Bay Street News

FS Bancorp, Inc. Reports Second Quarter Net Income of $9.0 Million or $1.13 Per Diluted Share and Previously Announced Share Repurchase Plan and 3.8% Increase in its Quarterly Dividend

MOUNTLAKE TERRACE, Wash., July 23, 2024 (GLOBE NEWSWIRE) — FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank” or “1st Security Bank”) today reported 2024 second quarter net income of $9.0 million, or $1.13 per diluted share, compared to $9.1 million, or $1.16 per diluted share, for the comparable quarter one year ago. For the six months ended June 30, 2024, net income was $17.4 million, or $2.20 per diluted share, compared to net income of $17.3 million, or $2.19 per diluted share, for the comparable six-month period in 2023.

“I am pleased with our financial results for the second quarter, and I am excited about Matthew D. Mullet’s recent well-deserved promotion to Bank President,” stated Joe Adams, CEO. “Matthew will make a great president and we are both thankful to our Board of Directors for increasing our forty-sixth consecutive quarterly cash dividend by $0.01 to $0.27 per common share and expanding our share repurchase plan, demonstrating our continued commitment to enhancing shareholder value.  The cash dividend will be paid on August 21, 2024, to shareholders of record as of August 7, 2024,” concluded Adams.

2024 Second Quarter Highlights

Segment Reporting

The Company reports two segments: Commercial and Consumer Banking and Home Lending. The Commercial and Consumer Banking segment provides diversified financial products and services to our commercial and consumer customers. These products and services include deposit products; residential, consumer, business and commercial real estate lending portfolios and cash management services. This segment is also responsible for the management of the investment portfolio and other assets of the Bank. The Home Lending segment originates one-to-four-family residential mortgage loans primarily for sale in the secondary markets as well as loans held for investment.

The Company reflected the sale of servicing rights in the first quarter of 2024 as a gain to the Commercial and Consumer Bank segment to offset the realized loss on sale of investment securities and will allocate the gain on a straight-line basis over four years as intercompany income from the Commercial and Consumer Banking segment to the Home Lending segment.

The tables below provide a summary of segment reporting at or for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

    At or For the Three Months Ended June 30, 2024  
Condensed income statement:   Commercial and
Consumer Banking
    Home Lending     Total  
Net interest income (1)   $ 28,051     $ 2,350     $ 30,401  
(Provision for) recovery of credit losses     (1,214 )     137       (1,077 )
Noninterest income (2)     2,269       3,599       5,868  
Noninterest expense (3)     (19,043 )     (4,814 )     (23,857 )
Income before provision for income taxes     10,063       1,272       11,335  
Provision for income taxes     (2,113 )     (263 )     (2,376 )
Net income   $ 7,950     $ 1,009     $ 8,959  
Total average assets for period ended   $ 2,359,741     $ 588,090     $ 2,947,831  
Full-time employees (“FTEs”)     450       121       571  
                         
    At or For the Three Months Ended June 30, 2023  
Condensed income statement:   Commercial and
Consumer Banking
    Home Lending     Total  
Net interest income (1)   $ 28,269     $ 3,283     $ 31,552  
Provision for credit losses     (629 )     (87 )     (716 )
Noninterest income (2)     2,706       2,127       4,833  
Noninterest expense (3)     (18,950 )     (5,254 )     (24,204 )
Income before provision for income taxes     11,396       69       11,465  
Provision for income taxes     (2,335 )     (14 )     (2,349 )
Net income   $ 9,061     $ 55     $ 9,116  
Total average assets for period ended   $ 2,313,228     $ 528,662     $ 2,841,890  
FTEs     444       137       581  
                         
    At or For the Six Months Ended June 30, 2024  
Condensed income statement:   Commercial and
Consumer Banking
    Home Lending     Total  
Net interest income (1)   $ 56,137     $ 4,610     $ 60,747  
Provision for credit losses     (2,465 )     (11 )     (2,476 )
Noninterest income (2)     4,662       6,317       10,979  
Noninterest expense (3)     (38,051 )     (9,335 )     (47,386 )
Income before provision for income taxes     20,283       1,581       21,864  
Provision for income taxes     (4,182 )     (326 )     (4,508 )
Net income   $ 16,101     $ 1,255     $ 17,356  
Total average assets for period ended   $ 2,380,803     $ 572,386     $ 2,953,189  
FTEs     450       121       571  
                         
    At or For the Six Months Ended June 30, 2023  
Condensed income statement:   Commercial and
Consumer Banking
    Home Lending     Total  
Net interest income (1)   $ 55,769     $ 6,445     $ 62,214  
Provision for credit losses     (2,118 )     (706 )     (2,824 )
Noninterest income (2)     5,086       4,966       10,052  
Noninterest expense (3)     (37,560 )     (10,168 )     (47,728 )
Income before provision for income taxes     21,177       537       21,714  
Provision for income taxes     (4,278 )     (108 )     (4,386 )
Net income   $ 16,899     $ 429     $ 17,328  
Total average assets for period ended   $ 2,281,815     $ 510,419     $ 2,792,234  
FTEs     444       137       581  
                         

(1) Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to the other segment. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of assigned liabilities to fund segment assets.

(2) Noninterest income includes activity from certain residential mortgage loans that were initially originated for sale and measured at fair value, and subsequently transferred to loans held for investment. Gains and losses from changes in fair value for these loans are reported in earnings as a component of noninterest income. For the three and six months ended June 30, 2024, the Company recorded net increases in fair value of $184,000 and $186,000, respectively, as compared to a net decrease in fair value of $520,000 and a net increase in fair value of $57,000 for the three and six months ended June 30, 2023. As of June 30, 2024 and 2023, there were $13.9 million and $14.3 million, respectively, in residential mortgage loans recorded at fair value as they were previously transferred from loans held for sale to loans held for investment.

(3) Noninterest expense includes allocated overhead expense from general corporate activities. Allocation is determined based on a combination of segment assets and FTEs.  For the three and six months ended June 30, 2024 and 2023, the Home Lending segment included allocated overhead expenses of $1.5 million and $3.0 million, compared to $1.6 million and $3.2 million, respectively.   

