared to $25.5 million for the three months ended June 30, 2025. The $602,000 increase was primarily attributable to a $1.5 million increase in salaries and benefits expense resulting from annual compensation adjustments implemented during the second quarter as part of the Company's annual compensation review process, as well as higher benefit costs. In addition, the Company recorded $417,000 in acquisition-related costs associated with the previously announced merger with Pacific West. These increases were partially offset by a $1.1 million reduction in operations expense, primarily due to an $800,000 decrease in the mortgage purchase reserve for estimated losses to mortgage loan repurchase obligations. The reduction reflects the seasoning of loans originated during the high-volume production years of 2020 and 2021, which has reduced the expected level of future repurchase-related losses.
Previous report
***General.***Net income was $15.8 million for the six months ended June 30, 2026, compared to $15.7 million for the six months ended June 30, 2025. The increase was primarily due to a $2.1 million, or 3.3%, increase in net interest income and a $1.3 million, or 12.2%, increase in total noninterest income, partially offset by a $1.6 million, or 43.1%, increase in provision for credit losses, and a $1.1 million, or 2.1%, increase in total noninterest expense.
Previous report
***Net Interest Income.***Net interest income increased $2.1 million to $65.2 million for the six months ended June 30, 2026, from $63.1 million for the six months ended June 30, 2025, primarily due to an increase in total interest income of $3.5 million, partially offset by an increase in total interest expense of $1.4 million. The increase in total interest income was primarily due to a higher average balance of loans outstanding. The increase in total interest expense was primarily the result of a $1.0 million increase in deposit interest expense, reflecting significantly higher average balances in interest-bearing checking accounts, including brokered deposits, and a 95- 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 $629,000 of incremental interest expense as the applicable interest rate increased following the repricing date. These increases were partially offset by a $267,000 decrease in borrowing costs, as the Company reduced average borrowings by $5.9 million in accordance with its funding and liquidity strategy.
Previous report
NIM (annualized) decreased one- basis point to 4.30% for the six months ended June 30, 2026, from 4.31% 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 one-basis point decline in NIM for the period, and higher costs associated with growth in interest-bearing checking balances, including brokered deposits. These increases were substantially offset by lower costs on CDs and borrowings.
Previous report
The average cost of total interest-bearing liabilities similarly decreased two basis points to 3.12%, reflecting the benefit of lower borrowing costs resulting from both a decrease in average borrowings of $5.9 million, and a decline in the average borrowing rate. The average cost of funds, which includes noninterest-bearing checking, increased two-basis points to 2.40%, from 2.38% for the six months ended June 30, 2025, primarily reflecting a lower proportion of noninterest-bearing deposits in the overall funding mix.
Previous report
The efficiency ratio improved to 67.27% for the six months ended June 30, 2026, compared to 68.89% for the six months ended June 30, 2025, due to revenue growth outpacing noninterest expense.
Reworded paragraphs (66)
Previous wording
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 wording
Further, statements about the effects of the Company’s acquisition with Pacific West Bancorp, completed on August 19, 2026, 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:
Previous 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.
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, Waldport, and recently the Portland metropolitan area of Oregon.
Previous wording
At June 30, 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 37.8%, 29.8%, 21.5%, and 10.9% of the portfolio, respectively.
Current wording
At September 30, 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 39.8%, 29.9%, 19.2%, and 11.1% of the portfolio, respectively.
Previous 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 27 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 June 30, 2026, the Company originated 1,221 indirect home improvement loans with an aggregate total of $28.9 million. Five contractor/dealers accounted for 72.9% of the dollar volume funded in this category, and three states – Washington, Oregon, and California – represented nearly three-quarters of total loan originations at 33.9%, 25.3%, and 14.6%, 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 31 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, 2026, the Company originated 1,189 indirect home improvement loans with an aggregate total of $28.8 million. Five contractor/dealers accounted for 64.84% of the dollar volume funded in this category, and three states – Washington, Oregon, and California – represented nearly three-quarters of total loan originations at 37.0%, 24.4%, and 13.1%, respectively.
