FS Bancorp, Inc. Reports First Quarter Net Income of $7.8 Million or $1.02 Per Diluted Share and Declares 53rd Consecutive Quarterly Cash Dividend

MOUNTLAKE TERRACE, Wash., April 21, 2026 (GLOBE NEWSWIRE) -- FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”) today reported 2026 first quarter net income of $7.8 million, or $1.02 per diluted share, compared to $8.4 million, or $1.10 per diluted share, for the prior quarter, and $8.0 million, or $1.01 per diluted share, for the comparable quarter one year ago. Pre-tax income of $9.9 million in the first quarter of 2026 increased $440,000, or 4.6%, from $9.5 million in the first quarter of 2025, with the decrease in net income between those periods primarily reflecting a higher effective income tax rate.

“We are excited about the announced merger with Pacific West Bancorp that occurred in February and our projected growth into the Portland, Oregon market area later in 2026,” stated Matthew Mullet, CEO and President of 1st Security Bank.

“Book value per share reached a split adjusted record of $42.42 in the first quarter of 2026, reflecting sustained earnings growth and disciplined capital management,” stated Joe Adams, CEO of FS Bancorp, Inc. “We are also pleased to announce that our Board of Directors has approved our 53rd consecutive quarterly cash dividend of $0.29 per common share, demonstrating our commitment to returning capital to long-term shareholders. The cash dividend will be paid on May 21, 2026, to shareholders of record as of May 7, 2026,” concluded Adams.

2026 First Quarter Highlights

Segment Reporting

The Company operates through two reportable 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 and cash management services. This segment also manages the Bank's investment portfolio and other assets. 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 tables below provide a summary of segment reporting at or for the three months ended March 31, 2026 and 2025 (dollars in thousands):

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Asset Summary

The following table presents the components and changes in total assets as of the dates indicated.

The composition of CRE loans at the dates indicated were as follows:

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

The composition of construction loans at the dates indicated were as follows:

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

During the quarter ended March 31, 2026, the Company sold $154.7 million of one-to-four-family loans compared to $180.1 million during the previous quarter and $91.9 million during the same quarter one year ago. The increase in the volume of loans sold during the current quarter compared to the prior quarter was primarily due to favorable rate activity. Gross margins on home loan sales decreased to 3.03% for the quarter ended March 31, 2026, compared to 3.08% in the previous quarter and decreased from 3.26% 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

The following table summarizes the components and changes in deposits, borrowings, equity, and book value per common share at the dates indicated.

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At March 31, 2026, the Bank had uninsured deposits of approximately $704.2 million, compared to approximately $718.1 million at December 31, 2025, and $679.4 million at March 31, 2025. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

In the table above, the linked quarter increase in stockholders’ equity at March 31, 2026, compared to December 31, 2025, was primarily due to net income of $7.8 million. Declines in the fair value of available-for-sale securities recorded in accumulated other comprehensive income (“AOCI”) were largely offset by improvements in the fair value of interest rate swap cash flow hedges, resulting in a net improvement of $83,000, net of tax. Gains and losses in fair value reflect changes in market interest rates during the periods. The increase in stockholders’ equity was partially offset by share repurchases of $620,000 and cash dividends paid of $2.2 million.

The Bank is considered “well capitalized” under the capital requirement established by the Federal Deposit Insurance Corporation (“FDIC”) and the Company exceeded all regulatory capital requirements. At March 31, 2026, capital ratios presented for the Bank and the Company were as follows:

Credit Quality

The following table summarizes the changes in the ACL on loans, nonperforming loans, and classified loans at the dates indicated.

The increase in nonperforming loans at March 31, 2026, compared to March 31, 2025 was partly driven by one commercial construction relationship, which remains in active development. Disbursements on this relationship, net of partial charge-offs of $2.3 million, contributed to a $3.0 million net increase in the nonperforming loan balance compared to March 31, 2025. Additional disbursements were made to support project completion and improve the probability of recovering collateral value. Increases in indirect home improvement and residential real estate nonperforming loans also contributed to the rise in nonperforming loans between the periods.

Operating Results

Net interest income increased $1.6 million to $32.5 million for the three months ended March 31, 2026, from $31.0 million for the three months ended March 31, 2025, primarily due to an increase in total interest income of $2.5 million, partially offset by an increase in total interest expense of $982,000. The $2.5 million increase in total interest income was primarily due to an increase of $2.7 million in interest income on loans receivable, including fees, resulting from net loan growth. The $982,000 increase in total interest expense was primarily the result of higher average deposit balances used to fund asset growth.

Net interest margin (“NIM”) (annualized) decreased one basis point to 4.31% for the three months ended March 31, 2026, compared to 4.32% for the same period in the prior year. The decrease primarily reflects the repricing of the Company’s subordinated notes to a floating rate on February 15, 2026, which resulted in an estimated two basis point decline in NIM for the quarter. Lower loan yields resulting from decreases in the prime rate further pressured net interest margin, which was partially offset by favorable deposit repricing.

The average total cost of funds, including noninterest-bearing checking, increased one basis point to 2.39% for the three months ended March 31, 2026, from 2.38% for the three months ended March 31, 2025. This increase was primarily due to the repricing of the Company’s subordinated debt, as previously discussed, and was partially offset by favorable deposit repricing.