Asset Summary

Total assets decreased $28.3 million, or 1.0%, to $2.94 billion at June 30, 2024, compared to $2.97 billion at March 31, 2024, and increased $35.8 million, or 1.2%, from $2.91 billion at June 30, 2023.  The decrease in total assets at June 30, 2024, compared to March 31, 2024, included decreases of $58.5 million in securities available-for-sale, $12.4 million in total cash and cash equivalents, and $10.5 million in certificates of deposit (“CDs”) at other financial institutions, partially offset by increases of $41.8 million in loans receivable, net, $7.4 million in FHLB stock, $3.9 million in loans held for sale (“HFS”), and $2.0 million in other assets.  The increase compared to June 30, 2023, was primarily due to increases in loans receivable, net of $114.8 million, loans HFS of $37.1 million, FHLB stock of $3.8 million, and interest receivable of $1.5 million. These increases were partially offset by decreases in total cash and cash equivalents of $99.1 million, securities available-for-sale of $4.7 million, core deposit intangible, net of $3.8 million, certificates of deposit at other financial institutions of $2.0 million, operating lease right-of-use of $1.7 million, premises and equipment of $1.3 million, and deferred tax asset, net of $1.2 million.

LOAN PORTFOLIO                                                
(Dollars in thousands)   June 30, 2024     March 31, 2024     June 30, 2023  
    Amount     Percent     Amount     Percent     Amount     Percent  
REAL ESTATE LOANS                                                
Commercial   $ 359,404       14.4 %   $ 359,055       14.7 %   $ 343,008       14.4 %
Construction and development     274,209       11.0       301,346       12.3       312,093       13.2  
Home equity     73,749       3.0       73,323       3.0       62,304       2.6  
One-to-four-family (excludes HFS)     588,966       23.7       580,050       23.7       521,734       22.0  
Multi-family     239,675       9.6       222,410       9.1       231,675       9.8  
Total real estate loans     1,536,003       61.7       1,536,184       62.8       1,470,814       62.0  
                                                 
CONSUMER LOANS                                                
Indirect home improvement     563,621       22.7       568,802       23.2       557,818       23.5  
Marine     74,627       3.0       73,921       3.0       72,484       3.0  
Other consumer     3,440       0.1       3,409       0.1       3,606       0.2  
Total consumer loans     641,688       25.8       646,132       26.3       633,908       26.7  
                                                 
COMMERCIAL BUSINESS LOANS                                                
Commercial and industrial (“C&I”)     285,183       11.5       256,429       10.6       237,403       10.0  
Warehouse lending     25,548       1.0       8,113       0.3       30,649       1.3  
Total commercial business loans     310,731       12.5       264,542       10.9       268,052       11.3  
Total loans receivable, gross     2,488,422       100.0 %     2,446,858       100.0 %     2,372,774       100.0 %
                                                 
Allowance for credit losses on loans     (31,238 )             (31,479 )             (30,350 )        
Total loans receivable, net   $ 2,457,184             $ 2,415,379             $ 2,342,424          
                                                 

Loans receivable, net increased $41.8 million to $2.46 billion at June 30, 2024, from $2.42 billion at March 31, 2024, and increased $114.8 million from $2.34 billion at June 30, 2023. While total real estate loans remained virtually unchanged at $1.54 billion at June 30, 2024, compared to March 31, 2024, there were shifts within the portfolio.  These included a $27.1 million decrease in construction and development loans, partially offset by a $17.3 million increase in multi-family loans which resulted from construction loans converting to permanent, and an $8.9 million increase in one-to-four-family loans (excludes HFS) primarily from new loan originations. Commercial business loans increased $46.2 million to $310.7 million at June 30, 2024, compared to $264.5 million at March 31, 2024, resulting from increases of $28.8 million in C&I loans and $17.4 million in warehouse lending.  Consumer loans decreased $4.4 million to $641.7 million at June 30, 2024, compared to March 31, 2024, resulting from a $5.2 million decrease in indirect home improvement loans, partially offset by an increase of $706,000 in marine loans. 

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

(Dollars in thousands)                        
    June 30, 2024     March 31, 2024     June 30, 2023  
CRE by Type:   Amount     Amount     Amount  
Agriculture   $ 3,639     $ 3,744     $ 3,946  
CRE Non-owner occupied:                        
Office     41,381       41,625       41,822  
Retail     37,507       38,712       38,310  
Hospitality/restaurant     28,314       24,751       25,430  
Self storage     19,141       21,383       21,283  
Mixed use     18,062       19,186       16,441  
Industrial     17,163       17,475       17,571  
Senior housing/assisted living     7,675       8,446       8,572  
Other (1)     6,847       6,785       11,149  
Land     3,021       3,151       1,531  
Education/worship     2,571       2,595       2,669  
Total CRE non-owner occupied     181,682       184,109       184,778  
CRE owner occupied:                        
Industrial     63,969       63,683       57,644  
Office     41,978       41,652       32,513  
Retail     20,885       21,836       21,457  
Hospitality/restaurant     10,800       10,933       14,306  
Other (2)     8,354       8,438       6,351  
Car wash     9,607       7,713       7,858  
Automobile related     8,200       7,479       9,870  
Education/worship     4,610       4,604       1,315  
Mixed use     5,680       4,864       2,970  
Total CRE owner occupied     174,083       171,202       154,284  
Total   $ 359,404     $ 359,055     $ 343,008  

_________________________

(1) Primarily includes loans secured by mobile home parks totaling $782,000, $789,000, and $2.4 million, RV parks totaling $692,000, $696,000, and $706,000, automobile-related collateral totaling $599,000, $604,000, and $0, and other collateral totaling $4.7 million, $4.7 million, and $8.0 million, at June 30, 2024, March 31, 2024, and June 30, 2023, respectively.

(2) Primarily includes loans secured by gas stations totaling $1.6 million, $1.7 million and $1.7 million, non-profit organization totaling $908,000, $915,000 and $969,000, and other collateral totaling $5.1 million, $5.8 million and $6.4 million, at June 30, 2024, March 31, 2024, and June 30, 2023, respectively.