Previous 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 June 30, 2026, the Company originated $202.7 million of one-to-four-family loans (including loans held for sale, loans held for investment, and fixed seconds). In addition, $2.6 million of loans were brokered to other institutions through the home lending segment. Of the loans originated, $156.1 million were sold to investors, of which $72.7 million were sold to the FNMA and FHLMC with servicing rights retained to maintain and further develop 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 September 30, 2026, the Company originated $211.1 million of one-to-four-family loans (including loans held for sale, loans held for investment, and fixed seconds). In addition, $1.7 million of loans were brokered to other institutions through the home lending segment. Of the loans originated, $122.9 million were sold to investors, of which $48.6 million were sold to the FNMA and FHLMC with servicing rights retained to maintain and further develop these customer relationships.
Previous wording
There have been no material changes to the Company’s critical accounting estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Current wording
Except for the new critical accounting estimate related to the Pacific West Acquisition discussed below, there have been no material changes to the Company’s critical accounting estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Previous wording
***Assets.***Total assets decreased $17.8 million to $3.18 billion at June 30, 2026, compared to $3.20 billion at December 31, 2025, primarily due to decreases of $19.2 million in securities available-for-sale, $13.2 million in loans held for sale, and $1.5 million in core deposit intangible, partially offset by increases of $6.4 million in FHLB stock, $5.8 million in loans receivable, net, $1.6 million in securities held-to-maturity, $1.5 million in total cash and cash equivalents, and $866,000 in operating lease right-of-use assets. Loan growth was funded primarily by borrowings, which also replaced a decline in deposit funding during the period.
Current wording
***Assets.***Total assets increased $479.8 million to $3.68 billion at September 30, 2026, compared to $3.20 billion at December 31, 2025, primarily due to increases of $385.0 million in loans receivable, net, $53.5 million in securities available-for-sale, $16.1 million in other assets, $15.7 million in total cash and cash equivalents, $5.6 million in BOLI, $5.1 million in FHLB stock, and $5.1 million in premises and equipment, partially offset by a decrease of $20.9 million in loans held for sale. These increases in assets were from a combination of assets acquired in the Pacific West Acquisition, which added $476.5 million in total assets, including $252.6 million in loans receivable, net and organic loan growth. Asset growth was funded primarily by deposits assumed in the Pacific West Acquisition and increased borrowings, which replaced $286.5 million in brokered deposits.
Previous wording
Loans receivable, net increased $5.8 million to $2.63 billion at June 30, 2026, compared to $2.62 billion at December 31, 2025:
Current wording
Loans receivable, net increased $385.0 million to $3.01 billion at September 30, 2026, compared to $2.62 billion at December 31, 2025:
Previous wording
● Commercial real estate (“CRE”) loans increased $35.5 million, primarily reflecting:
Current wording
● Commercial real estate (“CRE”) loans increased $244.6 million, reflecting:
Previous wording
○ $11.1 million in CRE non-owner occupied loans, and
Current wording
○ $121.3 million in CRE non-owner occupied loans,
Previous wording
○ $8.1 million in CRE owner occupied loans.
Current wording
○ $48.7 million in CRE owner occupied loans,
Previous wording
○ $16.3 million in commercial and speculative construction and development loans,
Current wording
○ $38.9 million in commercial and speculative construction and development loans, and
Previous wording
● Residential real estate loans increased $34.1 million, driven by:
Current wording
● Residential real estate loans increased $148.9 million, primarily driven by:
Previous wording
○ $31.8 million in one-to-four-family loans (excluding loans held for sale), and
Current wording
○ $129.8 million in one-to-four-family loans (excluding loans held for sale), and
Previous wording
○ $2.4 million in residential custom construction loans.
Current wording
○ $14.3 million in residential custom construction loans.
Previous wording
●Commercial business loans decreased $40.8 million, reflecting a decrease of $20.9 million in warehouse lending and $19.9 million in commercial and industrial (“C&I”) loans.
Current wording
●Commercial business loans increased $8.9 million, reflecting an increase of $21.5 million in commercial and industrial (“C&I”) loans, offset by a decrease of $12.6 million in warehouse lending.
Previous wording
In summary, loan growth was concentrated in CRE and one-to-four-family residential lending, while consumer balances declined, driven primarily by a reduction in indirect home improvement loans, reflecting the impact of current economic conditions on consumer demand.