For the three months ended March 31, 2026, the provision for credit losses on loans was $2.6 million, compared to $1.5 million for the three months ended March 31, 2025. The provision for credit losses on loans reflects a $422,000 increase net charge-off activity, along with heightened past due and nonaccrual consumer loans.

During the three months ended March 31, 2026, total net charge-offs increased $422,000 to $2.1 million, compared to $1.7 million for the three months ended March 31, 2025. The increase was primarily due to a $624,000 net charge-off increase in indirect home improvement loans, partially offset by a $281,000 net charge-off decrease in commercial business loans, with the remainder attributable to slightly higher net charge-off increases in marine and consumer loans. The rise in indirect home improvement and consumer loan net charge-offs reflects continued credit stress in those portfolios amid a challenging economic environment.

Total noninterest income increased $275,000 to $5.4 million for the three months ended March 31, 2026, from $5.1 million for the three months ended March 31, 2025. The increase primarily reflects a $684,000 increase in gain on sale of loans, partially offset by a $246,000 decrease in other noninterest income, and a $171,000 decrease in service charges and fee income.

Total noninterest expense increased $465,000 to $25.5 million for the three months ended March 31, 2026, compared to $25.1 million for the three months ended March 31, 2025. The $465,000 increase reflected higher costs in several areas: loan costs increased $334,000, due to higher loan origination activity; salaries and benefits rose $321,000 from competitive wage adjustments; acquisition related costs of $295,000 were recorded in connection with the previously announced merger with Pacific West Bancorp; and occupancy expense increased $159,000 due to branch renovations. These increases were partially offset by a $451,000 reduction in data processing expenses following renegotiated vendor contracts, and a $173,000 decrease in professional and board fees.

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”), 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: adverse 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, recessionary pressures or slowing economic growth; changes in interest rate levels and volatility, and the timing and pace of such changes, including actions by the Federal Reserve, which could adversely affect the Company's revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity; inflationary pressures and related monetary and fiscal policy responses, and their impact on consumer and business behavior; geopolitical developments and international conflicts including but not limited to tensions or instability in Eastern Europe, the Middle East, South America, and Asia, or the imposition of new or increased tariffs and trade restrictions, which may disrupt financial markets, global supply chains, commodity prices, or economic activity in specific industry sectors; the effects of a federal government shutdown, debt ceiling standoff, or other fiscal policy uncertainty; increased competitive pressures, including repricing and competitors' pricing initiatives, and their impact on the Company's market position, loan, and deposit products; 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 the Company's ability to borrow funds or raise additional capital, if necessary; the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment; the ability to adapt to rapid technological changes, including advancements in artificial intelligence, digital banking platforms, and cybersecurity; legislation or regulatory changes, including but not limited to shifts in capital requirements, banking regulation, tax laws, or consumer protection laws; vulnerabilities in information systems or third-party service providers, including disruptions, breaches, or attacks; environmental, social and governance matters; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, domestic political unrest 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 expressly disclaims any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

KEY FINANCIAL RATIOS AND DATA (Unaudited)

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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 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.

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Additional Information About the Merger and Where to Find It

This press release does not constitute an offer to sell or the solicitation of an offer to buy or exchange any securities or a solicitation of any vote or approval with respect to the proposed transaction with Pacific West Bancorp.

In connection with the proposed merger, a registration statement on Form S-4 will be filed with the SEC that will include a proxy statement of Pacific West Bancorp and a prospectus of the Company, which will be distributed to the shareholders of Pacific West Bancorp in connection with its votes on the merger of Pacific West Bancorp with and into the Company and the issuance of Company common stock in the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS WHEN THEY BECOME AVAILABLE (ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE INTO THE PROXY STATEMENT/PROSPECTUS) BECAUSE SUCH DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED MERGER AND RELATED MATTERS.

Investors and security holders will be able to obtain free copies of the registration statement on Form S-4 and the related proxy statement/prospectus, when filed, as well as other documents filed with the SEC by the Company through the website maintained by the SEC at www.sec.gov. These documents, when available, also can be obtained free of charge by accessing the Company’s website at www.fsbwa.com under the tab “Investor Relations” and then under “SEC Filings.” Alternatively, these documents, when filed with the SEC by the Company, can be obtained free of charge by (1) writing to FS Bancorp, Inc at 6920 220th Street SW, Mountlake Terrace, Washington 98043, Attn: Investor Relations or (2) by calling (425) 771-5299.

Participants in the Solicitation

The Company, Pacific West Bancorp and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Pacific West Bancorp in connection with the proposed transaction. Information about the Company's directors and executive officers is included in the proxy statement for its 2026 annual meeting of the Company’s shareholders, which was filed with the SEC on April 6, 2026. Information about Pacific West Bancorp’s participants and additional information regarding the interests of these participants will be included in the proxy statement/prospectus regarding the proposed transaction when it becomes available. Free copies of this document may be obtained as described above.

Contacts:

Matthew D. Mullet,

President and Chief Executive Officer

Phillip D. Whittington,

Chief Financial Officer

(425) 771-5299

www.FSBWA.com