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

(Dollars in thousands)     For the Quarter Ended         Current
    September 30,   December 31,   March 31,   June 30,   September 30,   December 31,   March 31,   June 30,         Weighted
CRE by type:   2024   2024   2025   2025   2025   2025   2026   2026   Total   Average Rate
Agriculture   $ 810   $ 116   $   $ 424   $   $ 326   $ 181   $ 260   $ 2,117   6.63 %
Apartment     4,496     30,696     1,753     4,740     1,832     10,127     3,006     14,566     71,216   4.27 %
Auto related                 2,106                     2,106   4.18 %
Hotel / hospitality     139         585     1,223     1,347         120     1,327     4,741   4.40 %
Industrial             903     590         10,477     2,197     174     14,341   4.41 %
Mixed use         801     1,763     3,500     253     320             6,637   4.99 %
Office     10,739     4,741     1,019         4,254     999     532     1,679     23,963   4.95 %
Other         1,220         117     1,256     249     3,479         6,321   4.90 %
Retail         1,279     2,023         676         479     3,308     7,765   4.22 %
Senior housing and assisted living                             2,199         2,199   4.75 %
Total   $ 16,184   $ 38,853   $ 8,046   $ 12,700   $ 9,618   $ 22,498   $ 12,193   $ 21,314   $ 141,406   4.51 %
                                                             

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

(Dollars in thousands)                            
    June 30, 2024     March 31, 2024  
Construction Types:   Amount   Percent     Amount   Percent  
Commercial construction – retail   $ 8,698     3.2 %   $ 8,290     2.8 %
Commercial construction – office     4,737     1.7       4,737     1.6  
Commercial construction – self storage     10,000     3.6       10,000     3.3  
Commercial construction – car wash     7,807     2.8       7,807     2.6  
Multi-family     30,960     11.3       53,288     17.7  
Custom construction – single family residential and single family manufactured residential     46,107     16.8       50,674     16.8  
Custom construction – land, lot and acquisition and development     7,310     2.7       6,455     2.1  
Speculative residential construction – vertical     131,293     47.9       134,047     44.5  
Speculative residential construction – land, lot and acquisition and development     27,297     10.0       26,048     8.6  
Total   $ 274,209     100.0 %   $ 301,346     100.0 %
                             
(Dollars in thousands)                            
    June 30, 2024     June 30, 2023  
Construction Types:   Amount   Percent     Amount   Percent  
Commercial construction – retail   $ 8,698     3.2 %   $ 7,340     2.4 %
Commercial construction – office     4,737     1.7       4,195     1.3  
Commercial construction – self storage     10,000     3.6       10,962     3.5  
Commercial construction – car wash     7,807     2.8       6,812     2.2  
Multi-family     30,960     11.3       61,071     19.6  
Custom construction – single family residential and single family manufactured residential     46,107     16.8       42,487     13.6  
Custom construction – land, lot and acquisition and development     7,310     2.7       6,395     2.0  
Speculative residential construction – vertical     131,293     47.9       135,351     43.4  
Speculative residential construction – land, lot and acquisition and development     27,297     10.0       37,480     12.0  
Total   $ 274,209     100.0 %   $ 312,093     100.0 %
                             

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

(Dollars in thousands)   For the Three Months Ended     For the Three Months Ended                  
    June 30, 2024     March 31, 2024                  
    Amount   Percent     Amount   Percent     $ Change     % Change  
Purchase   $ 193,715     92.3 %   $ 135,577     88.1 %   $ 58,138       42.9 %
Refinance     16,173     7.7       18,371     11.9       (2,198 )     (11.9 )
Total   $ 209,888     100.0 %   $ 153,948     100.0 %   $ 55,940       36.3 %
(Dollars in thousands)   For the Three Months Ended June 30,                  
    2024     2023                  
    Amount   Percent     Amount   Percent     $ Change     % Change  
Purchase   $ 193,715     92.3 %   $ 145,377     91.2 %   $ 48,338       33.3 %
Refinance     16,173     7.7       14,099     8.8       2,074       14.7  
Total   $ 209,888     100.0 %   $ 159,476     100.0 %   $ 50,412       31.6 %
(Dollars in thousands)   For the Six Months Ended June 30,            
    2024     2023            
    Amount   Percent     Amount   Percent     $ Change   % Change  
Purchase   $ 329,292   90.5 %   $ 247,866   91.6 %   $ 81,426   32.9 %
Refinance     34,545   9.5       22,634   8.4       11,911   52.6  
Total   $ 363,837   100.0 %   $ 270,500   100.0 %   $ 93,337   34.5 %
                                     

During the quarter ended June 30, 2024, the Company sold $164.5 million of one-to-four-family loans compared to $93.9 million during the previous quarter and $127.0 million during the same quarter one year ago. Gross margins on home loan sales decreased to 2.96% for the quarter ended June 30, 2024, compared to 3.43% in the previous quarter and from 3.07% in the same quarter one year ago. Gross margins are defined as the margin on loans sold (cash sales) without the impact of deferred costs.

Liabilities and Equity Summary

Changes in deposits at the dates indicated were as follows:

(Dollars in thousands)                                            
    June 30, 2024     March 31, 2024                  
Transactional deposits:   Amount   Percent     Amount   Percent     $ Change     % Change  
Noninterest-bearing checking   $ 613,137     25.7 %   $ 618,526     25.1 %   $ (5,389 )     (0.9 )%
Interest-bearing checking     166,839     7.0       188,050     7.6       (21,211 )     (11.3 )
Escrow accounts related to mortgages serviced (1)     10,212     0.4       28,373     1.2       (18,161 )     (64.0 )
Subtotal     790,188     33.1       834,949     33.9       (44,761 )     (5.4 )
Savings     151,398     6.4       153,025     6.2       (1,627 )     (1.1 )
Money market (2)     343,995     14.4       364,944     14.8       (20,949 )     (5.7 )
Subtotal     495,393     20.8       517,969     21.0       (22,576 )     (4.4 )
Certificates of deposit less than $100,000 (3)     530,537     22.3       579,153     23.5       (48,616 )     (8.4 )
Certificates of deposit of $100,000 through $250,000     427,893     18.0       424,463     17.2       3,430       0.8  
Certificates of deposit greater than $250,000     138,792     5.8       108,763     4.4       30,029       27.6  
Subtotal     1,097,222     46.1       1,112,379     45.1       (15,157 )     (1.4 )
Total   $ 2,382,803     100.0 %   $ 2,465,297     100.0 %   $ (82,494 )     (3.3 )%
                                             