Current wording
In summary, loan growth was primarily due to $252.6 million of loans acquired in the Pacific West Acquisition, including CRE non-owner and owner occupied loans of $131.4 million, multi-family loans of $26.8 million, one-to-four-family loans of $22.2 million, construction and development loans of $12.6 million, consumer loans of $18.8 million, and C&I loans of $40.9 million. Organic loan growth was concentrated in CRE and one-to-four-family residential lending, while 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
Total undisbursed construction and development loan commitments decreased $19.9 million to $215.5 million at June 30, 2026, from $235.4 million at December 31, 2025.
Current wording
Total undisbursed construction and development loan commitments increased $20.5 million to $255.9 million at September 30, 2026, from $235.4 million at December 31, 2025.
Previous wording
Loans held for sale, consisting of one-to-four-family loans, decreased $13.2 million to $30.5 million at June 30, 2026, from $43.7 million at December 31, 2025.
Current wording
Loans held for sale, consisting of one-to-four-family loans, decreased $20.9 million to $22.8 million at September 30, 2026, from $43.7 million at December 31, 2025.
Previous wording
For the six months ended June 30, 2026, one-to-four-family loan originations and refinancing activity increased, compared to the six months ended June 30, 2025, driven by improved mortgage rates. Refinance volume increased $56.6 million or 104.9%, and purchase originations increased $12.0 million or 4.1%, reflecting continued demand in the Company’s market areas.
Current wording
For the nine months ended September 30, 2026, one-to-four-family loan originations and refinancing activity increased, compared to the nine months ended September 30, 2025, driven by improved mortgage rates. Refinance volume increased $71.7 million or 97.3%, and purchase originations increased $35.4 million or 7.9%, reflecting continued demand in the Company’s market areas.
Previous wording
During the six months ended June 30, 2026, the Company sold $310.8 million of one-to-four-family loans, compared to $219.0 million for the same period in 2025, reflecting higher refinance activity driven by more favorable interest rates. The Company continues to manage loan production capacity in an effort to maintain a pipeline consistent with market demand. Gross margin on home loan sales (defined as the margin on loans sold, excluding the impact of deferred loan costs) was 3.01% for the six months ended June 30, 2026, compared to 3.14% for the six months ended June 30, 2025. The compression in gross margin reflects competitive pricing pressure in the current mortgage market as the Company maintained production volume consistent with market demand.
Current wording
During the nine months ended September 30, 2026, the Company sold $433.7 million of one-to-four-family loans, compared to $375.4 million for the same period in 2025, reflecting higher refinance activity driven by more favorable interest rates. The Company continues to manage loan production capacity in an effort to maintain a pipeline consistent with market demand. Gross margin on home loan sales (defined as the margin on loans sold, excluding the impact of deferred loan costs) was 3.16% for the nine months ended September 30, 2026, compared to 3.14% for the nine months ended September 30, 2025.
Previous wording
The ACL on loans totaled $31.2 million, or 1.17%, of gross loans receivable (excluding loans held for sale), at June 30, 2026, compared to $31.9 million, or 1.20%, at December 31, 2025. The ACL on unfunded loan commitments decreased $39,000 to $1.7 million at June 30, 2026, from $1.8 million at December 31, 2025. Total loans 30 days or more past due decreased to $16.6 million, or 0.62% of total loans, from $22.2 million, or 0.84%, at December 31, 2025, reflecting improved credit performance across the broader loan portfolio as the markets respond to current economic conditions and their impact on borrower cash flows.
Current wording
The ACL on loans totaled $36.5 million, or 1.20%, of gross loans receivable (excluding loans held for sale), at September 30, 2026, compared to $31.9 million, or 1.20%, at December 31, 2025. The ACL on unfunded loan commitments increased $371,000 to $2.1 million at September 30, 2026, from $1.8 million at December 31, 2025. Total loans past due decreased to $20.5 million, or 0.67% of total loans, from $22.2 million, or 0.84%, at December 31, 2025. Past due loans at September 30, 2026 were concentrated in commercial and speculative construction and development loans of $7.8 million, all of which were nonaccrual, and indirect home improvement loans of $7.2 million.
Previous wording
Nonperforming loans, consisting solely of nonaccrual loans, decreased $3.1 million to $15.6 million at June 30, 2026, from $18.7 million at December 31, 2025. The decrease was primarily attributable to a $2.3 million charge-off on a nonperforming commercial construction loan, and a decrease of $1.4 million in nonperforming CRE owner occupied loans, primarily due to loan payoffs, partially offset by an increase of $500,000 in nonperforming indirect home improvement loans. The ratio of nonperforming loans to total gross loans reduced to 0.59% at June 30, 2026, from 0.71% at December 31, 2025.
