FS Bancorp, Inc. SEC 10-Q Report

FS Bancorp, Inc., a prominent financial institution operating primarily in the greater Puget Sound area and parts of Oregon, has released its Form 10-Q report for the second quarter of 2025. The report provides a comprehensive overview of the company's financial performance and operational highlights, reflecting both growth and challenges faced during the period.

Financial Highlights

Total Interest and Dividend Income: FS Bancorp reported a total interest and dividend income of $48.7 million for the three months ended June 30, 2025, an increase from $45.9 million in the same period in 2024. This growth was primarily driven by higher interest income from loans receivable.

Net Interest Income: The company's net interest income rose to $32.1 million for the three months ended June 30, 2025, up from $30.4 million in the same period in 2024. This indicates improved interest income relative to interest expenses.

Net Income: FS Bancorp's net income for the three months ended June 30, 2025, was $7.7 million, compared to $9.0 million in the same period in 2024. The decrease in net income was attributed to higher noninterest expenses and an increased provision for credit losses.

Basic Earnings Per Share: Basic earnings per share were $1.00 for the three months ended June 30, 2025, down from $1.15 in the same period in 2024, consistent with the decrease in net income.

Diluted Earnings Per Share: Diluted earnings per share were $0.99 for the three months ended June 30, 2025, compared to $1.13 in the same period in 2024, reflecting the impact of the decrease in net income.

Business Highlights

Segment Performance: FS Bancorp operates in two primary business segments: commercial and consumer banking, and home lending. The commercial and consumer banking segment includes deposit and loan products for small- and middle-market businesses and individuals, while the home lending segment focuses on mortgage origination and servicing.

Geographical Performance: The company primarily operates in the greater Puget Sound area, the Kennewick-Pasco-Richland metropolitan area of Washington, and parts of Oregon. The economic conditions in these regions, particularly in Western Washington and the Oregon Coast, significantly impact the company's lending activities.

Loan Portfolio Composition: The loan portfolio is diversified across commercial real estate, residential real estate, consumer loans, and commercial business loans. Notably, there has been growth in commercial and speculative construction and development loans, as well as in multi-family lending.

Operational Challenges: The company has experienced elevated net charge-offs in the consumer loan portfolio, particularly in indirect home improvement loans. This has led to an increase in the allowance for credit losses, reflecting shifts in credit quality and adjustments to qualitative factors.

Loan Modifications: FS Bancorp has been actively modifying loans for borrowers experiencing financial difficulty, primarily through term extensions and payment delays. The company closely monitors the performance of these modified loans to assess the effectiveness of its loss mitigation strategies.

Future Outlook: Management anticipates continued growth in the loan portfolio, particularly in the commercial real estate and residential real estate segments. The company is also focused on managing credit quality and mitigating risks associated with economic conditions in its primary operating regions.

SEC Filing: FS Bancorp, Inc. [ FSBW ] - 10-Q - Aug. 08, 2025