(Dollars in thousands)                                            
    June 30, 2024     June 30, 2023                  
Transactional deposits:   Amount   Percent     Amount   Percent     $ Change     % Change  
Noninterest-bearing checking   $ 613,137     25.7 %   $ 658,440     27.9 %   $ (45,303 )     (6.9 )%
Interest-bearing checking     166,839     7.0       183,012     7.7       (16,173 )     (8.8 )
Escrow accounts related to mortgages serviced (1)     10,212     0.4       16,772     0.7       (6,560 )     (39.1 )
Subtotal     790,188     33.1       858,224     36.3       (68,036 )     (7.9 )
Savings     151,398     6.4       169,013     7.2       (17,615 )     (10.4 )
Money market (2)     343,995     14.4       419,308     17.7       (75,313 )     (18.0 )
Subtotal     495,393     20.8       588,321     24.9       (92,928 )     (15.8 )
Certificates of deposit less than $100,000 (3)     530,537     22.3       473,026     20.0       57,511       12.2  
Certificates of deposit of $100,000 through $250,000     427,893     18.0       358,238     15.1       69,655       19.4  
Certificates of deposit greater than $250,000     138,792     5.8       87,499     3.7       51,293       58.6  
Subtotal     1,097,222     46.1       918,763     38.8       178,459       19.4  
Total   $ 2,382,803     100.0 %   $ 2,365,308     100.0 %   $ 17,495       0.7 %
                                             

 

_________________________

(1) Noninterest-bearing accounts.

(2) Includes $4.0 million, $8.0 million and $51,000 of brokered deposits at June 30, 2024, March 31, 2024 and June 30, 2023, respectively.

(3) Includes $261.0 million, $331.3 million, and $295.7 million of brokered deposits at June 30, 2024, March 31, 2024 and June 30, 2023, respectively.

At June 30, 2024, CDs, which include retail and non-retail CDs, totaled $1.10 billion, compared to $1.11 billion at March 31, 2024 and $918.8 million at June 30, 2023, with non-retail CDs representing 24.9%, 31.0% and 33.7% of total CDs at such dates, respectively. At June 30, 2024, non-retail CDs, which include brokered CDs, online CDs and public funds CDs, decreased $71.2 million to $273.4 million, compared to $344.5 million at March 31, 2024, primarily due to a decrease of $70.3 million in brokered CDs. Non-retail CDs totaled $273.4 million at June 30, 2024, compared to $310.0 million at June 30, 2023.

At June 30, 2024, the Bank had uninsured deposits of approximately $586.6 million, compared to approximately $614.1 million at March 31, 2024, and $587.6 million at June 30, 2023.  The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.

At June 30, 2024, borrowings increased $52.0 million to $181.9 million at June 30, 2024, from $129.9 million at March 31, 2024, and decreased $18.0 million from $199.9 million at June 30, 2023. These borrowings were comprised of FHLB advances of $154.9 million, and overnight borrowings of $27.0 million.

Total stockholders’ equity increased $6.1 million to $284.0 million at June 30, 2024, from $277.9 million at March 31, 2024, and increased $34.1 million, from $249.9 million at June 30, 2023. The increase in stockholders’ equity at June 30, 2024, compared to March 31, 2024, reflects net income of $9.0 million, partially offset by cash dividends paid of $2.0 million and share repurchases of $2.4 million. In addition, stockholders’ equity was positively impacted by decreases in unrealized net losses on securities available for sale of $666,000, net of tax, and unrealized net gains on fair value and cash flow hedges of $216,000, net of tax, reflecting sales of investment securities and changes in market interest rates during the quarter, resulting in a $882,000 improvement in accumulated other comprehensive loss. Book value per common share was $37.15 at June 30, 2024, compared to $36.06 at March 31, 2024, and $32.71 at June 30, 2023.

The Bank is considered well capitalized under the capital requirements established by the Federal Deposit Insurance Corporation (“FDIC”) with a total risk-based capital ratio of 13.9%, a Tier 1 leverage capital ratio of 10.9%, and a common equity Tier 1 (“CET1”) capital ratio of 12.6% at June 30, 2024.

The Company exceeded all regulatory capital requirements with a total risk-based capital ratio of 14.1%, a Tier 1 leverage capital ratio of 9.5%, and a CET1 ratio of 10.9% at June 30, 2024.

Credit Quality

The ACLL was $31.2 million, or 1.26% of gross loans receivable (excluding loans HFS) at June 30, 2024, compared to $31.5 million, or 1.29% of gross loans receivable (excluding loans HFS), at March 31, 2024, and $30.4 million, or 1.28% of gross loans receivable (excluding loans HFS), at June 30, 2023. The $241,000 decrease in the ACLL at June 30, 2024, compared to the prior quarter was primarily due to a decline in nonperforming loans resulting from charge-offs of principal balances previously reserved for in the ACLL.  The year-over-year increase of $888,000 in the ACLL was primarily due to organic loan growth, increases in nonperforming loans and net charge-offs. The allowance for credit losses on unfunded loan commitments increased $77,000 to $1.6 million at June 30, 2024, compared to $1.5 million at March 31, 2024, and decreased $361,000 from $1.9 million at June 30, 2023. These changes period over period were attributable to fluctuations in unfunded construction loan commitments in these time frames.

Nonperforming loans decreased $700,000 to $11.4 million at June 30, 2024, compared to $12.1 million at March 31, 2024, and increased $2.1 million from $9.3 million at June 30, 2023. The decrease in nonperforming loans during the quarter was primarily due to decreases in nonperforming C&I loans of $766,000 and marine loans of $58,000, partially offset by an increase of $124,000 in indirect home improvement loans. The decrease in C&I loans during the quarter was primarily the result of C&I loan charge-offs of $733,000, which included a partial charge off of $380,000 on a nonperforming Small Business Administration (“SBA”) loan that is partially guaranteed. The increase in nonperforming loans compared to the same quarter the prior year was primarily due to increases in nonperforming construction and development loans of $4.7 million, indirect home improvement loans of $486,000, and home equity loans of $106,000, partially offset by decreases in nonperforming C&I loans of $3.1 million and marine loans of $144,000.