Current wording
Nonperforming loans, consisting solely of nonaccrual loans, increased $6.4 million to $25.1 million at September 30, 2026, from $18.7 million at December 31, 2025. The increase was primarily due to $8.6 million in nonaccrual loans acquired in the Pacific West Acquisition. Excluding acquired loans, nonperforming loans decreased $2.2 million, primarily due to a $2.3 million charge-off on a nonperforming commercial construction loan and a decrease of $1.4 million in nonperforming CRE owner occupied loans, primarily due to loan payoffs, partially offset by $1.5 million of other net additions. The ratio of nonperforming loans to total gross loans increased to 0.83% at September 30, 2026, from 0.71% at December 31, 2025.
Previous wording
Classified loans totaled $25.0 million at June 30, 2026, compared to $27.3 million at December 31, 2025. The coverage ratio of the ACL on loans to nonperforming loans was 199.2% at June 30, 2026, compared to 170.6% at December 31, 2025. The increase in the coverage ratio primarily reflects the decline in nonperforming loans relative to the ACL on loans.
Current wording
Classified loans totaled $38.4 million at September 30, 2026, compared to $27.3 million at December 31, 2025, primarily due to $12.5 million of classified loans acquired in the Pacific West Acquisition. The coverage ratio of the ACL on loans to nonperforming loans was 145.0% at September 30, 2026, compared to 170.6% at December 31, 2025. The decrease in the coverage ratio primarily reflects the nonaccrual loans acquired in the Pacific West Acquisition.
Previous wording
Overall, asset quality trends reflected improved delinquency and nonperforming loan metrics, continued growth in construction, CRE, and residential loan portfolios, ongoing elevated losses in certain consumer loan portfolios, and continued risk management and monitoring of nonperforming and substandard exposures.
Current wording
Overall, asset quality trends reflected improved delinquency and lower nonperforming loans in the legacy portfolio, offset by nonaccrual and classified loans acquired in the Pacific West Acquisition, ongoing elevated losses in certain consumer loan portfolios, and continued risk management and monitoring of nonperforming and substandard exposures.
Previous wording
Liabilities. Total liabilities decreased $29.0 million to $2.86 billion at June 30, 2026, from $2.89 billion at December 31, 2025. The loan-to-deposit ratio was approximately 108.6% at June 30, 2026, compared to approximately 100.9% at December 31, 2025.
Current wording
Liabilities. Total liabilities increased $454.3 million to $3.34 billion at September 30, 2026, from $2.89 billion at December 31, 2025, primarily due to the increases of $244.2 million in borrowings and $193.6 million in deposits. Deposits assumed in the Pacific West Acquisition of $435.6 million were partially offset by a $286.5 million decrease in brokered deposits. The loan-to-deposit ratio was approximately 107.0% at September 30, 2026, compared to approximately 100.9% at December 31, 2025, reflecting loan growth funded in part by borrowings.
Previous wording
Total deposits decreased $224.8 million to $2.45 billion at June 30, 2026, from $2.67 billion at December 31, 2025, reflecting decreases in most of the deposit categories. Transactional accounts (noninterest-bearing checking, interest-bearing checking and escrow accounts) decreased $54.7 million to $938.8 million at June 30, 2026, from $993.6 million at December 31, 2025, primarily due to decreases of $38.5 million in interest-bearing checking, $17.4 million in noninterest-bearing checking, and an offsetting increase of $1.1 million in escrow accounts related to mortgages serviced, reflecting higher customer balances associated with mortgage servicing activities. Money market and savings accounts increased $3.3 million to $553.0 million at June 30, 2026, from $549.7 million at December 31, 2025, primarily reflecting a $9.0 million increase in savings account balances, partially offset by a $5.8 million decrease in money market account balances.