Loans classified as substandard decreased $663,000 to $24.3 million at June 30, 2024, compared to $24.9 million at March 31, 2024, and increased $7.9 million from $16.4 million at June 30, 2023.  The decrease in substandard loans compared to the prior quarter was primarily due to a decrease of $637,000 in C&I loans.  The increase in substandard loans compared to the prior year was primarily due to increases of $4.7 million in construction and development loans, $2.0 million in CRE loans, $722,000 in one-to-four family loans, and $486,000 in indirect home improvement loans. There were no other real estate owned (“OREO”) properties at both June 30, 2024 and March 31, 2024, compared to one OREO property (a closed branch in Centralia, Washington) in the amount of $570,000 at June 30, 2023.

Operating Results

Net interest income decreased $1.2 million to $30.4 million for the three months ended June 30, 2024, from $31.6 million for the three months ended June 30, 2023, due to an increase in interest expense on deposits and borrowings, partially offset by an increase in interest and dividend income. Total interest income for the three months ended June 30, 2024, increased $5.1 million compared to the same period last year, primarily due to an increase of $4.2 million in interest income on loans receivable, including fees, primarily as a result of new loans being originated at higher rates and variable rate loans repricing higher. Total interest expense for the three months ended June 30, 2024, increased $6.2 million compared to the same period last year, primarily as a result of higher market interest rates, higher utilization of borrowings and a shift in deposit mix from transactional accounts to higher cost CDs.

For the six months ended June 30, 2024, net interest income decreased $1.5 million to $60.7 million, from $62.2 million for the six months ended  June 30, 2023, for the same reason as for the three-month comparison described above, with an increase in interest income of $11.3 million and an increase in interest expense of $12.8 million.

NIM (annualized) decreased 37 basis points to 4.29% for the three months ended June 30, 2024, from 4.66% for the same period in the prior year, and decreased 41 basis points from 4.68% to 4.27% for the six months ended  June 30, 2024.  The change in NIM for the three and six months ended June 30, 2024 compared to the same period in 2023, reflects the increased costs of deposits and borrowings, which outpaced the increased yields earned on interest-earning assets. 

The average total cost of funds, including noninterest-bearing checking, increased 90 basis points to 2.38% for the three months ended June 30, 2024, from 1.48% for the three months ended June 30, 2023. This increase was predominantly due to higher market rates for deposits and increased utilization of higher cost borrowings. The average cost of funds increased 90 basis points to 2.30% for the six months ended June 30, 2024, from 1.40% for the six months ended June 30, 2023, also reflecting increases in market interest rates over last year and increased utilization of borrowings. Management remains focused on matching deposit/liability duration with the duration of loans/assets where feasible.

For the three and six months ended June 30, 2024, the provision for credit losses on loans was $1.1 million and $2.5 million, compared to $1.1 million and $3.4 million for the three and six months ended June 30, 2023. The provision for credit losses on loans reflects an increase in the loan portfolio, as well as an increase in nonperforming loans and higher net charge-offs during the periods.

During the three months ended June 30, 2024, net charge-offs totaled $1.2 million, compared to $651,000 for the same period last year.  This increase was the result of increased net charge-offs of $648,000 in C&I loans and $42,000 in indirect home improvement loans, partially offset by a net recovery of $105,000 in marine loans. Net charge-offs totaled $2.7 million during the six months ended June 30, 2024, compared to $1.1 million during the six months ended June 30, 2023.  This increase included $1.1 million in C&I charge offs, along with net charge-off increases of $482,000 in indirect home improvement loans, $65,000 in other consumer loans and $64,000 in marine loans. Management attributes the increase in net charge-offs over the year primarily to volatile economic conditions.

Noninterest income increased $1.0 million to $5.9 million for the three months ended June 30, 2024, from $4.8 million for the three months ended June 30, 2023. The increase reflects a $736,000 increase in other noninterest income, primarily due to fair value changes on loans, a $516,000 increase in gain on sale of loans, primarily as a result of the increased volume of loans sold, and a $151,000 increase in gain on sale of investment securities, partially offset by a $383,000 decrease in service charges and fee income.  Noninterest income increased $927,000, to $11.0 million, for the six months ended June 30, 2024, from $10.1 million for the six months ended June 30, 2023.  This increase was primarily the result of an $8.2 million gain on sale of MSRs recorded during the first six months of 2024 with no similar transaction occurring in the comparable six month period in 2023, and an $878,000 increase in gain on sale of loans, partially offset by a $7.8 million loss on sale of investment securities resulting from management’s strategic decision to increase the yields earned on and reduce the duration of the securities portfolio, and a $439,000 decrease in service charges and fee income. 

Noninterest expense decreased $347,000 to $23.9 million for the three months ended June 30, 2024, from $24.2 million for the three months ended June 30, 2023. The decrease in noninterest expense was primarily due to decreases of $390,000 in loan costs, $141,000 in FDIC insurance, $135,000 in salaries and benefits, $124,000 in operations, and $104,000 in amortization of core deposit intangible (“CDI”), partially offset by increases of $375,000 in data processing, $231,000 in professional and board fees, and $107,000 in occupancy expense. Noninterest expense decreased $342,000 to $47.4 million for the six months ended June 30, 2024, from $47.7 million for the six months ended June 30, 2023.  Decreases during the six-month period ended June 30, 2024, as compared to the same period last year included $1.6 million in acquisition costs, $442,000 in salaries and benefits, and $275,000 in loan costs, partially offset by increases of $765,000 in data processing, $476,000 in professional and board fees, $378,000 in amortization of CDI, $292,000 in occupancy, and $192,000 in operations.