Current wording
Total deposits increased $193.6 million to $2.87 billion at September 30, 2026, from $2.67 billion at December 31, 2025.Transactional accounts (noninterest-bearing checking, interest-bearing checking and escrow accounts) increased $235.7 million to $1.23 billion at September 30, 2026, from $993.6 million at December 31, 2025, primarily due to increases of $135.1 million in interest-bearing checking, $91.5 million in noninterest-bearing checking, and $9.1 million in escrow accounts related to mortgages serviced. The increase in escrow accounts reflects higher customer balances associated with mortgage servicing activities, and the increase in checking accounts primarily reflects $351.5 million of deposits in checking accounts acquired in the Pacific West Acquisition, partially offset by a $140.2 million decrease in brokered interest-bearing checking deposits. Money market and savings accounts increased $66.6 million to $616.3 million at September 30, 2026, from $549.7 million at December 31, 2025, reflecting a $17.3 million increase in savings account balances and $49.2 million increase in money market account balances.
Previous wording
Certificates of deposit (“CDs”), which include both retail and non-retail CDs, decreased $173.3 million to $957.1 million at June 30, 2026, from $1.13 billion at December 31, 2025. Retail CDs decreased $4.3 million to $917.4 million at June 30, 2026, from $921.7 million at December 31, 2025. Non-retail CDs, which include brokered CDs, online CDs and public funds CDs decreased $169.0 million to $39.7 million, compared to $208.7 million at December 31, 2025, primarily due to a decrease of $167.0 million in brokered CDs. Non-retail CDs represented 4.2% and 18.5% of total CDs at June 30, 2026 and December 31, 2025, respectively. The decrease in non-retail CDs reflects the Company’s funding strategy of replacing certain brokered deposits with lower-cost FHLB and FRB borrowings, while continuing to manage liquidity and interest rate risk.
Current wording
Certificates of deposit (“CDs”), which include both retail and non-retail CDs, decreased $108.7 million to $1.02 billion at September 30, 2026, from $1.13 billion at December 31, 2025. Retail CDs increased $16.1 million to $937.8 million at September 30, 2026, from $921.7 million at December 31, 2025. Non-retail CDs, which include brokered CDs, online CDs and public funds CDs decreased $124.8 million to $83.4 million, compared to $208.7 million at December 31, 2025, primarily due to a decrease of $127.0 million in brokered CDs. Non-retail CDs represented 8.2% and 18.5% of total CDs at September 30, 2026 and December 31, 2025, respectively. The decrease in non-retail CDs reflects the Company’s funding strategy of replacing certain brokered deposits with lower-cost FHLB and FRB borrowings, while continuing to manage liquidity and interest rate risk. Total brokered deposits decreased $286.5 million to $76.1 million at September 30, 2026, from $362.6 million at December 31, 2025.
Previous wording
The Bank had uninsured deposits of approximately $719.5 million or 29.4% of total deposits, at June 30, 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.
Current wording
The Bank had uninsured deposits of approximately $859.9 million or 30.0% of total deposits, at September 30, 2026, compared to approximately $718.1 million or 26.9% of total deposits at December 31, 2025. The increase in uninsured deposits primarily reflects business deposits acquired in the Pacific West Acquisition. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.
Previous wording
Borrowings increased $195.2 million to $324.5 million at June 30, 2026, from $129.3 million at December 31, 2025. The increase reflects a shift toward FHLB and FRB borrowings, which offered more competitive rates than brokered deposits during the period, consistent with the Company's funding strategy. At June 30, 2026, borrowings were comprised of FHLB and FRB advances.
Current wording
Borrowings increased $244.2 million to $373.5 million at September 30, 2026, from $129.3 million at December 31, 2025. The increase reflects a shift toward FHLB and FRB borrowings, which offered more competitive rates than brokered deposits during the period, consistent with the Company's funding strategy. At September 30, 2026, borrowings were comprised of FHLB and FRB advances.
Previous wording
Stockholders’*** Equity.*** Total stockholders’ equity increased $11.3 million to $319.0 million at June 30, 2026, from $307.7 million at December 31, 2025. The increase primarily reflects net income of $15.8 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 $4.1 million, 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 $4.3 million, and share repurchases of $4.3 million.