About FS Bancorp

FS Bancorp, Inc., a Washington corporation, is the holding company for 1st Security Bank of Washington. The Bank offers a range of loan and deposit services primarily to small- and middle-market businesses and individuals in Washington and Oregon.  It operates through 27 bank branches, one headquarters office that provides loans and deposit services, and loan production offices in various suburban communities in the greater Puget Sound area, the Kennewick-Pasco-Richland metropolitan area of Washington, also known as the Tri-Cities, and in Vancouver, Washington. Additionally, the Bank services home mortgage customers across the Northwest, focusing on markets in Washington State including the Puget Sound, Tri-Cities, and Vancouver.

Forward-Looking Statements

When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent management’s current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially from those currently expected or projected in these forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: potential adverse impacts to economic conditions in the Company’s local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels; labor shortages, the effects of inflation, a potential recession or slowed economic growth; changes in the interest rate environment, including the past increases in the Federal Reserve benchmark rate and duration at which such increased interest rate levels are maintained, which could adversely affect our revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity; the impact of continuing high inflation and the current and future monetary policies of the Federal Reserve in response thereto; the effects of any federal government shutdown;  increased competitive pressures, changes in the interest rate environment, adverse changes in the securities markets, the Company’s ability to execute its plans to grow its residential construction lending, mortgage banking, and warehouse lending operations, and the geographic expansion of its indirect home improvement lending; challenges arising from expanding into new geographic markets, products, or services; secondary market conditions for loans and the Company’s ability to originate loans for sale and sell loans in the secondary market; volatility in the mortgage industry; fluctuations in deposits; liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; legislative and regulatory changes, including changes in banking, securities and tax law, in regulatory policies and principles, or the interpretation of regulatory capital or other rules; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform critical processing functions for us; environmental, social and governance goals; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; and other factors described in the Company’s latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other reports filed with or furnished to the SEC which are available on its website at www.fsbwa.com and on the SEC’s website at www.sec.gov. Any of the forward-looking statements that the Company makes in this press release and in the other public statements are based upon management’s beliefs and assumptions at the time they are made and may turn out to be incorrect because of the inaccurate assumptions the Company might make, because of the factors illustrated above or because of other factors that cannot be foreseen by the Company. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. 

FS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts) (Unaudited)

                          Linked     Prior Year  
  June 30,     March 31,     June 30,     Quarter     Quarter  
  2024     2024     2023     % Change     % Change  
ASSETS                                      
Cash and due from banks $ 20,005     $ 17,149     $ 17,573       17       14  
Interest-bearing deposits at other financial institutions   13,006       28,257       114,526       (54 )     (89 )
Total cash and cash equivalents   33,011       45,406       132,099       (27 )     (75 )
Certificates of deposit at other financial institutions   12,707       23,222       14,747       (45 )     (14 )
Securities available-for-sale, at fair value   221,182       279,643       225,869       (21 )     (2 )
Securities held-to-maturity, net   8,455       8,455       8,469              
Loans held for sale, at fair value   53,811       49,957       16,714       8       222  
Loans receivable, net   2,457,184       2,415,379       2,342,424       2       5  
Accrued interest receivable   13,792       14,455       12,244       (5 )     13  
Premises and equipment, net   29,999       30,326       31,293       (1 )     (4 )
Operating lease right-of-use   5,784       6,202       7,458       (7 )     (22 )
Federal Home Loan Bank stock, at cost   10,322       2,909       6,555       255       57  
Other real estate owned               570             (100 )
Deferred tax asset, net   4,590       4,832       5,784       (5 )     (21 )
Bank owned life insurance (“BOLI”), net   38,201       37,958       37,247       1       3  
MSRs, held at the lower of cost or fair value   9,352       9,009       17,627       4       (47 )
Goodwill   3,592       3,592       3,592              
Core deposit intangible, net   15,483       16,402       19,325       (6 )     (20 )
Other assets   23,912       21,958       23,604       9       1  
TOTAL ASSETS $ 2,941,377     $ 2,969,705     $ 2,905,621       (1 )     1  
LIABILITIES                                      
Deposits:                                      
Noninterest-bearing accounts $ 623,349     $ 646,899     $ 675,211       (4 )     (8 )
Interest-bearing accounts   1,759,454       1,818,398       1,690,097       (3 )     4  
Total deposits   2,382,803       2,465,297       2,365,308       (3 )     1  
Borrowings   181,895       129,940       199,896       40       (9 )
Subordinated notes:                                      
Principal amount   50,000       50,000       50,000              
Unamortized debt issuance costs   (439 )     (456 )     (506 )     (4 )     (13 )
Total subordinated notes less unamortized debt issuance costs   49,561       49,544       49,494              
Operating lease liability   5,979       6,410       7,690       (7 )     (22 )
Other liabilities   37,113       40,582       33,300       (9 )     11  
Total liabilities   2,657,351       2,691,773       2,655,688       (1 )      
COMMITMENTS AND CONTINGENCIES                                      
STOCKHOLDERS’ EQUITY                                      
Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued or outstanding                            
Common stock, $.01 par value; 45,000,000 shares authorized; 7,742,607 shares issued and outstanding at June 30, 2024, 7,805,795 at March 31, 2024, and 7,753,607 at June 30, 2023   77       78       77       (1 )      
Additional paid-in capital   55,834       57,552       56,781       (3 )     (2 )
Retained earnings   243,651       236,720       215,519       3       13  
Accumulated other comprehensive loss, net of tax   (15,536 )     (16,418 )     (22,444 )     (5 )     (31 )
Total stockholders’ equity   284,026       277,932       249,933       2       14  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,941,377     $ 2,969,705     $ 2,905,621       (1 )     1  
                                       

FS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts) (Unaudited)