Current wording
Stockholders’*** Equity.*** Total stockholders’ equity increased $25.5 million to $333.2 million at September 30, 2026, from $307.7 million at December 31, 2025. The increase primarily reflects net income of $20.7 million, $18.4 million of common stock issued in the Pacific West Acquisition, and $1.9 million of share-based compensation. Declines in the fair value of available-for-sale securities recorded in accumulated other comprehensive income (“AOCI”) were partially offset by improvements in the fair value of interest rate swap cash flow hedges, resulting in a net decline of $3.2 million, net of tax. Gains and losses in fair value reflect changes in market interest rates during the periods. The increase in stockholders’ equity was partially offset by cash dividends paid totaling $6.5 million, and share repurchases of $6.2 million.
Previous wording
Book value per common share was $43.57 at June 30, 2026, compared to $41.55 at December 31, 2025. The calculation of book value per share at June 30, 2026, was based on 7,320,801 common shares, derived by subtracting 102,971 of unvested restricted stock shares from the 7,423,772 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 of unvested restricted stock shares from the 7,507,519 reported common shares outstanding as of that date.
Current wording
Book value per common share was $43.05 at September 30, 2026, compared to $41.55 at December 31, 2025. The calculation of book value per share at September 30, 2026, was based on 7,739,797 common shares, derived by subtracting 127,570 of unvested restricted stock shares from the 7,867,367 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 of unvested restricted stock shares from the 7,507,519 reported common shares outstanding as of that date.
Previous wording
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.
Current wording
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 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 wording
***Net Interest Income.***Net interest income increased $536,000 to $32.6 million for the three months ended June 30, 2026, from $32.1 million for the three months ended June 30, 2025, primarily due to an increase in total interest income of $959,000, partially offset by an increase in total interest expense of $423,000. The $959,000 increase in total interest income was primarily due to an increase of $1.2 million in interest income on loans receivable, including fees, resulting from net loan growth. The $423,000 increase in total interest expense reflected a $612,000 increase in interest expense on borrowings resulting from higher average borrowing balances and a $423,000 increase in interest expense on the subordinated note following its repricing to a higher interest rate in 2026, partially offset by a $612,000 decrease in interest expense on deposits.
Current wording
***Net Interest Income.***Net interest income increased $2.0 million to $35.7 million for the three months ended September 30, 2026, from $33.7 million for the three months ended September 30, 2025. The increase was primarily due to a $2.4 million increase in total interest income, partially offset by a $452,000 increase in total interest expense. The increase in total interest income was primarily due to a $2.7 million increase in interest income on loans receivable, including fees, resulting from net loan growth and loans acquired in the Pacific West Acquisition. The increase in total interest expense reflected an $843,000 increase in interest expense on borrowings resulting from higher average borrowing balances and a $438,000 increase in interest expense on the subordinated notes following their repricing to a higher interest rate in 2026. These increases were partially offset by an $829,000 decrease in interest expense on deposits. The decrease primarily reflected lower average balances of, and rates paid on, CDs, partially offset by higher average balances of, and rates paid on, interest-bearing checking accounts, including deposits assumed in the Pacific West Acquisition.
Previous wording
***Interest Income.***Total interest income for the three months ended June 30, 2026, increased $959,000 to $49.7 million, from $48.7 million for the three months ended June 30, 2025. The increase was primarily due to a $1.2 million increase in interest income on loans receivable, including fees, as a result of higher average loan balances, partially offset by a lower average yield. Offsetting this growth were decreases in interest income on investment securities and interest-bearing deposits at other financial institutions, collectively totaling $266,000, primarily reflecting lower average balances and lower yields on interest-bearing deposits at other financial institutions.
Current wording
***Interest Income.***Total interest income for the three months ended September 30, 2026, increased $2.4 million to $53.4 million, from $51.0 million for the three months ended September 30, 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, including loans acquired in the Pacific West Acquisition, partially offset by a lower average yield. Offsetting the growth was a net decrease of $234,000 in interest and dividend income on investment securities, FHLB stock and interest-bearing deposits at other financial institutions, primarily reflecting lower average balances and lower yields on interest-bearing deposits at other financial institutions, partially offset by higher FHLB stock dividends resulting from higher average balances.
Previous wording
***Interest Expense.***Total interest expense increased $423,000 to $17.0 million for the three months ended June 30, 2026, from $16.6 million for the comparable quarter in 2025, due to an increase of $612,000 in interest expense on borrowings resulting from higher average borrowing balances, which was fully offset by a decrease in interest expense on deposits for the same amount, reflecting primarily a shift from brokered deposits to borrowings, and a $423,000 increase in interest expense on the subordinated note following its repricing to a higher interest rate in 2026.