  Three Months Ended          Linked     Prior Year  
  June 30,     March 31,     June 30,     Quarter     Quarter  
  2024     2024     2023     % Change     % Change  
INTEREST INCOME                                      
Loans receivable, including fees $ 42,406     $ 40,997     $ 38,216       3       11  
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions   3,534       3,883       2,651       (9 )     33  
Total interest and dividend income   45,940       44,880       40,867       2       12  
INTEREST EXPENSE                                      
Deposits   13,252       12,882       7,610       3       74  
Borrowings   1,801       1,167       1,219       54       48  
Subordinated notes   486       485       486              
Total interest expense   15,539       14,534       9,315       7       67  
NET INTEREST INCOME   30,401       30,346       31,552             (4 )
PROVISION FOR CREDIT LOSSES   1,077       1,399       716       (23 )     50  
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   29,324       28,947       30,836       1       (5 )
NONINTEREST INCOME                                      
Service charges and fee income   2,479       2,552       2,862       (3 )     (13 )
Gain on sale of loans   2,463       1,838       1,947       34       27  
Gain on sale of MSRs         8,215             (100 )     NM  
Gain (loss) on sale of investment securities, net   151       (7,998 )           NM       NM  
Earnings on cash surrender value of BOLI   242       240       227       1       7  
Other noninterest income   533       264       (203 )     102       NM  
Total noninterest income   5,868       5,111       4,833       15       21  
NONINTEREST EXPENSE                                      
Salaries and benefits   13,378       13,557       13,513       (1 )     (1 )
Operations   3,519       3,008       3,643       17       (3 )
Occupancy   1,669       1,705       1,562       (2 )     7  
Data processing   2,058       1,958       1,683       5       22  
Loan costs   653       585       1,043       12       (37 )
Professional and board fees   888       923       657       (4 )     35  
FDIC insurance   450       532       591       (15 )     (24 )
Marketing and advertising   377       227       430       66       (12 )
Acquisition costs               61       NM       (100 )
Amortization of core deposit intangible   919       941       1,023       (2 )     (10 )
(Recovery) impairment of servicing rights   (54 )     93       (2 )     (158 )     2,600  
Total noninterest expense   23,857       23,529       24,204       1       (1 )
INCOME BEFORE PROVISION FOR INCOME TAXES   11,335       10,529       11,465       8       (1 )
PROVISION FOR INCOME TAXES   2,376       2,132       2,349       11       1  
NET INCOME $ 8,959     $ 8,397     $ 9,116       7       (2 )
Basic earnings per share $ 1.15     $ 1.07     $ 1.17       7       (2 )
Diluted earnings per share $ 1.13     $ 1.06     $ 1.16       7       (3 )
                                       
    Six Months Ended     Year  
    June 30,     June 30,     Over Year  
    2024     2023     % Change  
INTEREST INCOME                        
Loans receivable, including fees   $ 83,403     $ 74,208       12  
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions     7,417       5,271       41  
Total interest and dividend income     90,820       79,479       14  
INTEREST EXPENSE                        
Deposits     26,134       14,234       84  
Borrowings     2,968       2,060       44  
Subordinated note     971       971        
Total interest expense     30,073       17,265       74  
NET INTEREST INCOME     60,747       62,214       (2 )
PROVISION FOR CREDIT LOSSES     2,476       2,824       (12 )
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES     58,271       59,390       (2 )
NONINTEREST INCOME                        
Service charges and fee income     5,031       5,470       (8 )
Gain on sale of loans     4,301       3,423       26  
Gain on sale of MSRs     8,215             NM  
Loss on sale of investment securities, net     (7,847 )           NM  
Earnings on cash surrender value of BOLI     482       448       8  
Other noninterest income     797       711       12  
Total noninterest income     10,979       10,052       9  
NONINTEREST EXPENSE                        
Salaries and benefits     26,935       27,377       (2 )
Operations     6,527       6,335       3  
Occupancy     3,374       3,082       9  
Data processing     4,016       3,251       24  
Loan costs     1,238       1,513       (18 )
Professional and board fees     1,811       1,335       36  
FDIC insurance     982       1,171       (16 )
Marketing and advertising     604       620       (3 )
Acquisition costs           1,562       (100 )
Amortization of core deposit intangible     1,860       1,482       26  
Impairment of servicing rights     39             NM  
Total noninterest expense     47,386       47,728       (1 )
INCOME BEFORE PROVISION FOR INCOME TAXES     21,864       21,714       1  
PROVISION FOR INCOME TAXES     4,508       4,386       3  
NET INCOME   $ 17,356     $ 17,328        
Basic earnings per share   $ 2.23     $ 2.23        
Diluted earnings per share   $ 2.20     $ 2.19        
                         

KEY FINANCIAL RATIOS AND DATA (Unaudited)

    At or For the Three Months Ended  
    June 30,     March 31,     June 30,  
    2024     2024     2023  
PERFORMANCE RATIOS:                        
Return on assets (ratio of net income to average total assets) (1)     1.22 %     1.14 %     1.29 %
Return on equity (ratio of net income to average equity) (1)     12.72       12.29       14.74  
Yield on average interest-earning assets (1)     6.48       6.30       6.04  
Average total cost of funds (1)     2.38       2.21       1.48  
Interest rate spread information – average during period     3.33       4.09       4.56  
Net interest margin (1)     4.29       4.26       4.66  
Operating expense to average total assets (1)     3.26       3.20       3.45  
Average interest-earning assets to average interest-bearing liabilities (1)     166.25       144.51       147.90  
Efficiency ratio (2)     65.78       66.36       66.52  
Common equity ratio (ratio of stockholders’ equity to total assets)     9.66       9.36       8.60  
Tangible common equity ratio (3)     9.07       8.74       7.88  
                         
    For the Six Months Ended  
    June 30,     June 30,  
    2024     2023  
PERFORMANCE RATIOS:                
Return on assets (ratio of net income to average total assets) (1)     1.18 %     1.26 %
Return on equity (ratio of net income to average equity) (1)     12.51       14.30  
Yield on average interest-earning assets (1)     6.39       5.98  
Average total cost of funds (1)     2.30       1.40  
Interest rate spread information – average during period     4.09       4.58  
Net interest margin (1)     4.27       4.68  
Operating expense to average total assets (1)     3.23       3.48  
Average interest-earning assets to average interest-bearing liabilities     144.07       146.82  
Efficiency ratio (2)     66.07       66.04  
                 
    June 30,     March 31,     June 30,  
    2024     2024     2023  
ASSET QUALITY RATIOS AND DATA:                        
Nonperforming assets to total assets at end of period (4)     0.39 %     0.41 %     0.34 %
Nonperforming loans to total gross loans (excluding loans HFS) (5)     0.46       0.49       0.39  
Allowance for credit losses – loans to nonperforming loans (5)     273.95       260.24       327.75  
Allowance for credit losses – loans to total gross loans (excluding loans HFS)     1.26       1.29       1.28  
                         
    At or For the Three Months Ended  
    June 30,     March 31,     June 30,  
    2024     2024     2023  
PER COMMON SHARE DATA:                        
Basic earnings per share   $ 1.15     $ 1.07     $ 1.17  
Diluted earnings per share   $ 1.13     $ 1.06     $ 1.16  
Weighted average basic shares outstanding     7,688,246       7,703,789       7,637,210  
Weighted average diluted shares outstanding     7,796,253       7,824,460       7,746,336  
Common shares outstanding at end of period     7,644,463 (6)     7,707,651 (7)     7,641,342 (8)
Book value per share using common shares outstanding   $ 37.15     $ 36.06     $ 32.71  
Tangible book value per share using common shares outstanding (3)   $ 34.66     $ 33.47     $ 29.71  
                         

 

_________________________

(1) Annualized.

(2) Total noninterest expense as a percentage of net interest income and total noninterest income.

(3) Represents a non-GAAP financial measure.  For a reconciliation to the most comparable GAAP financial measure, see “Non-GAAP Financial Measures” below.

(4) Nonperforming assets consist of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), foreclosed real estate and other repossessed assets.

(5) Nonperforming loans consist of nonaccruing loans and accruing loans 90 days or more past due.

(6) Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares.

(7) Common shares were calculated using shares outstanding of 7,805,795 at March 31, 2024, less 98,144 unvested restricted stock shares.

(8) Common shares were calculated using shares outstanding of 7,753,607 at June 30, 2023, less 112,265 unvested restricted stock shares.

(Dollars in thousands)   For the Three Months Ended June 30,     For the Six Months Ended June 30,     Linked Quarter     Prior Year Quarter  
Average Balances   2024     2023     2024     2023     $ Change     $ Change  
Assets                                                
Loans receivable, net (1)   $ 2,511,326     $ 2,371,156     $ 2,487,964     $ 2,331,978     $ 140,170     $ 155,986  
Securities available-for-sale, at amortized cost     283,422       265,424       307,417       268,036       17,998       39,381  
Securities held-to-maturity     8,500       8,500       8,500       8,500              
Interest-bearing deposits and certificates of deposit at other financial institutions     41,613       63,470       50,563       66,550       (21,857 )     (15,987 )
FHLB stock, at cost     7,040       4,628       4,607       5,477       2,412       (870 )
Total interest-earning assets     2,851,901       2,713,178       2,859,051       2,680,541       138,723       178,510  
Noninterest-earning assets     95,930       128,712       94,138       111,693       (32,782 )     (17,555 )
Total assets   $ 2,947,831     $ 2,841,890     $ 2,953,189     $ 2,792,234     $ 105,941     $ 160,955  
Liabilities                                                
Interest-bearing accounts   $ 1,794,966     $ 1,681,184     $ 1,813,865     $ 1,684,591     $ 113,782     $ 129,274  
Borrowings     140,964       103,764       121,057       91,619       37,200       29,438  
Subordinated notes     49,550       49,484       49,542       49,475       66       67  
Total interest-bearing liabilities     1,985,480       1,834,432       1,984,464       1,825,685       151,048       158,779  
Noninterest-bearing accounts     637,345       696,270       647,214       658,381       (58,925 )     (11,167 )
Other noninterest-bearing liabilities     41,785       34,434       42,516       34,436       7,351       8,080  
Total liabilities   $ 2,664,610     $ 2,565,136     $ 2,674,194     $ 2,518,502     $ 99,474     $ 155,692  

 

_________________________

(1) Includes loans HFS.

Non-GAAP Financial Measures:

In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States (“GAAP”), this earnings release presents non-GAAP financial measures that include tangible book value per share, and tangible common equity ratio. Management believes that providing the Company’s tangible book value per share and tangible common equity ratio is consistent with the capital treatment utilized by the investment community, which excludes intangible assets from the calculation of risk-based capital ratios and facilitates comparison of the quality and composition of the Company’s capital over time and in comparison to its competitors. Where applicable, the Company has also presented comparable GAAP information.

These non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. They should not be considered in isolation or as a substitute for total stockholders’ equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Reconciliation of the GAAP book value per share and common equity ratio and the non-GAAP tangible book value per share and tangible common equity ratio is presented below.

(Dollars in thousands, except share and per share amounts)   June 30,     March 31,     June 30,  
Tangible Book Value Per Share:   2024     2024     2023  
Stockholders’ equity (GAAP)   $ 284,026     $ 277,932     $ 249,933  
Less: goodwill and core deposit intangible, net     (19,075 )     (19,994 )     (22,917 )
Tangible common stockholders’ equity (non-GAAP)   $ 264,951     $ 257,938     $ 227,016  
                         
Common shares outstanding at end of period     7,644,463 (1)     7,707,651 (2)     7,641,342 (3)
                         
Book value per share (GAAP)   $ 37.15     $ 36.06     $ 32.71  
Tangible book value per share (non-GAAP)   $ 34.66     $ 33.47     $ 29.71  
                         
Tangible Common Equity Ratio:                        
Total assets (GAAP)   $ 2,941,377     $ 2,969,705     $ 2,905,621  
Less: goodwill and core deposit intangible assets     (19,075 )     (19,994 )     (22,917 )
Tangible assets (non-GAAP)   $ 2,922,302     $ 2,949,711     $ 2,882,704  
                         
Common equity ratio (GAAP)     9.66 %     9.36 %     8.60 %
Tangible common equity ratio (non-GAAP)     9.07       8.74       7.88  

_________________________

(1) Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares.

(2) Common shares were calculated using shares outstanding of 7,805,795 at March 31, 2024, less 98,144 unvested restricted stock shares.

(3) Common shares were calculated using shares outstanding of 7,753,607 at June 30, 2023, less 112,265 unvested restricted stock shares.

Contacts:
Joseph C. Adams,
Chief Executive Officer
Matthew D. Mullet,
President/Chief Financial Officer
(425) 771-5299
www.FSBWA.com


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