Current wording
***Interest Expense.***Total interest expense increased $452,000 to $17.7 million for the three months ended September 30, 2026, from $17.3 million for the comparable quarter in 2025, due to an increase of $843,000 in interest expense on borrowings resulting from higher average borrowing balances, and a $439,000 increase in interest expense on the subordinated notes following their repricing to a higher interest rate in 2026. These increases were partially offset by a decrease in interest expense on deposits of $830,000, reflecting primarily lower average balances of CDs, including a shift from brokered deposits to borrowings.
Previous wording
The average cost of total interest-bearing deposits decreased 11-basis points to 2.92% for the three months ended June 30, 2026, compared to 3.03% for the three months ended June 30, 2025, primarily reflecting lower rates paid on CDs, which more than offset higher rates on interest-bearing checking and savings and money market accounts. The average balance of total interest-bearing deposits decreased $13.5 million to $1.91 billion for the three months ended June 30, 2026, compared to $1.92 billion for the three months ended June 30, 2025, driven primarily by a decrease in CDs, partially offset by increases in interest-bearing checking and savings and money market accounts.
Current wording
The average cost of total interest-bearing deposits decreased 24-basis points to 2.79% for the three months ended September 30, 2026, compared to 3.03% for the three months ended September 30, 2025, primarily reflecting a shift in deposit mix from CDs to lower-cost interest-bearing checking and savings and money market accounts, as well as lower rates paid on CDs, partially offset by increases in market rates on interest-bearing checking and savings and money market accounts. The average balance of total interest-bearing deposits increased $44.2 million to $1.99 billion for the three months ended September 30, 2026, compared to $1.95 billion for the three months ended September 30, 2025, driven primarily by an increase in interest-bearing checking and savings and money market accounts, partially offset by decreases in CDs.
Previous wording
Provision for Credit Losses. For the three months ended June 30, 2026, the provision for credit losses was $2.6 million, consisting of a $2.6 million provision for credit losses on loans and an $82,000 provision on credit losses on unfunded loan commitments. This compares to a $2.0 million provision for credit losses for the three months ended June 30, 2025, which consisted of a $1.7 million provision for credit losses on loans, a $154,000 provision for held-to-maturity securities, and a $151,000 provision for credit losses on unfunded loan commitments. The increase in the provision for credit losses on loans primarily reflects higher net charge‑offs during the period.
Current wording
Provision for Credit Losses. For the three months ended September 30, 2026, the provision for credit losses was $3.5 million, consisting of a $3.0 million provision for credit losses on loans, a $409,000 provision for credit losses on unfunded loan commitments, and a $100,000 provision for held-to-maturity investments. This compares to the provision for credit losses of $2.3 million for the three months ended September 30, 2025, which consisted of a $1.9 million provision for credit losses on loans, a $457,000 provision for credit losses on unfunded loan commitments, and no provision for held-to-maturity investments. The increase in the provision for credit losses on loans reflects higher loan balances and increased nonaccrual loans, primarily due to the loans acquired in the Pacific West Acquisition.
Previous wording
***Noninterest Income.***Noninterest income increased $980,000 to $6.2 million for the three months ended June 30, 2026, from $5.2 million for the three months ended June 30, 2025. The increase primarily reflects a $609,000 increase in gain on sale of loans and a $404,000 increase in other noninterest income.
Current wording
***Noninterest Income.***Noninterest income increased $582,000 to $6.2 million for the three months ended September 30, 2026, from $5.6 million for the three months ended September 30, 2025. The increase primarily reflects the bargain purchase gain of $1.7 million from the Pacific West Acquisition, partially offset by a decrease of $971,000 in gain on sale of loans, reflecting lower volume on residential mortgage loan sales due to the current interest rate environment, and a decrease of $231,000 in other noninterest income.
Previous wording
The efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income and noninterest income, improved to 67.28% for the three months ended June 30, 2026, compared to 68.40% for the three months ended June 30, 2025, due to revenue growth outpacing noninterest expense.
Current wording
The efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income and noninterest income, deteriorated to 77.19% for the three months ended September 30, 2026, compared to 64.63% for the three months ended September 30, 2025, primarily reflecting the acquisition-related costs and higher salaries and benefits expense.
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